Bensheim—In the past financial year (10/2003 to 9/2004), Sirona, one of the world's leading manufacturers of dental equipment, considerably increased its sales and operating results comparable to the previous year (EBITDA). Revenues were 13 percent higher at 320 million euros (2002/03: 284 million euros). Operating results comparable to the previous year (EBITDA) increased by 17 percent to 71 million euros (2002/03: 61 million euros), EBITDA for the period was 22% of sales. While the operating results improved significantly, the company recorded an after tax net loss of 13 million euros due primarily to costs directly related to the 2004 change in ownership from Permira to EQT. Simone Blank, chief financial officer of Sirona commented on the results. "The operating results of the company have developed very positively. The net loss after taxes shown this financial year is the result of changes made in the course of the transfer of ownership, which was financed by a leveraged buy-out. The primary factors resulting in the reported loss were the transaction costs and the difference resulting from capital consolidation (step-up costs) associated with the change in ownership and the resultant implementation of the new financing structure. The changes in the ownership and financing structure also have had a significant impact on the balance sheet of the company."
The company, which has its headquarters in Bensheim, Germany, has increased its international presence significantly over the past year via acquisitions and the foundation of new subsidiaries. During this period, Sirona has gained worldwide market share and strengthened its position as the innovator in the dental industry.
Innovative product portfolio
The company attributes much of its recent growth to its innovative product offerings. In 03/04 all of the divisions contributed to the positive result. The dental CAD/CAM systems division had the largest increase amongst Sirona divisions. CAD/CAM systems provide for computer-aided design and manufacture of dental restorations. Sirona is the clear global leader in this rapidly growing sector. Sirona offers leading CAD/CAM solutions for both the dental practitioner and for the dental laboratory. Sirona recently enhanced the operating software for its inLab CAD/CAM system for dental laboratories. This technology allows dental technicians to construct four-component bridges, veneers, inlays and onlays as well as implant supra-constructions all on the computer screen.
In 2003/04, the handpiece division grew by the highest percentage of all Sirona business units. Market acceptance of the new contra-angle handpiece SIRONiTi, a handpiece used to treat root canals (endodontics), has been very positive. Further growth was generated by the successful entry of electric handpieces into the U.S. market. In just one year, Sirona has become a leading provider in this segment.
In July 2004, Sirona introduced its new generation of digital panoramic X-ray systems to the market. The ORTHOPHOS XG product line is the most technologically advanced imaging system on the market today and sets performance standards for ease of use and image quality. Initial demand has exceeded expectations.
The success of the C8+ and the M1+ drove growth in the treatment center division. The C8+ is a treatment center designed specifically to meet the requirements of global markets. The M1+ is the newly launched successor product to the M1, which has the distinction of being a global best seller with worldwide sales of over 34,000 units.
In the financial year 2003/04 Sirona invested 24 million euros in research and development. This represents 7.4 percent of annual sales, placing R&D spending clearly above the industry average.
International presence expanded significantly
Sirona has expanded its global presence with the formation of subsidiaries in France, Great Britain, Spain and Japan. With the recent additions, Sirona now has local operations in 15 countries. Sirona has also strengthened its competence in the area of dental hygiene and sterilization equipment by acquiring the Danish specialist Nitram Dental a/s. In October 2004, shortly following the end of the financial year, Sirona took over HTC Hipwo Group, one of the largest manufacturers of treatment centers in China. China represents a market with significant long-term growth potential for Sirona.
Sales made outside of Germany were 229 million euros in 2003/04. This represents 72 percent of total sales (previous year: 69 percent). Sirona experienced especially strong sales growth in North America, France and the UK. Despite a sluggish attitude towards investment in Germany, Sirona increased its domestic sales by more than 4 percent as compared to the previous financial year.
Sirona currently employs a total of 1,623 people. The percentage of employees outside of Germany has increased materially over the past year to 22 percent (previous year: 5 percent).
EQT and Executive Board consider trade sale or IPO
Sirona started its new financial year with an excellent first quarter. The company is expecting to continue to generate significant growth as a result of new product developments in the areas of handpieces, imaging systems and treatment centers. The demand for CAD/CAM solutions for dentists and dental laboratories has remained strong. To meet this growing demand, Sirona recently announced the launch of two new CAD/CAM product offerings: the inEos extra-oral scanner for dental laboratories which was introduced to the market at the beginning of 2005 and the infiniDent service for the centralized production of dental restorations. The company is also expecting continued dynamic growth in the United States.
"Sirona is well positioned to continue to outperform the dental market. We have a technologically advanced product portfolio, an exciting pipeline of new products, and a dedicated and motivated team of employees. It is therefore understandable that EQT is considering realizing the increased value of the company. To that end, we have retained UBS as our investment bank to explore strategic alternatives including the possibility of a public offering or a trade sale. After evaluating our options we will make a decision during the first half of 2005. UBS has estimated the value of the company to be in excess of nine times EBITDA. It is an exciting time for Sirona," commented Chief Executive Officer Jost Fischer.
About Sirona
Sirona is one of the world's leading manufacturers of dental equipment. The company produces treatment centers, imaging systems, handpieces and hygiene systems as well as systems for computer-aided ceramic restoration (dental CAD/CAM systems). The company has 15 sites throughout the world with its global headquarters in Bensheim/ Germany. Sirona has been pioneering innovative products in the dental industry for more than 125 years and currently employs a staff of 1,623. In the 2003/04 financial year, Sirona recorded sales of 320 million euro and an EBITDA of 71 million euros.
Please don't hesitate to contact us for further information:
Sirona Dental Systems GmbH
Jost Fischer
Simone Blank
Fabrikstrasse 31
D-64625 Bensheim
Germany
Telephone +49 (0) 6251 / 16 2401
Fax +49 (0) 6251 / 16 2412
Email:vorstand@sirona.de
www.sirona.de.