2017 First-half results Conference presentation for investors, - PDF document

16.08.2017 2017 First-half results Conference presentation for investors, analysts & media Basel, 17 August 2017 Disclaimer This presentation contains certain forward-looking statements that reflect the current views of management. Such statements 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 presentation. The Group is providing the information in this presentation 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. The availability and indications/claims of the products illustrated and mentioned in this presentation may vary according to country. 2 1

16.08.2017 First-half highlights Marco Gadola, CEO Creating growth opportunities in and beyond our space REVENUE GROWTH PROFITABILITY KEY DRIVERS + 14% organic 1 25.7% EBIT margin Total solutions Q2: +14% organic; +16% in CHF Strong volume growth drives margin Dynamic growth in non-premium, driven by H1: +14% organic; +18% in CHF improvement of 90bps Neodent expansion and boosted by consolidation of Medentika; Premium business driven by BLT SCOPE EXPANSION TECHNOLOGY OUTLOOK Orthodontic dentistry Digital power base On track …to deliver underlying revenue and Full acquisition of ClearCorrect; Acquisition of Dental Wings, investment in 38% stake in Geniova Rapid Shape & strategic partnerships to profitability growth as guided support implant, restorative & orthodontics businesses 1 Organic growth – i.e. excluding the effects of currency fluctuations and acquired/divested business activities 4 2 Guidance expectations barring unforeseen events/circumstances 2

16.08.2017 Above-market growth driven by new products and entry into new geographies & segments Organic revenue growth 2012-2017 BLT implant ‘ Roxolid Roxolid implant for all’ material ProAch edentulous solution Lab & chairside CADCAM offering 2012 2013 2014 2015 2016 2017 GBR biomaterials Variobase abutments PURE ceramic implant Premium Non-premium 5 High growth rates in Q2 following record first quarter EMEA Growth year-on-year (in %) 45% of Group North America 28% of Group APAC 17.2 17.2 17% of Group 9.9 10.0 22.5 19.4 Q2 H1 Q2 H1 Straumann Group LATAM 10% of Group Q2 H1 14.3 13.8 13.9 12.8 Q2 H1 6 Q2 H1 3

16.08.2017 Further margin expansion Revenue growth Underlying EBIT margin (%) Earnings per share excl. acquisition excl. one-time effects 1 excl. exceptionals & FX effects and FX effects +14% +120bps +26% organic EBITDA +130pbs 25.7 7.57 24.5 543.4 5.99 475.2 2016 2017 2016 2017 2016 2017 1 2017 EPS benefited from a CHF 24-million one-time effect related to the business combination of Medentika in Germany. 2016 EPS benefited from a 7 one-time deferred tax asset gain of CHF 41 million resulting from the merger of Straumann Brazil with Neodent. Both effects are not cash relevant. Strong topline growth drives steady margin improvements Organic revenue growth: 5-year Operating profit and margin: 5-year 14.3% 250 30% 24.8% 25.7% 13.1% 23.3% 200 20.9% 18.2% 9.1% 20% 150 6.4% 100 10% Premium market growth est. 3-4% 50 1.2% 0 0% 2013 2014 2015 2016 H1 2017 2013 2014 2015 2016 H1 2017 EBIT Exceptionals Underlying EBIT Margin  Over the past five years, revenue has risen 10% per annum and EPS 26% on average  ROCE reached 50% in H1 2017  With an equity ratio of 55%, the Group remains solidly financed to invest in further growth opportunities 8 4

16.08.2017 Business and regional review Peter Hackel, CFO Strong expansion across all regions Revenue development (CHFm, rounded) Regional share of organic growth 17.8% in CHF 14.3% organic 10% LATAM 7.0 543.4 17.1 21.9 25% 22.2 APAC 475.2 11.3 2.7 461.2 32% North Change in organic growth America 10.0% 17.2% 22.5% 13.9% 33% EMEA Revenues FX effect M&A effect Revenues EMEA North APAC LATAM Revenues H1 2016 H1 2016 @ America H1 2017 FX 2017 10 5

16.08.2017 EMEA robust – North America still on fast track EMEA Revenue change (organic)  EMEA maintained its pace in Q2 despite 56% two fewer selling days (Easter effect)  All businesses contributed to the positive 11.1% 10.1% 9.9% development; digital equipment business 9.4% 45% of Group 8.0% 7.7% also added to the growth following the presentation of new solutions at the IDS  Strong results in Russia, the UK, Saudi Arabia and Eastern Europe; Germany Q1 2016 Q2 Q3 Q4 Q1 2017 Q2 above prior year North America 17.3% 17.2% 17.2% 16.9%  North America kept strong pace 16.0%  Double-digit growth over six consecutive 12.5% quarters, outpacing the market 28% of Group  Straumann’s new 2.9mm BLT implant well received  Medentika’s cost-effective prosthetic solutions launched in the US Q1 2016 Q2 Q3 Q4 Q1 2017 Q2 11 Strong growth continues in Asia and Latin America APAC Revenue change (organic)  Largest regional country, China, was 56% 25.7% again the main growth driver 21.0% 20.2% 20.5% 19.4%  17.0% Anthogyr addition adds to growth  Demand for Straumann products was 17% of Group robust in Japan; other subsidiaries in the region performed well Q1 2016 Q2 Q3 Q4 Q1 2017 Q2 Latin America  Growth in Q2 (+13%) eased slightly, reflecting the higher prior-year period 17.2% 15.3% 15.0%  Dynamic growth in Mexico 13.3% 12.8% 12.7%  Positive uptake of Straumann BLT and 10% of Group Neodent Aqua implants Q1 2016 Q2 Q3 Q4 Q1 2017 Q2 12 6

16.08.2017 Double-digit growth across all businesses Implants Restorative Biomaterials 13 Key financials at a glance H1 2017 H1 2016 Δ % / bps in CHF million (rounded) Reported Exceptionals excl. Reported Exceptionals excl. excl. Exceptionals exceptionals exceptionals Revenue 543.4 461.2 Organic growth in % 14.3% 13.5% Gross profit 418.0 (2.0) 420.0 361.2 16% margin 76.9% 77.2% 78.3% ( 110 bps) EBITDA 156.1 158.0 129.2 22% margin 28.7% 29.0% 28.0% 100 bps EBIT 137.8 139.8 114.4 22% margin 25.4% 25.7% 24.8% 90 bps Gain on consolidation 25.0 25.0 0.0 Share of result of associates (2.6) (2.6) (0.6) Taxes (17.1) 0.6 (17.7) 22.0 40.5 (18.4) Net profit 24% 140.8 117.2 134.9 94.5 margin 25.9% 21.6% 29.3% 20.5% 110 bps Basic EPS 9.11 7.57 8.55 5.99 Free cash flow (18%) 45.2 55.0 8.3% 11.9% margin Exceptional CHF 23m gain in H1 2017 related to the Medentika business combination (CHF 24m after tax), which includes inventory revaluation expenses of CHF 2m (COGS) and a CHF 25m fair value gain (financial result). 14 In H1 2016, net profit was lifted by a one-time effect of CHF 41 million related to the capitalization of deferred tax assets in Brazil. 7

16.08.2017 Gross margin constrained by capacity expansion and higher share of third-party products Change in % -110bps -100bps 0.1 -2.7 1.6 -0.1 -0.3 Investments in future growth • Significant increase in manufacturing teams in 78.3 78.2 77.2 Curitiba, Andover & Villeret • Start-up costs in Curitiba 76.9 Gross profit FX effect Adj. gross Higher Plant Material, Underlying Business Gross profit margin H1 profit margin volume/price utilization labor & mix gross profit combination margin H1 2016 H1 2016 margin H1 exceptional 1 2017 2017 15 1 Inventory revaluation expenses of CHF 2 million related to the Medentika business combination. Underlying profitability improves – EBITDA up 120bps In % +100bps +120bps 1.7 -0.3 -0.2 -1.1 0.6 29.0 28.7 28.0 27.8 EBITDA FX effect Adjusted Change in Distribution R&D, Underlying Business EBITDA margin EBITDA gross margin Marketing & EBITDA combination margin H1 2016 margin administration margin H1 exceptional 1 H1 2017 H1 2016 2017 16 1 Inventory revaluation expenses of CHF 2 million in the ‘costs of goods sold’ related to the Medentika business combination. 8