2015 Half-year results Conference presentation for investors, analysts & media

Transcription

1 2015 Half-year results Conference presentation for investors, analysts & media Basel, 20 August 2015 Disclaimer This presentation contains certain forward-looking statements that reflect the current views of management. Such statements are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Straumann Group to differ materially from those expressed or implied in this presentation. Straumann is providing the information in this presentation as of this date and does not undertake any obligation to update any statements contained in it as a result of new information, future events or otherwise. The availability and indications/claims of the products illustrated and mentioned in this presentation may vary according to country. 2 1

2 First-half highlights Marco Gadola, CEO 2015 H1 - Strong underlying growth and profitability REVENUE BEST REGIONAL PERFORMERS KEY DRIVERS CHF 399m APAC & LATAM Roxolid & BLT Organic 1 revenue growth of 9% (H1) and 10% (Q2) - strongest quarter in 6 years Both regions post mid-teen revenue growth, while EMEA builds on recovery and is a main growth driver Implants grew across all regions driven by Roxolid and Bone Level Tapered (BLT) implant range UNDERLYING EBIT MARGIN 2 UNDERLYING NET PROFIT 2 GUIDANCE 24% CHF 73m FY targets raised Addition of accretive Neodent and operational gearing more than offset FX shock in January 2015 with underlying margin at 18% - before non-cash exceptional charges 2 Group aims to deliver organic revenue growth in mid- to higher-single digits; underlying EBIT margin in low 20 s. 1 Organic growth i.e. excluding the effects of acquisitions, divestitures and currency exchange rates 2 Charges in H related to the Neodent business combination amounted to CHF 77m (CHF 73m after tax), which include inventory 4 revaluation of CHF 13m (COGS) and a CHF 64m net loss below the EBIT line. 2

3 Underlying margin expansions on all levels Organic revenue growth excl. acquisition and and FX effect Gross margin (in %) excl. exceptionals and FX effect EBIT margin (in%) excl. exceptionals and FX effect Underlying EPS excl. exceptionals and FX effect +9.2% +120bps +540bps or +370bps excl. Neodent +24.8% Combined forces Employees Sales by region H North America 27% APAC 15% 2000 LATAM 10% 1000 EMEA 48% Figures include Neodent at time of consolidation on 1 March

4 Business and regional review Peter Hackel, CFO Key impacts of Neodent business combination Neodent contributed CHF 28m to Group s revenue from 1 March to 30 June Net Profit EBIT Impact on Amount in CHF million Reason Exceptional Other Cost of goods sold (13) Inventory adjustments Distribution costs (2) Amortization of customer-related intangible assets 1 Gain/loss on 21 Revaluation gain due to derecognition of the initial 49% investment consolidation Foreign exchange loss due to depreciation of BRL against CHF (85) between initial 49% acquisition in 2012 and full combination in 2015 Provision charges related to a change in a distribution agreement Result of associates (7) and litgation; charges were booked by Neodent prior to the consolidation in March Tax effect on exceptionals 4 Exceptionals partially tax deductible Total exceptionals (73) Total effect of exceptionals on net profit 8 1 Customer-lists will be amortized over 7 years and amount to approx. CHF 7 million p.a. and will vary depending on the BRLCHF currency development. 4

5 Significant profitability improvements in CHF million H H before business Reported combination Reported excluding FX exceptionals Revenue Organic growth% 9.2% 4.6% Change (rounded) excluding FX and exceptionals Gross profit % margin 75.8% 79.1% 78.9% 77.9% 120 bps EBITDA % margin 24.8% 28.0% 24.7% 22.6% 540 bps EBIT % margin 20.7% 24.0% 20.9% 18.6% 540 bps Net profit (0.7) margin (0.2%) 18.2% 19.1% Basic EPS (0.10) Free cash flow margin 11.3% 10.5% 9 Gross margin expansion; volume/mix and inventory effect offset FX headwind In % of revenue, rounded +130 bps +120 bps incl. Neodent 1.6% (1.2%) (1.0%) 0.9% (0.1%) (3.3%) 78.9% 77.9% 79.2% 75.8% Gross profit margin FX effect Adj. gross Price / volume profit margin / mix Inventory change1 Volume driven material and labor costs Like-for-like gross profit margin Neodent operational Exceptionals Reported gross profit margin Change in finished and semi-finished goods in 2015 compared with prior year 5

6 EBIT margin expands despite FX headwind In % of revenue, rounded +370 bps +540 bps incl. Neodent (2.3%) 0.7% 2.1% 1.0% (0.1%) 1.7% (3.3%) 20.9% 18.6% 22.3% 24.0% incl. Neodent 20.7% Reported H1 EBIT margin FX effect 2014 Adjusted H1 Gross margin EBIT margin improvement Distribution costs1 Administration expenses Other income 2015 Like-for-like H1 EBIT margin Neodent operational Exceptionals Reported H1 EBIT margin 11 1 A provision of CHF 12.5m is included in 2014 in connection with the agreed changes of Straumann s go-to-market approach in China Net profit reaches CHF 73m excl. exceptionals In CHF million, rounded 20.8 (7.4) (11.5) 2.1 (73.2) 68.7 Net profit margin 19.1% 72.6 Net profit margin 18.0% (0.7) Reported net profit H EBIT Financial result Share of results 2 from associate Income taxes 2015 Net profit H1 excl. exceptionals Exceptionals Reported net loss H Incl. CHF 2m of amortization expenses (Neodent s customer-related intangible assets) 2 Prior to the business combination, the Neodent result was reduced by provisions for a distributor agreement and an ongoing litigation in the amount of CHF 7 million. 6

7 Free cash flow increases as underlying profitability and working capital improve In CHF million 29.8 (10.5) 0.7 (2.2) (18.4) 9.9 (1.9) FCF margin 10.5% FCF margin 11.3% Free cash flow H EBITDA improvment Improved working capital Higher CAPEX investments Higher interest expenses Higher tax payments Difference in 1 non-cash OPEX Various Free cash flow H Chart shows the cash-relevant developments in H in relation to the same period in Year-on-year change mainly due to provisions in connection with the adapted go-to-market approach in China 13 Revenue growth across all regions, led by the Americas Revenue development (in CHF million, rounded) 11.0% in CHF 9.2% organic (18.6) Change in l.c. (5.2%) 7.2% 4.1% 10.5% 22.2% 14.3% Revenue H FX Effect Acquisition Effect Adj. revenue H EMEA North America APAC LATAM Revenue H

8 Sustained pick-up in EMEA; strong growth continues in North America EMEA 48% 5.5% Revenue change (organic) (2.0%) 2.4% 7.0% 56% 0.3% 8.3% Q Q Q Q Q Q Organic growth accelerates to 8% Strong performers: Spain, France, UK, Sweden and Germany Sequential improvement in distributor business Russian subsidiary operational by end of 2015 North America 27% 5.2% 5.4% 11.4% 9.3% 11.6% 9.3% Q Q Q Q Q Q Strong demand for Straumann implants driven by Bone Level Tapered implant rollout ProArch TM edentulous solution launched Regenerative portfolio strengthened 15 Double-digit growth in LATAM and Asia Asia Pacific 15% Revenue change (organic) 56% 15.3% 17.0% 14.5% 8.3% 34.5% 12.8% Q Q Q Q Q Q Q2 sales expectedly softer after dealer stocking effect in Q1 in China Robust growth in Japan and China Roxolid and BLT both receive regulatory clearances in Japan in July LATAM 10% 15.0% 30.6% 7.3% 36.7% 15.6% 11.7% Q Q Q Q Q Q Double-digit growth continues in Mexico and Brazil Neodent with double-digit growth in H1; Q2 lift from additional selling days in Brazil Neodent launched in Mexico; subsidiaries to open in Columbia (Q3) and Argentina (Q4) 16 8

9 Double-digit volume growth in implants and strong demand for new regenerative products Implants Restorative Regenerative 17 Update on strategic progress Marco Gadola, CEO 9

10 Our key strategic priorities 1 Driving a high performance culture and organization 2 Targeting unexploited growth markets & segments 3 Becoming a total solution provider for tooth replacement 19 Creating a high-performance culture and organization 1 Program to instill culture and mindset change well underway throughout the organization We want to be the first place that people come to do business, to find reliable solutions, to turn ideas into reality, to learn, master, succeed and to change lives. Refreshing our culture Key success factors and core behaviors identified to increase agility, strengthen commercial mindset etc

11 Core behaviours to help us achieve our key success factors 1 Key success factors challenge the status quo Our core behaviours engage in difficult conversations take responsibility think commercially learn constantly have courage to drive change and shape our future being passionate about what we do 21 Investing in emerging markets 2 LATAM Subsidiaries to open in Colombia (Q3) and Argentina (Q4) Russia Subsidiary to open in Q4 China New set-up 95% complete Thailand New distribution agreement; dedicated salesforce 22 11

12 New distribution model to unlock China; 20 distributors appointed nationwide 2 Straumann China Consultative sales force Network of independent distributors Public clinics Marketing, training & education Private clinics Heilongjiang Jilin Market expected to almost triple to a level of >CHF 700m by 2020 In 2014, ~600k implants were placed in China (compared with ~2.3m in Brazil) Straumann and its distribution partner sold >100k implants in 2014 No local Chinese players with significant share Completion of new route to market Xinjiang Tibet Q4 14 Q1 15 Q2 15 Q3 15 Gansu Qinghai Inner Mongolia Ningxia Chongqing Sichuan Yunnan Shaanxi Henan Guizhou Shanxi Guangxi Hainan Beijing Hubei Hunan Tianjin Hebei Liaoning Shandong Jiangsu Anhui Shanghai Zhejiang Jiangxi Fujian Guangdong 23 Using Straumann s global presence & know-how to expand Neodent s international footprint 2 Exisiting or planned availablity of Neodent products in 2015 through: Neodent s homemarket Instradent subsidiaries Distribution partners 24 12

13 New Bone Level Tapered implant: a significant growth opportunity 3 New-generation BLT: good primary stability, fast secondary stability (SLActive), high strength (Roxolid) Enables Straumann to compete in largest implant segment (>60% of implants are tapered/conical) Full market releases in N. America (Q1) and Europe (Q2/3) 2015 Already accounts for 9% of Straumann s implant volumes but still to be launched in Asia Pacific and Latin America Approvals just received in Brazil, and Japan together with Roxolid 25 Bone Level Tapered implant roll-out plan Q3 Q4 Q1 Q2 Q3 Q4 Q1-Q4 Q1-Q4 EMEA - Germany, Austria & Switzerland CMR FMR - Europe (outside DACH) CMR FMR - Distributors CMR FMR North America CMR FMR Asia Pacific - Japan 1 CMR FMR - China 1 CMR - Distributors FMR 3 Latin America 1 CMR FMR CMR = controlled market release to collect feedback from experienced users FMR = full market release, available to all customers Depending on regulatory clearance in respective region/country 2 Roxolid not yet available 3 Not in all distributor markets yet 13

14 Multiple new products and solutions introduced in H1 3 Straumann Variobase extensions incl. multi-unit restorations: screw/cementretained 1 bridges & over-dentures Straumann pre-milled abutment blanks Straumann Pro Arch solution Bridge and bar solutions through Straumann CARES X-Stream 27 1 The bridge / over-denture structure is bonded to the Variobridge solution CADCAM milling service expanded 3 Arlington (USA) facility expanded and fitted with state-of-the-art automation to cater for ProArch growth New milling center in Tokyo to become operational in Q4 Brazil CADCAM milling service for Straumann and Neodent customers operational 28 14

15 Further investments and partnerships to expand value and technology platforms 3 Germany (100%) Canada (55%) Brazil (100%) Germany (51%) Spain (30%) USA (12%) Taiwan (conv. bond) S. Korea (conv. bond) Germany Switzerland (44%) Taiwan (49%) Premium Austria Common technology and manufacturing platform Value 29 Securing access to leading-edge technology by increasing Dental Wings stake to 55% 3 Option for a stepped increase to full ownership by 2020 Founding shareholders remain with company and retain control Leadership in digital solutions and exciting launch pipeline support our strategy to be a total solution provider

16 Sights set on chairside and in-lab CADCAM markets 3 To complement its central milling and Scan&Shape services, Straumann aims to enter selected chairside & in-lab CADCAM markets through partnerships with Dental Wings (intra-oral and desk-top scanners) and Amann Girrbach (milling machines) In-lab Chairside Lab System Desktop scanner CARES Visual Motion 2 milling maching Intra-oral scanner (stand-alone) Intra-oral scanner CARES Visual Chairside system Intra-oral scanner CARES Visual Chairside milling machine Practice lab system Intra-oral scanner CARES Visual Motion 2 milling machine 31 supported with a broad range of materials 3 Straumann Co-branded with Amman Girrbach 3 rd party n!ce Cobalt-chrome Vita Pre-milled abutment blanks Zirconia Ivoclar 32 16

17 Emdogain celebrates 20 th anniversary Further indications in development Oral wound healing (H1 2016) Flapless treatment in periodontitis (H2 2016) See the 33 Outlook

18 Guidance 2015 Barring unforeseen circumstances Straumann expects the global implant market to continue growing in 2015 Group expects full-year revenue to grow organically in the mid- to higher-singledigit range Assuming that the currency exchange rates remain more or less at their H1 levels, the Group aims to achieve an EBIT margin in the low twenties, before business combination exceptionals Fair value adjustments to Neodent s acquisition-related inventory of CHF 13m 35 Questions & Answers 36 18

19 Calendar of upcoming events August H results conference Basel HQ 01 September Investor meetings Boston 02 September Investor meetings New York 03 September Investor meetings Montreal / Toronto 09 September Investor meetings Zurich & St.Gallen 14 September Investor meetings Vienna 15 September Investor meetings Frankfurt 23 September Investor meetings Copenhagen 24 September Investor meetings Stockholm 29 October Q3 sales publication Webcast 17 November Investor meetings Edinburgh 18 November Investor meetings London 37 Results publication and corporate events. More information on straumann.com Events 37 Straumann s currency exposure BRL 9% Revenue breakdown H Other 19% CHF 10% EUR 34% Average exchange rates (rounded) FX sensitivity (+/- 10%) on H Revenue EBIT 1 EURCHF /- 13 million +/- 8 million 1 USDCHF /- 10 million +/- 3 million 1 BRLCHF /- 4 million +/- 1 million 100 JPYCHF /- 2 million +/- 1 million USD/CAD /AUD 28% Cost breakdown H BRL 8% Other 8% CHF 43% Development of Straumann s main exchange rates since USD/CAD/ AUD 22% 38 EUR % 1 These distribution charts represent the total net revenues and the total COGS as well as OPEX in the various currencies. All numbers are rounded and based on H figures and include Neodent since 1 March. USDCHF EURCHF JPYCHF BRLCHF 19

20 Foreseeable FX impact has abated and counter-measures are on track YTD development of Straumann s main currencies Theoretical FX impact on revenue and EBIT 1.3 In CHF m (rounded) FX spot rates 16 Jan Ø FX rates January June Revenue (75) (39) EBIT (40) (24) EURCHF USDCHF USDCHF EURCHF 39 Source: Thomson Reuters, company estimates The BLT with the SLActive surface combines the best of both worlds 40 Chart for illustrative purposes only 20

21 Your contacts Fabian Hildbrand Corporate Investor Relations Tel. +41 (0) Mark Hill Thomas Konrad Corporate Communications Tel. +41 (0) Tel. +41 (0) International Headquarters Institut Straumann AG Peter Merian-Weg 12 CH-4002 Basel, Switzerland Phone +41(0) Fax +41(0)