Straumann Holding AG
Straumann lifts first-half sales by 33% to CHF 217 million (Part 2 of 3)
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Straumann lifts first-half sales by 33% to CHF 217 million (Part 2 of 3)
EBIT margin expands to 31%
Continued optimization of inventory and supply-chain management contributed to
an overall reduction in the cost of goods sold from 20% to 18% of sales. This
and a slightly positive currency effect on sales expanded the gross margin to
82%.
Overall operating costs decreased to 69% of sales compared with 72% in the first
half of last year. Selling costs rose from 36% of sales in the first half of
2003 to 38%, reflecting the Group’s growth strategy.
Owing to the integration of Biora and the reorganization of administrative
functions, certain items have been reallocated from research and development to
general administrative costs both in the period under review and in the
corresponding first half of 2003. General administrative costs remained constant
at 9% of sales, whereas research and development costs decreased 2% points to 6%
of sales but were maintained at the 2003 first-half level of CHF 13 million,
underscoring Straumann’s commitment to scientific innovation.
As a result of the favorable overall development of costs, operating profit grew
faster than sales, rising 45% to CHF 67 million. The EBIT margin improved to
31%.
102 new jobs created
To absorb and sustain the current high level of growth, the Group has continued
to invest in talent recruitment. In line with the Company’s growth ambitions,
102 new positions were created in the first six months of 2004, bringing the
total number of employees worldwide to 1,005 at the end of June. Approximately
half of the new recruitments were in sales force positions, strengthening the
field force by 22% to 247 representatives worldwide to support future growth.
Consequently, personnel costs were up 40% from the previous first half to CHF 63
million. In relation to sales, however, personnel costs increased only
slightly over proportionally by 1% point to 29%, while sales per employee still
rose by CHF 15,000 to CHF 424,000.
Depreciation constant as a proportion of sales
Operating profit before depreciation and amortization (EBITDA) improved
considerably by 43% to CHF 81 million, reflecting the aforementioned
improvements in operating efficiency. As a result, the EBITDA margin expanded 2%
points to 37% by comparison with the previous first half. Operating profit
before amortization (EBITA) rose 49% to CHF 72 million, with the EBITA margin
improving 4% points to 33%, despite an additional write-down of CHF 3 million on
the Waldenburg site as part of the Company’s planned relocation to Basel at the
end of 2004. Goodwill amortization charged in the first half came to CHF 3
million, most of which was related to the Biora acquisition.
Net profit up 42%
Financial expenses came to just less than CHF 1 million and were offset almost
exactly by financial income. The fact that the overall financial result was a
negative CHF 2 million was due to unfavorable currency developments.
The first-half tax rate was reduced to 17% owing to a one-time tax effect
related to the acquisition and restructuring of Biora. The tax rate would
otherwise have been 22%.
Due to the good operating result and the lower tax level, first-half net profit
climbed 42% to a record CHF 54 million. As a result, the net profit margin
increased 2% points to 25%, while earnings per share rose 42% to CHF 3.49.
High dividend and repayment of loans
First-half cash flow from operating activities rose 14% to CHF 65 million
leading to an operating cash flow margin of 30%. Capital expenditure totaled CHF
22 million, corresponding to 10% of sales, and was mainly due to capacity
expansion (CHF 15 million) and the new headquarter project in Basel (CHF 7
million).
The first-half free cash flow of CHF 43 million, the inflow of CHF 3 million
from the Company’s staff equity compensation scheme, and excess liquidity were
used to pay dividends of CHF 48 million (including the exceptional 50th
anniversary dividend), to repay outstanding short-term loans for the Biora
acquisition (CHF 15 million) and to repay the mortgage on the Waldenburg site
(CHF 14 million).
With the above total cash outflow from financial activities of CHF 74 million,
net liquidity stood at CHF 70 million on June 30, 2004.
Return on capital further improves to 42%
From December 31, 2003 to June 30, 2004, the Straumann Group’s total assets
decreased slightly to CHF 349 million, while the return on assets (ROA) improved
from 27% to 31%. Thanks to enhanced inventory management resulting in a
reduction of stocking levels from CHF 35 million to CHF 33 million, net working
capital increased only slightly from CHF 31 million to CHF 34 million, but
decreased as a proportion of sales from 9% to 8% over the first half of 2004.
Despite the increase in the equity ratio to 75%, return on equity (ROE) improved
from 36% to 42%. Based on the weighted average cost of capital of 9%, Straumann
further improved its first-half economic profit by CHF 14 million to CHF 43
million.
With the Group’s capital employed at CHF 262 million, return on capital employed
(ROCE) rose from 41% to 51%.
Outlook (barring unforeseen circumstances)
The growth effect from the Biora acquisition discontinued at the end of June and
will not contribute to the second half of the current year. Nevertheless, the
Group’s first-half sales performance provides a basis for increasing its full-
year sales growth expectation from 23-24% to around 26% in local currencies
compared with 2003. Linked to this, full-year operating margin is expected to be
not less than 30%. With a foreseen tax rate of 22% for the full year, the net
profit margin is expected to be in the region of 23%.
End part 2 of 3
end of message, (c)DGAP 12.08.2004
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WKN: 914326; ISIN: CH0012280076; Index:
Listed: Freiverkehr in Berlin-Bremen, Frankfurt, München und Stuttgart; SWX
Swiss Exchange
120636 Aug 04
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