2011 full-year results presentation - Straumann

2011 full-year
results presentation
Analysts’ & Media Conference Call
Basel, 22 February 2012
Disclaimer
This presentation contains certain “forward-looking
statements”, which can be identified by use of
terminology such as “expect”, “expectation”,
“intend”, “continue”, “achieve”, “maintain”,
“improve”, “foresee”, “anticipate”, “product
introductions”, “outlook”, “forecast”, or similar
wording.
Such forward-looking statements reflect the current
views of management and are subject to known
and unknown risks, uncertainties, assumptions and
other factors that may cause actual results,
performance or achievements of the Group to
differ materially from those expressed or implied
herein.
Should such risks or uncertainties materialize, or
should underlying assumptions prove incorrect,
actual results may vary materially from those
described in this presentation.
Straumann is providing the information in this
presentation as of this date and does not
undertake any obligation to update any forwardlooking
statements contained in it as a result of
new information, future events or otherwise.
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1

Agenda
Full-year highlights
Financial review
Business and regional review
Further innovation brought to customers
Academic presence strengthened
Outlook 2012
Questions & answers
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Full-year highlights
Beat Spalinger
President & CEO
2

What is happening in the market
North America and RoW performed well, helping the global
tooth restoration and replacement market to low-single-digit
growth in 2011.
Europe declined amid economic uncertainty and the debt
crisis. Consumer sentiment softened. The second and third
largest markets, Italy and Spain, suffered most.
In APAC the world’s fourth largest dental market, Japan, was
disrupted by natural disaster.
Industry consolidation and new technologies were major topics
in 2011.
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2011: A fundamentally positive year from a strategic and operational aspect
GROWTH
+4%
in local currencies as
full-year net revenue reaches
CHF 694 million
CURRENCY IMPACT
71m CHF
lost from top line in unprecedented
currency headwind:
net revenue contracts 6% in
CHF
DRIVERS
+10%
growth (l.c.) in North America;
dynamic emerging markets;
more products sold to more
customers in more geographies
than ever before
POSITION
NO.1
Pole position in implant
dentistry underpinned;
significant steps towards
leadership in digital dentistry
R & D
INNOVATION
CONTINUES
Multiple refinements, novel
solutions and services; 6%
of sales invested in R&D;
pipeline well stocked
JOBS
91
new positions
created worldwide,
mostly in Marketing & Sales
DIVIDEND
3.75 CHF FUTURE
per share maintained; CHF
1.55 thereof paid from capital
contributions
VISION
2020
New organizational structure;
leadership strengthened;
Straumann creates roadmap
for sustainable success
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6
3

Above-market performance over the past 4 years
25%
20%
15%
Global Dental implant market
by share of sales (100% = CHF 3.5bn)
Others
35%
10%
5%
0%
-5%
-10%
Zimmer Dental
6%
Biomet 3i
8%
Dentsply/Astra
14%
Straumann
19%
Nobel Biocare
18%
-15%
Straumann organic growth Leading dental implant companies 1
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1 Market share weighted growth rates (l.c.) of Biomet/3i, Dentsply, Nobel Biocare, Straumann and Zimmer; collectively representing 2/3 of the dental implant market.
7
Source: Published company data, 10-K and management comments
Financial review
Thomas Dressendörfer
Chief Financial Officer
4

Q4: 2% growth on high baseline in prior year
FY 2011 net revenue growth
Total Group: CHF 694m
(6.0%)
(10.1%)
or
71m 4.1%
Organic growth by quarter (l.c.)
7%
5%
5% 5%
4%
3%
2%
3%
2%
-1% -1%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Net revenue
in CHF
Currency
effect
Net revenue
in l.c.
-8%
2009 2010 2011
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9
Underlying EBIT in line with guidance despite strong currency headwind
in CHF million
Reported FX adjusted Reported Exceptionals
Preexceptionals
1
Change
FX adjusted
Net Revenue 737.6 666.5 693.6 693.6 4.1%
Gross profit
587.0 520.0 528.5 528.5
Gross profit margin 79.6% 78.0% 76.2% 76.2% (1.8%)
EBITDA
211.9 171.3 157.4 157.4
EBITDA margin 28.7% 25.7% 22.7% 22.7% (3.0%)
Operating profit (EBIT)
164.3 125.8 79.9 -40.2 120.1
EBIT margin 22.3% 18.9% 11.5% 17.3% (1.6%)
Net profit
131.0 71.0 -26.8 97.8
Net profit margin 17.8% 10.2% 14.1%
Basic earnings per share (EPS) 8.37 4.54 -1.7 6.26
Free Cash Flow
FY 2010 FY 2011
154.2 121.1
Free Cash Flow margin 20.9% 17.5%
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1
Throughout this presentation the term ‘pre-exceptionals’ means that the impairment of intangible assets (CHF 40 million) and the
corresponding deferred tax effect (CHF 13 million) are not included.
10
5

Main factors influencing profitability
▼ Unprecedented negative currency impact takes CHF 71 million off top line, with
transactional effect of CHF 38 million on operating income
▼ Intangible asset impairment of CHF 40 million
▼ Lower-margin digital solutions business grows faster than implants, mainly due to
successful scanner roll-out; production-related one-off costs impact gross margin
▼ Investment in Marketing & Sales to drive future growth
▲ Efficiency improvements in implant and CADCAM production
▲ Lower effective tax rate related to the impairment
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11
Volume expansion in core business offset by FX effect and business mix
In % of net revenue
-1.6%
0.8%
-0.3%
-0.2%
-1.1%
-1.0%
79.6% 78.0%
76.2%
Gross profit
FY 2010
FX effect
FX-adjusted Volume Pricing
gross profit
leverage & (Distributor)
FY 2010
efficiency gains
Inventory
Change
Business mix
Digital Solutions
Production
related
one-offs in H2
Gross profit
FY 2011
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12
6

EBIT margin before FX impacted by business mix and investment in M&S
In % of net revenue
-3.4%
or
CHF 38 m
-1.8%
0.4% -0.4% 0.3% -5.8%
22.3%
18.9%
17.3%
11.5%
EBIT margin
FY 2010
FX effect
FX-adj. EBIT Gross profit SG&A 2 Reorganisation
margin FY 2010
costs
R&D
EBIT margin
FY 2011
Impairment 1
Reported EBIT
margin FY 2011
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1
Impairment of intangible assets in the amount of CHF 40 million.
2
Includes ‘other income’ and a reversal of provisions in the amount of CHF 5 million.
13
Net profit impacted by currency headwind and impairment charge
In CHF million
-37.2
7.3
8.6
-14.6
0.3
2.3
-26.8
2010 2011
Interest income 1.1 1.6
Results from associates 0.2
Interest expenses (1.0) (0.5)
FX gains/losses (incl.
hedging instruments) (4.7) (3.6)
Financial result (net) (4.6) (2.3)
131.1
97.8
71.0
Net profit
margin 17.8%
Net profit
margin 14.1%
Net profit
margin 10.2%
Net profit FY
2010
FX
Corresponding
tax effect
Additional
gross profit
Higher
SG&A
R&D
Financial
result
Pre-excep.
net profit
FY 2011
Excep.
Net profit FY
2011
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1
Includes other income.
2
Exceptionals included the aforementioned impairment and related deferred tax effects.
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7

Strong cash flow maintained – in challenging conditions
In CHF million
- 58.5
FY 2010 FY 2011
Inventory: Days
of supply 158 123
Receivables: Days of
sales outstanding 45 48
-1.0
8.6 2.6
16.0 -0.7
154.2
FCF margin
20.9%
CHF 40m thereof related
to currency developments
121.1
FCF margin
17.5%
Free Cash
Flow FY
2010
Lower
Gross
profit
Higher cash
OPEX
Improvement
NWC
Lower
CAPEX
Lower tax Others Free Cash
payments 1 Flow FY
2011
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1
Incl. VAT tax payments of CHF 3 million.
15
High strategic flexibility thanks to strong liquidity and cash generation
In CHF million
140
-19
-59
-35
-6
6
350
Free Cash Flow
CHF 121m
CHF 24m thereof used for
purchase program
377
Cash
balance
year-end
2010
Operating
cash flow
CAPEX
2010 Treasury
dividend shares
bought
Investments Others 2
(associates 1 )
Cash
balance
year-end
2011
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1
Acquisition of minority stake in Dental Wings
2
Mainly exchange rate differences
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8

Dividend payout ratio increased
BoD proposes to the AGM:
in CHF
5
Payout ratio
80%
Dividend maintained at CHF 3.75 per
share 1
CHF 1.55 thereof paid with ‘reserves from
capital contributions’
4
3
2
1
Payout band width
2.50
3.00
3.75 3.75 3.75
1.85 1.55
1.90 2.20
60%
40%
20%
0
2005 2006 2007 2008 2009 2010 2011
0%
Paid with reserves from capital contributions ('tax exemption¨)
Dividend
Payout ratio (excl. exceptionals)
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1 Subject to approval by the Shareholders’ General Meeting
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Businesses and regional review
Beat Spalinger
President & CEO
9

Growth accross all businesses
Implants
Restoratives
Regeneratives
Volume expansion driven by
Bone Level range and Roxolid;
premium price positioning
defended
Scanner sales to drive future
prosthetic element business
expansion
Supported by Allograft and
roll-out of MembraGel
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Growth across all regions, led by North America and RoW
FY 2011 regional growth
Net revenue by region (rounded)
0%
2%
Europe
10%
53%
North
America
26% 25%
19%
6% 4%
Asia/Pacific ROW Group
22%
15%
5%
58%
Europe
CHF 404m
North America
CHF 156m
Asia/Pacific
CHF 101m
ROW
CHF 33m
Total Group
CHF 694m
Growth in l.c.
Contribution to global growth
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10

Europe stable amid economic uncertainty
Challenging environment limits possibility for growth
Consumer sentiment fragile
Situation in Italy and Spain deteriorated in the latter part
of the year
Q4 contraction due to decline in Spain and Italy; Germany
rises; strong growth in France and Eastern Europe
(in CHF million) Q4 10 Q4 11 % CHF FY 10 FY 11 % CHF
Net revenue 110.9 100.7 (9.2%) 444.9 404.4 (9.1%)
Growth in % l.c. 6.4% (3.4%) 3.2% 0.2%
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Double-digit growth continues in North America
Q4 (+12%) is strongest quarter in 2011, despite tough
comparison baseline
Growth in Canada and the US driven by implants and
intra-oral scanners; Regeneratives continue to develop
well
Currency headwind of 9% points
(in CHF million) Q4 10 Q4 11 % CHF FY 10 FY 11 % CHF
Net revenue 41.3 42.4 2.8% 164.7 155.6 (5.5%)
Growth in % l.c. 11.9% 12.0% 8.7% 10.2%
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11

Solid growth maintained in Asia/Pacific; strong expansion in RoW
Q4: solid growth in APAC driven by China and Japan
Bone Level implant roll-out progresses in Japan
Korea declines from exceptionally strong Q4 in 2010
Customer gains in Brazil; good performance in Mexico
(in CHF million) Q4 10 Q4 11 % CHF FY 10 FY 11 % CHF
APAC net revenue 24.2 25.0 3.0% 100.5 100.7 0.2%
Growth in % l.c. 2.9% 5.7% 2.1% 5.5%
RoW net revenue 7.2 7.5 4.7% 27.5 32.9 19.6%
Growth in % l.c. 10.7% 11.1% 12.3% 26.0%
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Further innovation brought to customers
12

Multiple refinements and new products in 2011
Straumann ® Classic
Straumann ® All-in-one Sets
Straumann ® Anatomic IPS
e.max ® Abutment NC
Nano and other
high-end ceramics
Straumann ® CARES ®
Variobase coping
coDiagnostiX 8 software
Straumann ® CARES Visual 6.2
Screw-retained bars and
bridges, full contour inlays,
onlays and veneers
Straumann ® repositionable
implant analog
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New-generation small-diameter soft tissue-level implant
Soft Tissue Level philosophy
SLActive ® surface
Roxolid ® material
Consistent Emergence Profiles
CrossFit ® at soft tissue level
Bone Control Design
Standard Plus Narrow Neck CrossFit ® (NNC)
• Roxolid ® , our strongest material
• SLActive ® , our fastest healing implant surface
• CrossFit ® , our reliable, intuitive connection
• Soft tissue level design: 1 stage surgery
• New transfer piece: handling convenience
For spaces and narrow bone ridges
• Indications include: front single-tooth gaps or
multiple-tooth replacement (bridges and
fixed/removable overdentures)
Controlled market release underway
• Full launch: spring 2012 in Europe and N. America 1
• Other markets 1 to follow
Straumann 1 Pending regulatory approvals/clearances
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13

Straumann CARES System 7.0 launch
New CARES Visual software based on
DWOS open standard software platform
Labs now have the flexibility to produce
prosthetic elements through third-party
milling or Straumann’s validated CAM
process
Fear of being ‘locked in’ to a single
manufacturer dispelled; labs now have
confidence to invest in CADCAM
Launch at Chicago Midwinter meeting
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CARES 7.0 – at the heart of the prosthetic workflow
Physical Inputs Data capture Design process Manufacturing In-mouth product
DVT
Pre-operative
Implant
Intra-oral
Central
In-lab
Drill guide
Abutment
Coping / bridge
Model
Design
Central
In/onlay
Full contour
Impression
Die
Desktop scan
Wax-up
Scan body
Impression scan
dwos inside
3 rd party
(e.g.in-lab,
chairside)
Dentures
Mouth guards
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Certain services currently in development 28
14

Stocked pipeline despite recent introductions
Project
• Small diameter TL Implants
• New implant material
• Implant maintenance
• Soft tissue control
• Advanced planning, guided surgery
• Standard software platform
• CARES 7.0/8.0
• Multi-unit restoration for Bone Level implants
• CADCAM abutment solutions
• Intra-oral scanner connectivity
• Restorative services
• New restorative materials
• Enhanced bone graft material
• PEG technology
Benefits
• More options; simplified handling
• Tooth-colored
• Rescue compromised implants
• Tissue control around implants
• New software
• Standardization of digital workflows
• CARES external workflow
• More options
• More options
• Improved communication & flexibility
• Access to digital workflows
• Enhanced efficiency & handling
• Enhanced regeneration
• More applications
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Academic presence strengthened
15

ITI membership now exceeds 11 000
World‘s largest implant dentistry network
25% increase in 2011 to >10 000 Fellows and Members
in 95 countries
New Study Club concept drives increase
Straumann is exclusive implant manufacturing partner
12'000
10'000
8'000
6'000
4'000
2'000
0
2007 2008 2009 2010 2011
Fellows
ITI Members
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Novel education concept with Academic Center for Dentistry in Amsterdam
ACTA’s undergraduate program to include teaching on all basic aspects of oral implantology,
often covered only in postgraduate courses
400 hours a year of extra training reserved for implant dentistry
Program focused on one implant system; Straumann provides materials, planning software etc.
ACTA has 500 enrolled dental students and treats approximately 500 patients per day
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16

Refreshing our internet footprint
Corporate website redesigned and completely
revised
Powerful new search function – faster, easier
access to information
Greater range and depth of content
Focus on information needs of patients and dental
professionals in Country updates in 2012
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Focusing our organization to increase effectiveness
Increased portfolio, reach, customer base and sales complexity prompted complete
reorganization – from bottom to top
CEO
Local Sales
Channel
4 focused sales forces
Country
organization
3 sales regions
Beat Spalinger
Business Unit
organization
2 main BUs
Finance
BU
Prosthetics
BU Surgical
Sales I
EMEA/
LATAM
Sales II
NAM
Sales III
APAC
Corporate
organization
EMB strengthened; new
Corporate structure
Thomas
Dressendörfer
Sandro
Matter
René
Willi
Frank
Hemm
Andy
Molnar
Beat Spalinger
(ad interim)
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Building from a position of strength and shaping our organisation for the future
New organisation will:
Bring us closer to customers
Bring better solutions to the market more effectively
Encourage entrepreneurship, ownership and
accountability and engagement (no downsizing)
Spur top-line growth by increasing sales efficiency
Help us to achieve our strategic goals and Vision 2020
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Outlook 2012 and beyond
18

Implant markets in large developed countries are far from mature
Implants placed per 10 000 population per year
Which means that only
~1 million US patients are
treated annually
2011 data; Straumann estimates, based on OECD, various statistics offices and Millennium Research Group. The population in the US is aging, resulting in more patients with tooth loss.
Straumann Patients who have been treated are likely to require maintenance work. Most people lose more than one tooth in life and thus re-enter the treatment path.
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Outlook (barring unforeseen circumstances)
2012
Market
Straumann
• Optimism for N. America and emerging markets; Europe faces challenges
• Our markets are expected to grow in the low-single-digit range in 2012
We are confident that we can grow ahead of the market in local currencies
With current exchange rates, we foresee little currency headwind in 2012
Continued investment to create/drive superior solutions/services, and to optimize efficiency
We expect gross and EBIT margins at least in line with 2011 levels
Beyond 2012
Market
Vision 2020
• Economic volatility for several years: market growth expected in high-single-digit range,
which still provides ample opportunity for shareholder value creation
Long-term growth drivers in our markets are valid and intact. Straumann has clear roadmap
and is well positioned for sustained success. Presentation at Capital Markets Day on 16 May
Straumann Please see media release or Annual Report for full version of this summary
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Questions & answers
2011 Annual Report – pre-print version available
Comprehensive value reporting
Independent expert opinions, executive
interviews, corporate governance,
compensation report, environmental
report, outlooks, etc.
GRI checked to level B
Straumann’s reporting quality recognized
in 2011 Swiss Annual Report awards
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20

Calendar of upcoming events
24 February Roadshow Chicago
27 February Citigroup Global Healthcare conference New York
28 February Roadshow Denver
29 February Roadshow San Francisco
01 March Roadshow Los Angeles
13 March Roadshow Frankfurt
14 March Morgan Stanley Medtech conference London
15 March Roadshow Amsterdam, Edinburgh
04 April Annual General Meeting Basel
10 April Ex-Dividend Date
16 April First Quarter results Conference Call
15/16 May 2012 Capital Markets Day Amsterdam
Detailed calendar on www.straumann.com
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Appendix
21

Net revenue growth by region
CHF million
Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011
Q3 2011
Q4 2011
Europe
growth in % CHF
growth in % l.c.
North America
growth in % CHF
growth in % l.c.
125.0
(0.2)
1.4
41.7
3.6
8.4
116.6
(2.0)
3.9
43.6
8.9
7.7
92.4
(9.0)
1.2
38.2
3.6
6.9
110.9
(4.9)
6.4
41.3
8.1
11.9
113.9
(8.8)
2.2
40.1
(3.7)
8.0
105.4
(9.7)
0.3
37.9
(13.2)
9.6
84.4
(8.7)
1.7
35.2
(7.8)
11.3
100.7
(9.2)
(3.4)
42.4
2.8
12.0
Asia / Pacific
growth in % CHF
growth in % l.c.
Rest of the world
25.5
(0.5)
(1.7)
7.1
26.2
15.0
8.3
6.8
24.6
2.7
(0.6)
6.5
24.2
5.9
2.9
7.2
25.5
0.0
2.2
8.9
26.2
0.0
8.9
9.4
24.0
(2.1)
5.2
7.1
25.0
3.0
5.7
7.5
growth in % CHF
growth in % l.c.
Group
growth in % CHF
growth in % l.c.
33.6
26.3
199.2
1.5
3.1
14.0
5.9
193.2
2.9
5.4
11.2
7.6
161.6
(3.9)
2.5
12.7
10.7
183.6
(0.2)
7.2
24.8
26.9
188.4
(5.4)
4.3
39.2
48.5
178.9
(7.4)
5.2
9.8
18.1
150.7
(6.7)
5.1
4.7
11.1
175.6
(4.4)
1.8
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Currency impact cuts top line by CHF 71 million
1.5
EURCHF
1.4
1.3
1.2
1.1
Average exchange rates (rounded)
FY 2010 FY 2011 YTD 2012 2
EURCHF 1.38 1.23 1.21
USDCHF 1.04 0.89 0.93
JPYCHF 1.19 1.11 1.20
1
Jan Feb Mar Apr May Jun Jul Sep Oct Nov Dec
USDCHF
1.2
1.1
Net revenue breakdown
CHF
14%
CHF
42%
Cost breakdown 1
1
0.9
Other
18%
EUR
44%
EUR
27%
0.8
0.7
Jan Feb Mar Apr May Jun Jul Sep Oct Nov Dec
2010 2011
USD/CAD/AUD
24%
Other
14% USD/CAD/AUD
17%
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
Straumann are rounded and based on 2011 figures.
44
2 Average spot rates as per 21 February 2012
22

Your investor relations & media contacts
Corporate Investor Relations
Fabian Hildbrand
Phone +41 (0)61 965 13 27
Mobile +41 (0)79 392 80 32
Email
fabian.hildbrand@straumann.com
Corporate Communications
Mark Hill
Thomas Konrad
Phone +41 (0)61 965 13 21 +41 (0)61 965 15 46
Email mark.hill@straumann.com thomas.konrad@straumann.com
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www.straumann.com
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