2013 Full-year results

2013 Full-year results
Analysts’ & Media Conference
Basel, 25 February 2014
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
Explanation of terms
To facilitate comparisons and to show underlying performance, this presentation refers to
‘organic growth’ and ‘exceptionals’
 ‘Organic growth’ means excluding the effects of:
— currency fluctuations
— the discontinuation of the intra-oral scanner distribution business (N. America and
Europe only) in October 2012
 ‘Exceptionals’ refers to:
— 2013: Restructuring charges of CHF 17m and a pension curtailment gain of CHF 9m,
both related to cost-reduction initiatives
— 2012: Charges of CHF 18m related to cost reduction and severances and the goodwill
impairment of CHF 21m relating to the global regenerative business
 2012 figures have been restated due to adoption of the IAS 19R (employee benefits)
standard.
3
2013 Highlights
Marco Gadola, CEO
2
Achievements and highlights
 Organization adapted to changing market
environment
Full-year 2013
 Turnaround achieved
 Profitability significantly enhanced
 Innovation lead restored
 Share price / investor confidence restored
 Third consecutive quarter of organic growth
Q4 2013
 Paradigm-changers launched at
successful EAO
 Foothold in value segment strengthened
5
Improvements at all levels
REVENUE
BEST PERFORMERS
GROSS MARGIN
N. America & ROW
78.8%
Full year: +1% (organic)
Fourth quarter: +4% (organic)
Full year: +8% (organic)
+95 base points1 driven by further
efficiency gains & optimized plant
utilization
EBIT MARGIN1
PREMIUM+VALUE STRATEGY
ORGANIZATION
18.2%
Portfolio expansion
Resized & refocused
+333 base points thanks to improved
gross profit and benefits from cost
optimization measures
Investments in Medentika and Createch
complement expanding Neodent
To support sales and adapt to
a fast-changing market
CHF
6
680m
1 Excluding
exceptionals
3
Good progress more than offsets the slow start
Global market for dental implants &
abutments (2013: CHF 3 bn 2013)2
10%
8%
Straumann
19%
6%
4%
2%
0%
Others
40%
-2%
Market share
Nobel
Biocare
17%
-4%
-6%
-8%
-10%
Zimmer
Dental
5%
-12%
Biomet 3i
7%
Dentsply
Implants
13%
Straumann organic growth
Market for tooth replacement & restoration (leading implant companies) 1
1Straumann, Nobel Biocare,
* Straumann,
Nobel Biocare,
based on company and SEC
Zimmer Dental,
Biomet 3i,Zimmer
DentsplyDental,
ImplantsBiomet
- based3i,
onDentsply
company Implants
and SEC -reports
2 Source: MRG and iData @2013 FX rates. Data include implants & abutments,
as well as management
comments.
reports
as well
as management comments.
but no instruments.
7
7
Key growth fundamentals remain intact
Proportion of US adults missing 1 or more teeth1
84%
68%
74%
59%
32%
 While caries prophylaxis has reduced tooth
loss in developed markets, potential for
implants is still huge due to demographics,
substitution potential etc
38%
20%
Age
18-24
25-34
35-44
45-54
55-64
65-74
75+
200
Top
3
100
 50-60% of the US adult population had lost
at least one tooth in or prior to 2012
 45% of those were fully treated; of the
untreated, 31% (approx. 20m) planned to
get treatment in the next 3 years
Implant penetration per 10 000 population in 20132
 More than a million people needed
replacements for existing restorations
(e.g. conventional bridges or dentures)
 In most countries the number of implants
placed annually per 10 000 population is
less than half the average of the top 3
countries
0
8
 Tooth loss due to decay/periodontal disease
correlates strongly with age; 3 of every 4 US
pensioners have missing teeth
1 Wisdom
teeth excluded
2
MRG and iData 2013
4
Business and regional review
Thomas Dressendörfer, CFO
Margin expansion at all levels
in CHF million
FY 2013
excl.
exceptionals
Revenue
Change organic %
679.9
679.9
1.2%
FY 2012
IAS19
excl.
restated 1 exceptionals
686.3
686.3
Change yoy
at constant
FX
excl.
exceptionals
at
constant
676.9
(1.0%)
Gross profit
535.9
531.5
534.4
525.0
0.3%
2.1%
margin
78.8%
77.5%
77.9%
77.6%
95 bps
127 bps
EBITDA
margin
EBIT
margin
148.4
156.4
119.5
132.5
128.8
18.1%
21.5%
21.8%
23.0%
17.4%
19.3%
19.0%
370 bps
398 bps
115.8
123.8
63.1
102.1
97.4
21.2%
27.1%
17.0%
18.2%
9.2%
14.9%
14.4%
333 bps
382 bps
Net profit
101.2
37.5
margin
14.9%
5.5%
Basic EPS
Free Cash Flow
margin
10
1 In
6.55
2.43
139.2
95.2
20.5%
13.9%
2013, Straumann adopted the revised IAS 19R regarding employee benefits. 2012 figures have been restated accordingly.
5
Organization adapted to match market development
2 452
 Headcount reduced by 300 to preeconomic crisis level
2 517
2 361
2 201
 Overall restructuring/downsizing costs in
2013 amount to a net CHF 8m including
severance packages and curtailed
pension obligations
2 217
2 170
 80% of leavers had found new jobs by
year-end, helped by outplacement support
 Strong, engaged team of professionals
retained
2008
2009
2010
2011
2012
2013
Cost
optimization
measures
implemented
11
Pick-up in H2 helps to restore margins to
acceptable levels
H1
in CHF million
H2
FY 2013
excl.
exceptionals
excl.
exceptionals
excl.
exceptionals
354.8
325.1
(0.9%)
3.7%
1.2%
Gross profit
276.2
259.7
535.9
margin
77.8%
Revenue
Change organic %
EBITDA
margin
EBIT
margin
679.9
79.9%
78.8%
74.5
80.0
73.9
76.4
148.4
156.4
21.0%
22.5%
22.7%
23.5%
21.8%
23.0%
56.8
62.3
59.0
61.5
115.8
123.8
16.0%
17.6%
18.1%
18.9%
17.0%
18.2%
Net profit
53.7
47.5
101.2
margin
15.1%
14.6%
15.0%
Basic EPS
3.48
3.07
6.55
Free Cash Flow
34.7
104.5
139.2
9.8%
32.2%
20.5%
margin
12
12
6
Third year of efficiency gains in operations
Significant efficiency gains
achieved through:
 Broader application of ‘lean’
manufacturing principles
 Insourcing
 Process re-engineering
 Design-to-cost initiatives
Bubble sizes illustrate market volume potential
13
Gross profit margin further expanded
In % of revenue
+127bps
0.8%
0.4%
(0.3%)
0.3%
(0.3%)
0.4%
78.8%
77.6%
77.5%
Gross profit
2012
14
FX effect
1 Lower-margin
Cost
optimization
charges
Adj. gross
profit @FX2013
Improved
volume/mix
offsets price
effect
iTero effect1
Inventory
changes
Manufacturing
efficiency gains
Gross profit
2013
intra-oral scanner sales discontinued October 2012
7
Successful reorganization drives EBIT improvement
In % of revenue
+382bps
4.3%
1.6%
5.6%
0.1%
(1.2%)
(2.2%)
(0.4%)
18.2%
17.0%
14.4%
9.2%
Restated
EBIT 2012
FX effect
Impairment &
cost
optimization
Adjusted
EBIT 2012
Gross profit
Change in
distribution
costs
Change in
admin.
expenses
Other income
EBIT 2013
Cost
excl.
optimization
exceptionals
Reported
EBIT 2013
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
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Impressive cash conversion
In CHF million
33.1
10.7
95.2
(11.9)
7.1
5.3
(0.3)
Days of sales
outstanding
2013: 49
2012: 49
Restructuring
charges
included
139.2
Days of
supply
2013: 161
2012: 152
FCF margin
13.9%
Free cash flow Improved gross
2012
profit
FCF margin
20.5%
(Cash) OPEX
Higher working Lower CAPEX
capital
Less income
taxes paid
Others
Free cash flow
2013
16
8
Solid cash position
In CHF million
2012 Dividend
of CHF 3.75
per share
139.2
14.0
199.2
2.9
54.2
57.8
140.5
Cash &
equivalents
Jan 2013
383.8
Investments in
portfolio
expansion:
Medentika GmbH
Createch
Medical S.L.
Free Cash Flow
Investments
Dividend paid
Bond proceeds Sale of treasury
shares
Others
Cash &
equivalents Dec
2013
17
Decline in Europe offset by solid growth elsewhere
In CHF million
(0.9%) in CHF
1.2% organic
(9.4)
(5.4)
(12.1)
13.6
4.5
2.4
686.3
679.9
671.5
Change organic
(1.5%)
Revenue FY
FX effect
(3.2%)
(0.8%)
1
iTero effect Revenue FY
@ FX 2013
Europe
2012
18
1 Discontinued
8.1%
4.7%
8.4%
North
America
APAC
ROW
Revenue FY
2013
of the intra-oral scanner business in October 2012
9
Double-digit growth in North America
Pockets of improvement in Europe
Europe
Revenue change (organic)
56%
0.2%
(5.6%)
(3.4%)
(1.4%)
 Q4 revenue lags behind prioryear period, reflecting challenging
markets
 Contractions in Italy, Germany
and Benelux
(7.7%)
54%
 Spain and Nordics improve
North America
Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013
19
10.6%
1.8%
27%
9.1%
11.0%
 Second quarter of double-digit
growth
 Growth across all businesses,
led by implants and regeneratives
2.1%
Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013
 Volume expansion and mix
(upgrade to Roxolid) contribute
to growth
Pie-chart segment indicates regional sales contribution to the Group
Turnaround in Japan sustains pick-up in Asia
Asia Pacific
Revenue change (organic)
16.3%
56%
-4.4%
14%
Rest of World
 China and South-East Asia
distributor markets posted
exceptionally strong orders
7.9%
0.9%
-0.9%
Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013
-2.6%
1.8%
-10.4%
5%
 Recent marketing approval in
Japan for SLActive surface
 Q4 revenue up 2% (l.c.) after
exceptionally strong Q3, reflecting
erratic distributor ordering patterns
in Middle East
35.1%
4.1%
 Double-digit increase in Q4; all
subsidiaries posted growth
Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013
 Good growth in LATAM; doubledigit growth (l.c.) in Brazil
 Currency headwind due to BRL
depreciation steals 6% points
from regional growth
20
10
Solid single-digit growth in implant and regenerative
businesses offsets decline in prosthetics
Implants
Restorative1
Regeneratives
Straumann
21 1 Excluding the effects of the discontinuation of the intra-oral scanner distribution business in October 2012
Working on the fundamentals
Marco Gadola, CEO
11
Tracking the progress of our key priorities
Cost reduction measures
Lean, high
performance
organization
Continuing cost discipline
New organizational set-up (customer focus)
Address changed
market dynamics
Target unexploited
growth markets
Customer- and market-driven solutions
ongoing
Address value segment
ongoing
Increase presence in fast-growing
underpenetrated markets
ongoing
23
Full implant range now available in
Roxolid®/SLActive®
New
Loxim™ transfer piece
for easier handling
 Implants with high strength and excellent osseointegration open up new
treatment possibilities
 Small-diameter implants avoid bone augmentation, saving trauma, discomfort
and cost – and increasing patients’ acceptance of treatment
24
12
A new attractive pricing concept
Address changed
market dynamics
‘More value, same price’ campaign
 Upgrade to Roxolid® SLA ® and SLActive®
implants with LOXIM™ transfer piece offered at
same price as titanium equivalents with old
transfer piece
 Implant pricing structure adjusted in Germanspeaking countries on 01/01/14; pricing of
‘entry-level’ titanium SLA implant reduced to
compete more effectively against value players
Existing
counter-screw
transfer piece
New Loxim
lift-off transfer
piece
Bubble sizes illustrate market volume potential
25
State-of-the-art e-shop
Address changed
market dynamics
 New functionality,
navigation and design
 Added value and
convenience for
customers
 Opportunities for
cross-selling and
efficiency gains
Bubble sizes illustrate market volume potential
26
13
Customer- and
market-driven
solutions
Ceramic implant
4mm implant
Exciting roll-out program
New
Highly esthetic, metal-free
Straumann®
Variobase
Straumann® ONE
Reduces need for bone augmentation
Original Straumann connection
for multiple CADCAM systems
Convenient, all-in-one package
27
Customer- and
market-driven
solutions
Covering the remaining white spots
New ceramic
implant
Roxolid/SLActive
4mm implant
Surgeons
High-tech
Ceramic
implants
Smaller, less
invasive
implants
Fixed
immediate
edentulous
solutions
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
Straumann
ONE
Premium
Value
Multiple tooth
Edentulous
Straumann
Variobase
28
Bubble sizes illustrate market volume potential
14
SLActive® launched in Japan
Customer- and
market-driven
solutions
 Customers and patients in Japan now have
access to the clinical benefits of SLActive1, 2, 3
 First company to bring a proven documented
hydrophilic dental implant surface to market in
Japan
SLA SLActive
1
2
29
3
Compared with grade 4 annealed and cold worked titanium; data on file, comparing material with specifications from standard ASTM F67;
Thoma DS et al. Preclinical findings presented at the AO Annual meeting, San Diego, USA, February 2009; Abs. SO4;
Al-Nawas B. Data presented at the EAO Annual Scientific Meeting, Monaco, October 2009
A visible cultural change
 New concept for marketing materials
 Fresh, emotive, lifestyle imagery
 To strengthen perception as professional,
dynamic, reliable partner
 Target groups include young and female dentists
30
15
Address changed
market dynamics
Full-solution
offering
Expanding our offering
Innovation and
clinical documentation
Limited
offering
‘Good
enough’
31
Chart for illustration purpose only
Premium and value price range covered
Addressing the
value segment
Ceramic implant
Roxolid SLActive
Roxolid SLA
Titan SLA
CM
Smart

Straumann
32
16
Dynamism at Neodent
Addressing the
value segment
 Strong value proposition
— Excellent price-quality ratio
— Multiple bone-level implant lines for various
indications and requirements (handling, prosthetics,
price)
— ILPAEO training/education faculty
— >5 million implants sold since founded
 Solid (domestic) performance1
— High-single digit growth in 2013
— Net profit margin expanded to >30%
 Expansion underway
— Successful launch in Spain in Q4
— Will cover 90% of Spanish market territories
by year end
— Strong product pipeline
— US launch in March
33
1 On
an adjusted basis
Focus on fast-growing emerging markets
Addressing the
value segment
 Biodenta
 Founded in 2007 in Taiwan and Switzerland
 Specializes in comprehensive solutions for dentists
and dental laboratories (dental implants, intraoral
scanning, chairside milling and CADCAM with
central milling)
 Focus on emerging market
 Global organization; regional hubs in Taiwan, US
and Switzerland; >200 employees
 Cooperation aimed at opening synergies in emerging
markets (China, Taiwan, India, Russia/Ukraine, Turkey,
Middle East etc) as well as the USA and Switzerland
 Straumann has purchased a bond from Biodenta for
CHF 6m, which can be converted into common shares
 Biodenta will pursue its planned growth strategy and,
having completed a pre-listing in 2012, is working
towards an IPO in the near-to-mid term
34
17
Outlook 2014
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 in local
currencies
 The Group will continue to invest in dental growth
markets and will extend the reach of its nonpremium offering
 Thanks to the full impact of the cost-reduction
measures, Straumann aims to expand operating
income margin in 2014
35
35
Confidence that we can outperform in 2014
based on….
 Leading innovation and solutions
— Only company with Roxolid small implants
— First company with hydrophilic implant surface in Japan
— Open CADCAM workflow; extended collaboration with 3Shape
allowing users to design & order customized abutments with
Straumann original connection
— ‘More Value’ campaign
 Initiatives to address GP segment (T&E, dedicated
product solutions)
 Investments in salesforces in growth markets and
in selling skills
 Traction from ITI World Symposium
 Entrepreneurial value segment strategy
— With Neodent, Medentika, Createch and Dental Wings,
Group satisfies a broader range of customer needs and
budgets than other global implant companies
36
18
First step towards goal of restoring historic
margin levels
Underlying EBIT margin
27.4%
25%
>20%
20.7%
20%
@ 2013 FX rates
18.2%
15-20%
15%
14.5% 10-15%
10-15%
10-15%
10%
2008
Straumann
37
1 Peers
2012
2013
Mid term
Dental benchmark1
comprise Nobel Biocare, Dentsply, Patterson, Henry Schein, Osstem, and Sirona.
2014 – An anniversary year
 60th anniversary of Straumann
 40th anniversary of our pioneering entry into implant dentistry
 25th anniversary of Straumann Netherlands and USA
 Longevity demonstrates our sustainable business approach
Bubble sizes illustrate market volume potential
38
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Questions & Answers
39
2013 Annual Report and IR twitter now available
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 Corporate governance,
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Subscribe and receive regular
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Calendar of upcoming events
2014
27 February
Investor meetings
Frankfurt
28 February
Investor meetings
Paris
05 March
Investor meetings
New York
06 March
Investor meetings
Mid Atlantic
07 March
Investor meetings
Chicago
02 April
Kepler Cheuvreux Swiss Conference
Zurich
04 April
Investor meetings
Singapore
11 April
Annual General Meeting
Basel
15 April
Dividend ex-date
30 April
First quarter sales
Webcast
26 August
Half-year 2014 results
Basel HQ
Detailed calendar on www.straumann.com
41
Publication and corporate events
41
Straumann’s currency exposure
Revenue breakdown 2013
Other
20%
Average exchange rates (rounded)
EUR
40%
CHF
12%
YTD 2014
Revenue
EBIT
1.23
1.24
+/- 25 million
+/- 15 million
USDCHF
0.93
0.92
+/- 17 million
+/- 7 million
JPYCHF
0.95
0.89
+/- 4 million
+/- 2 million
EURCHF
USD /
CAD /
AUD
28%
FX sensitivity (+/- 10%) on...
FY 2013
Development of Straumann’s main exchange rates since 2012
1.4
Cost breakdown 20131
1.3
Other
12%
1.2
EUR 21%
USD /
CAD /
AUD 22%
1.1
1
0.9
0.8
CHF 45%
42
42
2012
2013
USDCHF
EURCHF
JPYCHF
1
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.
21
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]
43
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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