Thomas Dressendörfer, CFO - Straumann...Being the partner of choice Thomas Dressendörfer, CFO...
Transcript of Thomas Dressendörfer, CFO - Straumann...Being the partner of choice Thomas Dressendörfer, CFO...
Being the partner of choiceThomas Dressendörfer, CFOInaugural CHF Bond RoadshowBasel/Zurich, 4 April 2013
� Straumann 2
Disclaimer
This presentation contains certain “forward-looking statements”, which can be identified by the use of terminology such as “will”, “guidance”, “would”, “prevailing”, “still be able to”, “should”, “confidence in achieving”, “turnaround”, “future”, “anticipated”, “continue”, “mid and long term”, “believes”, “outlook”, or similar wording. Such forward-looking statements reflect the current views of Management and are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Group to differ materially from those expressed or implied. These include risks related to the success of and demand for the Group’s products, the potential for the Group’s products to become obsolete, the Group’s ability to defend its intellectual property, the Group’s ability to develop and commercialize new products in a timely manner, the dynamic and competitive environment in which the Group operates, the regulatory environment, changes in currency exchange rates, the Group’s ability to generate revenues and profitability, and the Group’s ability to realize its expansion projects in a timely manner. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this report. Straumann is providing the information in this release as of this date and does not undertake any obligation to update any forward-looking 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.
Straumann in a nutshell
«To be the partner of choice»
Straumann is a global leader in implant and restorative dentistry and oral tissue regeneration
A pioneer of dental implants that offers ‘Swiss’ quality and scientific innovation for more than 50 years
Annual revenue of just under CHF 700 million with a respective Ebit margin of 15%
~2500 employees from ~45 nations
Listed at the SIX Swiss exchange with a market capitalization of CHF 2bn
Mission is ‘Simply doing more for dental professionals and patients’
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5 Straumann 5
1954 – 1970Material testing and research
1970 – 1990Medical devices
Since 1990Dental medical devices
Half a century of science-based innovation and precision engineering
1974First StraumannDental implant
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Significant business developments since IPO in 1998
1974 - Implant dentistry
2002 – Regenerative dentistry
2007 – Restorative and digital dentistry
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Straumann serves three dental specialty segments...
Regeneratives Dental implants & abutments
CADCAM restorations on natural teeth
CADCAMrestorations on implants
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Dental Implants & stock abutments
Regeneratives
Digital dentistry
Total market size
Market position /share
Segment size (share of sales)
Straumann active since
No. 1
18%
No. 4
<5%
No. 5
<5%
CHF 3.0bn1
CHF 0.4bn
CHF 2.0bn
1 Including implants, stock abutments and tools ; Source: MRG 2012, iDATA 2012, Straumann estimates
1970
2003
2007
Equipment
CADCAM Elements
Bone Substitutes
MembraneTissue Regeneration
Dental implants
Abutments
~90%
<5%
>5%
…and offers ‘bone to tooth’ solutions
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Main competitors
3M ESPE, Sirona, Dentsply,
3Shape, Nobel Biocare
Geistlich, Zimmer, ACE,
Dentsply, BioHorizons
Nobel Biocare, Dentsply, Biomet 3i,
Zimmer
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Why does CADCAM matter for Straumann?
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Digitalization will further change value chain for companies & workflows for dentists and labs
Surgical planning and prosthetic (i.e. crown) design software will converge
Enabler: Implant companies that offer full ‘bone-to-tooth’ solutions will have an advantage offer single component suppliers
The more general dentist will embrace implant treatments, the more important a completive CADCAM prosthetic offering will become
Straumann subsidiaries
Production plants
Distributors
A global footprint…
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Present in >70 countries through 23 fully-owned sales subsidiaries and a broad distributor network
…with dedicated production sites
Graefelfing (D)CADCAM scanner assembly
Arlington (USA):CADCAM milling
Markkleeberg (D)CADCAM milling
Andover (USA)implant system
Villeret (CH)implant system
Malmoe (S)regenerative products
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Straumann’s shareholder structure (on 31 December 2012)
Major private shareholders
38.1
Major institutional
shareholders 16.8
Other institutional
shareholders 16.5
Private individuals
11.0
Non-registered
17.6
Switzerland 56.8
Asia 14.2
Europe 9.1
USA 1.9
ROW 0.3
Non-registered
17.6
Major shareholders (REGISTERED)31 Dec 2012 31 Dec 2011
Thomas Straumann (Vice Chairman) 17.3 27.3
Government of Singapore Inv. Corp. Pte. Ltd. 13.8 n/a
Rudolf Maag 12.2 12.2
Simone Maag de Moura Cunha 5.2 5.9
Gabriella Straumann 3.4 3.4
Sprucegrove Investment Management 3.0 n/a
Total 54.9 48.8
Fundamentals intact – emerging markets with attractive growth profile
The opportunity and the challenge: meeting a huge medical need
Straumann1 Straumann estimates, Finnish National Agency of Medicines2 AFG study 2012 in developed countries with >5000 people interviewed
0-19 20-29 30-39 40-49 50-59 60-69 70-female male
Age distribution of implant treatments1
More than a quarter of a billion people in the industrialized world alone are missing one or more teeth; up to 1/3 of people over 65 have no teeth
59% of the 45-54 year olds and 33% of the <35 have lost at least 1 tooth1
Only ¼ seek treatment and of those only a fraction chooses implants
Reasons:
lack of awareness
lack of trained dentists offering implants
lack of reimbursement
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A global market yet to unlock
1 Straumann estimates, based on Millennium Research Group 2011.
Dental implants per 10 000 population in 20111
0
100
200
KR IT ES CH DE SE BR FR US JP UK CN
Top3193
Today, in most countries, the number of implants placed annually is >50% lower than the average of the three highest-penetrated countries
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1 Straumann definition for dental implant penetration: Number of people treated with dental implants/number of people treated for tooth loss2 Source:Straumann proprietary study based on ~5000 respondents conducted by AFG Research 2011; Straumann estimates
US example: implant penetration rising to 25-30%
Adult population
Implant treatment 2011: 15-20%2020: 25-30%
Conventional treatment2011: 80-85%2020: 70-75%
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People affected by tooth loss:45-55%
Annual tooth loss cases seeking treatment:5-10%
People actually treated: 45-55%
Oral hygiene / dental awareness / nutrition / aging population / education
‘Pain Level’ / economics / access to treatment / reimbursement / awareness
Financing / awareness / eligibility / treatment acceptance
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35%65%
20-25%
75-80%
10-15%
85-90%
35%
65%
28%
72%
19%
81%
17Emerging market definition according to MSCI; market split by value.Source: Euromonitor, BMI, MRG and Straumann estimates.
2004
Luxury watches
Automotive
Dental implants
2011 2015E
52%48%
58%42%
16%
84%
Emerging markets Developed markets
Emerging markets have gained share rapidly
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All BRIC countries will become top 12 healthcare markets by 2020
2000 Rank 2010 Rank 2020 Rank
US US US
Japan Japan China
Germany Germany Japan
France France Germany
Italy China Brazil
UK UK France
Canada Italy UK
China Canada Italy
Spain Brazil Spain
Netherlands Spain Russia
Australia Australia India
Brazil Netherlands Argentina
Source: Business Monitor International, 2010 and International Monetary Fund, World Economic Outlook Database, December 2010
0%
2%
4%
6%
8%
10%
12%
LatinAmerica
China India Russia UnitedStates
EU 5 Japan
Anticipated growth in healthcare costs between 2010-20
Average
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Brazil has an attractive growth profile
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Dental implantmarket size
(value)
Source: MRG 2010, Fundação Getulio Vargas, Ernst & Young, McKinsey Global Institute, BCG, US Census Bureau; Straumann estimates.
Neodent impresses in 2012 and offers excitingopportunity in South America
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Net revenue 20121 Growth
BRL196m +17%(approx. CHF 93m)
EBITDA
>40%Net profit Margin
BRL53m 27%
StraumannStraumann holds a 49% stake in Neodent with an option to increase to 100%. IFRS consolidation expected in 2015. Market share data from iData 2011.
1 Total revenues from all segments incl. international businesses
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LATAM 95%
Europe55%
North America
25%
APAC15%
RoW4%
Neodent
Europe 50%
North America
20%
APAC 15%
LATAM 13%
ROW 2%
How a full combination would look
Pro forma1
1100% combination of Straumann and Neodent
Combination allows Straumann to participate in future growth markets Option to increase to 100% over next five years
Consolidation expected in 2015
<5%
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Recent developments &Financial performance
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Weak economy in Europe Dampened consumer confidencePatients postponing complex treatment or taking cheaper/inferior options
Growth potential in North America intactSlow patient traffic Fundamentals intact
Asia: mixed picture Strong growth in China Sluggish Japan due to damaging media reports
Robust growth in Latin AmericaStraumann and Neodent grow strongly in Brazil
What is happening in the markets?
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New technologies enable full digital procedures with optimized materials (improved esthetics, durability, pre-shaded) No threat from new technologies expected Increased competition from low-cost/inferior alternatives including conventional tooth replacementDental labs under pressure to find optimal levels of production, outsourcing, efficiency and qualityImplant therapies are widely paid out of pocket - no increase in public reimbursement expected
Straumann’s response to these changes:
What is happening in the markets?
Dual brand strategy in selected marketsContinued high R&D investments to maintain innovation leadershipNew technologies and solutions to reduce cost of treatment and CAPEXFurther expansion of ITI network (due to lack of trained dentist)Drive sales efficiency (new sales force set-up implemented in 2012)
Above-average performance in a challenging market
1 Market share weighted growth rates (l.c.) of Biomet/3i, Dentsply, Nobel Biocare, Straumann and Zimmer; collectively representing 2/3 of the dental implant market. Source: Published company data, 10-K and management comments
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
Straumann organic growth
Market for tooth replacement & restoration (leading implant companies)1
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in CHF million ChangeReported excl.
exceptionals FX adjusted Reported excl.
exceptionals vs. adjusted
Revenue 693.6 693.6 697.5 686.3 686.3 (1.6%)
excl. iTero discontinuation (1.0%)
Gross profit 528.5 528.5 531.9 531.5 534.4
Gross profit margin 76.2% 76.2% 76.2% 77.5% 77.9% 1.6%
EBITDA 157.4 157.4 158.3 117.4 130.4
EBITDA margin 22.7% 22.7% 22.7% 17.1% 19.0% (3.7%)
Operating profit (EBIT) 79.9 120.1 120.3 61.0 99.5
EBIT margin 11.5% 17.3% 17.2% 8.9% 14.5% (2.7%)
Net profit 71.0 36.4
Net profit margin 10.2% 5.3%
Basic earnings per share (EPS) 4.54 2.36
Free Cash Flow 121.1 95.2
Free Cash Flow margin 17.5% 13.9%
FY 2011 FY 2012
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Performance on like-for-like basis
1 Throughout this presentation the term ‘exceptionals’ comprises the following: in 2011, the impairment of intangible assets in Japan of CHF 40m (and related tax effect); in 2012, the goodwill impairment of CHF 21m relating to the global regenerative business, and charges of CHF 18m related to the Group’s cost optimization program and severances
1
2
3
1
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Adapting from growth – to cost optimization and selective expansion
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REVENUE KEY DRIVER 2012 GROSS MARGIN
CHF 686m +6% (l.c.) 78%Promising start to 2012Market slowed from Q2
Solid growth in North America partly offset slow Europe (-5% l.c.)
Efficiency gainsMargin expanded
OPERATING INCOME MARGIN1 UNCHANGED DIVIDEND STRATEGY
15% CHF 3.75 VisionEBIT margin disappointing: Cost optimization programReduction of 150 positions
Return to normal cash dividend Reorganization; investment in key growth markets (e.g. Brazil, China, US); digital strategy advances to next level
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Despite heavy FX headwind, strong gross margin -OPEX rightsizing underwayIn CHF million
1 All figures pre-exceptional figures
79.7% 79.6% 76.2% 77.9% 76-78%
29.6% 28.7%22.7%
19.0%
up to 30.0%
2009 2010 2011 2012 Vision 2020
Gross margin EBITDA
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Solid cash generation
1 All figures pre-exceptional figures2 Investments in Neodent and Dental Wings
377 (266)2
(58)
(27)
115 141
0
100
200
300
400
Cash &equivalentsJanuary '12
Acquisitions Dividend CAPEX& others
Operatingcash
Cash &equivalents
Dec '12
in CHF Mio.
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CASH & EQUIVALENTS EBITDA1 NET DEBT/EBITDA
CHF141m CHF130m -1.08xMostly held centrally at the HQ; 1st tranche (49%) of Neodent acquisition financed through cash position
Or 19% of revenues. Solid profitability level despite challenging European market environment; cost optimization program running 2012-2013
Conservatively financed with a strong net cash position
EQUITY RATIO NET WORKING CAPITAL ANNUAL CAPEX (3Y AVERAGE)
82% CHF63m CHF20mNo Debt and shareholder equity of CHF 631 million
Or 9% of revenues Or 3% of revenues
Straumann 1 Excluding exceptionals
Debt free and solid cash generation
Building for the future
Demographics
The drivers of our industry
Patient awareness on esthetics & quality of life
Dentist training & experience
Increasing acceptance
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Implant market assumed to grow in high single digits
Implant dentistry market1 value (in CHF bn)
2011 2020 CAGR 2011-20
~3.5 6-8 6-10%
Main threat to long-term market growth in implant dentistry is the possibility of another global recession between now and 2020 (lower range estimate)
1 Includes implants, abutments, tools. These data only include inflation element.Source: MRG 2011, Straumann data. 33 Straumann
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The building blocks of our strategy
Extension of scope
Base
Defined growthinitiatives1
Based on market growth and our ability to outperform our market segment
Acceleration by capturing additional growth opportunities
Acceleration by extending business scope
Straumann1 Growth initiatives include regional strategies, sales force expansion in selected markets and access to new technologies.
Straumann and the ITI – a unique collaboration in evidence-based dentistry
Founded in 1980, the ITI is the world‘s largest implant dentistry network exceeding 13 000 members in 95 countries
Straumann is exclusive implant manufacturing partner
Thousands of training courses each year covering all levels of proficiency
Practice-driven education based on scientific evidence and consensus papers
Clinical activitiesPublications
Education
Network
Research
Commercialactivities
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Envisioned key financials and regional mix in 2020
~ 76-78%up to25%
36STRAUMANN CMD 2012Copyright Straumann. All rights reserved.
Net revenue(CHF)
>1.5bn
Gross margin
~76–78%
EBIT margin
up to25%
Europe
NAM
APAC
LATAM & ROW
20112020
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Key points in brief
Growth fundamentals are intact; existing markets provide attractive opportunities
‘Vision 2020’ provides a valuable roadmap for the future
Straumann has already started implementation, through a redesigned organization, tailored regional strategies and a portfolio of innovative solutions and services, to address key customer and market needs
Our vision statement “to be the partner of choice” remains unchanged and we will remain focused (i.e. modern tooth replacement market)
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Questions?
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EUR 21%
CHF 47%
Other 13% USD/CAD/AUD
19%
Straumann’s currency exposure
2011
2012
Cost breakdown1Net revenue breakdown
1 These distribution charts represent the total net revenues and the total COGS, SG&A costs as well as R&D expenses in the various currencies. All numbers are rounded and based on 2012 figures.
Other 21%
CHF 11%
EUR 41%
USD/CAD/AUD 27%
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Transaction exposure hedged for up to max 12 months Reduction of currency risk through natural hedges where possibleIncrease purchasing in foreign currencies Translation risk not hedged