- Half-year revenue reached CHF 1.2 billion, growing 21% organically
- Revenue increased by 15.1% to reach CHF 589 million in the second quarter
- Strong volume growth brought core EBIT to CHF 329 million, with a margin of 27.9%
- Reported net profit rose to CHF 265 million or 23%
- Further development of the doctor-led clear-aligner treatment solutions business in Europe by acquiring PlusDental
- Group plans to achieve net-zero carbon emissions by 2040
- Peter Hackel, CFO, decided to leave the company after eight years of service
- Outlook 2022 confirmed: Organic revenue growth expected in the low double-digit percentage range and profitability is expected around 26% including major growth investments
The implantology business continued its strong growth momentum supported by the recently launched immediacy implant solutions, which continue to contribute to customer conversions. The performance of the digital solutions portfolio, led by the intraoral scanner segment, remains very strong. As a highlight, physical events started to take place again such as the European periodontology congress EuroPerio.
Guillaume Daniellot, Chief Executive Officer, commented: “The first half of 2022 was very strong and I’m pleased that we were able to start our physical promotion activities again in most regions – especially in the second quarter. The level of demand for our solutions remained high, which calls for a special thanks to our teams for their tireless service to our customers. In parallel we made great progress with some of our strategic projects on digital transformation as well as consumer presence which will start to show impact in the near future. In the first half of the year, we didn’t see a heavy impact by the ongoing economic challenges yet. Despite the current macro-economic uncertainties, we feel confident to confirm our full-year guidance.”
The EBIT margin remained high at 27.9% which is a consequence of the very strong revenue growth as well as fewer expenses due to COVID restrictions in some regions at the beginning of the year and in China during the second quarter. In order to meet rising number of customer requests and manage challenges due to delays in the delivery of machinery, manufacturing has been running at full capacity.
STRATEGIC PROGRESS SECOND QUARTER
Premium immediacy solutions keep momentum
The Group’s premium immediacy solutions continued to be successful and launches in additional countries are still ongoing. They support customer conversions to the entire product portfolio, also accelerating BLT implant sales. Immediacy protocols involve fewer surgical interventions and clinic visits, offering shorter time-to-teeth treatment options for patients and enabling clinicians to reduce chair time per patient.
Challenger brands further expand global footprint
The Group’s range of challenger implant brands such as Neodent and Anthogyr continue to further establish themselves in countries where they are already present and at the same time expand their global footprint.
The Anthogyr X3 implant was successfully launched in several European countries and the education-based launch of the Neodent ZI ceramic implant has been well-received by professionals around the world. Medentika, the third challenger brand, showed very strong growth in Europe in the second quarter, although on a smaller basis.
Digital solutions performed very strongly
In the second quarter, the intraoral scanners such as TRIOS, Medit and Virtuo Vivo have shown very strong growth. They are the entry point of the digital workflow for clinicians. With the increased use of intraoral scanners, the demand for 3D-printed models in dental laboratories is also on the rise and therefore, the recent launch of the Rapid Shape P50 3D printer, a high-volume, high-intensity printing device, started well.
Orthodontics further strengthened its offering
In July, the latest version of the ClearPilot treatment planning software, ClearPilot 4.0, and the ClearCorrect Clinic App were released. ClearPilot 4.0 further expands the clinical features portfolio with the introduction of bite ramps, helping doctors to treat deep bites and cross bites in addition to a wide variety of other clinical cases with ClearCorrect aligners, including Class II malocclusions. In addition, this version enhances the creation of more effective and customized treatment plans with new tools, such as augmented 3D controls for aligner customization. The ClearCorrect Clinic App is a new guided educational tool designed to reduce chair time and increase patient conversion. Available in 11 different languages, the app includes a case assessment function, malocclusion education, patient educational videos, and a guided in-app tutorial for patients.
Strengthening the doctor-led direct-to-consumer business by acquiring PlusDental
The Straumann Group has signed an agreement to fully acquire PlusDental, a provider of orthodontic treatment solutions in Europe. The acquisition will accelerate the international expansion and footprint in the doctor-led consumer orthodontics segment through added market coverage in countries including the Netherlands and Sweden.
Straumann Group plans to achieve net-zero carbon emissions by 2040
In 2021, the Board of Directors established an ESG task force to define the Group’s sustainability framework, set goals for the various commitments within the framework and signed the Science Based Targets initiative (SBTi). This includes reducing scope 1,2 and 3 emissions in line with climate science. In August, the company set its goal to achieve net-zero carbon emissions by 2040 and will submit the targets for validation to the SBTi.
Peter Hackel, CFO, leaves the company after eight years of service
Peter Hackel, Chief Financial Officer of Straumann Group, has decided to leave the company by January next year to pursue other career opportunities. He re-joined the company as CFO in 2014. Since then, he successfully supported the company development throughout its growth journey and various financial challenges including the recent COVID pandemic. During his tenure, Straumann Group has maintained its position as the global leader in implant dentistry, expanded into orthodontics and entered the field of consumer presence. In addition, Peter led the development of the sustainability framework which is part of the company strategy.
Straumann Group CEO Guillaume Daniellot commented, “Peter Hackel has served Straumann with passion and devotion. The company has benefited significantly over the past years from his expertise and skills. He has always been a strong ambassador for our culture and sustainability journey. On behalf of the Executive Management Board and everyone at Straumann Group, I would like to thank Peter for his very valuable contributions and wish him all the best for the future”.
The search for a new CFO is under way.
The Board of Directors will propose the election of Olivier Filliol at the AGM in 2023
After thirteen years of service as a Member of the Board and Vice-Chairman since 2020, Beat Lüthi has decided not to stand for re-election at the next Annual General Meeting. Beat Lüthi joined the Board of Directors in 2010 and led the Audit and Risk Committee for several years. Since 2019 he has chaired the Human Resources and Compensation Committee.
The Board of Directors will propose the election of Olivier Filliol as a new Board Member at the next Annual General Meeting of the shareholders in 2023. At Mettler-Toledo International Inc. ‒ a leading manufacturer and marketer of precision instruments for laboratory and industrial applications ‒ Olivier Filliol served as President and Chief Executive Officer from 2008 to 2021. He has also been a Member of the Board of Directors at Mettler-Toledo since 2009, a Member of the Board of Givaudan S.A. since 2020 and is an active investment partner in more than 20 venture capital funded startups, with a focus on the life science tools, MedTech and digital tech spaces.
Olivier Filliol is Swiss and was born in 1967. He holds a Master’s degree and a Ph.D. in Business Administration from the University of St. Gallen, Switzerland, and has completed executive education at the Business School of Stanford University.
The Group will benefit from Olivier’s expertise, entrepreneurship and corporate experience, which make him a valuable contributor to strategic as well as operational matters. His experiences as a CEO and as a Board Member are of further benefit. As a new non-executive and independent Board Member, the election of Olivier Filliol will further contribute to the balance of competencies and the independence of the board.
REGIONAL PERFORMANCES IN THE SECOND QUARTER
Europe, Middle East and Africa region remains leading revenue contributor
The EMEA region remained the Group’s largest revenue contributor and reported strong revenue growth of CHF 259 million or 21% in the second quarter compared to the same quarter in 2021. Overall growth in the region was driven by Germany, Turkey, and Iberia. Premium and challenger implant sales remained high, and the digital business was remarkably successful, mainly driven by intraoral scanners. In addition, the fast-growing Dental Service Organization business helped increase revenues in the region. The DrSmile and ClearCorrect orthodontics business strongly contributed to growth in EMEA.
North America solid growth with digital innovation enhancing customer experience
The North America region reported revenue of CHF 172 million showing a solid 8% growth in the second quarter. This is in contrast to last year's exceptionally high growth rate which was influenced by the COVID comparison effect. Macro-economic effects such as inflation started to have an impact on patient flow and on the demand for clear aligners. The implant business continues to be the main growth driver, led by the Straumann and Neodent brands. The digital solutions business grew strongly with intraoral scanners remaining the largest growth contributor. In the second quarter, Straumann Group successfully introduced the new Straumann AXS customer platform which aims to unite existing and new digital service solutions.
Asia Pacific region growth impacted by local lockdowns
In the second quarter of 2022, the Asia Pacific region achieved revenue of CHF 112 million or 5.9% organic revenue growth compared to the same period in 2021. Japan and Australia performed strongly and India doubled its business. The pandemic lockdowns heavily impacted growth in China, however, pent-up demand resulted in an increased performance in June, following the bounce-back when restrictions were lifted. Digital Solutions and implantology, premium as well as challenger, grew successfully. During the quarter, the Anthogyr challenger brand has been successfully launched in South Korea. A new subsidiary has been established in Vietnam and the opening of the office in Malaysia as well as a second office in India were highlights of the second quarter.
Latin America growth remains strong
In the second quarter of 2022, the business in Latin America grew to CHF 47 million, up by 40% on the base quarter in 2021. Brazil remains the biggest revenue contributor in Latin America and showed a strong growth performance similar to the preceding quarter, with robust demand, notably for Neodent. The region continues to grow market share, onboarding new customers through nationwide educational events and patient marketing activities. The youngest subsidiary in the region, Peru, grew strongly as did Mexico, which is leading with its growth in the established markets. Digital solutions are performing very well, with the Virtuo Vivo intraoral scanner gaining momentum. In addition, the orthodontics business is contributing well to the regional performance.
OPERATIONS AND FINANCES
To facilitate a like-for-like comparison, the Group presents ‘core’ results in addition to the results reported under IFRS. In the first six months of 2022, the following effects (after tax) were defined as non-core items:
- The amortization of acquisition-related intangible assets amounting to CHF 5 million.
Gross profit margin remains at high level, almost reaching 2021 level
In the first six months of 2022, the Group’s strong topline growth led to a core gross profit of CHF 896 million which is a CHF 144 million increase in absolute terms. The corresponding margin of 76% remains very high despite the changing portfolio mix and a slight decrease of 30 basis points due to a negative currency effect compared to 2021.
Core EBIT margin at 27.9%
The core operating result (EBIT) amounted to CHF 329 million, which is an increase of CHF 45 million. The core EBIT margin reached 27.9%, which is 90 basis points below the same period in the prior year. Compared to pre-pandemic margins in the first half of 2019, this represents a 50 basis points increase. Currency fluctuations, mainly driven by the weakening of the Euro, had a negative impact of 60 basis points on the core EBIT margin.
Core distribution expenses rose by CHF 24 million to CHF 210 million in 2022. This includes direct sales-force expenses and logistics costs. Core administrative expenses increased by CHF 74 million to CHF 358 million. This includes research, development, general overhead and marketing costs, especially from the direct-to-consumer business.
Core net profit grew by more than CHF 41 million
Core net financial expenses decreased by CHF 3 million to CHF 7 million. This mainly reflects a favorable currency valuation result, which compensated for higher interest expenses. Income taxes amounted to CHF 52 million, which represents an increase of CHF 6 million. Core net profit reached CHF 269 million, resulting in a margin of 23%. Core basic earnings per share increased from CHF 1.42 to CHF 1.69.
Free cash flow reaches CHF 78 million
Cash flow from operations amounted to CHF 165 million. Net working capital increased by CHF 168 million compared to year-end 2021 due to increased short-term receivables, higher tax payments and inventories. In the first six months of 2022, days of sales outstanding increased by 10 to 58 compared to end of 2021 or four days higher compared to last year’s first half. Days of supplies increased by 12 to 179 since the beginning of the year, which was the same level as in the first half of 2021.
Capital expenditure in the first six months increased by CHF 40 million to CHF 88 million compared to the previous year, mainly driven by the Group’s production expansion initiatives.
The cash position on 30 June 2022 remained strong, at CHF 735 million.
OUTLOOK 2022 (BARRING UNFORESEEN CIRCUMSTANCES)
Straumann Group confirms the full-year guidance despite the uncertainties in the macro-economic environment and COVID. The Group will seek to anticipate and mitigate supply chain disruption, inflationary and geopolitical developments and their potential impacts. With its strategy and high-performing team in place, organic revenue growth is expected in the low double-digit percentage range and profitability is expected around 26%, including major growth investments.
Disclaimer
This release contains forward-looking statements that reflect the current views of management, and which are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Straumann Group to differ materially from those expressed or implied in this document. Statements are made on the basis of management's views and assumptions regarding future events and business performance at the time the statements are made. They are subject to risks and uncertainties including, but not confined to, future global economic conditions, pandemics, exchange rates, legal provisions, market conditions, activities by competitors and other factors outside Straumann's control. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual outcomes may vary materially from those forecasted or expected. Straumann is providing the information in this release as of this date and does not undertake any obligation to update any statements contained in it as a result of new information, future events or otherwise. This release constitutes neither an offer to sell nor a solicitation to buy any securities.
[1] The ‘core’ figures in this document exclude purchase-price allocation (PPA) amortization, impairments, restructuring expenses, legal cases, consolidation result of former associates, and other non-recurring incidents. Details and a reconciliation of the reported and core income statement are provided on pages 12ff.
