Full year report 2012 - Nobel Biocare Corporate

Alpha-Bio Tec (ABT) is targeting customer groups with higher price sensitivity and simpler product andsolutions needs. ABT continued to show growth rates above 20% thanks to the expansion of itsdistributor network and increasing market share in its distributor markets.Implant systems (84% of Group revenue) declined 1.3% (CER) for the year. NobelActive ® continued togrow at strong rates throughout the year, supported by the introduction of the 3.0 version and was up13% over the prior year. The new implant launches NobelReplace ® Platform Shift (PS) and ConicalConnection (CC) developed on track, attracting new customers and positively contributing to thedevelopment of NobelReplace ® , which is the Group’s largest implant line. Excluding Japan, whereimplant treatments were negatively affected as described above, implant systems grew 1.9% (CER) forthe full year. The individualized business (16% of group revenue) declined 9.2% in 2012. In this areahigh-end implant-retained solutions were flat, while the decline was above 20% in scanners andtraditional tooth-based restorations, where production is shifting towards chair-side and in-lab. Therecently launched NobelClinician TM treatment planning system, also uniquely available on Mac OS ® , isimproving treatment safety and gaining new subscribers. This tool has sold disproportionally well inJapan in view of the media coverage on implant safety. In October 2012, the first iPad ® controlled drillmotor OsseoCare TM Pro were delivered and beta testing in the NobelProcera ® Scan and Design Centerstarted, enabling laboratory customers a convenient way to access precision individualized componentsto treat edentulous patients.Financial performance updateGross profit in the reporting period increased to EUR 437.5 million (2011: EUR 432.5 million), reflectinga slightly lower gross margin of 75.4% compared with the previous year (2011: 76.0%). The negativesales impact in Japan and the reassessment of a royalty liability related to prior years accounted for thedecline in margin. A positive margin impact from currency and a slightly more favorable business mix(implant systems versus individualized) was broadly offset by a higher share of ABT sales and expensesfor the build-up of the new NobelProcera Scan and Design Center. The gross margin in individualizedwas largely in line with a year ago at just about 45%.Operating expenses in the full year were EUR 368.8 million (2011: EUR 360.4 million). In the course of2012 various initiatives were put into place to reshape Nobel Biocare into a fitter, performance-orientedorganization. Rightsizing of some functions was driven by reallocating resources to growth drivers suchas R&D and training and education. Further, Nobel Biocare rolled out its value-added program intoadditional markets, shifted sales resources from countries in decline in Europe to growing markets, suchas the US, China and Brazil. In addition, the company conducted six successful Nobel Biocare symposiain Europe and North America. As innovative products and solutions are a key growth driver for thebusiness, over 50 R&D projects were initiated and R&D spending increased by EUR 6.0 million or 21%(16% CER). This was partly funded through a reduction of administrative functions and expenses of EUR4.9 million or 6% (-9% CER). The efficiency improvement programs that were initiated throughout theorganization resulted in a reduction in headcount in the fourth quarter of the year. Overall operatingexpenses in 2012 include EUR 13.0 million from currency translation and EUR 3.7 million from nonrecurringcosts related to the accelerated measures to improve efficiency as well as increased costsrelated to legal cases. Excluding costs for termination and severance across functions, operatingexpenses in relation to sales at CER were broadly in line with prior year, and slightly lower in reportedcurrency.Full year report 20123/21