Dental implant maker Nobel Biocare Holding AG (NOBN.VX) Wednesday reported a better-than-expected second-quarter net profit on lower restructuring costs and higher cost savings, but said its market remains challenging.

Nobel, the world's largest maker of dental implants by sales, failed to give a quantitative guidance for 2009, but said it sees a stabilization in the market for dental implants, which it saw shrink 10% to 12% in the first half of 2009.

Investors welcomed the news and at 0720 GMT, Nobel shares were up 4.2% or, CHF1.12, at CHF27.62.

Nobel Biocare said net profit for the three months to June 30 rose to EUR28.2 million from EUR24.3 million a year earlier, beating analysts' estimates of a drop to EUR21.86 million. The figure includes restructuring costs of EUR5.8 million, while most analysts had penciled in costs of around EUR10 million.

"The figures for Nobel Biocare were pretty good," said Bernstein Research analyst Lisa Bedell. "While sales were below expectations, the strong margins seen in the second quarter signal internal improvements that will probably persist. The gross profit strength also indicates a decent external pricing environment," she said. Bedell rates Nobel Biocare at marketperform.

"Our cost saving measures and efficiency efforts showed good results and Nobel Biocare remains highly profitable," Chief Executive Domenico Scala said during a conference call with journalists. Scala said right now, it doesn't look like more job cuts will be necessary, and he sees the company well prepared for a future recovery of the market.

Nobel Biocare's second-quarter gross profit margin stood at 79.8%, largely stable compared to 81.9% in the the year ago period.

The Zurich-based maker of implants, crowns and bridges said sales for the period fell 8.7% to EUR153.5 million as patients, dental labs and dentists defer costly spending in time of recession, while the 10 analysts polled by Dow Jones had called for sales of EUR158.68 million.

"Our growth (in the first six months of 2009) is in line with the market despite deferred scanner revenues and an unfavorable country mix," the company said.

Nobel Biocare is currently launching a new scanner and software system, called Nobel Procera, which will bolster sales as the year progresses, Scala said in the conference call.

While the company has been gaining market share in Asia, especially in Japan, it's losing ground in Europe, where sales dropped 15%, Scala said.

"Especially the Iberian market is in bad shape, but its not getting worse," Scala said. In North America, where sales fell 2.7% in the three months to June 30, there were pockets of growth, but also areas of revenue declines, according to Scala.

Nobel Biocare shares have gained around 24% year-to-date driven by recent M&A speculation and hopes the company will benefit from its restructuring efforts once demand for its products picks up again.

Tuesday, Nobel Biocare's Swiss rival Straumann Holding AG (STMN.EB) reported a 6.9% drop in first-half sales, but said it had gained market share in the first six months of the year, also from Nobel.

Company Web site: www.nobelbiocare.com; www.straumann.com

-By Julia Mengewein, Dow Jones Newswires; +41 43 443 80 45; julia.mengewein@dowjones.com