Nobel Biocare -- Full Year Report 2007

U.S. Momentum Maintained -- Strong Performance in Asia/Latin America


ZURICH, Switzerland, Feb. 11, 2008 (PRIME NEWSWIRE) -- Full year highlights and outlook:

 - Revenue (organic) up 15.4% (l.c.) to EUR 665.9 million
 - Gross margin maintained at 84.0%
 - Profit from operations (EBIT) up 6% - margin at 32.5%
 - Basic earnings per share* up 9% to EUR 6.73
 - Operating cash flow EUR 134.1 million; cash return EUR approximately
   390 million
 - Dividend proposal: CHF 4.75, up 12%
 - Additional AGM proposals: Conversion to registered shares and 1:5
   share split
 - Board of Directors decided to apply for delisting at OMX (Swedish
   Stock Exchange)
 - Outlook 2008: Revenue (organic) growth mid-teens (l.c.); EBIT margin
   approximately 34%
 - Target 2010: Revenue growth of CAGR greater than 18%; EBIT margin
   approximately 36%

 Table 1.
 Selected income statement figures  Q4        Q4        FY        FY
 in EUR million                    2007      2006      2007      2006
 Revenue                           180.9     171.6     665.9     600.6
   Growth in local currencies       10.2%     22.8%     15.4%     24.4%
   Growth in EUR                     5.4%     18.8%     10.9%     24.0%
 Gross profit                      150.4     145.5     559.3     504.8
   Gross margin                     83.1%     84.8%     84.0%     84.0%
   Growth                            3.4%     23.8%     10.8%     26.7%
 Profit from operations             60.6      62.2     216.7     204.2
   Operating (EBIT) margin          33.5%     36.2%     32.5%     34.0%
   Growth                           -2.4%     11.7%      6.1%     25.8%
 Profit for the year*               45.1      46.4     166.2     154.2
   Profit margin *                  24.9%     27.0%     25.0%     25.7%
   Growth                           -2.8%      6.7%      7.8%     24.3%
 Basic earnings per share*, EUR     1.85      1.89      6.73      6.18
 Basic earnings per share, EUR      1.85      1.89      6.73      6.34
 * excluding sale of associate

Domenico Scala, CEO: "2007 was a year of solid operational performance as well as further revenue and profit growth in a more challenging market environment than 2006. Our performance in several European countries was not satisfactory, but measures taken should generate a positive effect from Q2 onward. In North America, growth was stronger in the second half of the year thanks to various initiatives. We performed strongly in Asia and Latin America, which are becoming increasingly important drivers of growth. The Company's many growth opportunities, combined with initiatives to increase operating efficiency, allow us to look ahead with confidence as 2008 progresses. And that confidence also allows us to set ambitious growth and margin targets for 2010."

Revenues increased in the fourth quarter by 10.2% in local currencies to EUR 180.9 million compared to EUR 171.6 million a year ago. This compares with a high growth base of 22.8% in Q4 2006 due to four very successful World Tour events. Overall, revenue growth of 15.4% in local currencies for the full year continues to be at or above the estimated market growth.

In Europe, revenues in local currencies grew by 2.0% (Q4 2006: 24.5%) in the fourth quarter. For the full year, revenues in local currencies increased by 12.9% (FY 2006: 22.0%) to EUR 300.2 million (266.6). Key markets such as Spain, Italy, France, Austria, The Netherlands and the emerging markets of Russia and the Baltic States showed ongoing strong growth, while continued management issues in Germany, Belgium and Switzerland were the main cause of an unexpected deterioration in those areas. The measures that have been initiated should exert positive impact from Q2 onwards. In addition, Germany, was affected by treatment postponements as insurance companies exceeded their yearly budget.

In North America revenue growth was maintained at 10.3% in local currencies in the fourth quarter (Q4 2006: 19.6%). Growth of 10.8% (23.3%) was recorded in local currencies for the full year and totaled EUR 227.7 million (222.1). Growth accelerated in the second half of the year due to various measures that were taken. As previously reported, a slowdown was observed in 2007 only in the Specialist segment, while growth in the General Practitioner segment continued.

In the Asia/Pacific region, revenue growth accelerated to 40.8% in Q4 (2006: 25%), bringing the full year pace to 34.1%. Japan, which accounts for a significant share of Nobel Biocare's business in Asia, saw revenue increase by 37.2%. Highlights of the year in this very important market included the hosting of a very successful World Tour in Osaka and the inauguration of the first Asian Procera production facility for individualized prosthetics in Tokyo. In 2007, Nobel Biocare also continued to develop its foothold in the promising markets of China and India.

In the Latin American markets, the company benefited from ongoing investments in direct markets, which have shown gratifying progress. As the franchises in Latin America expand continually, Nobel Biocare is gaining important brand recognition that will lead to tangible progress and increased market penetration.

 Table 2.
 Revenue by region - quarter        Q4        Q4         Growth in %
 in EUR million                    2007      2006       EUR      local
 Europe                             81.6      80.5       1.4%      2.0%
   Proportion of total revenue        45%       47%
 North America                      61.9      61.4       0.8%     10.3%
   Proportion of total revenue        34%       36%
 Asia/Pacific                       26.8      20.3      32.0%     40.8%
   Proportion of total revenue        15%       12%
 Rest of the world                  10.6       9.4      12.8%     16.5%
   Proportion of total revenue         6%        5%
 Total                             180.9     171.6       5.4%     10.2%

 Table 3.
 Revenue by region - full year      FY        FY         Growth in %
 in EUR million                    2007      2006       EUR      local
 Europe                            300.2     266.6      12.6%     12.9%
   Proportion of total revenue        45%       44%
 North America                     227.7     222.1       2.5%     10.8%
   Proportion of total revenue        34%       38%
 Asia/Pacific                       99.2      79.4      24.9%     34.1%
   Proportion of total revenue        15%       13%
 Rest of the world                  38.8      32.5      19.4%     22.6%
   Proportion of total revenue         6%        5%
 Total                             665.9     600.6      10.9%     15.4%

Gross profit for the fourth quarter increased to EUR 150.4 million (Q4 2006: EUR 145.5 million), resulting in a gross margin of 83.1% (84.8%). Gross profit increased to EUR 559.3 million for the full year compared to EUR 504.8 million last year. The gross margin remains at a high level of 84.0% for the full year (84.0%). The sustained gross margin level was driven by volume growth and a positive mix effect as a result of higher demand for new products and solutions launched over the past two years.

Profit from operations (EBIT) in the final quarter amounted to EUR 60.6 million (62.2) with an operating margin of 33.5% (36.2%). For the full year, profit from operations (EBIT) increased by 6% to EUR 216.7 million (204.2). The operating profit margin declined slightly to 32.5% (34.0%) mainly due to one-off cost and adverse currency developments. At constant currencies, profit from operations would have risen by 13%. Charges relating to the staff option program totaled a positive 0.5 million compared to costs of EUR 4.2 million for the same period last year.

Currencies - Due to the relative weakness of the U.S. dollar, revenues were reduced by EUR 23.6 million or 3.6%. Profit from operations (EBIT) was also trimmed by EUR 12.4 million or 5.7%, thereby reducing the margin by 80 basis points.

Net financial expense totaled EUR 4.7 million for the full year (FY 2006: EUR 3.6 million).

Taxation - The underlying tax rate for the full year amounted to 21.6%.

Profit for the fourth quarter amounted to EUR 45.1 million (46.4). Profit for the year increased to EUR 166.2 million compared to EUR 154.2 million last year (excluding sale of associate), despite the adverse foreign currency influence. At constant currencies, net profit would have risen by 14%.

Cash flow from operating activities for the full year amounted to EUR 134.1 million (160.3). An increase in trade receivables of EUR 29 million to EUR 152.7 million was the main reason for the reduced level of cash flow. The increase in receivables was mainly due to the change in geographical mix and in a moderate increase in DSO in several European countries. Inventories amounted to EUR 35.4 million compared to EUR 30.5 million at year-end 2006.

Net Cash increased to EUR 186.2 million from EUR 130.9 million at year-end 2006 mainly due to the proceeds from the issuance of a convertible bond and net proceeds from the sale of treasury shares and option purchases.

249 new jobs were created in 2007 to sustain the high growth momentum. As a result, Nobel Biocare employed a total of 2,242 employees at the end of December 2007.

Continued shareholder orientation in 2007 - The Group's ability to generate sustained cash flow enabled it to acquire 1,363,638 shares through open market repurchases and the issue of free put options. In total, the Company returned EUR approximately 390 million in cash to its shareholders. A proposal to cancel the shares repurchased in 2006 and 2007, totalling 1,704,488 or 6% of the outstanding share capital, will be submitted for approval at the 2008 Annual General Meeting.

The company intends to continue with the share buyback program after the 2008 AGM.

The company placed a convertible bond issue in Q4. Shares underlying the convertible bonds are sourced from existing treasury shares and by purchased call options.

Furthermore, the company is now hedging its existing obligation to employee stock option plan by means of derivatives rather than by holding physical shares, thereby freeing up capital in the amount of EUR 78.8 million.

Additional AGM proposals:

 - a dividend increase of 12% to CHF 4.75 per share
 - a 1:5 share split of the existing bearer shares with the intent of
   further increasing liquidity
 - a conversion of the existing bearer shares into registered shares
   with the intent of broadening the company's shareholder base

The AGM will be held 27 March 2008 in Zurich, Switzerland.

The Board of Directors decided to apply for a delisting of the company's shares from the OMX Nordic Exchange due to the very low trading volume in Nobel Biocare stock on that exchange. Swedish shareholders who wish to dispose of their holdings will be offered a commission-free dealing service for a limited period of time prior to delisting.

Update on initiatives and product introductions:

The University Partner Program was expanded with five leading dental schools in 2007 - King Saud University, Saudi Arabia; Ho Chi Minh University, Vietnam; Charite Universitatsmedizin Berlin, Germany; Loma Linda University, CA, USA; and Hebrew University, Israel. In total, 23 universities worldwide have joined this University Partner Program supported by Nobel Biocare. These key dental universities will now include implant dentistry and CAD/CAM-based restoration in their undergraduate curricula.

NobelActive(tm) - In the second half of 2007, a number of significant product roll-outs began, of which NobelActive is the one with the highest market potential. NobelActive is a newly designed implant that offers dental professionals novel and unique treatment possibilities. The product is currently in a pre-launch phase involving experienced clinicians, who first receive mandatory training. This controlled approach to introduction will ensure that this very innovative product reaches the market in the safest manner possible. NobelActive is expected to be introduced to the market in the second quarter of this year.

World Tour - After two World Tour events in the fourth quarter of 2007 in Japan and Russia, this concept of dental education conferences will be continued throughout 2008 in 12 major cities in Asia, Europe and Latin America.

Scientific and operational excellence - The company aspires to be the most recognized and trusted brand in its industry. It wants to be a hallmark of scientific leadership by adhering to high pre-market and in-market standards in the area of clinical research and regulatory, by adhering to high standards in terms of its sales and marketing practices, and by committing to long-term follow-up studies for its main products. The company has also the opportunity to significantly improve its operating efficiency.

Market - The premium tooth replacement market is one of the most attractive areas within the healthcare industry. The underlying growth drivers and the market potential are fully intact and remain highly attractive. Nobel Biocare is ideally positioned to address this attractive opportunity with the strongest portfolio in the industry, leading innovation from its own R&D, and through access to leading R&D networks. As the only full-solution provider with an integrated production process for individualized products and manufacturing facilities in all key regions, the company is in a strong position to reinforce its market leadership with standardized products and to accelerate its leading position for individualized products with Procera.

Outlook - The outlook for 2008, which foresees revenue (organic) growth in the mid-teens and an increase in EBIT margin to approximately 34%, is based on the launch of NobelActive, renewed emphasis on Procera, turn-arounds in underperforming countries in Europe, an acceleration in the U.S. and continued strong performance in Asia.

The company's many growth opportunities, combined with measures that have been initiated to increase operating efficiency, allow us to set ambitious growth and margin targets for 2010. These targets are based on continued geographic expansion, a higher share of revenues coming from Asia, the entering of fast-growing new market segments, further product launches and M&A. Best-in-class cost ratios in a number of support functions, as well as increased sales and marketing efficiency, enable the company to target a reduction of the operating expense to sales ratio and an increase in EBIT margin. For 2008-2010, the company is targeting a revenue growth of CAGR greater than 18% and a 2010 EBIT margin of approximately 36%.


 Rolf Soiron               Domenico Scala
 Chairman of the Board     Chief Executive Officer

An investor and analyst conference in English will be held today, 11 February 2008, at 09.00 am CET in Zurich.

Location: SWX Swiss Exchange, ConventionPoint, Auditorium,

The conference can be assessed (listen-only mode) via Webcast at or via telephone conference, using the dial in numbers below.

In addition, a telephone conference will be held today, 11 February 2008, at 2.00 pm CET:

 +41 91 610 5600 (in Europe)  
 +44 20 7107 0611 (in the UK)  
 +46 8 5069 2105 (in Sweden)  
 +1 866 291 4166 (toll free number in the U.S.)

For more details and additional dial-in numbers, see our homepage:

A separate media conference will be held today at 11.00 am in Zurich (sep invitation).

 Financial Reporting Calendar:
 Annual General Meeting 2008                    27 March 2008
 Interim Report 1, 2008                         30 April 2008
 Interim Report 2, 2008                         11 August 2008
 Interim Report 3, 2008                         03 November 2008

This Full Year Report 2007 is available in English and Swedish, while a shorter version media release is available in German. A preprint version of the Annual Report 2007 can be downloaded via or obtained in Pdf format from


This media release contains forward-looking statements based on beliefs of Nobel Biocare's management. When used in this media release, words such as "anticipate", "believe", "estimate", "expect", "intend", "plan" and "project" are intended to identify forward-looking statements. They may involve risks and uncertainties, including technological advances in the medical field, product demand and market acceptance, the effect of economic conditions, the impact of competitive products and pricing, foreign currency exchange rates and other risks. These forward-looking statements reflect the views of Nobel Biocare as of the date made with respect to future events and are subject to risks and uncertainties. All of these forward-looking statements are based on estimates and assumptions made by management of the company and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results or experience could differ materially from the forward-looking statements. Nobel Biocare disclaims any intention or obligation to update these forward-looking statements.

The character of the information is such that it shall be disclosed by Nobel Biocare Holding AG (publ) in accordance with the Swedish Stock Exchange and Clearing Operations Act (1992:543). The information was disclosed to the media on 11 February 2008 at 6.45 a.m.

Nobel Biocare is a medical devices group and the world leader in innovative esthetic dental solutions with its brands Branemark System(r), NobelReplace(tm), NobelSpeedy(tm), NobelPerfect(r), NobelDirect(r), Replace Select (dental implants), Procera(r) (individualized dental/ prosthetics), NobelGuide(tm) (complete patient rehabilitation program) and NobelSmile(tm) (patient education and awareness program). Nobel Biocare is a total solution provider for restorative esthetic dentistry, offering a wide range of innovative Crown & Bridge & Implant products, as well as training and education, patient information and clinically documented treatment concepts. Nobel Biocare has over 2,200 employees and recorded revenue of EUR 665.9 million in 2007. The Company is domiciled and headquartered in Zurich, Switzerland. Production takes place at five production sites located in Sweden, the U.S. and Japan. Nobel Biocare has direct sales organizations in 35 countries. The shares of the parent company Nobel Biocare Holding AG are listed on SWX Swiss Exchange and OMX Nordic Exchange Stockholm, Sweden. /

The entire release, including financial tables, is available at


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