2014 First-half results

2014 First-half results
Analysts’ & Media Conference
Basel, 26 August 2014
1
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.
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1
First-half highlights
Marco Gadola, CEO
Strong financial and strategic progress
REVENUE
BEST PERFORMERS
GROSS MARGIN
APAC & ROW
78.9%
H1: +5% (organic)
Q2: +3% (organic)
Double-digit growth in both regions
+1.6% points (excl. FX) driven by
strong implant volumes, optimized
plant utilization and product mix
EBIT MARGIN
TOTAL SOLUTION PROVIDER
GROWTH STRATEGY
20.9%
Portfolio expansion
Geographic and
segment expansion
Underlying margin1 improved 4.2%
points driven by improved gross
profit and reduced OPEX
New prosthetics range launched, new
generation tapered implant, full
regenerative range, innovation leadership
CHF
359m
Investments in China and ‘value-brand’
platform
1 Excluding
2
4
exceptionals in prior year and currency exchange rate effects
The term ‘organic’ in this presentation means excluding the effects of acquisitions, divestitures and currency exchange rates
2
Fifth consecutive quarter of above-market growth
10%
Rightsizing and
re-organisation
measures
8%
Q2: revenue of
CHF 179mn (+3% in l.c.)
6%
4%
2014
guidance
2%
0%
-2%
-4%
-6%
-8%
Easter effect
-10%
-12%
1
Market for tooth replacement & restoration (leading implant companies)
Straumann l.c. growth
5
5
* Straumann, Nobel Biocare, Zimmer Dental, Biomet 3i, Dentsply Implants - based on company and SEC
1Straumann, Nobel Biocare, Zimmer Dental, Biomet 3i, Dentsply Implants, based on company and SEC reports, as
reports as well as management comments.
well as management comments.
Share price reflects restored confidence
Relative share price development
in the past 5 years
...and over the past 2 years
STMN N SMI rebased MSCI World rebased
6
Source: Thomson Reuters Datastream
3
Business and regional review
Thomas Dressendörfer, CFO
Margin expansion at all levels
in CHF million
report ed
Change
H1 2013
H1 2014
report ed
excl. except ionals
(rounded)
excl.
except ionals
and FX
359.1
354.8
343.4
1.2%
(1.9%)
(1.7%)
Gross profit
283.4
276.2
265.5
margin
78.9%
77.8%
77.3%
Revenue
YoY change
EBITDA
margin
EBIT
margin
88.8
74.5
80.1
74.7
24.7%
21.0%
22.6%
21.7%
75.0
56.8
62.4
57.2
20.9%
16.0%
17.6%
16.7%
Net profit
68.7
53.7
48.5
margin
19.1%
15.1%
14.1%
Basic EPS
4.42
3.48
Free Cash Flow
37.6
34.7
10.5%
9.8%
margin
reported
excl.
exceptionals
and FX
4.6%
6.7%
110 bps
160 bps
370 bps
300 bps
490 bps
420 bps
400 bps
500 bps
18.9%
31.1%
41.7%
8
4
Higher implant sales and efficiency gains lift gross
profit margin
In % of revenue, rounded
+160 bps
(0.4%)
1.2%
0.8%
(0.5%)
78.9%
77.3%
77.8%
H1 gross profit
margin
FX effect
Adj. H1 gross
profit margin
Price / volume / Inventory change
mix
2013
9
1 Change
1
COGS (higher
volumes)
H1 gross profit
margin
2014
in finished and semi-finished goods in H1 2014 compared with prior year
EBIT margin clears 20% threshold
In % of revenue, rounded
+420 bps
2.6%
0.0%
1.6%
(0.9%)
1.6%
20.9%
16.7%
16.0%
Reported H1
EBIT
FX effect
Restructuring
costs1
Adjusted H1
EBIT
Gross margin
improvement
OPEX reduction
2013
10
1 Exceptional
costs of CHF 6 million related to last year’s cost optimization measures
Other income
Reported H1
EBIT
2014
10
5
Higher profitability drives cash flow
In CHF million, rounded
Increase mainly
due to severance
payment accruals
in H1 2013
(24.7)
27.0
0.4
7.2
(3.0)
(4.0)
+4 days: ‘Days of sales’
+8 days: ‘Days of supplies’
34.7
37.6
FCF margin
9.8%
FCF margin
10.5%
Free cash flow
H1 2013
11
Improved gross
profit
Lower cashOPEX
Higher working
capital
Lower CAPEX
Higher interest
paid
Various
Chart shows cash-flow-relevant changes between 31 Dec 2013 and 30 June 2014 compared with prior year period
Free cash flow
H1 2014
11
Growth across all regions
In CHF million, rounded
1.2% in CHF
4.6% in l.c.
5.5
(11.3)
2.9
4.6
2.6
359.1
354.8
343.5
1.4%
(3.3%)
Revenue H1
FX Effect
2013
Change in l.c.
Revenue H1 @
FX 2014
Europe
5.3%
12.2%
18.6%
North America
APAC
ROW
Revenue H1
2014
12
6
Good performance in N. America; Europe reflects
early Easter in 2013
Revenue change (organic)
 Softer Q2 reflects Easter effect
mainly in Central Europe
Europe
4.1%
56%
0.2%
(3.4%)
(1.4%)
(1.5%)
(7.7%)
55%
North America
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014
10.6%
9.1%
11.0%
5.2%
5.4%
2.1%
 Encouraging growth in France, UK
and Iberia
 Soft Q2 in Turkish and Russian
distributor market
 Q2 +5% on top of strong
comparative period in 2013
 Mid-single-digit growth in North
America
26%
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014
 FX changes reduce regional
growth in CHF by 6%-points
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Boost from emerging markets
Asia Pacific
Revenue change (organic)
16.3%
56%
7.9%
8.3%
0.9%
-4.4%
14%
Rest of World
15.3%
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014
 Double-digit growth driven by China
and Japan
 SLActive Tissue Level stimulates
growth; SLActive Bone Level to
launch in Q3
 Currency headwind (mainly JPY)
cuts regional growth in CHF by 8%points
 Q2 +9%; sales fluctuation due to
erratic distributor ordering
35.1%
28.6%
4.1%
-2.6%
5%
1.8%
 Strong performance by Straumann
Brazil; Neodent posts high single9.0%
digit growth
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014
 Mexico and distributor markets
continued to grow well, but less than
in exceptionally strong Q1
14
7
Strong implant volume growth as the main driver
Implants
Restorative
Regeneratives
15
Our key strategic priorities to address
changed market dynamics
Marco Gadola, CEO
8
Tracking the progress of our key priorities
Cost reduction measures
Lean, high
performance
organization
New organization with increased
customer focus
Continuing cost discipline

Address changed
market dynamics
Immediate edentulous
solutions
New tapered implant
Ceramic implant
Innovative Smileloc
More CARES solutions
Full regenerative range
Customer- and market-driven
Solutions





Increase presence in fast-growing
underpenetrated markets
Distribution take-over & new
hybrid approach in China
Target unexploited
growth markets


Address value segment
Instradent set up and
Neodent rolled-out
Investments in MegaGen
& Biodenta
17
Covering the remaining white spots
Roxolid/SLActive
4mm implant
New ceramic
implant
High-tech
BLT implant & enhance
screw-retained prosthetics
Ceramic
implants
Smaller, less
invasive
implants
Fixed
immediate
edentulous
solutions
Surgeons / Prosthodontists
GPs
Implants for
narrow spaces
Cost-effective,
open platform
restoration
Low-tech
Esthetic, fast implant
solutions with single
crown / small bridge
Simple
edentulous
solutions
Standard
implant
solution
packages
Single tooth
Premium
Value
Multiple tooth
Edentulous
Straumann
ONE
Straumann
Variobase
18
Bubble sizes illustrate market volume potential
9
New prosthetics and Bone Level Tapered implant
enhance immediate edentulous solutions
CADCAM sub-structure embedded in
fixed full-arch prosthesis
New range of screw-retained implant
abutments offering increased flexibility
New Bone Level Tapered implants
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New generation BLT implant to be launched
 Tapered implants are increasingly
popular and account for more than
50% of the global implant market1
 Combination of Roxolid, SLActive
and Straumann design make this a
new generation BLT implant with
high strength, short healing time and
a wide range of reliable prosthetic
options
 Handling benefits and good primary
stability meet customer needs for
immediate restoration solutions
 Marketing approvals obtained in
Europe & N. America; full-market
release in Q1 2015
20
1 iData and Straumann estimate
10
Charitable event using Straumann fixed
edentulous immediate solutions attracts attention

3-day charitable event at Afopi
dental campus near Paris
involving 14 patients and 60
dental professionals

Patients received total immediate
dental restorations (both jaws,
with 6-8 Straumann BLT implants
per jaw and fully functional fullarch provisional dentures) all in
one day
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Small diameter Straumann ‘Pure’ Ceramic Implant

New 3.3mm diameter ideal for narrow spaces in front of mouth

Complements 4.1mm PURE Ceramic Implant launched in Q1

Tooth-colored material for high-end esthetic, metal-free solution

High predictability, 100% tested

ZLA surface for enhanced osseointegration

First implants successfully placed in controlled MAT
(market acceptance test) phase

To be presented at EAO in Rome in September
22
11
Straumann’s comprehensive implant portfolio
Q1
20152
Tissue Level
SLA
Titanium1

Roxolid

SLActive
4mm short
implant
SLActive
Bone Level
SLA
SLActive




Bone Level Tapered
SLA
SLActive
PURE
Monotype
ZLA





Ceramic
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Innovative prosthetic anchorage


Straumann acquires 12% of RODO Medical, a privatelyheld developer of innovative implant restoration devices,
in California
Crown
RODO’s Smileloc system

Uses a clip mechanism made of ‘shape memory’ alloy

Prosthetic crowns fixed without cement or screws

Convenient removal and replacement of prosthetic
parts without damage
RODO
device
Implant
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12
Collaboration with botiss – update

Agreement signed in Q2 with Europe’s second
largest supplier of oral tissue regeneration
products

Exclusive distribution rights for extensive range of
botiss products in most countries

Botiss co-distributes Emdogain® in Germany and
takes over distribution in parts of Eastern Europe
and Middle East

Call option to obtain up to 30% of botiss in 2017

Straumann to start selling botiss products in
Europe in Q4; other regions to follow pending
regulatory clearances
25
Increasing share in fast-growing
geographies & segments
13
New hybrid multi-distributor model
in China


Growth of private hospital and practice segment expected to
exceed public hospital segment, which Straumann leads
Agreement with former distributor Beijing Finest Medical
Instrument Co. Ltd. to take over certain assets
 fixed considerations of CHF 9mn plus variable consideration
up to CHF 18mn depending on business performance until
2016

Greater control of business in China; access to distribution
network, customers, market data etc.

Further sales growth through hybrid multi-distributor model
approach

Significant investments to build a consultative sales force and
local training-&-education organization with target of growing in
private segment, where Straumann is under-represented
27
Substantial investments in dynamic Asian
markets
China (BJFM)
MegaGen
Biodenta Corp.
DM Capital
Location
China
Korea, international
presence
Taiwan/Switzerland,
international presence
China
Investment
Consideration up
to CHF 27m
CHF 18m convertible
bonds (3% p.a.)1
CHF 6m
+2m convertible
bonds (1% p.a.)
CHF 5m
Strategic
rationale
Spur market share
growth in fast-growing
Chinese market – further
focus on ‘private’
segment
Drive growth in fastgrowing Asian and other
emerging markets
Provide comprehensive
solutions for dentists &
labs in value segment in
emerging markets
Investment in dentistry
fund with a focus on
China
28
14
Targeting unexploited growth
markets
Multi-brand strategy to address premium and
value segments
Germany
Spain (30%)
Brazil (49%)
Germany (51%)
Canada (44%)
Germany (100%)
Taiwan
Korea
USA (12.5%)
Common platform for
technology & production
Premium
Value
30
15
Introducing a new distribution platform…

Instradent to drive and manage distribution and internationalization of
Sraumann’s value business

Small dedicated team in Basel building up business in various countries, which
will sell specific value brands, supported by common platform for technology
and production

Subsidiaries already running in Spain and US (Neodent), and soon to launch in
Italy
31
Multibrand sales-flow to value segment
Other
Local
subs. D D D D CUSTOMER D =Distributor 32
16
Building a global presence in the value segment
Abutments
Implant systems
Europe1
NAM
LATAM
APAC
Implants
Standard
prosthetics
CADCAM
Abutments
for 3rd party
implants
Bars/bridges
for 3rd party
implants
33
Outlook
17
Outlook 2014 unchanged
Barring unforeseen circumstances

Straumann expects the global implant market to
develop positively in 2014 and its revenue to
grow in the low-single-digit range (l.c.).

Group will continue to invest in growth markets
and its non-premium offering. Despite this, and
thanks to last year’s cost-reduction measures,
Straumann will deliver an expanded operating
profit margin in 2014.

Mid-term it aims to achieve solid growth with
further operating margin improvements.
35
35
On track to restore comparable 2008 margin
Underlying EBIT margin
27.4%
25%
>20%
~20%
20%
@ today’s FX rates
18.2%
15-20%
15%
14.5% 10-15%
10-15%
10-15%
2013
2015
10%
2008
Straumann
36
1 Peers
2012
Dental benchmark1
comprise Nobel Biocare, Dentsply, Patterson, Henry Schein, Osstem, and Sirona.
18
Questions & Answers
37
Calendar of upcoming events
2014
26 August
2014 First‐half conference
Basel HQ
27 August
Investor meetings
Zurich
04 September
Goldman Sachs Healthcare conference
London
05 September Investor meetings
London
15 September Investor meetings
Frankfurt
23 October Third‐quarter results Webcast
20 November
Credit Suisse Swiss Midcap conference
Zurich
03 December
Berenberg European conference
Bagshot/London
04 December
Investor meetings
London
Full‐year 2014 results
Basel HQ
2015
27 February
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Results publication and corporate events. More information on straumann.com → Events
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Straumann’s currency exposure
Revenue breakdown 2013
Average exchange rates (rounded)
Other
20%
EUR
40%
USD /
CAD /
AUD
28%
FX sensitivity (+/- 10%) on...
FY 2013
YTD 2014
Revenue
EBIT
EURCHF
1.23
1.22
+/- 25 million
+/- 15 million
USDCHF
0.93
0.90
+/- 17 million
+/- 7 million
JPYCHF
0.95
0.88
+/- 4 million
+/- 2 million
Development of Straumann’s main exchange rates since 2013
CHF
12%
110
Cost breakdown 20131
Other
12%
EUR 21%
90
USD /
CAD /
AUD 22%
70
2013
2014
CHF 45%
USDCHF
EURCHF
JPYCHF
1
39
39
These distribution charts represent the total net revenues and the total COGS as well as OPEX expenses in the various
currencies. All numbers are rounded and based on 2013 figures.
Your contacts
Fabian Hildbrand
Corporate Investor Relations
Tel.
+41 (0)61 965 13 27
Email
[email protected]
Mark Hill
Corporate Communications
Tel.
+41 (0)61 965 13 21
Email
[email protected]
Thomas Konrad
Tel.
Email
+41 (0)61 965 15 46
[email protected]
40
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International Headquarters
Institut Straumann AG
Peter Merian-Weg 12
CH-4002 Basel, Switzerland
Phone +41(0)61 965 11 11
Fax +41(0)61 965 10 01
www.straumann.com
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