Straumann Holding (SIX Swiss: STMN) Q1 2026 Earnings Call

0:01 Ladies and gentlemen, welcome to the Straumann Group Q1 twenty twenty six Results Conference Call and Lab Webcast. I would like to remind you that all participants will be in listen only mode the conference is being recorded. The presentation will be followed by a Q and A session. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Guillaume Daniella, CEO. Please go ahead. Thank you and good morning or afternoon to all of you. Thank you for attending this conference call on the Straumann Group's first quarter results.

0:46 Please take note of the disclaimer in our media release and on slide two. During this conference call, we are going to refer to the presentation slides that were published on our website this morning. As usual, the discussion will include some forward looking statements. As shown on slide three, I will start with the first quarter performance overview. Isabelle will then cover the financial details and afterwards I will share strategic updates and our outlook. We will be happy to answer your questions at the end of the presentation. Let's move directly to slide five. I'm pleased to present you today a strong start to 2026 with a solid performance across regions and business segments. We delivered revenue of CHF $673,000,000 in the first quarter corresponding to an organic growth of 7.1%.

1:42 All regions contributing to the successful beginning of the year and I'm particularly pleased with the very solid momentum in North America with continued growth quarter after quarter. Importantly, this performance is clearly driven by strong execution. We continue to gain market share across key segments supported by our innovation pipeline, our digital offering and a strong customer engagement we are creating through education. In implantology, we are further expanding our leadership through innovation, driven by the continued rollout of IXL and the development of our clinical education and research activities with exciting new initiatives, including the launch of a new specialist network.

2:30 More on that in a moment. In orthodontics, the transformation is progressing very well. The transition to Smart T manufacturing in EMEA and Asia Pacific has been successfully completed and we are introducing significant enhancements to our value proposition in the coming weeks. Overall, this strong start combined with continued progress across our strategic priorities gives us confidence as we look ahead to the rest of the year. And despite the still demanding market environment and ongoing geopolitical uncertainties, we confirm our outlook for 2026. Let me now move to slide six and walk you through the regional performance in more detail.

3:16 Overall, we delivered solid growth across all regions, reflecting the strength of our diversified geographic footprint and continued execution across markets. Starting with EMEA, our largest region, we achieved strong organic growth of 7.8% despite a very high comparable base in the prior year. Performance was broad based across countries and business franchises with particularly good contributions from Spain, Austria and Poland, while other markets also delivered solid growth, underlining the resilience of our business. Moving to North America, the region delivered strong growth of 7.7% with continued momentum across all businesses.

4:05 Importantly, we are seeing a consistent improvement from quarter to quarter, reflecting strong commercial execution, increasing traction of our digital workflows and continued expansion of strategic customer partnerships. In Asia Pacific, we continue to see two distinct dynamics across the region. On the one hand, outside of China, performance remains strong with growth above 10% supported by solid contributions from key markets such as Japan, India and Southeast Asia. On the other hand, in China, market conditions remain affected by the delayed volume based procurement process, GDP. However, underlining trends are stabilizing with improving patient flow and distributors slowly restocking from low inventory levels.

4:59 Overall, this resulted in a stabilized regional development of 4.5% against a very strong prior year comparison. Finally, Latin America once again delivered outstanding performance with organic growth of 19.5%. Growth was broad based with particularly great momentum in Brazil and across Hispanic markets, including Mexico and Argentina, driven by strong demand for challenger influence and increasing adoptions of digital solutions. Overall, this regional performance highlights the resilience of our business model and our ability to consistently outperform the market across different environments.

5:46 With this, I will now hand over to Isabelle, who will take you through the financial performance in more detail. Thank you, Guillaume, and good morning also from my side. It's a pleasure to walk you through our financial highlights for the first quarter of twenty twenty six. Let me start on Slide eight with the details of our revenue development. We delivered a strong organic revenue growth of 7.1% in the first quarter. This corresponds to a reported decline of 1.2% in Swiss francs, which represents a negative foreign exchange impact of 53,000,000 Swiss francs. This was mainly driven by the US dollar, which depreciated by more than 10% versus the Swiss franc compared to the prior year period, as well as the Euro, which weakened by more than 4%.

6:36 Assuming currencies remain at current levels, we expect the negative foreign exchange impact to gradually moderate over the course of the year. Looking at the drivers of this organic growth, the main contributions came from EMEA, North America and Latin America, reflecting solid performance across our key regions. In terms of the regional share of this organic growth, EMEA remains our largest region, contributing around 47% to the group's revenue growth, followed by North America at 28% and Latin America at 23%, while Asia Pacific remains at a lower level mainly due to the current dynamics in China. Overall, this clearly demonstrates that despite the impact from currency movements, the underlying business performance remains strong and well diversified.

7:30 At the same time, we continue to actively mitigate external headwinds from operational excellence measures, which I will walk you through on Slide nine. Over the past quarters, we have made significant investments into our global manufacturing and supply chain footprint and we are now beginning to see the first tangible benefits. First, for our premium portfolio, our new Shanghai campus is now fully ramped up, supporting cost efficiency, while at the same time reducing our exposure to foreign exchange volatility through our local for local production approach. At the same time, we have optimized our production footprint in Europe, including adjustments in Vilere, where some volumes have been reallocated as part of our global manufacturing setup.

8:20 In orthodontics, the transition of production to Smarty in EMEA and APAC has been successfully completed and the ClearCorrect production site in McCleberg has been closed. This marks an important step towards a more scalable and cost efficient operating model with further benefits expected to materialize over the course of the year. In addition, for our Challenger portfolio, we continue to expand our global production footprint. New Dent is further strengthening its manufacturing capabilities with the expansion of its site in Kubo Chiba to be finished this summer, supporting future global growth. Overall, while we are continuing to expand our production capacity, we have introduced measures to improve efficiency and reduce cost.

9:07 These measures strengthen our ability to mitigate external headwinds, including fragment exchange volatility, and position us well to drive further margin improvement in the coming quarters. As a final comment, I would like to mention that the impact from the current geopolitical environment remains limited, reflecting the resilience of our diversified footprint and global manufacturing setup. With this, I will now hand back to Guillaume for the strategy update. Thank you, Isabelle. Let me now turn to our strategy update, starting with a look at our market share in a large and growing market on slide 11. Let me start by putting our performance into the context of our market opportunity.

9:53 We operate in a large and growing market of around CHF 20,000,000,000, where we have now reached a total market share of around 14% and continue to gain share across key segments. Our strategy is built on two complementary dimensions, perform and transform. On the perform side, we focus on strengthening our leadership in our core implant segment, where we hold a market share of above 35%. The unique combination of our innovation capabilities with our global footprint and our deep clinical engagement will enable us to keep gaining share. On the Transform side, we are targeting high growth segments where our market share is still relatively low and where we see significant upside potential.

10:44 This includes clear aligners where the market size is around billion and our current share is around 5%, highlighting the opportunity ahead as we continue to transform our automotives business. In addition, we are building strong momentum in digital equipment, particularly antherosclerosis scanners and in CanCam prosthetics, where we are working to disrupt workflows through digital chairside solutions. Overall, this combination of leadership expansion in our core business and significant headroom in adjacent segments provides a clear runway for continued growth. Let me now show you how we execute on this strategy starting with implantology on slide 12.

11:33 Supporting our premium implant growth, IXL has been extremely successful across all regions and is a strong growth driver for the group. It is not only attracting new customers from value and premium systems, but also driving significant conversion as existing clinicians switch to the IXL platform to benefit from simplified workflows and increased efficiency in their daily practice. We are also seeing strong traction with some large DSO customers where IXL is increasingly becoming the system of choice, further supporting our market share gains. Importantly, IXL is the most successful product launch in Straumann's history despite being on the market for just over a year.

12:22 Building on this success, we are now clearly doubling down on it. All new premium innovations will be built on the ISL platform, further strengthening its value proposition and driving continued adoption. Let me highlight a few examples. We are launching iGUIDE for IFL, specifically designed for full launch treatments, enabling faster and more efficient guided surgeries in higher value indication. At the same time, we continue to expand the platform with new prosthetic solution. This includes the introduction of the new enhanced value based XC line, featuring a laser treated surface designed to further improve performance and clinical outcomes.

13:10 Overall, this differentiated innovation approach is key to our future success, strengthening customer adoption and further reinforcing our leadership in implantology. Let me now move to slide 13 and show you how the adoption of innovation and clinical education is translating into growth. With ICI, we have a leading global network for evidence based education and research with more than 25,000 members across over 100 countries, training more than 200,000 clinicians every year. This very strong foundation allows us to drive adoption of our solutions at scale and support clinicians across all levels of experience.

14:00 Moving on this, we are now further expanding our reach by supporting the launch of AOME, a new global specialist network focused on advanced oral and maxillofacial implantology. With AOME, we are specifically targeting highly specialized clinicians who perform complex procedures, further strengthening our position in high value segments of the market. Together, ITI and AOME create a very powerful and complementary education ecosystem, allowing us to engage with clinicians across the full spectrum from general practitioners to leading experts in complex cases. This is a key strategic differentiator supporting both adoption and long term customer loyalty and ultimately driving further market share gains.

14:57 Let me now move to the transform side of our strategy, starting with orthodontics on slide 14. Our orthodontics transformation is built on three key dimensions. First, a more focused go to market approach targeting high growth countries. Second, improved scalability and profitability through our SmartT technology partnership. And third, a strengthened value proposition with a clear focus on general practitioners. As Isabelle just mentioned, we have successfully completed the transition of our production to SmartT in EMEA and Asia Pacific. This strategic partnership allows us to significantly improve our manufacturing efficiency and scalability, creating a strong foundation for future profitable growth.

15:51 At the same time, we have sharpened our go to market approach, focusing on selected markets with strong growth potential and with a clear ambition to build the leading position among general practitioners. In these targeted growth markets, we are already seeing great progress in case conversion, translating into solid growth for ClearCraft. And this is exactly where our upcoming innovations come into play. Starting from May, we will introduce a series of new features that significantly enhance our ClearCorrect value proposition. Let me highlight a few key examples. First, the integration of CBCT data into the workflow, enabling more comprehensive diagnostics and improved treatment planning, particularly for more complex cases.

16:45 This is then strengthening our clinical capabilities. Second, the outcome simulator, which allows clinicians to visualize treatment results with the patient directly at a chair. This significantly improves patient communication and drives higher case acceptance. Third, the introduction of Scallop Streamline, which expands the range of clinical options with a phased rollout depending on regulatory approvals. And finally, remote care, which enables integrated remote monitoring of treatments. We are seeing very strong customer interest and highly initial positive feedback, especially from general practitioners as it reduces share time and improves treatment consistency.

17:38 Overall, all these innovations combined with our improved operating model and focused go to market approach significantly strengthen our competitiveness and position us well to scale in the Orthodontics market. Let me now move to slide 15 and show you how we are building strong momentum in digital equipment. This very strong momentum seen right now in our digital equipment business is primarily driven by the successful launch of our new Serious X3 RFR scanner, which has been on the market for six months only. Since its launch, we have seen very strong growth with overwhelming customer feedback and high demand across regions.

18:28 This success is significantly increasing the number of users, adopting our digital workflow solutions and driving increased demand for consumables. And this growing installed base is a key driver for future value creation. As more clinicians adopt our scanners and connect to our cloud based platform access, we are seeing increasing usage of integrated workflow, including our Midas signature three d printing solution. Here, we continue to expand our offering with new features being introduced this spring. This include expanded indication, such as new advanced material with a higher content and inlay and only application.

19:17 Overall, this clearly demonstrates how we leverage digital equipment as an entry point into our Straumann ecosystem, driving platform adoption, increasing workflow integration and ultimately generating recurring revenue through consumables. With this, let me conclude with our outlook for 2026 on slide 17. Following the strong start into the year, we remain very confident in our outlook. We operate in a total addressable market of more than CHF 20,000,000,000 with significant growth opportunities across our core and adjustment segments. At the same time, market conditions are expected to remain volatile with ongoing macroeconomic and geopolitical uncertainties.

20:06 However, our resilient business model, strong market positions and continued execution give us confidence going forward. For 2026, we continue to expect delivering high single digit organic revenue growth alongside a core EBIT margin improvement of 30 to 60 basis points at constant 2025 exchange rates. With this, we are happy to move to the Q and A session to answer your questions. As usual, we kindly ask you to limit the number of questions to two in order to give all the participants a chance to pose their question within the available time. Corey Scholl, can we have the first question please? Sure. The first question comes from Hassan Al Wakeel from Barclays. Please go ahead.

20:55 Good morning. Thank you for taking my questions. Firstly, if you could just expand on the strength in North America, the extent of any market improvement, if at all, versus share gains and how this progressed throughout Q1 and into Q2. Are you observing any changes in demand or consumer sentiment? And if you could talk to the confidence that you have on continuing this momentum, particularly as comps get tougher throughout the year? And then secondly, on inflation dynamics, are you seeing any changes in inflation at the moment or do you expect them to to make its way to your cost lines this year or next on the back of the Middle East conflict?

21:43 And what steps are you taking to mitigate be it pricing or otherwise? Thank you. Mr. Hassan, a lot of questions in Q2. Well, let me comment on the North American side. Most of our improved dynamic is coming from stronger execution and capability to materialize on the innovation we launched on the market. We have seen a rather stable patient flow. We don't believe that our strong results has been mainly coming from tailwinds, but a lot and we see from where you were asking from where this is coming from, it's coming from all businesses.

22:38 We have seen strong traction of our IXL innovation on the premium side. We have seen good development of our challenger brand also through our DSO partnership. And we have seen also for our new transform areas, significant growth on the digital side, thanks to the complete value proposition we have with Cereals for the entry and mid level, but also with PreShape as higher end offering of the iOS market. And finally, we see orthodontics also being able to getting traction versus what we had in the past year. Then one of the good confidence we have moving forward for North America is the fact that our growth is coming from all the different franchises and then bringing some resilience to this performance.

23:41 We have not seen a particular different trend in the different months. We see more kind of a stable than the performance capabilities. And that's the way we are seeing that moving forward in 2026. For the inflation side, when it comes specifically to North America demands, we are not seeing impact for the time being. If you remember, we in 2022 and twenty twenty three first half, we had also quite a lot of inflation in North America. Actually, it was really, really strong. And our demand has been pretty resilient, because I believe that still the implant patients that are affording implant treatments are not immediately impacted by the lower level of inflation.

24:35 But as more impacted us has been over time about the interest rate as we have discussed in the past. And I would say that would be with a significant increase of interest rate that we would see more impact of the demand side from our perspective, if we look at the history. And from our cost side, I think as also Isabelle rightly said in the initial presentation, we are taking let's say, measures in order to mitigate any potential increased costs coming from that Middle East crisis, even though when you look at our overall energy cost, this is not significant from a total cost of the group because it's high single digit to low single digit millions, where we are able then through some specific cost reduction measures trying to absorb this moving forward in the first quarter, but also in the rest of the year.

25:42 Very helpful. Thank you. The next question comes from Susana Lubyck from Bernstein. Please go ahead. Hey, good morning and thanks for taking my questions. I have two please. I guess just first on China, is there any update on the timing of VBP? And it sounds like I guess the patient flow has started to get better and there's less maybe a little restocking for how you're thinking about through the trajectory of that business until we hit VDP? And then second, can you talk a little bit about sort of the headwinds and tailwinds for margins in 2026? I guess, when you gave the guidance, we've had tariff cuts in Brazil, potentially sort of further delay in the VBP and hence, delays the price cuts and then sort of the starts of the Middle The Middle East conflict, how should we think about the magnitude of the potential tailwinds versus potential headwinds?

26:47 Yes, of course, Susana. Thanks for the question. China, VDP, then the well, what we can say is that no news, okay? Then they have been it has been postponed, but there is no official information on when it's going to be implemented. Potentially second part of the year, potentially a bit later, I would say, we don't have a clear view here. And what we can say, what does it mean for us? It leads to a normalization right now of the patient flow, even if it's at the low side. But we see really a normalization of activity with patients coming back to practices because there is really no information even, let's say, locally about when this DVD could happen.

27:33 We have been as a consequence distributor that are also slowly restocking in line with current insulin consumptions, meaning that we see more activity also for us on the sales side. Then what does it mean if we look moving forward on the rest of the year? Then because of the very strong comparison rate, we were growing more than 20% in the second quarter Also last year in China, we see something like maybe slow negative single low single digit to flattish for the second quarter. And obviously, with a pretty good growth in the thermodynamic because we have seen the start of the significantly destocking at that time.

28:25 PVVP would be coming. What does it mean? It means that we would have, of course, a lower volume in the three, four weeks of implementation, much higher afterwards. Then that's why we would still see growth we believe in the second half. And we are also then higher pricing for a longer period than expected, this is our initial plan. Then I would say the fact that VDP is not going to be implemented so far would be, well, rather balanced versus what we have seen to rather positive, especially because we have now Shanghai manufacturing, which is allowing us to capitalize on our lower pricing and lower COGS and higher pricing than anticipated.

29:13 This is actually a good segue for your questions on the different building blocks for the overall margin. And Isabelle, if you would like to take this one, we have some different moving pieces that are really interesting to explain. Definitely. And thanks for your question, Silvana. So I think since we last talked, the main building blocks behind our 2026 EBIT development are broadly unchanged, although obviously there are a few moving parts I would like to go through step by step. So on the external side, as Cleo already elaborated, we continue to carefully monitor and manage the factors we do have FX volatility, tariff developments, timing of the VBP, oil pricing, what have you. So, this is something we're very aware of and continuously monitor.

30:02 And just to remind you, what we said in the beginning, what we assumed for our guidance is the macroeconomic environment similar to what we've seen in the second half of last year, and this is something we would confirm as we speak, But I think more importantly on the internal side, there are a few things we see developing very positively. So to start with is our orthodontics transformation. This market partnership improves the economics of our line of business and margins with that, primarily driving COGS down due to the lower COGS per liners, the automation and manufacturing at scale SMARTi brings to this partnership. But it's as well basically all the things I already mentioned during my presentation, So the increasing contribution from the local manufacturing in China, which is now almost fully ramped up, but a lot of the products we sell in China are now being produced in China.

31:01 Adding to what Guillaume said, we can hold on to the higher pricing for a longer time, but at lower costs from our Shanghai campus. We see a stronger digital mix with our own IVAS scanner portfolio, namely the SiriusXM X3 we launched half a year ago, and then last but not least, all of the ongoing productivity measures we discussed during the Capital Markets Day and now partially during my presentation as well. Then on the flip side, what we will see in terms of phasing is obviously higher tariff impacts in the first half year, and now with the current announcements, a little bit lower impact in the second half, obviously, still to be seen how it really turns out after the one hundred and fifty days, and then, obviously, a shift in timing from VBP 2.0, which was originally anticipated in the first half of the year now to potentially the second half. We're still waiting for official confirmation on that, but this obviously, as for the top line to conclude this, the year has started on a good note.

32:05 Environment, however, remains a little volatile, particularly with the geopolitical macro uncertainties. What I can say so far is early trends are encouraging to what we see. Saving between the first half and second half will obviously depend how these factors evolve, but I think especially due to the VBP timing will be a little bit more even than initially expected, and overall, we remain very confident in the margin progression implied by our guidance. That was very comprehensive. Appreciate it. The next question comes from David Ellington from JPMorgan. Please go ahead. Hi, guys. Most of my questions have been asked. Maybe just firstly on LATAM.

32:54 I just wondered if you could put out how much the growth was due to pricing. And if it was due to pricing, how much is that sustainable? It looks like it sounds like the market is to be strong, but I just wanted to get a pricing impact. I know that's been a historic driver. And I thought maybe just on the cost inflation side, just any particular areas you would pull out that you are potentially highlighted as potential problems as we go into second half of the year? Thank you. LATAM pricing is actually limited. A lot of this is coming from volume. We have done really, really well on our implant development and especially now, not only Brazil, but also we have a very, very good progression in all the, what we call, Hispanic countries.

33:42 I want to again explain one of the major difference we have with a lot of competitors is that we have our own subsidiary. Then we are not going through distributors in many of those markets, in Argentina, in Peru, in Colombia, in Chile. And we have been also investing with feet on the ground. And we are seeing significant traction on what we're doing also in those countries. Yes, then mainly volume and we are looking on having still then this really good development in LatAm moving forward, might not be at the 19%, which is exceptional with also some strong digital market adoption, but still promising for this part of the world.

34:34 On the cost inflation side, David, I think what we can say so far is well under control. As Giem said, the exposure we do have to the direct categories that will be subject to inflation. On the one hand side, energy costs. Luckily, we are very low on energy. So just to give you a reference, energy is a very low single digit percentage of our total cost, and those prices are usually secured one, one and a half years in advance by our procurement department, so we are very much on the safe side there. Similar picture we see for shipping costs, so with a lot of the big suppliers we do have running contracts where pricing is secured, so I think this is very well under control, And even if we see some increases, we are confident we can mitigate with other saving measures, especially since it seems like we will get a little bit of tailwind from the tariffs once it's announced. So for us, it should not be an issue, and we do not expect any downside to the guidance by the current inflation tendencies we see.

35:49 The next question comes from Houveau Volme from BNP Paribas. Please go ahead. Hi, guys. Thanks for taking my questions. I have two, please. On EMEA first, 8% organic growth in Q1. Could you maybe discuss the impact from pull forward of demand? And would it be a realistic scenario to assume a return to possibly low double digit growth from Q2 onwards? Second question, clarification on profitability. Isabelle, when you mentioned similar margin level in H1, could you maybe clarify whether it's H1 getting better than what you initially anticipated or H1 better, but more uncertainty on H2? Thank you. Yes, think you will go. EMEA, I think very we expressed and I think I expressed that on regular basis, the fact that we see a very solid resilient trend on our business by the fact that we have several very strong structural factors that are supporting this.

36:54 On the one side is, of course, the fact that we are present in the entire Western And Eastern Europe, again, which the dealers and have been investing also on our go to market on the challenger and premium side in order to keep developing our market share. Secondly, we have also the fact that when it comes to the resilience versus, for example, the current environment, GPs are placing implants and it's a gold standard of treatment for replacing tools. Then we see that despite a little bit some of the turbulence that we see around, this is going to be also resilient moving forward. Now, we are happy with this really strong results of EMEA based on the one side, Q4 then the very significant then performance due to some sales that has been done prior to price increase in some markets as explained in the full year results. And also that the comparison base last year Q1 was also very strong because it was 10%.

38:09 Now are we seeing a potential double digit for Q2? I think I would not express it like this. I think we are very confident to stay in the same high single digit, potentially low single low double digit, but it's still adding this very, very strong growth in the biggest part of our business because it represents 48% or 47% of the group sales. Then very confident moving forward, still going to be in between the high single digit to low double digit. But this is really the confidence in those numbers that I think is really the strength of the EMEA for our overall performance.

38:55 And when it comes to profitability, and Isabelle will give more color on this, but yes, it's more an improvement of what we see in the product lines that we are seeing from a trend standpoint than some of the single die that will come to the first half. And it's not so much of it's a rebalancing by the fact that the first half will be higher than expected versus our single die. Thanks, Guillaume, for the segue. I mean, very good question, Igor. So, what has changed or what has changed since we last talked? Let's go through that. So, as Guillaume said, for the full year, the assumptions we put in are still valid, but we see a slightly different phasing than we initially anticipated.

39:41 And there's majorly two factors that go into this. It's on the one hand side, the tariff impact. So we've had initially higher tariff impact compared to last year in the first half and then lower impact on the second half. Basically now with the Supreme Court declaring them illegal and rates going down to 10%, especially from Brazil formerly 50%, This will obviously be a little bit of a relief to what we initially expected for the first half of the year, although at this stage, it's still early to reflect this into our assumptions for the full year or to point to any specific upside, especially since it's yet to come what will happen after the one hundred and fifty days. But this is why the first half year will be slightly better than expected due to lower tariffs we will see come through, especially in quarter two.

40:33 And second thing we already talked through is the timing of VBP 2.0. This was initially planned for in our guidance in the first half of the year. From what we see now, this will move into the second half, and we see a very stable, solid performance in China as we speak. So, we will likely have the timing effect there as well. And maybe what I would add to this that was part also of the presentation, we have made a lot of investment and efforts on our cost side, And we see some tractions that might be a little bit earlier than planned on automation being done on our premium side by the fact that we are manufacturing in China for premium by the strength of our own scanners versus third party product, which is helping the gross margin. And obviously, when you are also then driving performance in North America versus what was, of course, past year than with the higher priced market being successful.

41:38 We see also, of course, this operational leverage that we can generate more than what we have been able to do in the same period last year. Next question comes from Julien Dumas from Jefferies. Please go ahead. Yes, hi, good morning, Guillermo. Thanks for taking my questions. I have two, but there are actually one is a follow-up to your comments. I think it was on China, but just want to make sure I clearly understood. I think you referred to maybe flat to low single digit growth, But is that for China or is that for APAC in the second quarter? So that would be helpful to get a clarification on that. And the second question is more for Isabelle, guess.

42:26 Could you just give us an updated view on FX impact on margin for the full year as we are here today? Just wondering whether it may be the impact of headwinds has come down a little bit from when we last discussed. Thank you. Yes. Thanks, Julien, for helping us to precise this. I was mentioning China. China will be low single digit to flat in the second quarter based on the very high comparison base and the normalization of the patient flow on the rather low side. Then which means that it will help Asia Pacific to come up with better contribution to the overall group growth in the rest of the year. And to put a little bit more color onto the FX impact, I mean, obviously, the impact we've seen in the first quarter was massive, but this is more an equation of the spot rates now compared to the spot rates last year. Just going into Liberation Day, especially the US dollar was particularly stronger than it was this quarter one.

43:33 That indicated roughly 104% for the Euro, and we will see a little bit of a turnaround. We already see that coming in for Q2 actually as we speak. So looking at the full year guidance, as previously said, we are operating in a very volatile FX environment And I think we somehow have to take it as it comes, as the year evolves. But just to give you an indication, so we actually rerun our forecast for this year with a March spot rate. And as it seems, the overall FX impact will be slightly below what we've seen last year. I'm sorry, just to follow-up, are we talking about margin impact, right? Both, actually.

44:18 Both. Yes. So what we currently see for the margin impact would be roughly 100 to 120 basis points at end of March quarter and lower impact for the top line as well, yes. Yes. Thank you very much. The next question comes from Graham Doyle from UBS. Please go ahead. Good morning, guys. Thanks a lot. Just two questions, please. On China, could you just maybe talk a little bit again about that phasing? To the extent you can, I understand it's like PVPs still a little bit sort of up in the air? But if we're assuming, call it, down mid singles or slightly better maybe for the first half, Would you still expect like pent up demand in the second half if you get VDP out there? Or should we expect like say more moderate growth in the second half than I think consensus and models more like kind of 20% the second half? Just to understand, is it just going to balance phasing there now as well? And maybe if you just comment on The U.

45:19 S, obviously, comps get a bit tough in the second half, but it does feel like you've had this very, very stable kind of durable build in growth in The U. S. Over the last five quarters or something? And are you seeing better underlying demand sequentially as well, which kind of makes you feel comfortable that high single digits over the midterm is sustainable and actually maybe we can see that through this year as well. Just to get your comfort level there would be really good. Thank you. When it comes to China, Graham, I think there are two scenarios. Let's say the scenario is no VBP this year. Okay? No VBP this year means that we are going to see then patient flow normalization without being potentially in the 2025% from a patient flow standpoint.

46:15 But on our side, if you have a normalization of the patient flow with very low single halves that we had, which was around the minus 20%, then obviously, we expect to have some double digit growth for the rest of the year. Then when it comes to VDP, if there is a VDP in the second half, then you will see then a much higher volume potentially at a lower price than at this we still remain to be seen. But as we had a very low comparison base, we still expect growth in the second part of the year in the case of VVT as well. And that's why we have been saying that China for us, now that we are going to arrive in a much better comparison territory, then whether VVT or not, we are still expecting growth for China in the Superbatch.

47:17 When it comes to U. S, I cannot say that we have seen once again then a sequential improvement of the patient flow. I expressed the fact that we see the patient flow being rather stable, but our capability to generate much more growth is coming from our capability to execute on the opportunity that we have at hand, that are our IXL innovation on premium, that our business partnership capabilities on our challenger brands and also then all the development we do on digital and the orthodontic space with significant new value proposition here on the orthodontic side as expressed with all the new innovation we are coming up in May, but also with our own oral scanners that are just being launched in October last year. Then that's where we believe we can create still traction in a stable environment in North America. And we are confident that we can still drive current trend that we're seeing right now.

48:33 That's really helpful. Maybe just a quick cheeky follow-up. On VDP, is there anything like have you learned anything as to why this is being a bit delayed? Like are you expecting different outcomes? Is it as you guys were discussing, you know, this sort of trade off between education and price, for example, or are there other things happening? At this stage, Graham, I would prevent from any speculation. I think that we have seen and known through experience that the regulation in China are moving into more states. If you remember the first GDP that's been announced even eighteen months or two years before it has been actually implemented.

49:20 Some, I guess, that what's happening in the Chinese authorities, there are also some priorities sometimes that are changing. And one is more priority has higher priority than others. And that's why at the moment, we don't know why it's the case. We don't know when it will be happening. And that's where I think it will explain on our agility culture of our organization to try to make the best out of the solution of the situation. And I think we have a lot of solutions to be able to leverage the current situation with a normalization of the patient flow. Awesome. Thanks a lot guys. Really appreciate it. The next question comes from Oliver Metzger from ODDO VHS.

50:07 Please go ahead. Yeah. Good morning. Thanks for taking my questions. First one is in China. So first of private and the public market. So obviously there's a VBP delay. Does it mean that you experienced a stronger support at private practices and correspondingly also a positive volume price mix? And second question is about the comment you made about the regain of lower priced input customer for IXL platform. For first time, you made this comment at your CMD. Today, you reiterated that. So initially, it was just a ray of hope. Now you confirm it again. So I would describe it cautiously as a trend. If you have to quantify this development, would you regard this in the context of your progress already as becoming significant or is it just, let's say, in initial trends, which doesn't have any meaningful impact yet?

51:09 Yes. Thank you, Oliver, for the question. When you look at the Chinese market, you know, private and public is 25% of the total business. Private will be the remaining 75%. I would even say 25% public, 30% DSO and the rest is regular than smaller practices. One of the specific approach of the VBP has been that the Chinese authorities have been able to bring the private sector to be aligned with the VBP. And which means that when we have seen the VBP implementation, the 1.0, it has actually transformed the entire market and not only the public hospital segment. And that has been something that we might not have expected as much, but that's why I don't believe that the VBP II O will drive different trends between the public and the private, but they will try to influence the market in the same way.

52:20 And that's where we don't know exactly what will be the priority of the VDP rules moving forward, because we know that the authorities are also very focusing on the quality of care and that, you know, the product, the high quality products still going to be available for the public sector, but also for the private sector and allowing also the patients and the clinicians to be able to run their practice with offering the best potential care. We know that Chinese speaking, they want to favor also the local Chinese companies as soon as they are ready to be able to scale for this kind of volume in the market. And I don't feel yet that the VBP 2.0 will completely change the dynamic at least in between private and public and also in between this kind of premium versus value.

53:20 But once again, we have to see what will be coming when it's there. When it comes to IXL and thanks for picking that up. Yes, we see that we have with premium the capability to switch not only other premium company clinician users, but also value clinician users. And this especially based on what one of our customer has been expressing during our Capital Market Day is because of the digital workflow associated to this. He clearly expressed the fact that you can use an implant at a higher price as soon as they are offering a workflow allowing you to reduce your appointment by two or three appointments for achieving the same treatment solution.

54:09 And this is exactly what some of our workflow are offering. And it was the specific fast molar workflow that we have presented where you use one implant, you have a consumable that allows you to scan the implant at the moment of surgery, which means that you don't need to ask the patient to come back for starting to doing the prosthetic process. And then time is money for all the patients. They can see more patients and they can do more cases. And that has been one of the reasons, thanks to the digital efficiency of our workflow associated with IXL that we have been able to transform some value users.

54:55 Is it a significant that we see? I would not say significant, but it's more and more the case. Why is this? Because now that Enfraud scanners are adding a price point, which is favoring a significant market penetration, GPs are all going to be equipped. And when you have a series at a price that allow you to get started with digital workflow, then you have immediately access to the ISL workflow. And that's where we see an initial trend that we are going to promote, of course, very significantly by demonstrating that the return of a treatment of an implant treatment is not based only on the price of your implant, but obviously of your entire treatment steps that is needed in order to finalize your process. And we are really looking forward to doing this and you will see more of us promoting now our workflow that are delivering significant benefits and value for clinicians.

56:04 Okay, great. Thanks very much. The next question comes from Brandon Laskat from William Blair. Please go ahead. Thanks for taking the question and congrats on the next quarter. I wanted to focus first Guillaume on The U. S. Just in part because I was hoping you could talk a little bit about what you mentioned before, which is that you've had some commercial changes there. Correct me if I'm wrong, think you had a new leader put in place in The United States last year. I was hoping you could just reflect for a minute on what kind of what are the commercial changes that are resonating well? What are the commercial changes that are leading to better results in North America? Just to also get a better understanding of how durable these improvements in U. S. And North America growth can be. Yes, we changed leader in May last year.

56:53 You're totally right. And, you know, you are adding a strong commercial oriented leader, then you are building up trust within the organization that they will be supported to be able to achieve the best possible results. I think success from a commercial traction is coming on the one side by systems. That means you all know commercial excellence and that means ensuring the right productivity, the right targeting. And this needs to have significant monitoring for from the sales management side. And when you have a leader, which has a very clear understanding of this and a very clear expectations about productivity and efficiency on the sales side, this is driving immediately differentiation in performance that you can achieve.

57:55 Is it sustainable? Yes, because afterwards, when you have implemented this more monitored approach on sales excellence, you are also helping your team to be more successful. And then when you have more success, have obviously more energy within the team and you have also the capability to overachieve some of the targets that have been assigned. Then it's also a virtuous circle that you need to implement. And this is what we're seeing in North America right now. And that's where we need also to support this with additional investment, with some additional investment we sit on the ground with marketing promotion and above all with further innovation because that's still the name of the game. And then a strong commercial team is going to really drive a very strong performance as soon as you are also giving them the means to differentiate themselves on the marketplace.

58:51 And this is what we're able to do with the different enhancements of our value proposition across our businesses that we are doing on a regular basis. Got it. Thank you. And then maybe, Isabelle, for you as my follow-up here. You know, on the 30 to 60 bps of EBIT margin expansion expected for the year on a core basis, I think you've had I'd argue two good things since you gave that original guidance come out. One of them is, of course, the tariffs. The other, it seems that China is doing even as we're waiting for VBP, China is doing better and you're getting some of the benefits of manufacturing there. Just kind of curious, why wouldn't that push you maybe on the core EBIT margin expansion? Why wouldn't that those two push your expansion potential in 2026 higher? Why the reiterated guide by both of those coming in, I think more positive, but correct me if I'm wrong. Thanks.

59:48 Excellent question, Brandon. Thanks for that. So, I mean, what we see how the year started, we are very satisfied with the top line development and the margin development as well. So I think it has been a really, really good and strong start to the year. As already indicated earlier, you know, we see a lot of moving parts right now. We have the macroeconomic volatility we somehow have to manage. We have to monitor the tariffs a little bit closer. All of the things we did internally with the orthodontics transformation, with the new factory in Shanghai, all of this is now falling into place. So the trends we currently see, they are encouraging. The phasing, as already said, will look a little differently, so with a stronger first half.

1:00:34 But, of course, I think for the full year, it's still a little early to be too enthusiastic about it right now because it still will depend a lot on how all of those factors I just talked through, so the tariffs, the macro environment, the VBP, will actually play out throughout the year. So I think we are confident that the margin progression we indicated we can do this, but it's still a little early to reflect all of this in our assumptions and point to any specific upside potential. So things remain. We are very confident, but I think this is something to be discussed later in the year. Okay, thanks for the questions. Next question comes from Falko Friedrichs from Deutsche Bank. Please go ahead.

1:01:23 You. Two questions from my side, please. The first one is another clarification. Guillaume, you meant to say that China in Q2 is flat to a low single digit decline, correct? I said low single digit decline to flattish. Yes, that's correct. Okay, got it. Thank you for clarifying that. And then my second question, do you see a risk of hitting another potential air pocket in demand in China in the second half if VBP is in fact implemented in late 'twenty six or even early twenty twenty seven? Well, it's it's difficult to say, but I don't see a potential air pocket because you will have still people that we now see that VDP will it is less likely to happen in the coming months than they will come to practice and get their treatment done.

1:02:30 But as there will be no change into pricing, people will not reconsider like, oh, I was not planning to do any implants, but I'm going to do one like it was the case for the VBP announcement with significant price change. And I think it will drive to the practice the people that are waiting, but that they were planning to have treatment. And there are some is it going to be, let's say, a significant push? I don't think so. As we see things really normalizing, but it's a step by step approach. Then I don't expect if VBP will be postponed later any specific air pocket from a patient flow standpoint.

1:03:16 However, obviously, because of the low comp base, we should be able to see then a potential good growth from China, not so much from an extraordinary patient flow, but mainly because of normalization and a lower comp base. Okay. Thank you. Next question comes from Richard Berton from Goldman Sachs. Please go ahead. Thank you very much. Good morning. Just two for me, please. First one is just a follow-up on IXL. Are you able to give us a rough sense of how much of your premium customer base has now been converted to IXL? And then second question, we've heard some feedback that the two Korean competitors in implants are trying to be a little bit more assertive on competition in Europe. Is that something that you're seeing? Does that have any impact on market structure or competitive dynamics in Europe? Thank you.

1:04:14 What I can say with the success of IFL is so much that it's now representing more than 20% of our total volume of premium implants. Then in a kind of a sixteen to eighteen month start, it's a very, very significant achievement in a conservative market. Then this is where we see and this is also why we have decided to double down on it And that all innovation that we are going to do on the prosthetics side as an example, on the digital workflow side will be everything connected to the IXL platform and especially that specific unique connection, which is what we call the top fit connection, which is bringing really a lot of benefits from an affiliation standpoint in order to continue to push then our IXL penetration and being really the reference implant system within the industry.

1:05:16 When it comes to the Korean, we don't see yet major investments. We have seen them active in Europe for quite some time. We know also that the current headwind they are having in China is also significantly squeezing their investment capability from what we believe, then I don't feel in Europe having more constraints coming from our Korean competitors than what we had in the past period. Not less, but not more. Great, thank you again. The last question we can take today comes from Julien O'Adour from Bank of America. Please go ahead.

1:06:09 Hi, thank you very much. Good morning, everyone, and thanks for squeezing me in. The first one, I haven't talked so much about the clear aligner, but it seems that you are improving quite substantially the offering on the supply chain, software and also on features. I'm just wondering if you have also made enough investment on the sales and marketing to make sure you get some immediate traction on the back of such improvements. And are you still aiming to reduce by half the loss that have to correct by year end? Or have you identified some areas where you would prefer maybe to invest the money on? So that's the first question. And quick one on China for the second one. Could you maybe comment just on the competitive landscape you're seeing in the country, and especially on the zirconium, titanium implants from Chinese competitors? I mean, do you see players having this kind of technology? And do you expect this category to be, I mean, creating all that's included in the next visit around?

1:07:05 Thank you. Yeah. Good question as well here on the go to market for ClearCorrect. Then we are indeed investing and have invested significant money in then driving our value proposition up with our then the partnership with, on the one side, Smart T, but also with Total Monitoring and rewiring entirely our manufacturing approach for EMEA in Asia Pacific. Could we even drive faster reasons with more feet on the ground? The answer is not yet, because with regard to the investment we have done before on the sales and marketing side, we were really ahead from our feet on the ground with regard to the results we can generate.

1:08:03 Then that's why we are really excited about what we are doing right now, because we were adding in all the growth countries that we have selected, the market rich and the team in order to do much more than we have been doing until now. And we were needing, obviously, an enhanced value proposition and a very consistent manufacturing capability supporting them in order to deliver the performance that we were expecting. Then that's where, as we are speaking right now, they will be able to deliver a lot of growth with regard to the new setup that we have without force to have the need to add additional seats on the ground for the time being.

1:08:50 Now moving forward, we will see, but we can expect significant growth with the current investment we are having on the sales and marketing side. When it comes to the China competitive side, China is really developing really good technology overall. We have seen this. We are leveraging some of it, with our anti oral scanner offering, as an example, with Allied Star and our serial scanner. Then we take Chinese competitors seriously. Now they are trying, of course, then to develop technology that we have done on our clinical premium side with Otsolid.

1:09:36 They are naming products with zirconia and tetadium combination. We are testing it. I don't think that it reached yet the characteristic that we have from a mechanical property standpoint. Is it going to be a category in the VBP? Honestly, I have no clue about this. It might be a way where the clinician authorities would like to differentiate product. But only at this point, this is just pure speculation and nobody knows really. And I think we will see when we will be from there. And our goal will be once again to be able to differentiate significantly from any other competitors and bring the best product at the best price with then all the Chinese clinicians taking into consideration that our significant differentiation in China is our education capability, which is still very, very much needed to open the market and for which Chinese competitors have very low capabilities at this moment in time.

1:10:48 Thanks, Obi. I mean, if I can quickly come back on the P line. So, if you don't need more investment, I guess you're you're pretty in line to reach the, like, the 26 ambition you have on the margin side, which means, like, lowering the, like, the losses that roughly by half for, like, of the current rights? I think we are in line with, yes, what we have planned, and then we don't need any additional investment to be able to deliver what we have in our plan. Yes, that's correct. Okay. Thank so much. Thank you. Yeah. Then thank you also. Thank you for joining us today and for your continued interest in the Straumann Group. So we are looking forward to see you again soon and wishing you a nice day.

1:11:37 Good bye from Basel and from all of us. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call and thank you for participating in the conference. You may now disconnect your lines. Goodbye.