- Reported revenue down 0.8% to EUR 576.6 million (CER -6.4%)
- Q4 revenue growth affected by strong US base effect and scanner launch in H2 2009
- Gross profit margin at 77.7%: NobelProcera ramp-up costs
- Operating profit (EBIT) at EUR 84.9 million; EBIT margin of 14.7%.
- Net profit at EUR 45.7 million; net margin of 7.9%
- NobelActive with accelerating growth momentum in 2010
- NobelProcera: Initial portfolio rollout completed
- Series of symposia attracted great interest
- Basic earnings per share of EUR 0.37 (CHF 0.51)
- Dividend proposal CHF 0.35 per share; withholding tax free distribution
 

Domenico Scala, CEO: “While our financial performance was disappointing in 2010, the operational progress and investments in growth have laid the foundation for a more promising 2011. With the successful completion of the initial NobelProcera product rollout, the company has launched the most comprehensive prosthetics portfolio in the market. It took longer than anticipated to fully deploy this offering, but we now have the most complete material and product portfolio in the industry. NobelActive, our most successful implant introduction, continues on its path of success with double-digit growth. With our Nobel Biocare Symposia series, we have introduced a new conference format that has attracted many existing and new customers. The operational progress made in 2010 and improving economic conditions in certain markets represent a very good base for the company to return to growth in 2011.”
 

Investments in product portfolio expansion, long-term industry trends and a stronger organization
 
For the full year 2010, revenueat constant exchange rates (CER) declined by 6.4%. Owing to favorable foreign currency influences, however, reported revenue decreased by 0.8% to EUR 576.6 million. In the fourth quarter, reported revenue decreased by 1.6%, while at CER it declined by 7.9%. Profit from operations (EBIT) for the full year was EUR 84.9 million (2009: EUR 128.6 million). The lower EBIT and EBIT margin (14.7%) compared with the prior year (22.1%, or 24.4% excluding restructuring charges) are the result of lower revenue, the rollout of NobelProcera and increased selling and marketing activities. Net profit as reported was EUR 45.7 million compared with EUR 105.8 million a year ago and reflects earnings per share (EPS) of EUR 0.37 (2009: EUR 0.86).
 
In 2010, Nobel Biocare continued to make investments aimed at broadening the product portfolio in prosthetics and implants in order to provide more cost-effective treatment solutions.  Significant investments in training and education, customer service and marketing, as well as in scientific documentation were also made. The operational milestones achieved in 2010 include:
 
NobelActive, launched in 2008, continued to attract existing as well as new customers. Underpinned by a steadily increasing number of scientific and clinical publications and presentations, accelerating double-digit growth was achieved throughout the year. In 2011, this innovative implant system will be expanded with a new 3.0 mm implant, further broadening the treatment range. The company’s comprehensive implant portfolio was supplemented through the introduction of the easy-to-use Snappy abutment system, line extensions and a new surgical kit for NobelReplace, the most widely sold implant system in the world, as well as through the launch of a new one-stage implant system, Replace Select TC, for overdenture solution treatment.  Nobel Biocare’s versatile range of implants accommodates the personal preference, solution level and treatment concept of every dental professional. The assortment includes bone- and tissue-level implants for all indications, bone types and surgical protocols.
 
A key priority in 2010 was also NobelProcera. Following the initial launch in 2009 with a new scanner, software and new materials, the array of solutions was rounded out during the course of the year to include titanium crowns and bridges, abutments for third-party platforms, cobalt chromium crowns and bridges, as well as the Telio CAD Temporary Crown and Bridge. The company’s state-of-the-art 5-axis milling production process offers improved surface finish and an emergence angle of up to 90 degrees for better soft tissue support and esthetic outcome. All NobelProcera manufacturing facilities are currently being upgraded with the latest technology. The company also initiated its Preferred Partner Program with leading dental material providers Ivoclar Vivadent, VITA Zahnfabrik and Noritake, which provides access to a wider range of state-of-the art, high-performance dental materials.
 
Today, Nobel Biocare offers the most comprehensive range of solutions for fully edentulous patients, from fixed and removable overdenture solutions for the premium (fixed solutions with the NobelProcera implant bridge), value (a fixed solution with the All-on-4 treatment concept, or a removable solution with multiple implants and overdenture bars) and economy segments (a fixed solution with an overdenture implant, or a removable solution with two implant and overdenture bars).
 
Digitization of the treatment process is one of the key trends in dentistry for the coming years. New technologies are evolving rapidly and enable dental professionals to deliver greater patient satisfaction as a result of effective diagnostics, predictable treatment planning and minimally invasive surgeries. Effectiveness, safety and comfort are the primary expectations patients have when receiving implant therapy. A milestone in 2010 was to upgrade our NobelGuide concept to meet future market needs. The NobelGuide concept utilizes 3D diagnostics, 3D planning and guided dental implant placement to ensure a predictable, positive outcome. NobelGuide facilitates safe, minimally invasive surgery that results in less patient pain, reduced swelling and shortened healing times. Dental professionals will gain even more diagnostic and interdisciplinary planning capabilities with the release of NobelClinician. Going forward, this new software can be integrated into our NobelProcera CAD/CAM system.
 
Strong interest at industry conferences and Nobel Biocare Symposia 2010– Nobel Biocare successfully introduced a new conference format – the Nobel Biocare Symposia − with two global meetings in New York City and Tokyo and seven local symposia in other key markets. Overall, more than 7,000 people attended these events. The conference format, which includes assessments of patient case studies via on-stage panel discussions, master classes and hands-on sessions, was very well received by the participants. The steadily broadening and innovative product portfolio attracted strong interest.
 
Training and education of dental professionals is an important driver for market development and growth. Nobel Biocare’s commitment to training and education (T&E) was underscored by the hundreds of educational courses conducted worldwide in 2010 as well as through the expansion of the Global University Partnership Program to include a total of 27 dental schools. The dental colleges of the Universities of Sheffield, Heidelberg and Sichuan joined the program in 2010. The newest member, as of January 2011, is the Karolinska Institutet in Sweden. It is one of the leading medical universities and each year nominates the Nobel Prize winner in physiology or medicine. This partnership program, which was initiated in 2005, has now produced its first class of graduates from a curriculum that covered implant dentistry, CAD/CAM prosthetics and 3D diagnostics. Nobel Biocare also renewed a long-term partnership with the Seattle Study Club, the acknowledged leading federation of its kind for advanced, locally based therapeutic coordination and dental education.
 
Strengthening scientific leadership – In 2010 Nobel Biocare further intensified its investments in scientific leadership. The results of clinical trials on all of our major product systems were published, including a seven-year follow-up on TiUnite, a three-year data report on dedicated overdenture implants, and two-year results on NobelActive. A list of selected publications is included in the Annual Report 2010.
 
Executive Committee (EC) changes in 2010– Hans Geiselhöringer was appointed Head of Global Marketing and Products as of February 2010, succeeding Robert Gottlander, who is leaving the company at the end of May 2011.
 
Effective as of 1 January 2011,further appointments to the EC were made: Melker Nilsson was appointed President and General Manager North America as successor to Bill Ryan, who has reverted back to his former role as an advisor to the CEO and also became the non-executive Chairman North America. Mike Thompson was appointed Senior Vice President & General Manager Asia/Pacific. He took over from Tom Olsen, who is now Executive Vice President of Sales for North America.This change further strengthens the North American senior management team. Also, Jörg von Manger-Koenig, Group General Counsel, was appointed Senior Vice President Legal and Compliance and a member of the EC.


Overall stabilizing market conditions, regional performances impacted by company-specific factors
 
In Europe, Middle East and Africa (EMEA), full-year revenue (CER) declined by 6.9% to EUR 248.3 million (Q4: -6.6%). Throughout the year, the overall performance in the region was negatively impacted by an unfavorable country mix. Most markets stabilized and some showed initial signs of improvement. As expected, major markets such as Spain (economy) and Sweden (reimbursement change) were weak performers for the year. Italy, France and some smaller markets demonstrated year-on-year growth, while momentum in the UK and Germany improved toward the second half of the year. In Germany, an experienced and long-standing Nobel Biocare manager was appointed as new country head.
 
In North America, revenue (CER) for the full year decreased by 5.8% to EUR 193.7 million (Q4: -9.2%). Substantial changes to the organization and the go-to-market have been realized in the earlier part of the year. While these changes have started to deliver an underlying improvement, this is not fully visible yet due to the high comparison base as a result of the H2 2009 scanner launch. Indeed, excluding the effect of the 2009 scanner launch, we recorded a sequential improvement of implant sales from Q3 to Q4 2010. While access to financing for larger cases still remains an issue, we are witnessing improved momentum in the broader dental implant market.
 
In the Asia/Pacific region, revenue (CER) for the full year was down 2.1% to EUR 125.6 million (Q4: -5.8%).
The fourth quarter comparables were influenced to a certain extent by the strong base effect from strong scanner sales at the end of 2009. In Japan, performance for the full year was flat in an otherwise declining market. This translates into a further gain in market share. While the performance in some markets such as Southeast Asia remained weak, India and China achieved accelerating double-digit growth, albeit from a small absolute base. A new regional headquarter has been established in Hong Kong providing more focus to this important region and to ensure business quality and sustainable growth.
 
In Latin America/Rest of the world, full-year revenue (CER) for 2010 declined by 42.2% to EUR 9.0 million (Q4: -35.9%). The region’s overall performance is still being impacted by ongoing efforts to streamline the local operations, tighter credit management and a stricter pricing policy.
 
Outlook – Most markets have stabilized, with some of them even having returned to growth in 2010. However, the challenging economic environment is still exerting an adverse effect on patient flow and case acceptance, in particular for larger and more complex treatments.
 
Based on current momentum, we believe that the dental implant market expanded by approximately 2-3% in 2010 and we expect further improvement to approximately mid-single-digit growth in 2011. Nobel Biocare continues to focus on strategy execution and making the necessary investments that will allow the company to return to at least market growth within the next three to six months, inasmuch as we can now increasingly build on our strengthened organization and broadened product portfolio. Based on the anticipated revenue growth, the company is targeting an EBIT margin of around 18% for 2011, barring any adverse currency effects.
 

Prior year figures are restated to reflect minor changes in the management structure
 
Financials: Investments affect margins, one-time FX gains and tax charges
 
Gross profit for the full year was EUR 448.0 million (2009: EUR 467.9 million as reported, EUR 468.8 million before restructuring), reflecting a gross margin of 77.7% (2009: 80.5% and 80.6%, respectively). While the gross profit margin for the standardized business improved in the second half of the year due to efficiency gains and increased production volumes, the overall margin was negatively impacted by high ramp-up costs for NobelProcera.
 
Operating expenses for the full year amounted to EUR 363.1 million (2009: EUR 339.3 million or EUR 327.2 million before restructuring). This increase is entirely due to a EUR 27 million adverse currency impact on reported operating expenses. Investments aimed at product portfolio expansion, selling and marketing activities, training and education, as well as organizational development have been largely funded by other operating expense savings. In 2010, Nobel Biocare has hired approximately 190 additional people, mainly for NobelProcera, Marketing and Products.
 
Profit from operations (EBIT) for the full year totaled EUR 84.9 million (2009: EUR 128.6 million, or EUR 141.6 million before restructuring), reflecting an operating margin of 14.7% (2009: 22.1% and 24.4%). This lower margin is the result of both lower gross profit and higher operating expenses.
 
Currencies – The weakening of the euro had a significantly positive influence on reported revenue. However, mainly the stronger Swiss franc and Swedish krona led to a significant increase in reported operating expenses, which in turn offset the positive foreign exchange impact on gross profit.
 
Net financial result for the full year was EUR 15.5 million (2009: EUR 8.7 million). This result was attributable to non-recurring foreign currency gains, which resulted from changes to internal funding structures, as well as effective hedging gains to compensate for the negative impact on the EBIT margin.
 
Taxes – Tax expenses amounted to EUR 54.7 million versus EUR 31.5 million. This reflects a base tax rate of 23% for the current year in addition to a roughly EUR 30 million exceptional tax charge related to the restructuring of the Group’s internal profit streams. Following the structural improvements realized in 2010, a medium-term tax rate of 20% is achievable once EBIT margins have reverted back to levels clearly above 23%.
 
Net profit for full year was EUR 45.7 million (2009: EUR 105.8 million as reported), reflecting a net profit margin of 7.9% (2009: 18.2%). Adjusted for one-off taxes and exceptional foreign exchange gains in both periods, the net profit margin decreased from 12.9% to also 7.9%.
 
Cash flow from operating activities for the full year totaled EUR 97.1 million (2009: EUR 177.8 million), mainly driven by a decrease in operating profit. This lower result is attributable to weaker EBIT and non-recurrence of the significant working capital improvements that were achieved in 2009. However, on a CER basis, further working capital improvements were realized through 2010. Cash & cash equivalents at the end of December 2010 stood at EUR 239.5 million (2009: EUR 240.7 million). Net financial debt amounted to EUR 13.2 million versus a net cash position of EUR 1.9 million a year ago.
 
The Board of Directors’ (BoD) proposals to the Annual General Meeting of shareholders (AGM) scheduled for 30 March 2011, in Zurich, Switzerland, in addition to the approval of the annual accounts, include:
 
Dividend – The Board of Directors approved a dividend proposal of CHF 0.35 per registered share (2009: CHF 0.55/share). It is planned to pay this dividend out of reserves and in a shareholder-friendly way without deduction of withholding tax. This will result in an essentially unchanged net cash dividend for shareholders. The payment date for this dividend, if approved by the AGM, is set for 6 April 2011 (ex-dividend date: 1 April 2011, record date: 5 April 2011).
 
All Directors of the Board stand for re-election with the exception of Antoine Firmenich, who after six years of service, will not stand for re-election.
 
The Remuneration report 2010 for the Group will again be subject to a consultative vote by the shareholders.
 
Subsequent events – On 16 February, the Board of Directors appointed Richard Laube as new CEO to assume his duties on 1 May 2011. He will join the company on 1 April 2011 and follow Domenico Scala who decided to leave the company with effect from 30 April 2011.
 
 
Nobel Biocare (NOBN, SIX Swiss Exchange) is a world leader in innovative restorative and esthetic dental solutions. As a complete solutions provider, Nobel Biocare offers the most comprehensive range of solutions from tooth to root, for single tooth to fully edentulous indications. The solutions portfolio covers dental implants (including the key brands NobelActiveTM, Brånemark System®and NobelReplaceTM individualized prosthetics and equipment (NobelProceraTM guided surgery solutions and biomaterials. Nobel Biocare has more than 2,400 employees and recorded revenue of EUR 576.6 million in 2010. The company is headquartered in Zurich, Switzerland. Production takes place at seven sites located in Canada, Israel, Japan, Sweden, and the US. Nobel Biocare has 34 direct salesorganizations.