Straumann Holding AG

Thank you for attending this conference call on the Common Group's Azure Reasons 2025. Please take note of the disclaimer in our media release and on slide two. As always, the presentation and discussion will contain forward-looking statements. During this conference call, we are going to refer to the presentation slides that were published on our website this morning. Today, it's my pleasure to host our second quarter results presentation together with Isabelle Adel, our new CFO, who has joined us in June. As outlined on slide three of the agenda, I will start by sharing the key highlights of the first half year. Isabelle will then walk you through the financials in more detail before I provide an update on our strategic progress and outlook. At the end of the presentation, we would be very happy to take your questions. Let's start with our highlights and move directly to slide five. First of all, we are really pleased with how the business performed and are excited to share the key highlights with you today. We had a strong first half with revenue reaching 1.3 billion and the second quarter alone contributing 667.5 million Swiss francs, reflecting solid momentum across all businesses. Organic growth reached 10.2% in the first half and 9.3% in the second quarter. While continuing to invest in capacity expansion, education, and digital transformation, we achieved a core EBIT margin of 27.3% or 26.6%, including strong currency headwinds. One of the highlights of the second quarter is our 2025 new product launches, which are off to a strong start, with IXL gaining momentum following a successful rollout in Europe and Australia. Clinicians have responded very positively to our latest influence innovation, highlighted its clinical versatility, which has led to improved clinical outcomes. We will share more on this later in the presentation, including the latest workflow innovations designed to significantly enhance clinical efficiency and productivity, as well as reducing shift time for patients. Another important milestone of the second quarter was the regulatory approval of our Stroman premium implant production in China. This marks a significant step in strengthening our market position and supporting long-term growth in the Chinese market. Building on this momentum, we are pleased to confirm our outlook for 2025, despite the latest tax impact. Looking at slide 6, the patient flow dynamics per region remain consistent with the previous quarter amid ongoing macroeconomic uncertainties. we continue to gain new customers across regions, thus increasing our market share, which reflects our commercial execution strength. Let me highlight once again the remarkable performance of our EMEA business. Despite a persistently uncertain macroeconomic environment, EMEA continues to deliver a solid, consistent growth quarter after quarter. It reflects our clear strategy and effective execution, even with the Easter holidays, which affected the start of the second quarter. Thanks to the successful rollout of launches like ISL, the Access Digital Platform, and the Infrared Scanner Serials, we continue to reinforce Stroman's leadership in EMU. In North America, our performance kept the same dynamic than in the previous quarter, a solid outcome given the continued volatility and cautious consumer spending, particularly impacting out-of-pocket dental treatments. The patient flow stayed stable, but also hasn't shown a meaningful recovery yet. Our digital solutions and our multi-inclined brain offerings continue to perform well and gain market shares while orthodontics overall remains challenging. Asia-Pacific continues to shine with strong double-digit growth, driven by the robust patient demand and the strong performance of both our premium and challenger brands. Especially in China, the value-based procurement process continues to support dental implant treatment awareness and improves affordability. With our recent launches and investment in education, we are expanding our position across both mature and emerging markets in the Asia-Pacific region. Finally, Latin America completed our global performance with a strong double-digit growth, led by our trusted New Zealand brands and adoption of digital solutions. It is important to note that our Scrum and Implant brand also posted very good growth there. Across all regions, our ongoing product launches, regulatory readiness, and go-to-market investments are not just supporting current results. They are continuing to create a strong foundation for sustainable growth moving forward. And with that, I'll hand over to Isabelle, who will take you through the financials in more detail.

Thanks a lot, Guillaume, and warm welcome to everybody from my side as well. I'm beyond excited to be part of this great organization and look forward to contributing to the next chapter of our growth and value creation together with a great team. Let me start with our revenue on slide number eight. As already mentioned by Guillaume, the group's second quarter revenue reached around 668 million Swiss francs, with an organic growth of 9.3%. And in Swiss francs, this corresponds to 1.9% growth in the second quarter, investing continued currency headwinds. Sorry. As 2025 exchange rates, the 2024 second quarter revenue would have been 44 million Swiss francs lower. in this currency effect was majorly due to the depreciation of the Euro, the Chinese RMB, and various emerging market currencies. But as Guillaume already mentioned, if we look at the operational performance, the specific patient flow dynamic we saw in the regions remained broadly the same as in the first quarter, which supported the strong regional performance we saw in the first half of the year. And this includes China as well as the U.S. So the Asia-Pacific region recorded the fastest growth, driven by China's continued strong contribution, and was followed, as already outlined, by the EMEA region, which still is the largest region for the Straman Group. And, of course, I mean, I would like to guide you through a little bit how that translates into profitability. So looking at our gross profit development on slide 9, In the first six months of the fiscal year, the group's strong top-line growth, which is so led to a core gross profit of 972 million Swiss francs, which is a currency-adjusted increase of 91.2 million Swiss francs. And the corresponding margin of this achievement was slightly higher than last year at 72.1%. but with a decrease of 50 basis points due to negative currency effect compared to 2024. So this means the gross margin remains at a consistent level despite significant external pressure, which really underscores the group's robust business fundamentals. So as you said, 50 basis points down due to FX effect, but other one-offs we saw in the first half of the year were most certainly the ramp up of our Shanghai campus and the recently imposed US tariffs, we very effectively managed to absorb by managing very diligently our productivity and our spend. So we saw that supported by favorable product mix, basically due to sustained demand for premium solutions, and significant focus on improvements in manufacturing efficiency and productivity, we managed to show this very strong gross profit. And I think this enhancement really reflects the group's ongoing efforts to optimize operations across the global footprint. But I think what it shows more, and we will see that in the next few slides to come, the resilience of the group's ability to manage volatility in uncertain times, while at the same time continue to invest in strategic growth initiatives, such as innovation, which I saw, but as well as capacity expansion and digital transformation. Moving to slide 10, the core average margin reached 26.6%, which is a currency-adjusted margin decrease of around 40 basis points in those volatile times versus prior years. with currency movements having a negative impact of 90 basis points on the core average. This is majorly, yet again, due to the strengthening of the first rank. Looking at the building blocks beside the gross profit we already talked through, the distribution expenses had a positive impact of 80 basis points, which is due to ongoing investment and focus on how we go to market on enhancing our logistics capacity. But as Guillaume already outlined, we of course increased a little bit our focus on innovation and education, but at the same time digital transformation. We invested into our sales force, our people and talent in general, and this is why we had a slightly negative impact on the administrative costs, which bear all of those investments as well. The same pattern we will see looking at our cash flow on slide 11. So you can see our cash flow slightly declined here and there, but it's yet solid in the first half at 130 million Swiss francs. And the decline was mainly related to 29 million higher CapEx in the first half of the year, still reaching 8.4% of our revenue. What did we invest into? And part of that you've seen already, but we really continue to invest in capacity expansion to really continuously enhance our global manufacturing footprint and our digital transformation externally as well as internally. And that's why capital expenditure for the first six months remained at a high level, totaling 113 million Swiss francs, so coincidentally exactly the same number we posted in terms of free cash flow. So three things to mention here. We're expanding our manufacturing sites. I'll give you a few examples. In Brazil, we are about to build the fifth factory for our Neodent branch to enhance our capabilities and foster the growth we are seeing. In Germany, we opened a new factory for our Medentica branch. And I think most importantly, we are progressing steadily with the development of our new Shanghai campus and training. And this campus will serve as a hub for manufacturing, clinical education, as well as innovation in China. All of those projects I just mentioned are critical to enhancing our production capability, plus strengthening our presence in our global key markets. Having said this, our cash position end of June was at 247 million square francs, so still a very solid performance, especially taking into account that we obviously paid for this. So, concluding, turning to slide 12, let's look at our full financials. I will not go into all the details, so for full clarification, you will find the year-on-year comparison on the reported IFRS basis and the core reconciliation table in the pan mix of this presentation. The two things to highlight, the NAS financial expenses amounted to 24 million Swiss francs, reflecting currency hedging costs and currency losses in the group's main exposures. I think really the counter effect we've obviously seen in the FX result we already talked through. But at the same time, our core net profit amounted to 265 million Swiss francs, so increasing 16% of constant currency year over year, while sustaining a very high margin of 20% of revenue, which led to an ex-adjusted basic earnings per share of 1.66 francs. And having said this, I will hand back to you, Guillaume, for our strategic outlook.

Thank you very much, Isabelle. Then let's talk about our achievements and recent strategic progress, starting directly with slide 14. Within today's uncertain environment, we remain very confident in the strength of our fundamentals. We operate in a large global market with a share of 12.5%, with strong growth opportunity thanks to the limited penetration of our clinical solutions, both in implants and orthodontics. but also in the early 20s. Additionally, we are well positioned to further capture a significant additional share of this market, thanks to our well-diversified multi-brand and multi-price portfolio and a broad geographic presence, which is backed by a global manufacturing footprint. Inflatology, of course, is the cornerstone of our business, where we lead with a 35% global market share. As mentioned in the last quarter, we see considerable growth potential in both developed and emerging markets, driven by increased awareness, more trained patient-facing influence, and improved affordability for patients. Let's move on to slide 15. Our well-established strategy compass is designed to guide us in capturing a larger share of our total addressable market of around 20 billion Swiss francs. At the core of our strategy are three key pillars, innovation, digitalization, and education, each essential to unlock the opportunities ahead. I'm pleased to report that we have made strong progress across all those three areas in the second quarter. First, starting with our premium input segments, iExcel clearly demonstrates the strengthening of our position as the most clinically versatile and efficient solution. In the value segment, Neodent and Ontogear continue to expand their reach. And on the digital side, innovations like Sirius, Unique, the Midas Read Printer new technology, and the Stroman Access platform are transforming workflows, making treatments more efficient and accessible. Altogether, those innovations support both existing and new customer position, reinforce our leadership across the value chain, and position us strongly for continued growth. Now, let's move to slide 16. As we continue to innovate and grow, it is important to stay focused on the challenges clinicians are facing and the true problems we are committed to solving. The premium implant market can be typically split into three segments following implant designs. Paranal wall implants, which now make up about 10 to 15% of total implant volume market. Apically tapered implants, making up roughly 455%. And fully tapered implants, which around 30 to 35%. The trend is clear. Apically and fully tapered designs are growing at a more dynamic pace, driven by immediacy protocols and patient demand for faster treatment, while the classic parallel wall implant segment is declining. Until now, managing different clinical situations required multiple implant systems. To treat different bone densities, clinicians have to choose between parallel wall, apically tapered or fully tapered implants, all with different surgical kits, prosthetic platforms and connections. It is demanding a lot of training, more stock and limits surgical flexibility at your site. When conditions change during a procedure, switching implant designs also meant switching instruments, adding time, complexity and stress for the patient. An additional major pain point remains inventory complexity. Many practices still operate with multiple and fragmented systems, leading to inefficiencies, higher costs, and heavy inventory burdens. IXL changes all of that. It brings together four implement designs in one system, with a unified prosthetic platform, a single connection, and one surgical kit only. This simplifies workflows, reduces inventory, and gives clinicians true intraoperative flexibility, enabling implant design changes on the spot during surgery without changing instruments. Feedback from all first users has been extremely positive. Patients report greater procedural control, streamlined workflow, and very positive clinical outcomes. Therefore, with IXL, we are not just simplifying implantology. We are really setting a new benchmark in premium treatment versatility. Let's move to slide 17. To further differentiate, IXL is coming with RobSolid and SL-ACTIV, two of our most Stroman Group advanced technologies, enabling minimally invasive protocols and faster OCO integration. The combination of its new implant design and the strength of Bronxolid allows clinicians to confidently use a reduced 3.75 diameter in most indications. This not only enables less invasive treatments, but also help preserve bone, supporting better functional and aesthetic outcomes. A key part of our next generation IXL portfolio is the apically tapered C-line made of rock solid and featuring our proven SL-Active surface. The new BNC implant within this line integrates the torque-fig connection already known from our X-line for its high strength and slip abutment designs. BNC also introduces an improved self-taping thread design and extended cutting flutes that eliminate the need for taping and increasing placement efficiency. A major milestone in July was the launch of the RockSolid SLA version of the IXLC line. SLA is our classic surface technology with a proven surface topography that supports reliable bone integration, ideal for standard healing protocols. By offering now this new option, IXL can meet a wider range of clinical needs and cost-conscious customer segment requirements, making it one of the most universal systems in our portfolio. This additional option strengthens our ability to compete wisely across all geographies, supporting broader market penetration and sustainable growth. Let's now move to slide 18 to talk about one of our important R&D focus, ceramic inputs. In July, the Stroman Group acquired full ownership of Maxon Dental, increasing our stake from 49% to 100%. Located in Kensington, Germany, Maxon Dental is one of the most advanced technology centers for ceramic implantology and a developer of the world's first two-piece ceramic implant system using proprietary ceramic injection molding technology. Ceramic implants are more than just an aesthetic alternative. They offer distinct biological advantages that will become increasingly important in clinical practice. According to clinical studies, this includes a reduced risk of inflammation, better soft tissue integration, and a potential lower incidence of oral implantitis compared to traditional titanium systems. To leave this promising field in the future, we have taken another step forward by acquiring maximum dental fluid. This acquisition not only secures a well-advanced and scalable technology platform, but also strengthens the group position as a leader in implant solution innovation. Moving on to slide 19, let's take a closer look at how we deliver excellent customer experience beyond the product, which is closely linked to one of our key success pillars, digitalization. In today's environments, offering high-quality products is no longer enough. What truly differentiates us is our ability to make clinical workflows simpler, faster, and more connected, and that's exactly where our new digital capabilities come into play. Allow us to present a few examples to explain this in practical terms. The FastMolar workflow, for example, is a streamlined, free-stack-only approach that enables to restore quicker and easier posterior teeth. The solution uses fewer plants and reduces significantly chair time, helping dentists work more efficiently and comfortably while still delivering highly reliable clinical outcomes. On slide 20, Let's look at another workflow innovation example, which is supporting the digital full-out workflow, the latest Stroman Exact innovation. It helps clinicians treat patients who need a full set of new teeth by guiding them through each step, from the first digital scan all the way to the final restoration. It simplifies what is usually a very complex process and saves time both for the dentist and most notably for the patient. Now turning to slide 21, let's take a closer look at China, the market with massive long-term potential where education and local capability building play a critical role in accelerating adoption and expanding market access. While implant penetration in China is still low, the introduction of volume-based procurements has significantly increased patient access and awareness leading to a clear acceleration in adoption. However, product availability alone is not enough. To fully unlock the market's potential, investment in clinical education and training is essential. That's why we have made it a strategic priority to build a robust local clinical ecosystem centered around our new education and training center together with the ITI partnership. This facility is equipping more local clinicians with the skills and confidence to deliver high-quality implant treatments, laying the foundation for sustainable long-term growth. In parallel, we have made strong progress in local manufacturing with the phased launch of our new Shanghai Compass, which is now licensed to produce trauma implants. This allows us to manufacture implants locally, improving responsiveness, reducing costs, and importantly, ensuring we are well positioned for future volume-based procurement cycles. With this, Stroman is ready to lead in this high potential market and shape the future of Influential District in China. Let's take a moment now to talk about what sits at the foundation of our consistent performance, our player-learner culture. On slide 22, you will see how our shared mindset and core beliefs shape the way we work and grow. We strongly believe in our high-performance player learner mindset. It's this culture that empowers us to adapt, grow, and stay focused on delivering on our purpose, which is unlocking the potential of people's lives. To show a great example on how our purpose is actionable in our organization, let me highlight our internal Smile Movement initiative. It's a global initiative we launched in March that brings our people together through walking, running, and cycling. Every kilometer is tracked and matched with a donation to the Neustromann Group Foundation, which will help fund dental restorations for patients in need. The goal is to connect at least half a million Swiss francs through a worldwide team challenge. And it is a powerful reminder that together, we can make a real difference beyond our daily work. Finally, let's look at our outlook on slide 23. We have entered 2025 from a position of strength, backed by a down-the-sea-fight portfolio, a strong market presence, and a clear strategic vision. With this foundation, we remain confident in our ability to navigate the complexities of the global landscape and continue expanding our market share, reinforcing our confidence in our long-term ambition for 2030. Our broad geographic presence provides resilience against regional economic fluctuations, while our worldwide manufacturing footprint supports our supply chain flexibility in times of growing geopolitical complexities. It comprises 19 sites worldwide, supporting flexibility and agility. In particular, our strong local manufacturing presence in the U.S. has proven essentials. The majority of our premium implants for static, regenerative solutions and aligners of the U.S. market are produced domestically, safeguarding operational continuity. For value implants, Brazil remains the most efficient production location and we continue to maintain flexibility across our network. Amid the evolving landscape of global trade, including newly imposed tariffs, the group is proactively implementing a range of measures to mitigate its impact. As a result, And despite these external headwinds, we remain confident in our ability to achieve organic revenue growth in the high single-digit percentage range in 2025, along with a 30 to 60 basis point improvement in the core EBIT margin at constant 2024 currency rates. Let's move to slide 24 now. Before we wrap up today's presentation, I am pleased to announce our upcoming Capital Markets Day, which will take place on the 25th of November. The event will be held both in person and online, and we would be delighted to welcome as many of you as possible on site in Basel. The formal invitation with the full agenda and registration details will follow in September, and we hope to see many of you there. With this, we would like to open the question and answer session. If you have a question, please press star and one on your phone to join the queue. As usual, we kindly ask you to limit the number of your questions to two in order to give other participants a chance to pose their questions within the available time. Can we have the first question, please?