January 16, 2009 / 7:14 AM / 11 years ago

UPDATE 2-Straumann 2008 net profit to be hit by writedowns

* Says writedowns will hit 2008 net profit

* Says will still pay a dividend

* Expects to grow more than market in 2009

* Shares fall 3.5 percent

(Adds details, background)

By Katie Reid

ZURICH, Jan 16 (Reuters) - Straumann Holding AG (STMN.S) said writedowns will hit its 2008 net profit and sales growth had eased in the fourth quarter but the Swiss dental implant maker expects to grow in 2009 despite a stagnant market.

Straumann, which is the No.2 maker of dental implants, said on Friday it would make a small profit in 2008 but writedowns on intangible assets related to previous acquisitions would weigh on its bottom line.

The value of the assets, which totalled 330 million Swiss francs ($295.4 million) on June 30, had fallen by around half due to the economic crisis, Straumann said. The writedowns will be announced with the full-year results on Feb. 12.

By 0852 GMT, shares in the group, which lost some 40 percent last year, had fallen 3.5 percent to 172.80 Swiss francs, underperforming a 0.2 percent rise in the European healthcare index .SXDP, while shares in rival Nobel Biocare NOBN.VX were 3.7 percent weaker.

Full-year revenue rose 15 percent in local currencies to 779 million francs, in line with the group’s guidance, Straumann said, adding that it would still pay a 2008 dividend.

However, fourth-quarter sales growth eased to 5 percent after an 11 percent increase in the previous quarter as demand weakened in September, October and November, stabilising in December.

“The market, especially in the U.S., is slowing down more than anticipated, in line with the recent quarter of (U.S. rival) Biomet. Read-through to Nobel Biocare is negative as it has even more sales in the U.S.,” said Kepler Capital Markets analyst Florian Gaiser.

STAGNANT MARKET

Implant makers are facing tough trading conditions due to consumer curbing their spending on dental treatments that are not absolutely necessary as they worry about the severity of the economic downturn.

However Straumann, which competes with market leader Nobel Biocare, said it expected to still grow next year, while the dental implant market was not likely to see any growth in 2009.

Chief Executive Gilbert Achermann told Reuters he did not see any reason why the market should not return to 15 percent growth in the future.

The group also said it expects to have an operating margin of more than 20 percent in 2009, depending on currency developments, after guiding for an operating margin of 25 percent in 2008.

Achermann said Straumann would not reach its target for an earnings before interest and tax (EBIT) margin of 30 percent in 2010. Howver, it said this was a realistic goal in the long term.

Straumann also said it would cut its global workforce by about 3 percent, or 80 jobs, leading to double-digit million franc savings, Achermann said.

The group had already said it would cut working hours in a bid to bring production in line with slower market growth.

In October, Straumann lowered its full-year outlook for revenue growth and its forecast for net profit margin. Nobel Biocare shocked investors with a series of profit warnings throughout the year.

Straumann said that excluding the writedowns its full-year operating and net profit margins should be in line or above its guidance. The group was guiding for an operating profit margin of 25 percent and a net profit margin of 20 percent. ($1=1.117 Swiss francs) (Additional reporting by Oliver Hirt; editing by Karen Foster)

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