GROWTH AFFECTED BY WEAK SALES IN AMERICAS
Sales - Sales growth is 2% measured in local currency. Total sales amount to USD 99 million compared to USD 101 million in Q3'11. Sales continue to be affected by a slowdown in prosthetics sales in Americas due to ongoing audits by Recovery Audit Contractors (RAC audits). Sales growth in prosthetics is flat or 0%, measured in local currency and sales growth for bracing and supports is 3%, measured in local currency. Growth in Asia is yet again excellent, or 24%, measured in local currency.
Profitability - Operations are healthy and Össur continues to show good profitability. The third quarter is the second consecutive quarter where bracing and supports are growing while prosthetics decline, which has negative effects on the gross profit margin. Despite the change in the product mix and slow sales the gross margin remains stable, demonstrating the success of the manufacturing in Mexico and other lean initiatives within manufacturing and operations. Gross profit amounts to USD 62million or 63%, the same ratio as in Q3'11.
EBITDA amounts to USD 18 million corresponding to a margin of 19%, down from 20% in Q3'11. EBITDA margin is impacted by changed product mix and increased investment in R&D.
Jón Sigurðsson, President & CEO, comments:
"The results of the third quarter are below our expectations and will therefore affect the expected results for the full year 2012. This is mainly due to effects from reimbursement audits in Americas which have had a more profound impact than management anticipated. However, this quarter has been exciting for us as we saw Oscar Pistorius make history by being the first amputee to participate in the Olympics. Again at the Paralympics we saw Oscar and other elite athletes continue to inspire us and demonstrate to the world what it means to redefine ability. We are proud to be participants in that journey."
US Prosthetics market - During 2012 the prosthetics market in US has been affected by RAC audits into payments made by Medicare to O&P providers. These audits have created uncertainties in the market and a slowdown in demand for high end products. Recent survey performed by AOPA (American Orthotic & Prosthetic Association) demonstrates that 75% of the respondents are currently dealing with audits and 81% report that the audits have high impact on overall operations. These audits have had more impact on the market than management initially estimated and are expected to continue to have an impact into 2013.
Paralympics - Team Össur members and Össur Ambassadors achieved extraordinary performance during the 2012 Paralympic Games. The group, which includes some of the world's best-known athletes, captured a total of 21 medals (6 Gold, 7 Silver and 8 Bronze), and set 6 new World Records. Out of the amputee finalists in the games, 2/3 used Össur prosthetic products such as the Flex-Foot Cheetah.
Guidance 2012 - Due to current negative sentiment in the Americas prosthetic market and slowdown in prosthetics sales in the region, management expects the results of 2012 to be below the previously announced guidance of organic LCY sales growth of 4-6% and adjusted EBITDA margin of 20-21% of sales. Revised guidance for the full year 2012 is organic LCY sales growth of 2-3% and adjusted EBITDA margin of 18-19% of sales.
Conference call tomorrow 24 October at 12:00 CET/ 10:00 GMT/ 6:00 EST
Tomorrow, Wednesday 24 October Jón Sigurðsson, President and CEO, and Hjörleifur Pálsson, CFO, will host a conference call presenting and discussing the results of the third quarter of 2012. The conference call will be conducted in English and can be heard on Össur's website: www.ossur.com/investors (http://www.ossur.com/investors)
To participate in the meeting please call one of the following telephone numbers:
Europe: 44 (0) 1452 555131 or + 46(0)8 506 307 79
The United States: + 1 866 682 8490
Iceland: 800 9300
Q3 2012 Investor Presentation (http://hugin.info/133773/R/1651579/532871.pdf)
Ossur financial statement 30.09.2012 (http://hugin.info/133773/R/1651579/532872.pdf)
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information contained therein.
Source: Ossur Hf via Thomson Reuters ONE
