UPDATE 2-Nobel Biocare warns Japan sales slowdown to hit profit

Thu Oct 4, 2012 5:11am EDT

* Operating profit to miss analyst expectations

* Company sees no improvement in Japan in coming months

* Japan accounts for 13 percent of sales

* Shares fall 8.5 pct vs 0.3 pct rise in healthcare index (Adds shares, details, analyst comment)

By Martin de Sa'Pinto and Catherine Bosley

ZURICH, Oct 4 (Reuters) - Swiss dental implant maker Nobel Biocare said negative media coverage in Japan of implant treatments damaged its third-quarter sales and will impact revenues and profits for the year, sending shares sharply lower.

The company said operating profit would be 67 to 70 million euros ($86.4 to 90.3 million) for the full year. Analysts had expected 76.15 million euros, according to Reuters data.

The Zurich-based company, which competes with Straumann , said in August, a public debate in the Asia-Pacific region over the safety of dental implants had fuelled a 5.6 percent drop in sales.

Japan accounts for about 13 percent of its revenues.

The company also ditched its forecasts for global market growth in 2012, warning of a modest decline for the rest of the year as demand falls prey to poor economic conditions.

"The development is difficult to predict at this point in time but the company does not anticipate any improvement in the coming months," Nobel said in a statement on Thursday.

The firm expects revenue for the full year to fall in the low single digit percentage range at constant foreign exchange rates.

It said third-quarter revenue was 131 million euros, up 2 percent year-on-year in euro terms and down 5.1 percent at constant exchange rates.

Nobel has for years faced headwinds as the economic downturn causes patients to postpone pricey dental work. Screw-in prosthetic teeth can cost thousands of francs apiece.

The firm has undergone a series of management changes in an attempt to regain its footing. After CEO Heliane Canepa left in 2007, Domenico Scala was brought in from agrochemical group Syngenta. He was charged with restoring the group's reputation after an aggressive marketing campaign tarnished Nobel Biocare's standing among industry experts and Swedish professors questioned the safety of some of its products.

But Scala struggled to get to grips with regional management issues and product mix. In early 2011 he was replaced by current head Richard Laube, a former executive at Nestle.

"The profit warning by the dental implant-maker should give investors a new toothache. But it seems good that in the third quarter they don't seem to have lost any market share," analysts at the bank Notenstein said.

Shares in Nobel Biocare, which have already fallen nearly 14 percent this year, traded 8.3 percent lower at 8.66 Swiss francs at 0716 GMT, underperforming a 0.2 percent rise in the Stoxx European Healthcare index.

"The root-canal treatment for turning around the business seems to be showing some effects. However, the path to new market share gains should still take some time," the Notenstein analysts said.

Already in August, CEO Laube characterised the market as "bad", though the firm stuck to its target for revenue growth in line with the market. ($1=0.7751 euros) (Reporting by Martin de Sa'Pinto; Editing by Mike Nesbit)

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