Össur - First Quarter Report 2013
Highlights
* Sales amounted to USD 97 million compared to USD 100 million in Q1'12.
* Sales declined by 3% measured in local currency.
* Bracing and supports sales declined by 2% while prosthetics sales declined
by 3%, both measured in local currency.
* Q1'13 was affected by fewer sales days compared to same quarter last year
due to the Easter holidays. Adjusted for this effect, sales declined by 1%.
Sales of bracing and supports were flat and prosthetics sales declined by
1%.
* The US prosthetics market continues to be impacted by turbulence in the
reimbursement environment.
* Performance in EMEA varies between countries, with strong growth in Eastern
Europe and continued strong growth in bionics.
* Gross profit amounted to USD 60 million or 62%, the same ratio as in Q1'12.
Efforts in Mexico and lean initiatives contribute to a stable margin.
* EBITDA amounted to USD 14 million corresponding to a margin of 14% compared
to 18% in Q1'12.
* Net profit amounted to USD 5.8 million or 6% of sales compared to USD 9.8
million and 10% of sales in Q1'12.
* Cash generated by operations was 9% of sales, the same as in Q1'12. Cash
generated by operations is traditionally low in the first quarter.
* Reimbursement scrutiny in the US continues with Medicare reducing
reimbursement for O&P products by 2%, effective as of 1 April 2013.
* As a reaction to changed reimbursement environment in the US Össur is
working on various initiatives. One is a broader product offering, which
focuses especially on solutions for low active users, reacting to a market
trade down to low active products. Management has also initiated a cost
reduction program that will reduce costs by USD 5 million for the remainder
of the year.
Financial Guidance for 2013
* Management reiterates its previous guidance for 2013; LCY organic sales are
expected to be in the range of 2-4% with an EBITDA margin of 18-19%.
* Due to changed reimbursement environment in the US, management expects the
results of 2013 to be in the lower end of the guided range, both in terms of
sales and EBITDA.
Jón Sigurðsson, President & CEO, comments:
"The first quarter has been challenging. Effects from the turbulent US
reimbursement environment have had a more profound impact than we anticipated
and will continue throughout this year. We have taken measures to react, however
it will take some time to adjust to these changes in the market and get back on
track. Performance in EMEA varies between countires, however, prosthetics sales
continue to steadily increase with great performance in bionics. Sales in new
markets within EMEA are promising and growth in Asia was yet again excellent".
Conference Call
Össur will host a conference call on Thursday 25 April 2013 at 12:00 CET/ 10:00
GMT/ 6:00 EST. To participate in the call, call Europe: +44 (0)203 043 24 36 or
+46 (0)8 505 598 53, The United States: + 1 866 458 40 87, Iceland: 800 8660