1st Dental aims to get its teeth into market

CROWN and bridge-maker 1st Dental Laboratories said it is ready to seize opportunities in the fragmented dental market after returning to profit.

The Harrogate-based group has emerged from a tough two years' trading following the acquisition of its biggest rival in 2004.

Yesterday its new, streamlined board said a strategy of improving productivity, driving innovation, cutting costs and working more closely together helped it put the troublesome purchase of Benchmark behind it.

Hide Ad
Hide Ad

1st Dental leads the UK laboratory market with a five per cent share, and has a network of 14 laboratories. It competes with about 3,500 small laboratories across the UK, who serve the nation's 28,000 dentists.

"The financial status of the industry in conjunction with a skills shortage will drive the consolidation of the industry," said chief executive Nigel Spring. "We believe we are well placed to work with that."

1st Dental hopes to lead a move towards larger laboratories seen in the US and Asia. It aims to do this mainly by grabbing market share and launching new products.

"Many of these small labs are run by people close to retirement," said chairman Grahame Sewell. "There are various ways to use our muscle as market leader.

Hide Ad
Hide Ad

"We are expecting to build our business but I would not expect to see acquisitions in the short to medium term."

The acquisition of Benchmark, coupled with government-imposed changes to the dental sector and the loss of key management, had seen it report two years of declining sales and losses.

It made a 3.25m goodwill impairment last year on laboratories associated with Benchmark, driving it to a 4.1m loss in the year to the end of November. It paid 4.7m in cash and shares for Benchmark in late 2004. But Mr Sewell said after imposing changes in culture and bolstering management, those issues are behind it.

The group reported 10,000 pre-tax profits in the six months to the end of May, compared with 326,000 losses a year earlier. It improved gross margins to 35.3 per cent from 32.3 per cent a year earlier. It now employs 220 staff including 97 technicians, and sales per employee are up five per cent, in part reflecting 10 job cuts.

Hide Ad
Hide Ad

Its board has been cut from seven to three, although Mr Sewell said 1st Dental may add a non-executive director, possibly with a medical background.

However, sales fell 4.1 per cent to 4.9m as heavy snowfall at the start of the year, the Icelandic volcanic ash cloud and slumping discretionary spending among private dental patients took their toll. 1st Dental earns roughly 60 per cent of its revenues from the private sector, and the rest from the NHS.

But the group typically sees higher revenues in the second half of the year and Mr Sewell said he is "cautiously optimistic".

Going hi-tech

State-of-the-art technology plays an increasing role in the dental sector, according to 1st Dental.

Hide Ad
Hide Ad

The group has seen increasing uptake of its Zirconia products, which use zirconium dioxide. The oxide is less likely to cause gums to recede, often a problem with metal dentures.

It has also launched a range of computer-designed crowns and bridges made from chromium cobalt.

The CAD/CAM Laser PFM products are designed in partnership with engineering firm Renishaw and use direct metal laser sintering.

Related topics: