2015 Half-year results

18.09.2015
2015 Half-year results
Conference presentation for investors, analysts & media
Basel, 20 August 2015
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
18.09.2015
First-half highlights
Marco Gadola, CEO
2015 H1 - Strong underlying growth and
profitability
REVENUE
BEST REGIONAL PERFORMERS
KEY DRIVERS
399m
APAC & LATAM
Roxolid & BLT
Organic1 revenue growth of 9% (H1)
and 10% (Q2) - strongest quarter in
6 years
Both regions post mid-teen revenue
growth, while EMEA builds on recovery
and is a main growth driver
Implants grew across all regions driven
by Roxolid and Bone Level Tapered
(BLT) implant range
UNDERLYING EBIT MARGIN2
UNDERLYING NET PROFIT 2
GUIDANCE
CHF
24%
Addition of accretive Neodent and
operational gearing more than offset
FX shock in January 2015
1
2
4
CHF
73m
FY targets raised
with underlying margin at 18% - before
non-cash exceptional charges2
Group aims to deliver organic revenue
growth in mid- to higher-single digits;
underlying EBIT margin in low 20’s.
Organic growth – i.e. excluding the effects of acquisitions, divestitures and currency exchange rates
Charges in H1 2015 related to the Neodent business combination amounted to CHF 77m (CHF 73m after tax), which include inventory
revaluation of CHF 13m (COGS) and a CHF 64m net loss below the EBIT line.
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18.09.2015
Underlying margin expansions on all levels
Organic revenue growth
Gross margin (in %)
EBIT margin (in%)
Underlying EPS
excl. acquisition and
and FX effect
excl. exceptionals
and FX effect
excl. exceptionals
and FX effect
excl. exceptionals
and FX effect
+9.2%
+540bps
+120bps
+24.8%
or +370bps
excl. Neodent
24.0
4.59
398.5
365.1
77.9
79.1
18.6
3.67
2014
2015
2014
2015
2014
2015
2014
2015
5
Combined forces
Sales by region H1 20151
Employees
4000
North
America
27%
APAC
15%
3000
LATAM
10%
2000
1000
EMEA
48%
0
2000
6
1
2005
2010
2015
Figures include Neodent at time of consolidation on 1 March 2015
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18.09.2015
Business and regional review
Peter Hackel, CFO
Key impacts of Neodent business combination
Neodent contributed CHF 28m to Group’s revenue from 1 March to 30 June
EBIT
Impact on
Cost of goods sold
Net Profit
(13)
Distribution costs
Gain/loss on
consolidation
1
Inventory adjustments
(2)
21
(7)
Tax effect on
exceptionals
4
Total exceptionals
(73)
Amortization of customer-related intangible assets 1
Revaluation gain due to derecognition of the initial 49% investment
(85)
Result of associates
8
Reason
Amount in CHF million
Exceptional
Other
Foreign exchange loss due to depreciation of BRL against CHF
between initial 49% acquisition in 2012 and full combination in 2015
Provision charges related to a change in a distribution agreement
and litgation; charges were booked by Neodent prior to the
consolidation in March
Exceptionals partially tax deductible
Total effect of exceptionals on net profit
Customer-lists will be amortized over 7 years and amount to approx. CHF 7 million p.a. and will vary depending
on the BRLCHF currency development.
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18.09.2015
Significant profitability improvements
H1 2015
in CHF million
Organic growth%
Change (rounded)
Reported
excluding FX
398.5
359.1
340.4
9.2%
4.6%
Reported
Revenue
H1 2014
before business
combination
exceptionals
excluding FX and
exceptionals
Gross profit
301.9
315.0
283.4
265.1
19%
margin
75.8%
79.1%
78.9%
77.9%
120 bps
98.6
24.8%
82.7
20.7%
111.7
28.0%
95.8
24.0%
88.8
24.7%
75.0
20.9%
76.9
22.6%
63.3
18.6%
45%
540 bps
51%
540 bps
EBITDA
margin
EBIT
margin
Net profit
margin
Basic EPS
Free cash flow
margin
(0.7)
72.6
68.7
(0.2%)
18.2%
19.1%
(0.10)
4.59
4.42
44.9
37.60
11.3%
10.5%
3.67
9
Gross margin expansion; volume/mix and
inventory effect offset FX headwind
In % of revenue, rounded
+120 bps incl. Neodent
+130 bps
1.6%
(1.2%)
(0.1%)
(1.0%)
(3.3%)
0.9%
79.2%
78.9%
77.9%
75.8%
Gross profit
margin
FX effect
Adj. gross Price / volume
profit margin
/ mix
Inventory
change1
Volume driven Like-for-like
material and gross profit
labor costs
margin
2014
2014
10
1 Change
Neodent
operational
Exceptionals
Reported
gross profit
margin
2015
2015
in finished and semi-finished goods in 2015 compared with prior year
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18.09.2015
EBIT margin expands despite FX headwind
In % of revenue, rounded
+540 bps incl. Neodent
+370 bps
2.1%
(2.3%)
(3.3%)
1.7%
(0.1%)
1.0%
0.7%
24.0% incl.
Neodent
22.3%
20.9%
Reported H1
EBIT margin
FX effect
Adjusted H1 Gross margin
EBIT margin improvement
Distribution Administration Other income
costs 1
expenses
2014
11
20.7%
18.6%
Like-for-like
H1 EBIT
margin
Neodent
operational
Exceptionals Reported H1
EBIT margin
2015
1 A provision of CHF 12.5m is included in 2014 in connection with the agreed changes of Straumann’s
go-to-market approach in China
Net profit reaches CHF 73m excl. exceptionals
In CHF million, rounded
20.8
(7.4)
(11.5)
(73.2)
2.1
72.6
68.7
Net profit
margin
19.1%
Net profit
margin
18.0%
(0.7)
Reported net
profit H1
2014
EBIT1
Financial result Share of results
from associate2
Income taxes
Net profit H1
excl.
exceptionals
Exceptionals
Reported net loss
H1
2015
1
12
Incl. CHF 2m of amortization expenses (Neodent’s customer-related intangible assets) 2 Prior to the business
combination, the Neodent result was reduced by provisions for a distributor agreement and an ongoing litigation
in the amount of CHF 7 million.
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18.09.2015
Free cash flow increases as underlying
profitability and working capital improve
In CHF million
29.8
(10.5)
0.7
(2.2)
(18.4)
(1.9)
9.9
44.9
37.6
FCF margin
10.5%
Free cash flow
H1 2014
13
FCF margin
11.3%
EBITDA
improvment
Improved
working capital
Higher CAPEX
investments
Higher interest
expenses
Higher tax
payments
Difference in
non-cash OPEX1
Various
Free cash flow
H1 2015
Chart shows the cash-relevant developments in H1 2015 in relation to the same period in 2014
1 Year-on-year change mainly due to provisions in connection with the adapted go-to-market approach in China
13
Revenue growth across all regions, led by the
Americas
Revenue development (in CHF million, rounded)
11.0% in CHF
9.2% organic
11.0
4.7
10.1
7.6
24.6
(18.6)
398.5
365.1
359.1
Change in l.c.
(5.2%)
Revenue H1
2014
FX Effect
2014
7.2%
Acquisition Adj. revenue
Effect
H1 2014
4.1%
EMEA
10.5%
North
America
22.2%
APAC
14.3%
LATAM
Revenue H1
2015
2015
14
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18.09.2015
Sustained pick-up in EMEA; strong growth
continues in North America
Revenue change (organic)
48%
8.3%
7.0%
EMEA
5.5%
2.4%
 Strong performers: Spain, France,
UK, Sweden and Germany
56%
0.3%
 Sequential improvement in
distributor business
(2.0%)
North America
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015
11.4%
5.2%
9.3%
 Organic growth accelerates to 8%
11.6%
9.3%
5.4%
27%
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015
 Russian subsidiary operational by
end of 2015
 Strong demand for Straumann
implants driven by Bone Level
Tapered implant rollout
 ProArchTM edentulous solution
launched
 Regenerative portfolio
strengthened
15
Double-digit growth in LATAM and Asia
Asia Pacific
Revenue change (organic)
 Q2 sales expectedly softer after
dealer stocking effect in Q1 in
China
34.5%
56%
15%
15.3% 17.0% 14.5%
12.8%
8.3%
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015
LATAM
15.0%
7.3%
 Roxolid and BLT both receive
regulatory clearances in Japan in
July
 Double-digit growth continues in
Mexico and Brazil
36.7%
30.6%
 Robust growth in Japan and China
11.7%
15.6%
10%
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015
 Neodent with double-digit growth in
H1; Q2 lift from additional selling
days in Brazil
 Neodent launched in Mexico;
subsidiaries to open in Columbia
(Q3) and Argentina (Q4)
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18.09.2015
Double-digit volume growth in implants and strong
demand for new regenerative products
Implants
Restorative
Regenerative
17
Update on strategic progress
Marco Gadola, CEO
9
18.09.2015
Our key strategic priorities
1
Driving a high performance
culture and organization
2
Targeting unexploited
growth markets & segments
3
Becoming a total solution
provider for tooth replacement
19
Creating a high-performance culture and
organization
1
 Program to instill culture and mindset
change well underway throughout the
organization
 We want to be the first place that people
come to do business, to find reliable
solutions, to turn ideas into reality, to
learn, master, succeed and to change
lives.
Refreshing
our culture
 Key success factors and core behaviors
identified to increase agility, strengthen
commercial mindset etc.
20
10
18.09.2015
Core behaviours to help us achieve our key
success factors
Key success factors
1
Our core behaviours
challenge the status quo
engage in difficult conversations
take responsibility
think commercially
learn constantly
have courage to drive change and
shape our future
being passionate about what we do
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2
Investing in emerging markets
Russia
Subsidiary to
open in Q4
China
New set-up
95% complete
LATAM
Subsidiaries to open
in Colombia (Q3) and
Argentina (Q4)
Thailand
New distribution
agreement;
dedicated
salesforce
22
11
18.09.2015
New distribution model to unlock China;
20 distributors appointed nationwide
Straumann China
Consultative
sales force
Network of
independent
distributors
2
Public clinics
Marketing, training &
education
Private clinics
Heilongjiang
Jilin
 Market expected to almost triple to a level
of >CHF 700m by 2020
Liaoning
Xinjiang
Tianjin
Hebei
Ningxia
 In 2014, ~600k implants were placed in
China (compared with ~2.3m in Brazil)
Qinghai
Shanxi
Tibet
Jiangsu
Shanghai
Anhui
Sichuan
Chongqing Hubei
Zhejiang
Hunan
Guizhou
Q4‐14
Completion of new
route‐to‐market
Shandong
Shaanxi Henan
 Straumann and its distribution partner sold
>100k implants in 2014
 No local Chinese players with significant
share
Beijing
Inner Mongolia
Gansu
Q1‐15
Yunnan
Jiangxi
Fujian
Guangxi Guangdong
Q2‐15
Q3‐15
Hainan
23
Using Straumann’s global presence & know-how 2
to expand Neodent’s international footprint
Exisiting or planned availablity of Neodent
products in 2015 through:
Neodent’s homemarket
Instradent subsidiaries
Distribution partners
24
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18.09.2015
New Bone Level Tapered implant: a significant
growth opportunity
3
 New-generation BLT: good primary stability, fast
secondary stability (SLActive), high strength
(Roxolid)
 Enables Straumann to compete in largest
implant segment (>60% of implants are
tapered/conical)
 Full market releases in N. America (Q1) and
Europe (Q2/3) 2015
 Already accounts for 9% of Straumann’s implant
volumes but still to be launched in Asia Pacific
and Latin America
 Approvals just received in Brazil, and Japan
together with Roxolid
25
3
Bone Level Tapered implant roll-out plan
2014
Q3
Q4
2015
Q1
Q2
Q3
Q4
2016
2017
Q1-Q4
Q1-Q4
EMEA
- Germany, Austria & Switzerland CMR
- Europe (outside DACH)
- Distributors
N o r t h Am e r i c a
FMR
CMR
FMR
CMR
CMR
FMR
FMR
As i a P a c i f i c
- Japan1
CMR
FMR
- China1
CMR
- Distributors
FMR3
L a t i n Am e r i c a 1
CMR
FMR
CMR = controlled market release to collect feedback from experienced users
FMR = full market release, available to all customers.
1
26
3
Depending on regulatory clearance in respective region/country
Not in all distributor markets yet
2
Roxolid not yet available
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18.09.2015
Multiple new products and solutions
introduced in H1
3
Straumann Variobase® extensions incl.
multi-unit restorations: screw/cementretained1 bridges & over-dentures
Straumann® pre-milled
abutment blanks
Straumann® Pro Arch solution
Bridge and bar solutions through
Straumann CARES® X-Stream™
27
1
The bridge / over-denture structure is bonded to the Variobridge solution
CADCAM milling service expanded
3
 Arlington (USA) facility expanded and fitted
with state-of-the-art automation to cater for
ProArch growth
 New milling center in Tokyo to become
operational in Q4
 Brazil CADCAM milling service for Straumann
and Neodent customers operational
28
14
18.09.2015
Further investments and partnerships to
expand value and technology platforms
Germany (100%)
Spain (30%)
Germany
3
Canada (55%)
Brazil (100%)
Germany (51%)
Taiwan
(conv. bond)
S. Korea
(conv. bond)
USA (12%)
Switzerland (44%)
Taiwan (49%)
Austria
Premium
Common technology and
manufacturing platform
Value
29
Securing access to leading-edge technology
by increasing Dental Wings stake to 55%
3
 Option for a stepped increase to full ownership by 2020
 Founding shareholders remain with company
and retain control
 Leadership in digital solutions
and exciting launch pipeline
support our strategy to be
a total solution provider.
30
15
18.09.2015
Sights set on chairside and in-lab CADCAM
markets
3
To complement its central milling and Scan&Shape services, Straumann
aims to enter selected chairside & in-lab CADCAM markets through
partnerships with Dental Wings (intra-oral and desk-top scanners) and
Amann Girrbach (milling machines)
In-lab
Chairside
Lab System



Desktop scanner
CARES Visual
Motion 2 milling
maching
Intra-oral scanner
(stand-alone)


Intra-oral scanner
CARES Visual
Chairside system



Intra-oral scanner
CARES Visual
Chairside milling
machine
Practice lab system



Intra-oral scanner
CARES Visual
Motion 2 milling
machine
31
…supported with a broad range of materials
Straumann
Co-branded with
Amman Girrbach
3rd party
n!ce
Cobalt-chrome
Vita
Pre-milled abutment
blanks
Zirconia
3
Ivoclar
32
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18.09.2015
Emdogain celebrates 20th anniversary
Further indications in development
 Oral wound healing (H1 2016)
 Flapless treatment in periodontitis
(H2 2016)
See the video @
www.youtube.com/watch?v=yje0q-esud0
33
Outlook 2015
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18.09.2015
Guidance 2015
Barring unforeseen circumstances
 Straumann expects the global implant
market to continue growing in 2015
 Group expects full-year revenue to grow
organically in the mid- to higher-singledigit range
 Assuming that the currency exchange
rates remain more or less at their H1
levels, the Group aims to achieve an
EBIT margin in the low twenties, before
business combination exceptionals1
1
35
Fair value adjustments to Neodent’s acquisition-related inventory of CHF 13m
35
Questions & Answers
36
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18.09.2015
Calendar of upcoming events
2015
20 August H1 2015 results conference
Basel HQ
01 September
Investor meetings
Boston
02 September
Investor meetings
New York
03 September
Investor meetings
Montreal / Toronto
09 September
Investor meetings
Zurich & St.Gallen
14 September
Investor meetings
Vienna
15 September
Investor meetings
Frankfurt
23 September
Investor meetings
Copenhagen
24 September
Investor meetings
Stockholm
29 October
Q3 sales publication
Webcast
17 November
Investor meetings
Edinburgh
18 November
Investor meetings
London
37
Results publication and corporate events. More information on straumann.com → Events
37
Straumann’s currency exposure
Revenue breakdown H1 2015
Average exchange rates (rounded)
CHF
10%
Other
19%
BRL
9%
EUR
34%
USD/CAD
/AUD
28%
FX sensitivity (+/- 10%) on...
2014
H1 2015
Revenue
EBIT
1.07
+/- 13 million
+/- 8 million
1
EURCHF
1.21
1
USDCHF
0.92
0.95
+/- 10 million
+/- 3 million
1
BRLCHF
0.39
0.32
+/- 4 million
+/- 1 million
100
JPYCHF
0.86
0.79
+/- 2 million
+/- 1 million
Development of Straumann’s main exchange rates since 2014
120
Cost breakdown H1 20151
BRL
8%
Other
8%
110
100
CHF
43%
90
80
70
USD/CAD/
AUD
22%
2014
2015
USDCHF
1
EURCHF
JPYCHF
BRLCHF
EUR
17%
These distribution charts represent the total net revenues and the total COGS as well as OPEX in the various
38 currencies. All numbers are rounded and based on H1 2015 figures and include Neodent since 1 March.
38
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18.09.2015
Foreseeable FX impact has abated and
counter-measures are on track
YTD development of Straumann’s main
currencies
Theoretical FX impact on revenue and EBIT
In CHF m (rounded)
1.3
FX spot rates
16 Jan
Ø FX rates
January‐June 2015
Revenue
(75)
(39)
EBIT
(40)
(24)
EURCHF
1.02
1.07
USDCHF
0.87
0.95
1.1
0.9
0.7
01.01.2015
01.03.2015
01.05.2015
USDCHF
01.07.2015
EURCHF
Source: Thomson Reuters, company estimates
39
The BLT with the SLActive surface combines
the best of both worlds
40
Chart for illustrative purposes only
20
18.09.2015
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]
41
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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