2013 Half-year results Analysts & Media Conference Basel, 20 - - PDF document

2013 half year results
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2013 Half-year results Analysts & Media Conference Basel, 20 - - PDF document

2013 Half-year results Analysts & Media Conference Basel, 20 August 2013 Disclaimer This presentation contains certain forward-looking statements, which can be identified by the use of terminology such as will,


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SLIDE 1

2013 Half-year results

Analysts’ & Media Conference Basel, 20 August 2013

 Straumann

2

Disclaimer

This presentation contains certain “forward-looking statements”, which can be identified by the use of terminology such as “will”, “guidance”, “would”, “prevailing”, “still be able to”, “should”, “confidence in achieving”, “turnaround”, “future”, “anticipated”, “continue”, “mid and long term”, “believes”, “outlook”,

  • r similar wording. Such forward-looking statements reflect the current views of Management and are

subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Group to differ materially from those expressed or implied. These include risks related to the success of and demand for the Group’s products, the potential for the Group’s products to become obsolete, the Group’s ability to defend its intellectual property, the Group’s ability to develop and commercialize new products in a timely manner, the dynamic and competitive environment in which the Group operates, the regulatory environment, changes in currency exchange rates, the Group’s ability to generate revenues and profitability, and the Group’s ability to realize its expansion projects in a timely manner. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this report. Straumann is providing the information in this presentation as of this date and does not undertake any obligation to update any forward-looking 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.

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SLIDE 2

Highlights

Marco Gadola

CEO

 Straumann

4

Weak economy in Europe

  • Consumer confidence still fragile
  • Raising healthcare costs and co-pay levels reduce disposable income for

dental treatment

  • Market still receding as patients postpone or take cheaper/inferior options
  • Many practice owners perceive general business conditions as negative

Growth potential in North America intact

  • Momentum picks up in Q2
  • After downward trend in 2012, dental practice activity indicators show

improvements in tooth replacement procedures

Asia: mixed picture

  • China continues to perform well
  • Japanese market still receding

What is happening in the markets?

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SLIDE 3

5

Fundamental shifts

  • To lower-cost alternatives
  • Dental labs under pressure to find optimal levels of in-house

production, outsourcing, efficiency and quality

  • Role of General Practitioners (GPs) increasing in implant dentistry

New technologies

  • Digital procedures and workflows
  • Optimized materials (improved esthetics,

durability, pre-shaded)

  • No visible threat from substitution technologies

What is happening in the markets?

 Straumann

Source: iData Research, US data, 2012

6

 Straumann

2008 2014

Implant specialists GPs placing implants GPs restoring implants

60 600 87 400

GPs restore but don’t place implants

15 900 29 700

GPs place implants

GPs are increasingly important and have different preferences and needs

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SLIDE 4

Resolute cost reduction measures bearing fruit without impairing selling power

7

REVENUE KEY PERFORMANCE H1 GROSS MARGIN CHF 355m

+6% (organic l.c.)

78%

Slightly down on prior year despite acceleration in Q2 in N. America (+11% in Q2); Europe and Japan remain difficult Margin expansion through efficiency gains in manufacturing OPERATING INCOME MARGIN1 HEADCOUNT STRATEGY

18% 2313

Customer-driven solutions

EBIT lifted by initial results from cost optimization measures Reduction program almost complete; some employment contracts still running out Addressing changed market dynamics and unexploited growth markets

 Straumann 1 Excluding cost optimization program costs

Thomas Dressendörfer

CFO

Business and regional review

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SLIDE 5

in CHF million

Change

FX adjusted excl. exceptionals

  • vs. adjusted

Net Revenue 361.7 361.0 354.8 (1.7%) Gross profit 278.4 277.4 276.2 Gross profit margin 77.0% 76.9% 77.8% EBITDA 71.0 70.6 74.5 80.0 EBITDA margin 19.6% 19.6% 21.0% 22.5% (2.9%) Operating profit (EBIT) 54.6 54.1 56.8 62.3 EBIT margin 15.1% 15.0% 16.0% 17.6% 2.6% Net profit 44.6 53.7 Net profit margin 12.3% 15.1% Basic earnings per share (EPS) 2.88 3.48 Free Cash Flow 19.9 34.7 Free Cash Flow margin 5.5% 9.8%

H1 2012 H1 2013

 Straumann

Margins improved on all levels

1 In 2013, Straumann adopted the revised International Accounting Standard 19 regarding employee benefits. The 2012 figures

have been restated accordingly.

2 Throughout this presentation the term ‘exceptionals’ refers to restructuring charges of CHF 13 million and a decrease in pension

  • bligations of CHF 7 million, both in H1 2013 and both related to cost reduction initiatives

3 1

9

2

77.0%

  • 0.1%

76.9%

  • 0.1%

0.4%

  • 0.4%

1.0% 77.8%

Gross profit H1 2012 FX effect Adjusted gross profit H1 2011 Volume, Price & Mix iTero effect Inventory changes Manufacturing efficency gains Gross profit H1 2013

 Straumann

10

Gross margin improved despite lower top line

In % of revenue

1 Decreased proportion of gross margin dilutive iTero scanner sales

1

H1 2012

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SLIDE 6

15.1%

  • 0.1%

15.0% 0.9% 2.2%

  • 0.6%

0.1% 17.6%

  • 1.6%

16.0%

EBIT margin H1 2012 FX effect FX adj. EBIT margin H1 2012 Higher gross profit SG&A savings Higher R&D Other income EBIT margin H1 2013 Exceptionals EBIT margin H1 2013

 Straumann

11

SG&A savings lift EBIT margin

In % of revenue

1 2

1 One-time project costs of CHF 6m related to Straumann’s reorganization, Neodent transaction and IAS19

Large international clinical trials set new benchmark

 Straumann

12

  • >1000 Straumann Bone Level implants evaluated

in Europe, US and Australia

  • Implant survival rates of more than 98% in daily

practice with practically no bone loss around implant.

  • Results considerably better than values reported in

meta-analysis of studies with other implants

  • Results add to wealth of strong clinical evidence

and provide clear reasons for patients and dentists to insist on Straumann rather than undocumented alternatives

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SLIDE 7

15.1%

  • 0.1%

15.0% 0.9% 2.2%

  • 0.6%

0.1% 17.6%

  • 1.6%

16.0%

EBIT margin H1 2012 FX effect FX adj. EBIT margin H1 2012 Higher gross profit SG&A savings Higher R&D Other income EBIT margin H1 2013 Exceptionals EBIT margin H1 2013

 Straumann

13

SG&A savings lift EBIT margin

In % of revenue

1 2

1 One-time project costs of CHF 6m related to Straumann’s reorganization, Neodent transaction and IAS19 2 Restructuring charges of CHF 13 million and a decrease in pension obligations of CHF 7 million

19.9

  • 0.6
  • 2.3

8.3 3.6 4.7 1.2 34.7

Free cash flow H1 2012 Lower gross profit OPEX (cash) Reduced working capital Lower CAPEX Less income taxes paid Others Free cash flow H1 2013

 Straumann

14

Improved cash flow despite restructuring charges

FCF margin 9.8% FCF margin 5.5%

In CHF million

Cash & equivalents 31 Dec 2012 CHF 141m

  • Operating cash flow

CHF 41m

  • CAPEX

(CHF 7m)

  • Bond proceeds

CHF 199m

  • Dividend

(CHF 58m)

  • Others

CHF 1m Cash & equivalents 30 June 2013 CHF 317m

Related to restructuring initiatives

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SLIDE 8

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 Straumann

6.3% (3.9%) (1.6%) 0.7% Change organic

North America partly offsets weakness in Europe

(0.2%) (0.8%)

2012 2013

(1.9%) in CHF (0.9%) organic

In CHF million

361.7 (0.7) (3.0) 358.0 (8.0) 5.5 (0.8) 0.1 354.8

Revenues H1 2012 FX Effect iTero Effect Revenues H1 2012 @ FX 2013 Europe North America APAC ROW Revenues H1 2013

Performance led by core implant business

Implants Regeneratives Restoratives / CADCAM

 Straumann

16

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SLIDE 9

17

 Straumann

Strong growth in North America; Europe flat

56%

  • Revenue flat in Q2 (l.c. and organic)
  • All countries improve in Q2 and

benefit from shift in selling days after disappointing start to the year (H1 -4%)

  • France, UK and Switzerland return

to growth

0.2%

  • 7.7%
  • 5.6%
  • 5.3%
  • 7.0%

Q2 2013 Q1 2013 Q4 2012 Q3 2012 Q2 2012

Europe North America

10.6% 2.1% 1.8% 5.1% 7.0% Q2 2013 Q1 2013 Q4 2012 Q3 2012 Q2 2012

  • Q2 organic revenues rise 11% (l.c.)
  • All businesses above previous year;

Implants grow double-digit:

  • Pricing and product mix contribute to

growth; fundamentals intact Revenue change (organic)

55% 26%

Pie chart segment indicates regional sales contribution to the Group.

18

 Straumann

Sequential improvements in APAC and RoW

56%

  • Q2 in line with prior year (l.c.)
  • Japan: implant market still to

recover from negative public perception

  • Solid performances in China and

Australia

0.9%

  • 4.4%
  • 0.9%
  • 2.4%

4.2% Q2 2013 Q1 2013 Q4 2012 Q3 2012 Q2 2012

Asia Pacific Rest of World1

4.1%

  • 2.6%
  • 10.4%

1.4%

  • 7.4%

Q2 2013 Q1 2013 Q4 2012 Q3 2012 Q2 2012

  • 4% growth in Q2 (l.c.)
  • Mexico posts good growth, while

region’s largest market, Brazil, reports sales in-line with prior-year

  • Distributor markets in the Middle

East recovering gradually

14% 5%

1 Revenue contribution from Neodent will be included after consolidation in 2015.

Revenue change organic

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SLIDE 10

Building for the future

Marco Gadola

CEO

Our goal of better profitability…

 Straumann

20

Underlying EBIT margin

15-20%

2008 2012 E2013 Mid term

10-15% >15% >20% >25%

Straumann Dental benchmark1

1 Peers comprise Nobel Biocare, Dentsply, Patterson, Henry Schein, Osstem, and Sirona.

10% 15% 20% 25%

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SLIDE 11

... and how we will achieve it

 Straumann

21

  • Cost reduction measures

implemented in 2012 and 2013

  • Cost discipline inherent to new

Straumann culture

  • New organizational set-up

focusing on customer needs

Lean, high performance

  • rganization
  • Customer- and

market-driven solutions

  • First projects to

launch in Q4 2013

Address changed market dynamics

  • Address value segment
  • Increase presence in fast-

growing underpenetrated markets

Target unexploited growth markets

  • Organization based on

‘bullish’ expectations, which have not materialized

  • Restorative franchise & GP

segment neglected

  • Innovation and

Development technically driven

  • Pure premium focus

Prior to 2012

2008 2012 2015

Moving forward

Organization adapted to market reality

 Straumann

22

2361 2452 2575 2517 2431 2243 2230

FY 2010 FY 2011 Q3 2012 FY 2012 Q1 2013 Today FY 2013

≈140 ≈200

Lean, high performance

  • rganization

Resizing Resizing

1 At the end of Q2, Straumann had a global workforce of 2313 including redundancies in subsidiaries where employment

contracts finished ater 30 June.

1

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SLIDE 12

... and how we will achieve it

 Straumann

23

  • Cost reduction measures

implemented in 2012 and 2013

  • Cost discipline inherent to new

Straumann culture

  • New organizational set-up

focusing on customer needs

Lean, high performance

  • rganization
  • Customer- and

market-driven solutions

  • First projects to

launch in Q4 2013

Address changed market dynamics

  • Address value segment
  • Increase presence in fast-

growing underpenetrated markets

Target unexploited growth markets

  • Organization based on

‘bullish’ expectations, which have not materialized

  • Restorative franchise & GP

segment neglected

  • Innovation and

Development technically driven

  • Pure premium focus

Prior to 2012

2008 2012 2015

Moving forward

Tapping exciting growth opportunities...

Target unexploited growth markets

Single tooth Multiple tooth Edentulous

Ceramic implants Simple edentulous solutions Smaller, less invasive implants

* Bubble size illustrates market volume potential  Straumann

24 Implants for narrow spaces Esthetic, fast implant solutions with single crown / small bridge Standard implant solution packages Fixed immediate edentulous solutions

Low-tech High-tech

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SLIDE 13

affordability

 Straumann

25

...with solutions to suit:

customer segments local market conditions

Surgeons GPs

Premium Value

Spain

Target unexploited growth markets

Outlook

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SLIDE 14

Outlook 2013 and beyond

Barring unforeseen circumstances

  • While positive developments are expected to continue in North

America and other underpenetrated markets, Straumann expects the effects of the weak economy and consumer sentiment to continue in Europe, constraining overall revenue development in 2013.

  • Despite a shortfall in full-year revenue, the successful outcome
  • f cost reduction initiatives will drive sustainable profitability

improvements as anticipated, with the main savings beginning to have an impact in Q3.

  • In the mid term, Straumann aims to return to solid growth and a

higher operating margin.

27

 Straumann

Questions & answers

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SLIDE 15

70 80 90 100 110 2012 2013 USDCHF EURCHF JPYCHF

EUR 21% CHF 47% Other 13% USD/CAD/AUD 19% Other 21% CHF 11% EUR 41% USD/CAD/AUD 27%

29

Slight currency headwind expected for the full year

Cost breakdown 20121 Revenue breakdown 2012

1 These distribution charts represent the total net revenues and the total COGS, SG&A costs as well as R&D

expenses in the various currencies. All numbers are rounded and based on 2012 figures.

 Straumann

Average exchange rates (rounded)

FY 2012 H1 2013 EURCHF 1.21 1.23 USDCHF 0.93 0.93 JPYCHF 1.17 0.99 Straumann’s major exchange rates since 2012 (indexed to 100)

Calendar of upcoming events

26 August Investor meetings Stockholm/Copenhagen 27 August Investor meetings Amsterdam/Brussels 28 August Investor meetings Frankfurt 04 September Goldman Sachs Medtech conference London 05 September Investor meetings London 16 September Investor meetings Geneva 17 September Investor meetings Vienna 30 September Investor meetings New York 01 October Investor meetings Boston 02 October Investor meetings Toronto 31 October Third quarter results Webcast 25 February Full-year results conference Basel 11 April Annual General Meeting Basel Detailed calendar on www.straumann.com

 Straumann

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SLIDE 16

 Straumann

31

Your contacts

Fabian Hildbrand Corporate Investor Relations

Phone +41 (0)61 965 13 27 Mobile +41 (0)79 392 80 32 Email fabian.hildbrand@straumann.com

Mark Hill Thomas Konrad Corporate Communications

Phone +41 (0)61 965 13 21 Phone +41 (0)61 965 15 46 Email mark.hill@straumann.com Email thomas.konrad@straumann.com