- Revenue for the full year 2012 was up 2.0% versus prior year to EUR 580.5 million and down 2.7% at constant exchange rates (CER) – broadly in line with the estimated market development
- Events in Japan continued to impact Q4 revenue which was down 1.1% versus 2011 to EUR 153.0 million and down 3.4% at CER
- Revenue excluding Japan was essentially flat for the full year (-0.3% at CER) with growth in implant system revenue. Revenue declined in individualized copings and small-unit bridges
- Operating profit (EBIT) of EUR 68.7 million reflecting a margin of 11.8%
- Continued shift of resources to R&D and growing market organizations were partially offset by efficiency gains in administration
- Net profit was up 15.3% to EUR 45.8 million (2011: EUR 39.8 million): proposed dividend per share up 33% to CHF 0.20 (2011: CHF 0.15)
Table 1: Selected key figures in EUR million
Variance at constant exchange rates (CER)
Operating profit (EBIT)
Net financial result
Profit before tax
Basic earnings per share, EUR
Net cash from operating activities
Richard Laube, CEO: “We have achieved a number of important milestones with our 2012 results. Profit before tax, net profit and earnings per share have materially improved. More importantly, we have broken a vicious cycle of market share loss in our core implant business after years of decline. Our strategy “Designing for Life” is being effectively implemented throughout the entire organization and we see accelerating performance, especially in our efficiency programs during the second half of the year. We anticipate the market environment to remain difficult in the short-term but we are rebuilding Nobel Biocare to perform in all conditions”.
Business performance update
Table 2: Revenue by region
in EUR million
Europe, Middle East and Africa (EMEA)
Share of total revenue
Share of total revenue
Share of total revenue
* A new segment “Americas”, which reflects realigned management structures, has been reported since 1 January 2012. As previouslyannounced, the revenue of LatAm/RoW has now been included into other regions, mainly North America. For better comparison, prior
year figures have been reclassified to reflect the new regional segment definition.
In 2012, Nobel Biocare generated revenue of EUR 580.5 million, an increase of 2.0% compared with 2011 supported by a positive currency effect driven mainly by the strong US dollar and Japanese yen against the euro. This development is estimated to be in line with peers. Year-on-year CER growth was down 2.7%. Revenue was significantly impacted by the double-digit percentage market decline in Japan, which contributes about 12% to the group revenue. Excluding Japan, revenue for the full year would be at prior year level at CER (-0.3%).
In Europe, Middle East and Africa (EMEA), revenue (CER) for the full year declined by 3.6% to EUR 230.1 million (Q4 2012: -2.7% CER). Many markets in this region remained weak throughout the year due to the continued economic and fiscal challenges and subsequent low patient flow for implant-based tooth restorations. In two large European markets, Spain and Italy, the decline in 2012 was significant. Nobel Biocare developed at least in line with peers in most markets in Europe. Market share gains were achieved in Russia and France as well as in Italy and Sweden in declining markets.
In the Americas, revenue (CER) in 2012 increased by 1.8% to EUR 228.5 million (Q4 2012: 2.8%). This performance was driven by the low single-digit percent increase in the US, driven by implant systems, which grew broadly in line with peers, supported by the continued implementation of value-added services. As a result of the softening market in the US during the course of the year, the landscape has become more competitive. In Canada performance remained sluggish after a weak start to the year. In Nobel Biocare’s two directly-served Latin American countries, Brazil and Mexico, the company achieved a strong improvement compared with the prior year.
In the Asia/Pacific region, revenue (CER) for the full year was down 8.6% to EUR 121.9 million (Q4 2012: -14.9%). The market in Japan was heavily affected due to adverse media coverage on dental implant treatments in general. Subsequently, patient flow declined significantly and the market was estimated to be down about 15%. Excluding Japan, which accounts for about 60% of the regional revenue, APAC grew 6.9% (CER) in 2012. Double-digit percent increases were achieved in China, India and Taiwan, while revenue in Australia and Southeast Asia declined. Thanks to continued rapid growth, China is now the third largest revenue contributor in the region after Japan and Australia.
Alpha-Bio Tec (ABT) is targeting customer groups with higher price sensitivity and simpler product and solutions needs. ABT continued to show growth rates above 20% thanks to the expansion of its distributor network and increasing market share in its distributor markets.
Implant systems (84% of Group revenue) declined 1.3% (CER) for the year. NobelActive® continued to grow at strong rates throughout the year, supported by the introduction of the 3.0 version and was up 13% over the prior year. The new implant launches NobelReplace® Platform Shift (PS) and Conical Connection (CC) developed on track, attracting new customers and positively contributing to the development of NobelReplace®, which is the Group’s largest implant line. Excluding Japan, where implant treatments were negatively affected as described above, implant systems grew 1.9% (CER) for the full year. The individualized business (16% of group revenue) declined 9.2% in 2012. In this area high-end implant-retained solutions were flat, while the decline was above 20% in scanners and traditional tooth-based restorations, where production is shifting towards chair-side and in-lab. The recently launched NobelClinicianTM treatment planning system, also uniquely available on Mac OS®, is improving treatment safety and gaining new subscribers. This tool has sold disproportionally well in Japan in view of the media coverage on implant safety. In October 2012, the first iPad® controlled drill motor OsseoCareTM Pro were delivered and beta testing in the NobelProcera® Scan and Design Center started, enabling laboratory customers a convenient way to access precision individualized components to treat edentulous patients.
Financial performance update
Gross profit in the reporting period increased to EUR 437.5 million (2011: EUR 432.5 million), reflecting a slightly lower gross margin of 75.4% compared with the previous year (2011: 76.0%). The negative sales impact in Japan and the reassessment of a royalty liability related to prior years accounted for the decline 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 expenses for the build-up of the new NobelProcera Scan and Design Center. The gross margin in individualized was 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 of 2012 various initiatives were put into place to reshape Nobel Biocare into a fitter, performance-oriented organization. Rightsizing of some functions was driven by reallocating resources to growth drivers such as R&D and training and education. Further, Nobel Biocare rolled out its value-added program into additional markets, shifted sales resources from countries in decline in Europe to growing markets, such as the US, China and Brazil. In addition, the company conducted six successful Nobel Biocare symposia in Europe and North America. As innovative products and solutions are a key growth driver for the business, 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 EUR 4.9 million or 6% (-9% CER). The efficiency improvement programs that were initiated throughout the organization resulted in a reduction in headcount in the fourth quarter of the year. Overall operating expenses in 2012 include EUR 13.0 million from currency translation and EUR 3.7 million from non-recurring costs related to the accelerated measures to improve efficiency as well as increased costs related to legal cases. Excluding costs for termination and severance across functions, operating expenses in relation to sales at CER were broadly in line with prior year, and slightly lower in reported currency.
Profit from operations (EBIT) for the full year was slightly down to EUR 68.7 million (2011: EUR 72.1 million). Impact from lower Japan sales, a reassessment of a royalty liability related to prior years and termination and severance costs accounted for the decrease in EBIT margin over the prior year. Positive currency impact was largely offset by investments into growth drivers. The EBIT margin for 2012 was 11.8% (or 11.0% in CER) compared with 12.7% in the prior year.
Currencies – For 2012, the favorable currency translation impact was 4.7pp on revenue, and 0.8pp on the EBIT margin. The US dollar and Japanese yen strengthening against the euro drove this positive currency translation impact. Gross margin was positively impacted by 0.1pp.
The net financial result in the reporting year was EUR -7.7 million (2011: EUR -16.6 million). Interest expense in 2012 was lower due to a lower debt level compared with the year before (EUR 250 million convertible bonds repaid in November 2011 and replaced by a CHF 120 million straight bond). While the hedging result of the ongoing business was broadly neutral, the overall hedging result comparison benefitted from a EUR 11.6 million one-off hedging cost in relation to the convertible bond in 2011.
Taxes –Tax expenses in 2012 were EUR 15.2 million versus EUR 15.7 million in 2011. A more favorable regional profit contribution mix as well as favorable outcome of certain tax disputes led to this improved result despite a higher profit before tax. The underlying tax rate is 24.8% compared with 28.3% in the prior year.
Net profit for the year was up by 15.3% to EUR 45.8 million (2011: EUR 39.8 million), reflecting a higher net profit margin of 7.9% (2011: 7.0%). The improved net financial result and tax result were the main reasons for this improvement, which led to earnings per share (EPS) of EUR 0.37 (2011: EUR 0.32).
Cash flow from operating activities for the full year totaled EUR 103.0 million (2011: EUR 93.1 million). This improvement was primarily a result of exceptional taxes paid in the previous year. At the end of 2012, Nobel Biocare reported a cash position of EUR 146.6 million versus EUR 107.5 million in 2011 and has returned to a net cash position. This cash level is further supported by the syndicated credit facility giving the Group sufficient financial flexibility from a strategic perspective.
Strategy progress update
Nobel Biocare’s strategy is guided by the company mission “Designing for Life”. This aims to help customers treat more patients better for improved quality of life with superior products and solutions designed to last the life of the patient. This mission is realized and business performance is achieved through four strategic pillars:
Innovative products and solutions “Designing for Life” – The NobelActive® implant system has reached 5 years of double-digit growth. This performance was supported by the successful launch execution of the 3.0 narow version, which continues to attract new customers. The introduction of NobelReplace® Platform Shift (PS) and NobelReplace Conical Connection (CC) has also been on track. Aiding patient safety through the use of digital technology is one of the focus areas. Here, the recently upgraded NobelClinicianTM treatment planning software continues to gain new subscribers, disproportionally well in Japan. Further, the Group saw a very well uptake of the new drill motor, OsseoCareTM Pro, that was introduced in October and is uniquely operated by an iPad®. As previously reported, the new NobelProcera® Scan and Design Center began initial beta testing in early October, offering customers a convenient way to access precision individualized components needed to treat edentulous patients. The Group is again at the forefront and widening its lead in the digital workflow.
Customer value add “Partnering for Life” – Over the course of the year, Nobel Biocare has established a new sales and marketing organization, reducing redundancies and enabling quicker service to the customer. A tool box with a broad variety of programs to help customers to treat more patients better was introduced. The programs range from study clubs and the esthetic alliance that improves professional networking and various patient communication tools designed to attract patient visits. To facilitate interaction with Nobel Biocare, a new online store went live, first in the US, with gradual introduction in EMEA and Asia in 2013. To support the recent and upcoming product and solution launches the Sales Academy sales force training program has been rolled out globally since the beginning of this year.
Training and education “Learning for Life” – The Company established a new T&E concept with leading clinicians, which aims to help customers to improve quality of treatment care and safety. The company conducted six very well attended symposia in Europe and North America in 2012. The recently announced Global Symposium in New York in June, featuring nearly 100 key opinion leaders and experts in their fields has filled up quickly and only a few seats are left.
Operating efficiency and effectiveness – Nobel Biocare is systematically reshaping into a fitter performance- oriented organization. Efficiency improvement programs have been initiated throughout the organization, resulting in a reduction in headcount in the fourth quarter. Resources were reallocated from administration to growth drivers such as R&D and growing country organizations.
Product launches 2013 – Nobel Biocare has established a systematic innovation pipeline following the relevant clinical focus areas. For 2013 the following launches have already been announced: A new implant version with a partially machined collar expanding the NobelReplace® portfolio. Further, a significant upgrade of NobelClinician improving images for planning of implant placement and prosthetic restorations. A new second-generation NobelProcera® Scanner and additional restorative components for competitive implant platforms, further opening NobelProcera®. Additionally, an initial milestone step will be achieved with the opening of the NobelProcera® milling system to a third-party scanner with the new openaccess program.
Executive Committee update – Effective 1 January 2013, Walter Ritter, Head Global Human Resources was appointed to the Nobel Biocare Executive Committee. At the same time, Frank Mengis assumed his responsibilities as Head of Global Operations and member of the Executive Committee. Frank Mengis has extensive senior management experience in operations and manufacturing in the life sciences field including the dental industry. Most recently, he held senior management positions in Project Management and Development, Global Manufacturing, Operations and Quality Management at Straumann.
Annual General Meeting
The Board of Directors’ proposals to the Annual General Meeting of shareholders (AGM) scheduled for 28 March 2013, in Zurich, Switzerland, in addition to the approval of the annual accounts, include:
Dividend – The Board of Directors proposes a dividend of CHF 0.20 per registered share (2011: CHF 0.15) reflecting the improved net profit of the year and a payout ratio of 44%. It is planned to pay this dividend out of reserves and in a shareholder-friendly way without deduction of withholding tax. The payment date for this dividend, if approved by the AGM, is set for 8 April 2013 (ex-dividend date: 3 April 2013, record date: 5 April 2013).
Addition to the Board of Directors – To drive the implementation of Nobel Biocare’s strategy, one of the priorities of the Board of Directors has been to broaden and strengthen its operational and management expertise, in particular in the area of medical technology and implant-based tooth restoration. Following this priority, the Board of Directors proposes Franz Maier to be elected as a Member of the Board. Franz Maier brings a successful track record of over 20 years in both functional and general management positions, most recently as an Executive Vice President Sales and Member of the Executive Board of Straumann in the medical devices and biotechnology industry. All existing Members of the Board stand for re-election.
Nobel Biocare believes that the market conditions for 2013 will remain difficult, similar to 2012.
In this environment, the Company targets to modestly build market share and deliver modest revenue growth. Based on this and the initiated measures, and barring any unforeseen events, Nobel Biocare expects to deliver an EBIT margin improvement of 50 to100 bps at constant exchange rates (CER).
Nobel Biocare is moving from ‘rebuilding’ to a phase of continual performance improvements. Within the next 3 to 5 years, assuming markets improve beyond 2013 to modest mid-single digit growth, Nobel Biocare targets growing at least in line with the market and to improve EBIT margin also continually between 50 to 100 bps per annum at constant exchange rates.
Nobel Biocare is a world leader in the field of innovative implant-based dental restorations. The company’s portfolio offers solutions from single tooth to fully edentulous indications with dental implant systems (including key brands NobelActive®, Brånemark System® and NobelReplace®), a comprehensive range of high-precision individualized prosthetics and CAD/CAM systems (NobelProcera®), diagnostics, treatment planning and guided surgery solutions (NobelClinician® and DTX Studio™) and biomaterials (creos™). Nobel Biocare supports its customers through all phases of professional development, offering world-class training and education along with practice support and patient information materials. The company is headquartered in Zurich, Switzerland. Production takes place at six sites located in the United States, Sweden, Japan and Israel. Products and services are available in over 80 countries through subsidiaries and distributors.