Nobel Biocare sales grow for first time in two years
ZURICH (Reuters) - Swiss dental implant maker Nobel Biocare Holding (NOBN.S) stuck to a forecast for higher market share and revenue in 2013 after chalking up its first quarterly sales growth at constant exchange rates in two years.
Dental implant makers have grappled with falling sales and profit margins as cash-strapped consumers cut back on cosmetic dentistry, which is generally not reimbursed by insurers.
At the same time, an influx of low-cost competitors has nibbled away at the market share of premium players like Nobel and local rival Straumann STMN.VX.
Figures from Nobel on Thursday suggested the tide was starting to turn, as sales in the second quarter rose 2.3 percent at constant exchange rates to 147.8 million euros versus an average analyst forecast of 144 million in a Reuters poll.
Nobel Biocare stuck to its target to improve its EBIT margin by 50 to 100 basis points, excluding the 6.2 million euros one-off charge. It aims to grow at least in line with the market over the next 3-5 years.
Chief Financial Office Oliver Walker told analysts the company had grown more confident that it could deliver on those forecasts.
Shares in Nobel Biocare, which have risen by around 65 percent so far this year, shot up 9.4 percent to 14.00 Swiss francs by 0828 GMT, compared to a 0.5 percent gain by a European healthcare sector index .SXDP.
"Nobel Biocare's 2Q13 results confirm the impression from Straumann's numbers this week that the market for premium dental implants is recovering towards modest growth," said J. Safra Sarasin analyst David Kaegi, who has a 'neutral' rating on the stock.
In Europe, which makes up 42 percent of sales, revenue rose 3 percent at constant exchange rates, driven by Russia and Eastern Europe and its value brand Alpha-Bio Tec. Sales in Spain also grew after many years of decline.
In the Americas, its second-biggest regional market, sales were up 4.4 percent, although that was weaker than Straumann's 8.1 percent growth there. Revenue fell 3.1 percent in Asia-Pacific, dragged down by Japan, where negative publicity about dental implants has hit sales.
PREMIUM VS LOW COST
Nobel has pinned its turnaround strategy on bringing out new products, training its sales force and improving relationships with dentists, rather than focusing on cheaper implants as some investors have urged.
On Tuesday, Straumann said it wanted to become a leading provider of value implants too, in an admission that the market for cheaper implants - which accounts for 60 percent of volume - is growing faster than the traditional premium business.
While Nobel still wants to differentiate itself as a premium service provider, it has some exposure to the value market with its discount brand Alpha-Bio Tec. Vontobel analyst Carla Baenziger said its strategy of offering both premium and discount brands seemed to be very successful in certain markets.
But she sounded a note of caution about declining profitability. Earnings before interest and taxes (EBIT) as a percentage of sales fell to 8.2 percent from 13.4 percent in the first quarter.
"This indicates that growth was mainly driven by lower margin business," said Baenziger, who rates the stock 'hold.'
(In Aug 22 story corrects name of analyst in eighth paragraph)
(Reporting by Caroline Copley; editing by David Cowell and Tom Pfeiffer)
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