Sales grow in high teens across all regions with Europe lifted by improvement in Germany and contribution from new Italian subsidiary
- Operating and net income rise 20% and 25% respectively
- Earnings per share increase 25% to CHF 4.37
- New North American HQ with world-class training and production facilities operational in record time; BIO srl. integrated and other strategic initiatives on track
Close to 100 new jobs created
Key figures
(in CHF million) H1, 2005 H1, 2004
Group Sales 256.0 217.2
Growth in % 17.8 32.9
Growth in local currencies in % 19.3 32.1
Operating profit (EBIT) 80.4 67.2
Margin in % 31.4 30.9
Growth in % 19.6 45.2
Net profit 68.1 54.4
Margin in % 26.6 25.1
Growth in % 25.0 42.6
Earnings per share in CHF 4.37 3.49
Basel, 12 August 2005: In the first six months of 2005, Straumann Group sales rose 19% in local currencies (l.c.), or 18% in Swiss francs to CHF 256 million on top of an exceptionally strong comparative period of last year. With operating profit rising 20% to CHF 80 million, net income grew 25% to CHF 68 million. Correspondingly, the operating and net margins expanded to 31% and 27% respectively, while earnings per share rose 25% from the first half of 2004 to CHF 4.37. Straumann created a further 96 new jobs in the first six months of 2005 and increased its total number of employees to 1228.
Strategic achievements
In June, Straumann inaugurated its new North American headquarters in Andover near Boston, Massachusetts , just over a year after construction began. Incorporating state-of-the-art education and manufacturing centers, the new facility initiated the company’s first production outside Switzerland .
The company advanced its strategy to gain direct control of its distribution channels. Having successfully completed the integration of BIO srl., Straumann now generates more than 85% of Group turnover through its own subsidiaries. A further contribution will come from Straumann Australia Pty, which took over distribution of Straumann products at the beginning of July.
Product development and launch program
The Group made further progress with its product development and launch program. Straumann’s individualised implant prosthetics service, ‘CARES’, was received very positively at various trade fairs / meetings in the second quarter and is being rolled out in Germany, Switzerland and Austria, with other markets to follow. In addition, the company launched a new synOcta® gold abutment, the Straumann Bone Block Fixation set, and a new range of ‘single patient’ drills. These are just some of the numerous new products and meaningful contributions that Straumann introduced to improve handling and convenience for dental professionals.
At the recent World Symposium of the International Team for Implantology (ITI) in Munich , independent medical and scientific researchers presented the initial body of scientific evidence to support Straumann’s innovative implant surface technology SLActive, which significantly reduces healing time. Based on the scientific platform of the current gold standard SLA® surface, SLActive is supported by more scientific studies than any other implant at launch. To date, more than 500 SLActive implants have been placed and the selective introduction of the new surface technology is now underway. A further clinical update will be provided during the European Association for Osseointegration meeting in Munich in September. SLActive will be available to customers in Europe and Asia in September, and in the USA in March 2006.
Progress was also made with other exciting new products, notably the Straumann Bone Ceramic, which continues its selective introduction and the Straumann Membrane, which is undergoing clinical trials.
Sustained job creation and talent recruited
Straumann continued to invest in talent recruitment, creating 96 new positions worldwide in the first six months of 2005. This and the addition of the Italian distributor team increased the global workforce to 1228.
Double digit growth continued
The increase in Group sales of 19% (l.c.) is well in line with the company’s forecast. Organic growth contributed 14% points to sales growth in the first six months of 2005, while 5% points were acquisition related. With the Swiss franc remaining stable against the Euro and strengthening against the US dollar, sales growth amounted to 18% in Swiss francs.
Sales grew in the high teens across all regions. European revenues were up 19% in both l.c. and Swiss francs to CHF 164 million, on top of strong growth of 28% in the comparison period of 2004. With the region contributing 64% of Group turnover, sales growth was lifted by additional revenues from the acquired Italian distributor, which helped to offset temporary shortfalls in Germany due to the slow adoption of the healthcare reforms. German sales picked up considerably in the second quarter, resulting in first-half growth in the mid teens.
North American revenues continued to be driven by implant sales and rose 17% to CHF 61 million (24% of Group sales), on top of exceptionally strong first-half growth of 43% in 2004. Owing to the negative currency impact, sales growth amounted to 12% in Swiss francs.
The Asia/Pacific region contributed 10% of Group revenues and posted first-half sales growth of 18% to CHF 26 million on the back of exceptional first-quarter orders ahead of announced price increases. Sales grew strongly through both quarters in Australia as the distribution team prepared to transition to the new Straumann subsidiary.
Revenues in the rest of the world climbed 59% to CHF 6 million or 2% of Group sales.
EBIT margin expands to 31%
Operating costs excluding other income decreased from 70% to 69% of sales, despite an expected increase in the cost of goods sold to 19% of sales. Selling costs remained at 38% of Group sales, while general administrative costs and research and development costs decreased to 7% and 5% of sales respectively. As a result, operating profit (EBIT) rose 20% to CHF 80 million and the EBIT margin expanded to 31%.
Net income rises 25%
The development of the US dollar and the Euro against the Swiss franc contributed to a positive financial result. This together with the improved operating result and successful tax management lead to a 25% increase in net income to CHF 68 million. As a result, the net profit margin improved 2% points to 27% of sales.
High capital expenditure
Operating cash flow reached CHF 61 million, leading to an operating cash-flow margin of 24%. Capital expenditure totaled CHF 97 million, reflecting significant investments in projects such as the new US headquarters, infrastructure expansion, and the acquisition of the Italian distributor.
As a result of all these activities, overall cash and cash equivalents on 30 June 2005 amounted to CHF 37 million.
Outlook (barring unforeseen circumstances)
With strategic achievements and first-half developments fully in line with the company’s forecasts, the Group confirmed its expectation for 2005 sales to grow in the region of 20% in local currencies, with operating and net profit margins expanding by about one percentage point.