UPDATE 2-Nobel Biocare profit falls as strong euro, Ukraine weigh

Tue Apr 29, 2014 8:01am EDT

Related Topics

* First-quarter revenue falls 1.9 percent

* Strong euro, tensions in Ukraine hit sales

* Cost cutting measures help improve EBIT margin (Adds CEO, analyst, detail)

By Alice Baghdjian

ZURICH, April 29 (Reuters) - Swiss dental implant maker Nobel Biocare said on Tuesday the strong euro caused its first-quarter sales to fall, while bad weather in North America and tensions between Ukraine and Russia also took their toll.

The dental implant market has shown tentative signs of a turnaround in demand in recent quarters after the financial crisis made consumers in developed countries postpone or scrap non-urgent treatment. However, the recovery remains patchy.

The firm said a weakening of the U.S., Canadian and Australian dollars as well as a weaker yen and rouble against the euro, its reporting currency, were behind a fall in quarterly net profit, and that some currencies had not been hedged due to the high economic cost.

Net profit fell to 12.5 million euros ($17.31 million) from 13.3 million a year earlier, roughly in line with expectations. Revenue was down 1.9 percent to 138.8 million euros.

Nobel Biocare's biggest market, Europe, the Middle East and Africa, posted a 0.5 percent rise in sales, with a decline in the main European markets of France, Italy and Germany offsetting strong growth in Spain, Belgium, Britain and Sweden, the firm said.

The ongoing crisis between Ukraine and Russia - one of the top contributors to European sales - has made dentists there more cautious about purchases, Nobel's chief executive said.

"Customers are not ordering because they are concerned they won't have patients," chief executive Richard Laube said on a call with analysts, adding that sales of its cheaper Alpha-Bio Tec implants had resisted the negative impact.

Meanwhile, unusually cold weather in North America until early March prevented consumers from attending dental appointments, hitting sales there, Laube said. Revenue in the Americas, the firm's second largest market, fell 2.7 percent.

"In any quarter we will have some markets come in a little worse, but we are not dealing with a Nobel Biocare structural issue, we are talking about acute market issues," said Laube.

"We are confident we can go in and help these markets back to a level of competitiveness," he said.

Excluding the impact of currencies, revenue rose 2.8 percent to 138.8 million euros in the first quarter compared with a year earlier.

Cost cutting helped strengthen the firm's EBIT margin to 14.6 percent, excluding the impact of currencies, compared with 13.4 percent in the first quarter of 2013.

"The improvement in EBIT margins is pleasing and shows measures are starting to take hold," said Sibylle Bischofberger at ZKB, who rates the company stock as "underweight".

Shares in the implant maker rose 0.8 percent by 1130 GMT.

The Swiss firm said it expected to improve its full-year EBIT margin by about 100 basis points from 12.1 percent in 2013.

Analysts in a Reuters poll had forecast sales of 142 million euros and an average net profit of 12.8 million. ($1 = 0.7223 Euros) (Reporting by Alice Baghdjian; Editing by Mark Potter and Sophie Walker)

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