August 21, 2012 / 5:57 AM / 5 years ago

UPDATE 2-European austerity bites into Straumann sales

* H1 net profit 43.8 mln Sfr vs 46.6 mln Sfr forecast

* H1 net sales fall 1.5 pct to 361.7 mln Sfr

* Expects flat global tooth replacement market over full year

* Shares fall to 9-year low, Nobel Biocare also down (Adds CEO comment, shares, analyst)

By Caroline Copley

ZURICH, Aug 21 (Reuters) - Swiss dental implant maker Straumann cut its outlook for the global tooth replacement market after cash-strapped patients in Europe made fewer trips to the dentist, hurting sales.

The region’s debt crisis and resulting economic downturn has battered sales of dental implants made by Straumann and its Swiss rival Nobel Biocare as patients cut back on pricey dental treatment.

Straumann, which had previously forecast low-to-mid single digit growth in its markets over the full year, cut that on Tuesday to “flat at best”. The company said it expects to make full-year revenue at least in line with 2011.

By 0804 GMT Straumann’s shares, which have already shed nearly a quarter of their value this year, had dropped 8.2 percent to 114.40 francs, a nine-year low. Shares in Nobel Biocare, which reports second-quarter results on Wednesday, were down 2.6 percent.

“We believe that the difficult times for dental implants are not limited to 2012 only,” Vontobel analyst Carla Baenziger wrote in a note.

In Europe, Straumann’s sales fell 7 percent in local currencies in the second quarter, hit by tough conditions in Italy, Spain and Portugal.

Sales growth in the United States, which rose by double-digits in the first quarter, slowed to 7 percent in the second. Spalinger said he does not expect a further deterioration of the U.S. market.

The Basel-based group made 56 percent of its total sales in Europe.

“Our environment has been disappointing and the gradual market improvement that we were expecting has not materialised,” Chief Executive Beat Spalinger said in a statement.

CONFIDENCE KEY

Spalinger said weak consumer confidence was hurting the industry and future market growth hinged on politicians fixing the debt crisis.

“If politicians can find a solution to the euro crisis even if the economy is not improving much, we see that consumer confidence might pick up again and we will see positive market growth again in 2013,” he told Reuters in an interview.

In May, Straumann bought a 49 percent stake in Brazil’s Neodent, in an attempt to expand in a booming market for cosmetic surgery and offset sluggish demand in Europe.

Spalinger did not rule out further acquisitions over the next year but said the priority was to integrate Neodent.

After investing in its sales force in North America and revamping its organisational structure, Straumann said it had started a project to cut costs to protect margins.

First-half net profit after minority interests rose 13.9 percent to 43.8 million Swiss francs ($45.01 million), undershooting analysts’ average forecast for 46.6 million francs.

The year-ago number was weighed down by a 40 million franc impairment charge on its Japanese unit following the earthquake there in March 2011.

$1 = 0.9732 Swiss francs Reporting by Caroline Copley; Editing by Erica Billingham

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