UPDATE 2-Straumann sales rise as pricing strategy takes hold

Wed Apr 30, 2014 3:02am EDT

Related Topics

* Q1 sales rise 2.9 pct to 180 mln Sfr vs 178 mln f'cast

* Expects softer second quarter due to late Easter

* Confirms full-year sales and margin guidance

* Shares indicated up 1.9 pct (Adds CEO comment, details on pricing strategy, share indication)

By Caroline Copley

ZURICH, April 30 (Reuters) - Straumann Holding AG, the world's largest maker of dental implants, posted a 2.9 percent rise in sales in the first quarter as it started to reap the benefit of a new pricing strategy.

The premium dental implant market has shown tentative signs of a turnaround in recent quarters, after the financial crisis made consumers in developed countries postpone or scrap non-urgent treatment and trade down to cheaper brands.

Basel, Switzerland-based Straumann is encouraging customers to trade up to its premium Roxolid implants by offering the newer product at the same price as an older range, in a bid to close the gap on rivals and win market share.

The strategy may be paying off, with revenue up 4 percent in its biggest market Europe in the first quarter compared with a 7.5 percent fall a year earlier. Also this year's late Easter - which fell outside the first quarter - meant dentists surgeries were open for more days in the period.

"We've seen a very pleasing development when it comes to the volumes of this new range," Chief Executive Marco Gadola told Reuters in an interview, adding he did not expect much margin impact from the strategy since Roxolid's production costs are similar to those for its older product.

But, like local rival Nobel Biocare, Straumann cautioned against over-optimism.

"Although the economic recession has lost its sting, its effects have not disappeared," Gadola said in a statement. "Despite signs of economic recovery in developed markets, consumer confidence is still fragile. Unemployment remains high and competition is intense."

The firm reported first-quarter revenue of 180 million Swiss francs ($203.7 million) against an average analyst forecast in a Reuters poll of 178 million.

Excluding the impact of a weaker U.S. dollar and Japanese yen, sales rose 6 percent in the first three months of the year, making it the company's best quarterly increase in three years.

Shares in Straumann, which rose over 4 percent in the previous session, were indicated up 1.9 percent, according to premarket indications by bank Julius Baer.

Straumann said it expected a softer second quarter given the late Easter break this year and a sales tax rise in Japan at the start of April, but confirmed its full-year guidance for low-single digit sales growth in local currencies and an expansion in its operating income margin.

Weaker currencies, freezing weather in North America and tensions between Ukraine and Russia weighed on results at Nobel Biocare, where sales fell 1.9 percent in the first quarter.

($1 = 0.8836 Swiss francs) (Editing by Matt Driskill and David Holmes)

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