SAUHY (SAUHY) Q2 2026 Earnings Report, Transcript and Summary

Ladies and gentlemen, welcome to the Straumann Group Half Year 2026 Results Conference Call and Live Webcast. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Guillaume Daniellot, CEO. Please go ahead, sir.

Thank you, and good morning or afternoon to all of you. Thank you for attending this conference call on Straumann Group's half year 2026 results. Before we begin, let me address the leadership transition we announced this morning. After almost 20 years with the company, I will conclude my 7-year tenure as CEO of the Straumann Group by the end of the year. I have planned actually for quite some time, and I genuinely believe it is a very good moment for a smooth leadership transition. The company is in a strong position with a clear vision, strong strategy, which is delivering results, many opportunities ahead and more importantly, a high-performing management team well positioned for the next chapter. Therefore, I'm sincerely very pleased about Christopher Norbye's appointment, and I'm looking forward to supporting him with a smooth and efficient handover -- but for the time being, I'm fully focused on closing the year strong, meaning that you will still have the pleasure of hearing from Me for the Q3 results. And now let's move on to talk about our half year results. Please take note of the disclaimer in our media release and on Slide 2. 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 3, I will start with the 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. Then let's move directly to Slide 5. I'm very pleased to present our results for the first half of 2026. The excellent second quarter performance, continued market share gains and meaningful margin progress led us to upgrade our profitability outlook in June. We delivered revenue of CHF 707 million in the second quarter, corresponding to an organic growth of 8.5% and reported growth of 5.9% in Swiss francs. This brought half year revenue to around CHF 1.4 billion, representing organic growth of 7.8% or CHF 2.3% in Swiss franc. The acceleration from the first to the second quarter is important. It shows the pace we've drilled through the first half with every region contributing and mature markets performing particularly well. The measures we introduced to improve profitability are also delivering significant improvements. Our core EBIT margin reached 26.9% at constant 2025 exchange rates or 25.7%, including currency effects. Digital solutions were another key contributor. our intraoral scanner portfolio, led by the SIRIOS X3, grew at double-digit rate. This strong adoption is expanding our active from access user base at also a double-digit rate and in turn, driving further growth across software and consumables. This rapidly expanding connected base of users is strengthening our digital ecosystem and creating a platform for future growth across implantology, orthodontics and prosthetics. In implantology, IEXCEL continued to deliver customer conversions and new account wins, while Neodent further expanded its global reach. ClearCorrect also continued to make fast progress with its transformation. And very importantly, we are translating this dynamic growth into higher profitability. Manufacturing productivity and supply chain optimization are lowering our cost base, while disciplined OpEx management is creating further operational leverage. Isabelle will explain the drivers in more detail in a moment. Overall, the priorities presented at our Capital Markets Day are clearly translating into results. We are excited about the opportunities ahead and remain fully confident in delivering our upgraded outlook for 2026. Let me now turn to Slide 6 and look at how this performance developed across the regions. Starting with EMEA, our largest region, organic growth reached 8.6% in the second quarter and 8.2% for the first half. Mature markets performed particularly well with Germany delivering solid growth and Poland and Hungary showing especially strong performance, supported by positive contribution from Iberia, Benelux and other established European markets. Implantology was the main growth driver. iEXCEL continued to attract new customers and support share gains, while Neodent and Anthogyr expanded their reach in the challenger segment through significant new customer acquisition performances. In parallel, ClearCorrect also continued to expand its presence among general practitioners. Moving to North America. Organic growth reached 8.4% in the second quarter and 8.1% in the first half. The region continued to outperform the underlying implant market despite the remaining cautious consumer sentiment and stable patient flow. Premium implantology led the performance with XL driving double-digit growth in new customer acquisition and Neodent also pursuing its market penetration. The DSO segment remained an important contributor, supported by long-term strategic partnerships and increasing adoption of integrated workflows. Consequently, digital solutions also grew at a double-digit rate, supported by our own ultra scanner portfolio. In Asia Pacific, organic growth improved to 7.4% in the second quarter, bringing first half growth to 4.2%. Outside China, the region posted a very strong growth with 25% in the second quarter, led by Japan, India and Southeast Asia. Premium implantology and Neodent performed well, while Digital Solutions made a significant contribution led by Serial X3 and increasing adoption across the region. In China, performance improved sequentially as patient flow gradually recovered and distributor inventory stabilized. We expect the VBP 2.0 process to potentially begin in the second half of the year with an expected operational implementation planned for early 2027. Finally, Latin America delivered another quarter of double-digit growth with 11.8% in the second quarter and 15.4% for the first half. Brazil and the Hispanic markets, especially Mexico, Argentina and Colombia were the main contributors. Premium implantology achieved double-digit growth. Neodent continued to expand across the region and digital solutions also grew at double-digit rate. Overall, this regional performance highlights the resilience of our business model, the high strength of our geographical footprint and our ability to gain share across different market environments. With this regional overview, I will now hand over to Isabelle to take you through the financial performance in more detail.

Thank you, Guillaume, and good morning, good afternoon also from my side. It's a pleasure to walk you through our financial performance for the first half of 2026. Let me begin with gross profit on Slide 8. We generated a core gross profit of CHF 972 million in the first half, corresponding to a core gross margin of 70.5%. Let me walk you through the bridge from left to right. After excluding noncore items and translating the prior year results at 2026 exchange rates, the comparable starting point is a core gross margin of 71%. Productivity and mix added 40 basis points. This reflects not only a favorable product mix, but also the continued progress of our operational excellence program and the enhancement of our production network strategy, including our Shanghai campus, which is now fully up and running. As a result, the rightsizing of our production facility in Villeret has been finalized with a write-down of equipment that will no longer be used, resulting in a onetime margin effect of 30 basis points. This underlines our technology strategy shift towards more advanced technologies such as the multi spindle to further improve productivity in future. U.S. tariffs reduced the margin by a further 60 basis points, resulting in the core gross margin of 70.5% Importantly, if we exclude the tariff impact and the onetime equipment write-down, the underlying bridge shows a clear improvement in gross margin. On the right-hand side of the bridge, the IFRS gross margin reached 72%. The 150 basis points difference to core mainly reflects U.S. tariff refunds recognized during the first half of the year. Overall, the core gross margin remains at a high level. The underlying trend is encouraging as productivity measures, supply chain optimization and local for local production continue to lower COGS. With the gross margin bridge in mind, let me now turn to EBIT on Slide 9. Our core EBIT amounted to CHF 355 million with a margin of 25.7%, including currency effects. At constant 2025 exchange rates, the margin reached 26.9%. Starting from the comparable prior year core margin of 24.8% at 2026 exchange rates, the 50 basis points gross margin change flowed through to EBIT. This was more than offset by 130 basis points of efficiency gains, while other effects added around 10 basis points. As a result, the core EBIT margin improved by around 90 basis points on a comparable current currency basis. The main driver behind this was disciplined OpEx management as well as the execution of our operational excellence programs. Core operating expenses increased in absolute terms because we continue to invest in commercial capabilities, innovation, digital platforms and our strategic priorities, whilst keeping our headcount flat, improving scalability. As a result, as a percentage of revenue, core OpEx improved by approximately 130 basis points compared with the prior year period at current year exchange rates. This reflects operating leverage, sharper resource allocation and productivity measures across the organization. The improving profitability of ClearCorrect and our intraoral scanner business also contributed. Overall, we translated revenue growth into a meaningful increase in profitability while continuing to fund future growth. This brings me to the net result on Slide 10. Core net profit reached CHF 262 million in the first half, corresponding to a margin of 19% -- on a currency adjusted basis, this represents an increase of 15.7% compared with the prior year period. The bridge is primarily driven by the improvement in EBIT, which contributed CHF 38 million. The financial results had a small negative impact of CHF 3 million. Results from associates added CHF 2 million, while income tax reduced the bridge by CHF 2 million. The effective core tax rate was 18.8%. Noncore items had a net negative impact of CHF 11 million after tax, resulting in an IFRS net profit of CHF 251 million. These items mainly include M&A-related effects and legal costs, partially offset by the tariff refunds I mentioned earlier. Overall, this development shows the quality of the earnings improvement and how effectively operating performance converted to the bottom line. Let me now turn to cash flow and investments on Slide 11. In the first half of 2026, we generated a free cash flow of CHF 169 million, an increase of 49% compared with the prior year period. This corresponds to 12.2% of net revenue compared with 8.4% 1 year ago. The increase was supported by higher operating cash generation and lower capital expenditure. Net cash from operating activities amounted to CHF 239 million, while net cash used in investing activities was CHF 105 million. Financing activities and foreign exchange movements reduced cash by CHF 228 million, which included the dividend payment. Cash and cash equivalents amounted to CHF 381 million at the end of June, and we also maintained a net cash position of CHF 350 million, including a target equity ratio of close to 59%. Capital expenditure amounted to CHF 74 million or 5.4% of revenue compared with CHF 113 million in the prior year period. The lower capital expenditure reflects the completion of a multiyear period of significant capacity investment. At the same time, we continue to invest in the Shanghai campus, the expansion of Curitiba and productivity initiatives and digitalization. Overall, our cash generation and balance sheet provides the flexibility to support organic growth, innovation and strategic investments. This leads me to our capital allocation priorities on Slide 12. So let me reiterate, our capital allocation remains unchanged. First, we reinvest in the business to drive sustainable future growth. because over the past several years, we have completed an intensive manufacturing investment cycle and substantially expanded capacity across our network. With the Shanghai campus, additional manufacturing capacity in Curitiba and investments in automation now in place, we have the manufacturing footprint to support the growth we expect in the coming years. As a result, we expect capital expenditure intensity to remain below the levels of the peak investment year. Our second priority is to maintain a strong balance sheet. This gives us the flexibility to accelerate strategic initiatives and pursue value-creating M&A. And third, we remain committed to maintaining and increasing dividends with our earnings. Overall, the disciplined order balances reinvestment for growth, financial flexibility and shareholder returns. With that, I will now hand back to Guillaume for the strategy update and outlook.

Thank you, Isabelle. Let me now turn to the strategy update. I will start with the size of the market opportunity on Slide 14. When you look at our market position today, 2 things stand out: the strength of the business we have built and the size of the opportunity still ahead of us. That is the logic behind our perform and transform strategy. We are executing both dimensions in parallel, strengthening performance in our core businesses while transforming adjacent high-growth potential businesses with investments in new and differentiated value propositions. On the perform side, we are building from positions of real strength. In implantology, we are the clear global leader. Together with regenerative, these are categories where our brands, clinical heritage, innovation pipeline and strong global customer relationship give us a powerful platform to keep outperforming the market. But leadership does not mean we have reached the ceiling. There is still massive headroom in our core business, and we continue to see opportunities to gain share through innovation, stronger go-to-market execution and broader customer penetration. The Transform side is adding a significant dimension of growth. In clear aligners, imaging equipment and CAD/CAM for setting, our positions are relatively small compared with the size of the opportunity. What is particularly exciting today are the innovations we have invested in over the past quarters are now coming together to transform our competitive capabilities in each of those market segments and start to deliver results. So across the portfolio, we have a powerful combination, an implant leadership position we can continue to expand and significant headroom in large adjacent markets where we are only at the beginning of our expansion. This gives us a very attractive runway for sustained growth. Let me now show you how our growth playbook turns this opportunity into execution on Slide 15. Our growth playbook combines product leadership with unique customer experience. Product leadership starts with innovation, differentiated solutions such as Straumann iEXCEL Implant Performance System or the SIRIOS X3 intraoral scanner as key examples. They expand clinical applications, simplify treatment and improve clinical outcomes. But being a product champion is only one part of a successful equation. Today, health professionals expect an efficient clinical experience, seamless end-to-end connectivity through efficient workflows, which deliver predictable treatment execution. This is where digitalization is critical. Our Straumann Access platform turns individual innovations into an integrated ecosystem that improves practice efficiency and create a unique clinician experience. Finally, education completes our dental practice value creation formula. It gives clinicians the confidence and skills to adopt new solutions and workflows with efficiency. Across implantology, orthodontics and prosthetics, the same logic applies. Innovation creates differentiation, digitalization increases efficiency and engagement and education drives adoption. Let's start by the entry point into the ecosystem by moving to Slide 16. Every digital workflow in our ecosystem starts with a scan. This is why we have built a differentiated intraoral scanner portfolio covering the full market through multiple brands and price points. At the premium end, we offer the 3Shape TRIOS portfolio. SIRIOS X3 addresses the midrange segment and SIRIOS provides an attractive entry-level solution. This breadth, combined with the successful launch of SIRIOS X3 has significantly accelerated adoption across all our markets. Over the last 12 months, we have captured a very significant share of global intraoral scanner sales, reflecting the strong adoption of our portfolio. This represents an important strategic opportunity as every scanner placement expands our user base and creates an entry point into Straumann AXS, our open cloud-based platform shown in the middle of the slide. In the first half of the year, the connected user base grew at a double-digit rate, creating a much larger installed base for future growth. Then moving to the right, these workflows connect directly to the Straumann Group product portfolio, supporting clinicians through our implant, restorative and orthodontic solution. This is why intraoral scanners is truly a strategic segment for us. It is the gateway to recurring revenue, deeper customer engagement and future growth across the entire ecosystem. Let me now show you a clear example about what this means in daily practice on Slide 17. The Straumann Fast Molar treatment solution based on our scannable Anatomic Healing Abutment shows how product innovations, combined with digital integration translate into greater practice efficiency. At the bottom of the slide, you can see the traditional workflow. After surgery, the clinician placed a conventional healing abutment. At a later appointment, the healing abutment is removed and replaced by a scan body. After the scan, the scan body needs to be removed and the healing abutment is placed once again before the final restoration at a later stage. This means several component changes, additional chair time and another patient visit. At the top, the Straumann Fast Molar treatment workflow is much simpler. The clinician places the anatomical healing abutment at the time of surgery and can directly scan it on the same day. The restoration can then be produced from the scan without intermediate scan body steps with all the necessary data automatically transferred to the dental laboratory. This is saving at least one full patient appointment and around 30 minutes of clinical time. For the practice, this means higher productivity, fewer handling steps and a more standardized workflow. For the patient, it means fewer visits, less manipulation of the healing side and a faster, more convenient treatment journey. And for Straumann, the workflow strengthen the use of original restorative components and create recurring value around the implant system and its differentiation. The Straumann Fast Molar treatment workflow shows how digitalization is directly improving treatment execution. In addition, AI is also now more and more enhancing those digital capabilities and drive practice growth. We have just released an important AI-led innovation supporting implant case conversion before treatment begins. Let me turn to Slide 18. Here, the SmileCloud AI-enabled technology supports implant case conversion before treatment even begins. As you can see in the video, it transforms a simple 2D patient photo into a dynamic 3D video simulation instantly at the chair side. The patient can see immediately her future use Smile in a kind of real life. This makes the expected outcome tangible, strengthen patient understanding and confidence and support significantly higher and faster conversion of advanced implant cases. Because the solution is connected to Straumann AXS, it also enables more efficient digital case collaboration and further strengthen our ecosystem. Having shown our digitalization supports both treatment efficiency and case conversion, let me now turn to our premium portfolio on Slide 19. In premium implantology, iEXCEL is the main driver. In the first half, it represented close to 40% of Straumann premium implant volumes globally sold. It is attracting new accounts, driving conversion from both premium and value competitors and supporting share gains across key geographies. The simplicity of the platform is a key advantage, especially combined with the unique SLActive surface and the unique Roxolid material, which supports clinicians to deliver excellent clinical outcomes with confidence. To continue on our dynamic market penetration, we are further investing in a rich innovation pipeline built around iEXCEL. As another example, we have just launched iGuide, our fully guided surgery solution for iEXCEL, which translates digital treatment planning into precise implant placement through a simple intuitive procedure, giving clinicians greater confidence and predictability. Overall, we are really confident that iEXCEL and the premium pipeline will continue to drive growth and reinforce our market-leading position. Let me now move from premium to the Challenger segment on Slide 20. Our Challenger portfolio complements premium and allows us to address distinct customer needs across markets and price points. Neodent is our global challenger brand. It continues to scale at a very dynamic pace through constant go-to-market and education investments in key geographies, supported by additional manufacturing capacity now created in Curitiba. Its differentiated ground north portfolio and broadening geographical presence make Neodent a very important growth engine for the group. In parallel to Neodent, our Medentica brand is also growing well, building on its leadership in MPS abutment system, a multi-platform system abutment compatible with all major implant systems. As a new opportunity, it has locally developed in China a new implant line, which will support our challenger offering in this key market. Finally, at the regional level, Anthogyr is expanding in EMEA with Axiom X3 combining clinical differentiation with treatment simplicity. Together, Straumann, Neodent, Anthogyr and Medentica give us a very unique multi-brand, multi-price point portfolio with global reach and especially local relevance. This portfolio is a key part of our strategy to continue gaining share in implantology and China is one of the key examples where this multi-brand approach will become increasingly important. Let me turn to Slide 21. China remains one of the most compelling long-term opportunities in implantology. As the chart shows, China remains far below mature market benchmarks. Compared with Spain, where penetration is around 480 implants per 10,000 adults, China has substantial room to grow. This creates substantial headroom for long-term growth overall. This opportunity is supported by a large patient population, rising treatment awareness and a good growing number of trained clinicians. So the opportunity is there. Let's see how we are planning to capture it on Slide 20-22. Over the past GDP cycle, the Chinese market has significantly evolved and so have we. Today, we are competing with 3 very important strengths. The first is the breadth of our multi-brand portfolio. We have a clear market-leading position in premium with Straumann. And given the low penetration shown on the previous slide, premium still has significant room to grow. At the same time, the challenger segment has become the larger part of the market by volume and offers substantial headroom for us. Anthogyr already gives us an established proposition in this market. Earlier this year, we launched our new locally developed Medentica implant line targeted to the local eco segment. A new event is planned to be finally registered in 2027. This multi-brand approach enables us to address all customer needs and price points. It also gives us multiple options to adopt in the future when VBP 2.0 new rules will be released. After this multi-brand portfolio, our second important strength is local manufacturing. Our Shanghai Compass is complete and fully operational. Most of our Straumann and Anthogyr products for China are now manufactured locally. This improves our cost position, strengthen supply resilience and allows us to compete effectively under different potential VBP 2.0 scenarios. And finally, our third strength is our local education network. Through the ITI and our local education programs, we continue to train new implant dentists and help experienced clinicians move into more advanced cases. This expands the clinician base, support treatment adoptions and build long-term customer trust and relationship. We are very confident that these 3 major competitive strengths will be able to respond effectively to any scenario under VBP 2.0. With that, let me now turn from implantology to the transformation of ClearCorrect on Slide 23. Our ClearCorrect transformation is progressing rapidly. The new value proposition is gaining traction with customers, supported by a sharper commercial focus, a more scalable operating model and digital tools designed for general practitioners. The digital features launched in the middle of the year are driving strong GP adoption, which is accelerating active case growth. AI-enabled tools, especially case assessments, make case evaluation and treatment planning easier. They help GPs treat more patients and start more active cases in full confidence. At the same time, the completed Smart manufacturing transition has improved the consistency of our turnaround times across EMEA and Asia Pacific and is driving the expected COGS improvement. This strengthened the ClearCorrect brand in the GP segment, supports further growth and improves the scalability of the business. Together, these developments keep us on track to reach breakeven by end of 2027 for our ClearCorrect business and make it a meaningful growth contributor for the group. This brings me to one final point on our growth strategy. As Isabelle explained, we are moving into a lower capital expenditure cycle as the major manufacturing capacity investments are largely behind us. At the same time, we continue to invest selectively in the areas that are critical to our short, midterm and long-term growth. Let me briefly highlight where we are focusing this investment on Slide 20-24. First, -- we continue to invest in innovation and digital transformation, including an exciting implant product pipeline for the future and further AI-supported ecosystem treatment workflows. Second, we are investing in go-to-market initiatives to strengthen customer reach and our capacity to scale. And third, we continue to invest in our people, organization and culture. They are essential to execute with speed, consistency and entrepreneurial mindset. These 3 dimensions are critical to deliver the ambition we presented at the Capital Market Day and to turn our market opportunities into sustainable dynamic growth. With that, let me now turn to our outlook for 2026 on Slide 26. Following the excellent first half performance, we upgraded our profitability outlook in June. And today, we are pleased to confirm it. We operate in an addressable market of more than CHF 20 billion with significant growth opportunities across our core and adjacent segments. At the same time, we remain mindful that the external environment continues to be volatile with ongoing macroeconomic, geopolitical and regulatory uncertainties. However, our leading market positions, proven business model and strong innovation and transformation pipeline give us confidence that we can continue to perform across different environments and capture the opportunities ahead. Against this backdrop, for the full year, we continue to expect high single-digit organic revenue growth, together with a core EBIT margin improvement of around 140 to 170 basis points at constant 2025 exchange rate. We remain very confident in our ability to deliver this outlook and excited about the opportunities ahead. With this, we are happy to move to the Q&A session to answer your questions.

[Operator instructions] [indiscernible] can we have our first question, please?

The first question comes from Graham Doyle from UBS.

Well done Hopefully, you get some time off very well earned. Actually, just 2 quick questions. Firstly, just as part of the CEO search, it's reasonable to assume that the midterm guidance was the new CEO had to buy into? And then maybe just a second question on working capital, if Isabelle, if you could just give us some color on the receivables buildup in the first half as well, please?

You want to start with the net working capital...

Yes, happy to start with the net working capital, Graham, and thanks for your questions. So I think, I mean, we need to differentiate between a couple of different things. I think when it comes to inventories, looking at this, we had the tactical buildup during last year with the tariffs and we're still, as we speak, mitigating. I think you all noticed there was a new announcement in July. So we started to slightly stock up again. But this is all planned and nothing to worry about. It's just really us managing basically the uncertainty we have with the tariffs as well as the slight uncertainty with the VBP because obviously, we want to be prepared to be able to deliver. When it comes to the accounts receivable part, I mean, there's always some swings and roundabouts when you look at it at certain point in time because given we are looking at an average of 12-month revenue compared to a spot accounts receivable balance. And there's a lot of phasing, obviously, in there looking at it and June was a super strong month. This is why from a percentage point of view, it was up slightly. But if you look at it, I think what is important to notice, please, for the time being, do not only look at trade working capital, but include other working capital as well. Given last year, we had a reclassification from other to trade working capital. And if you look at it, we are basically more or less flat compared to prior year at the same period in time.

Yes, Graham, thank you, Isabel. And for the midterm guidance, Graham, yes, I think we come back to the short comment I've done at the beginning. The company is in a very strong situation with a very clear strategy, an ambition that has been aligned with the Board, that has been communicated to the capital market and with a strategy which is showing already quite strong results with regard to the performed transform we put together. Then while he has not started yet, but I can speak on his name, but yes, Christopher agrees with the midterm guidance that we have given. And well, with what we are, let's say, transitioning, then this is going to be a good position to get there, at least we are very confident to get there. And something to say as well the management team is also then aligned and also confident with that guidance because we have really, really strong leader in all the different parts of the world and the company. And this guidance is a commitment not only by the CEO, but by the entire organization.

The next question comes from David Adlington from JPMorgan.

Maybe just on the CEO change and thanks for your work over the last 7 years. But I just want to check, did you check internally and what was the thought process to go external? And then secondly, just on -- maybe just on VBP. I just want to get your latest thoughts on what you think the likely price impact is going to be.

Yes. On the CEO change, obviously, it's more a question for the Board because these are the Board owning than the CEO decisions and selection. But what I can confirm is, yes, I think we are looking at talent inside and outside. And at the end, I think the Board has decided to go with the candidate which is providing the breadth of expertise and experience that will be the most adequate with what we want to achieve. And I think Christopher is coming with obviously a very large expertise and experience on different functions, different geographies, different industries. And as we have a very strong dental knowledge internally, I think that the value will lie in the combination of bringing all those knowledge together. And I'm sure that as we believe he has a personal trade that fits well with the Straumann culture, that's where we believe that it will be a good asset and a value creation for the organization. When it comes to VBP, I see VBP in still in a positive way for, I would say, 3 major reasons. The first one is we are entering into a very low comparison base. We have done a significant double-digit decline in China than now since Q3 2025, meaning that we have almost 4 at least 2.5 quarters to go with a low comparison base that could absorb any kind of changes also in the Chinese market coming from a potential price standpoint. The second side is that I believe that from a pricing standpoint, I don't see a significant price reduction. And I think I explained a couple of times because in the private market, which is representing 80% of the market in China, the price level are already much lower than the VBP price level that has been set 4 years ago. And that it may decrease the price that was set 4 years ago, but the reality is that the ASP is already lower, and I don't expect a major overall ASP drop versus what we had in the past. The third reason why I'm confident is that we have local manufacturing and multi-price point with our multi-brand strategy. Then -- while we don't know what the rules of the VBP will be, I think what was critical for us is really to prepare multiple options. And we have multiple options in price points, a lot of options from a manufacturing standpoint. And I think we have the premium company with being the most advanced in local manufacturing in the country. Then if you combine lower COGS with acceptable, we said between minus 5% to minus 15% at ASP decrease maximum and the capability to play in different segments, we see the VDP as a potential opportunity to continue to gain share if we play the new rules in the right manner. And obviously, everything will depend on those rules. We will do, as usual, being agile, being dynamic in execution and especially at the end, serving clinicians and customers in the better way because this is also what is guaranteeing long-term success by creating relationship and engagement from that side.

The next question comes from Hassan Al-Wakeel from Barclays.

Firstly, another on the CEO transition, and thank you for the interactions over the years, Guillaume, and congrats on the many successes. Can you elaborate on why now having presented the 2030 strategy relatively recently and the Board's view on what Christopher will bring to advance the growth strategy of the company, the strengths, his expertise, particularly given a more limited health care background. And then secondly, if you could help unpack the magnitude and drivers of the strength in digital solutions in North America, how SIRIOS X3 is trending since the Q4 launch and the extent to which this is supporting your higher profitability view for the year given the mix benefit? And how significant a growth driver or accelerator of growth in NAM could this be in the years ahead given the success here in recent months?

A lot of questions, A. Thanks for the kind words. Why now? Very often, people are expecting a management change when you have a crisis in an organization. And what is really important is -- was that -- I see my role as a CEO, one of the last very important things that needs to be done is to do a very smooth and efficient transition. And that was also part of my responsibility, and I'm not taking that lightly. 20 years in an organization, 7 years as a CEO, you can count the COVID years double. Then I think it's also the right time that we can have some fresh eyes and different perspective to continue then to enrich the Straumann journey and bring it to the next level. Then I'm proud about the years I've done here to serve, but I think that value could be created also by a different perspective after a while. As we are in a very strong situation, as we have a very good strategy, I think it allow more flexibility in that transition at looking at obviously different candidates. That's one of the reasons it's now. It's also because I have planned that for quite some time, and there is a limit to every good thing. And December 2026 will be this one for me. When it comes to Christopher, I think once again, it's a Board decision. I've been happy to be associated in the search and being able to see then his background. And I think what Christopher has done is interesting in many ways. I think first thing he has done a lot of different roles. He has responsibilities in finance. He has responsibilities in operations, in sales and obviously, also CEO in both private equity and listed company standpoint. And I believe that this is always already giving a very, very good overview on how you can also maximize value creation in an organization. The approach where I think it's a lot of value for us, he lived in China, he lived in the U.S., he lived in Europe and looking at the split of our business at Straumann, which is truly global with 45% in Europe, 30% of our business in NAM, 20% in Asia Pacific, 8% to 10% in LatAm, you need to be global in your way of thinking, but still having local relevance in what you are talking about. And I think there are a few leaders that have that breadth of experience from a geographical standpoint and from also then the different functions in an organization. And the third, I think it's also -- I think Christopher has a very strong track record on value creation in the different companies he led, which is also something, obviously, that is very critical for the Board and every investors making sure that this is a proven leader in the organization where he went. And finally, to your point on no health care or not so much health care experience, indeed, he has not lately a lot of experience on health care, but he started his career in Össur, where he spent 8 years on the orthopedics side and then he has already experienced this environment. At the same time, as I expressed to you before, we have a very strong management team that knows dental very, very well. And when you have a new leader coming, it's also his specific expertise that are coming from his past experience that will be an asset for organization. A lot of M&A in venture experience. If I remember in ASSA ABLOY, there have been a lot of digital transformation in all those locking systems that we have been able to lead. Then yes, I think a lot to learn. And I think a good leader from a cultural standpoint that together with the team and the 12,000 worldwide Straumann team members will lead this company to the next level when he will take over in December. Now a very strong onboarding will be done. He needs to travel in all the different regions, in all the different manufacturing sites, meeting people and customers where they are. And this is what I actually developed it even by myself, and I will make sure that he will see all the key areas, key customers and especially be confronted with the key topics in order to be ready to take a lead and of course, drive this then the journey to the future. When it comes to the digital side, you were asking in North America, yes, double-digit growth in North America and digital. It's a strong acceptance of our SIRIOS X3. But once again, it's also a strong partnership with 3Shape, where we are really selling what the customer wants. And I think this is very important. There are a lot of different expectations when it comes to starting digital dentistry. You have the high-end doctors that want to have already the high-end technology being able to leverage maybe more advanced software capabilities that are going together with the scanner, and that's where our partnership with 3Shape that we really value is supporting us to offer that right solution as it's fully connected with our Straumann AXS. Now SIRIOS is offering the opportunity for GPs that want to have a lower investment to then be able to start also their digital journey. And that's why it was so important for us to have an entry-level scanner that we have with SIRIOS, which is a level below SIRIOS X3, which is also very supportive, allowing us to do product bundle with implant or clear aligners because of the fact that as a proprietary technology, then our Cost of Goods Sold (COGS) is very different than a third-party product. And that's what we are doing. And while we have been able to grow significantly in this business, we did not need to increase significantly headcount because we have automated a lot of those processes. And I think with the maturity of our team having increased significantly in digital, I think we are also much more efficient in the way we are handling digital customers.

The next question comes from Julien Dormois from Jefferies.

Guillaume before my 2 questions, since congrats on the highly successful team and also thank you for the openness and engagement you have shown with all of us over the years. So I wish every success in the next chapter. My 2 questions. The first one pretty much relates to the midterm guidance. Obviously, you were pretty optimistic about the company continuing to improve its margin between 2025 and 2030, but you've almost delivered 3 years in one in 2026 already. So how should we think about the path to 2030? Is the objective pretty much the same? Or has it been upgraded in the meantime? And the second question is back to China and VBP 2.0. First, we're now at the end of August. So have you seen any sign of change -- any early sign of change in ordering patterns among your customers? And whether you believe that following the implementation, we should see a pretty meaningful rebound in patient volumes like what we saw in VBP 2.0?

Thank you. I appreciate the comments, and I will start with VBP and Isabelle commenting on the trajectory that we're expecting on the profitability side that we see as positive. at the moment, a stable situation on the China pension flow. Somewhat the news has been already sent out last year, people were expecting it. And now I think it's not a news anymore. It's -- people were even wondering so we if this is going to come anyway. Then we don't see any change in the current market dynamic and the patient behavior. We have this stable patient flow. Distributors are still keeping their inventory at a rather low level, but keep ordering as they are getting the need from clinicians. And then that's why we're expecting despite the VBP potentially getting operationally started that we should have significant growth coming from China based from this low than the comparative base. What will become -- do we expect a significant boom in volume? I don't think that VBP will completely slash the pricing like it was the case, then I think it will come back to regular double-digit growth in the low to mid-teens, which I think this is what China potential is having in its potential. And this is the way we are planning it for the years to come. Now of course, we can have even stronger growth if then there is a little bit more price decrease than what we have planned. But yes, we see China as a very interesting market moving forward. And we believe that in the next 12 months, we should see a double-digit growth whatever the VBP will be coming because we have all the ways that we can answer this.

I'm happy to take over your question regarding the margin guidance. So I can confirm that our 2030 ambition remains unchanged to what we communicated last year at the Capital Market Day. The strong profitability development we've seen in 2026 really reflects, I would say, faster execution, more focus on several initiatives we already discussed. So I would say it's nothing that structurally changed. We just really see that execution and how our teams pick up the different initiatives we launched in a very, very positive way and really make sure we get the full benefit we actually wanted to see. So on the COGS side, obviously, it's the manufacturing, the new footprint, supply chain optimization, all of the new machines we already talked about. This is picking up nicely. But then especially on the OpEx side as well. And this is why for me, it's so important to stress this, what we're talking about is a sustainable improvement in our margin. assets on the one hand side, really all the operational excellence that now comes to work. But when you look at our numbers that compared to last year, our headcount has been flat and our administrative expenses have gone down. And this is part of the equation. So it's not that we say we're doing those huge restructuring programs, but it's really focusing our energy and our resources where they bring more value, which means we reallocated people naturally from admin functions more towards sales and put a huge focus on how can we automate, how can we standardize and how can we get the best value. And this, of course, includes our procurement excellence program we've talked about quite a while. Having said this, I would not interpret the increase in profit guidance and the big improvement we are seeing as pulling forward the fixed demand from the years to come. But I can reiterate, we say we have 40 to 50 basis points as an average annual core EBIT margin ambition. Of course, strengthening average because it can vary in the different years. But I would expect the good progress we're seeing now to continue well into 2027. Obviously, still too early to give a clear guidance for next year. This will come at a later point in time, but happy to confirm the ambition we stated and that all of the initiatives we talked about are well on track.

The next question comes from Hugo Solvet from BNP Paribas.

Congratulation Guillaume on the tenure as CEO and all of the interactions over the year. Maybe first one on Isabelle, a quick follow-up on the last question on the core EBIT 130 bps efficiency gains. Can you unpack this a little bit for us, please? And you're clearly delivering ahead of the initiatives and ahead of the plan. So do you see additional levers to be implemented in the next couple of years? And lastly, on instruments, obviously, strong contribution to group growth. Can you quantify that maybe for us, please? And as you will be lapsing strong comps in the coming quarters, would you anticipate instrument growth to slow down or to continue at a strong double-digit pace. Thank you.

So I'm happy to take the question on the core EBIT margin, A. So it's -- I mean, the programs we announced last year during the Capital Market Day, they are still, I would say, up and running and continuously evolving. So looking at OpEx intensity, it's majority around operational excellence, really thinking things more globally, how can we use our resources in a more mindful way and really allocate people where they make most sense to achieve our targets in total for the group. Having said this, I think for me, strongest indicator, what we see now, flat headcount with 8% growth. So I think this is a really good achievement. Of course, we are planning to do more of this in the years to come. But obviously, as you can imagine, when you start programs like this, you still find some of those so-called low-hanging fruit. So you can execute quite quickly on some stuff you see. But in the years to come, obviously, we will see more of those improvements. So it's particularly obviously about becoming more scalable, more automated, focusing on our people, on adding value. And then on the other hand side, getting all the procurement savings we can have as a group. But looking into the years ahead, of course, we need to be aware this does not come for free, but we need to invest into this. We need investment into technology, into new structures we will potentially need. And this is why I'm super confident with this 40 to 50 basis points because we always have to make sure, of course, to find the right balance. But the moment we invest, we will have a negative impact on the margin and a positive impact from the initiatives that are already up and running, but we expect this trajectory to continue well into 2030.

When it comes to the digital equipment, Hugo, and thanks also for the comment, just that there is a lot of penetration still to do. Not only actually -- and thanks to our technology, which is very cost effective, our market is not only like the mature market that we think have the capability to afford digital technology. But actually, we have the capability to be strong in Brazil, strong in India, delivering a lot of technology equipment in China. And we see, again, in the next 3 years at least capability to grow those digital sales moving forward. And especially if you look at it and which is also one of the underlying vision of the strategy, which is our overall workflow and our ASX platform, when we are going to have done, for example, a lot of the penetration with scanner and we see those workflow further developing, we will be able to plug any potential new technology to this platform. 3D printing as we are doing as a partnership with SprintRay, milling machines or any new technology that will come that we could want to have also kind of a proprietary technology that we have opened up an opportunity of digital equipment that will not be only related to intraoral scanners, but to any technology that will improve the workflow in the future, and we'll be able to decide whether we want to play in it as a partner or as also having our own offering. So that's why we see that as a very exciting path into the future where we'll be able to continue our digital equipment business moving forward.

The next question comes from Susannah Ludwig from Bernstein.

I guess, first, congratulations, Guillaume, on a long and successful tenure at Straumann. I have a couple of questions on margins. You noted that executing ahead of expectations on internal improvements was the key driver of your margin guidance upgrade. But to what extent did the VBP delay and lower Brazil tariffs play a role? And to what extent have you decided to reinvest some of the benefits from the improved external environment? And then just quickly, with the recent weakening of the Swiss franc, what's your current expectation on the margin headwind from FX?

I may take the first part of the first question, and you will complete Isabelle and make afterwards. But yes, that's a very good question, Susannah. Actually, yes, we are reinvesting a part of the great results that we are having on the profitability side. And maybe we did not present it like this at the Capital Markets Day in detail, but we were having clear plan on that profitability side. And that's the result of 12-month efforts that we have been doing since somewhat Q3 last year because if you look at that 12-month period, where Isabelle said that our headcount remained flat or even decreasing despite a high single-digit growth, and that's what we have been planning over the past 12 months on one side, gross margin and manufacturing, then being more efficient on our own manufacturing technology, leveraging local and different manufacturing places at lower cost, but also moving when possible, third-party product to our own proprietary technology, which is what's happening with the digital side or contracting partner like Smartee to decrease this. And obviously, afterwards, being able to reinvest some of it despite efficiency in our -- then the operational work into go-to-market innovation, and I think we are building up also an exciting pipeline in the implant side, but also on the digital side and ClearCorrect in the future as we are seeing already the development we just launched. Then yes, I think we are not putting everything out there on the profitability side and the EBIT line, but really making sure that we are going to have all the necessary investments to deliver our 10% CAGR midterm guidance that we put out there for 2030 in our -- the midterm guidance plan.

And Susannah, thanks for your question. So happy to take the more financial structural part of it. So regarding the EBIT guidance upgrade, I can confirm the significant part of what we've seen is a structural improvement. and that is here to stay. But you're perfectly right, obviously, pointing out, we have 2 external tailwinds that help us as well, particularly the lower tariff exposure and the delayed implementation of VBP 2.0. I mean what we've seen in the first half of the year, when you look at it, we still had a significant impact from the tariffs. So the release is more to come in the second half because you have seen the 60 basis points on the gross profit. And to bear in mind, this is on the one hand side, the tariffs we paid this year, and we still have to pay, although on a lower base than initially expected. And then obviously, the unwind from last year's tariffs on the balance sheet. Just as a reminder, that was CHF 7 million as well that came into our P&L this year. So having said this, it's hard to quantify exactly given VBP is a little delayed, lower volumes, lower costs as well, but we still have the higher prices out there. I would say at least 2/3 of the improvement we have seen is structural and the rest would be a little bit tailwind from the tariffs and from the VBP taking place later than expected. Yes, regarding FX, this is obviously always the hardest question to answer. But just to give you a feeling of where we are right now. So if we use the current spot rates as of July, the impact we would expect for this year would be somewhere in between 80 to 100 basis points negative impact on the EBIT margin.

The next question comes from Daniel Jelovcan from ZKB.

And of course, I also shared the comments from my previous speaker regarding you,Guillaume . So first question is, can you shed some light on your USP of iEXCEL now versus the competitive inroad of the S line of No. They mentioned that 25% of their actually quite good growth was from competitive accounts. I don't believe it's coming from you. It's rather coming from the other U.S. guy, but maybe you can shed some light on that. I mean they mentioned the same clinical connection for all the lines and so on, but maybe how it compares to your iEXCEL? That's the first question. And the second question, why has LatAm slowed down, still a good growth, of course, but not close to 20% like in the past?

Thanks, Daniel. And I appreciate you allow me to go on the technical side. No, S line is an interesting, let's say, new product that -- or new initiatives that nobody is doing, but it's not at all comparable with iEXCEL for different reasons. The first one is that what S line is that they took their old implant design and they put the same connection on it. And from that perspective, they have imitated our connection for implant design, okay? And that's the only thing that it's, let's say, comparable. What is not comparable is what the quality of this connection is about is not putting the same connection on all implants, which is making your connection successful. With our TorcFit, we have the best connection, which is existing on the marketplace and very, very well expressed by clinicians from a stability standpoint, from tightness standpoint from then the easiness to use standpoint. And then I think that's where I think the value of the connection being placed on all our 4 implant design are representing, obviously, already a USP on the connection that has been placed on Nobel implant design. And the critical value of iEXCEL is on the one side, the fact that you need one surgical kit. What does it mean? It means when you start surgery, you can -- because you use the same surgical kit, you can change your mind and you can still decide the implant design you want to use even when you have started the clinical case. And this is unique to iEXCEL because on the line, it's still the surgical kit corresponding to the implant design that they are having, okay? The third, of course, huge difference is that iEXCEL is combining the unique SLActive surface and the unique Roxolid material, which is allowing for minimal invasive surgery that we are the only one to have. Then while it's good to see Nobel taking initiatives and being able to keep this premium segment and more dynamic and demonstrating the value of premium offering through new initiative and innovation. No, this has not slowed down at all our iEXCEL growth, and we don't see these initiatives as a way to slow down our market share gain on the iEXCEL system. When it comes to LatAm, Latin America, yes, I think one can say 11% or 11.8% might not be what we have been used to. You have to look at Q1 where it was 19.5%, which was higher than what we were expecting. Then if you look at the first half, which is already 15%, then this is exactly what we're expecting from Latin America being in the mid-teens. And if you deliver in an incredible number of consecutive quarter like LatAm has done on a high base, I think they are doing a super job. And I would more look at the 15% growth for the first half, Daniel, which is more demonstrating the performance of the LatAm team more than just the spot look at what Q2 has been.

The next question comes from Veronika Dubajova from Citi.

And also, Guillaume, let me add my congratulations to an incredibly successful career. And thank you for all the interactions we've had through the years. Maybe just a couple of quick ones for me. One, I just want to go back to the success you're having in digital. Obviously, you've talked about this doubling of market share. If I look at what you've achieved since you gave that ambition at the CMD, which was only 3 quarters ago, you're already there. By my math, kind of digital has added 200 to 300 basis points to group growth rate so far year-to-date. I'm just curious kind of whether you're rethinking that ambition and you think there's scope for you to expand your market share more beyond that sort of 10% ambition that you gave us back in November and sort of or whether this is a pull forward of that success, but you think that sort of doubling of market share to roughly 10% is still the right number, but we're getting there a lot faster than you thought. So that's my first question, please. And then my second question is just a quick check in on the North American market. And obviously, with a lot of the noise and heading into the midterms, what are your best expectations at this point in time for the growth rate in North America in the back half of the year given the tougher comparison base and maybe some conflicting data points on consumer confidence as well?

Thank you, Veronika. Yes, on digital side, I think it's -- and that's also a good question. When you look at the 10%, and we try to put 10% plus on this segment, the segment which is represented here, it's not the intraoral scanner on its own only. It's also the 3D printed and the milling machines and it's all digital equipment. And that's why we are saying 10%, but it means that it's already much wider or larger when it comes to intraoral scanner per se. okay? Then we have significantly increased our market share on intraoral scanner. It's still difficult to assess it. But I think, yes, I would say in the number of scanners sold per year right now, we are on, I would say, at least between 1/4 to 1/3 of the number of scanners sold in Munich right now based on the performance that we are seeing and the echo that we have seen from other players in this field. Then that means we are representing more and more a very larger share of the intraoral scanner sold, and I believe this will continue. Then it will be a way where our 10% obviously increased significantly more right now. And as we are presenting that in a yearly market share, that's why we did not move it to 20% already. But putting 10% plus on our side means that we are already seeing that we are moving very significantly the needle. And we expect more for the months and quarter to come, and we are continuing to invest in new technology together with partners because we also want to play into the 3D printing segment, and we still value very much also the partnership we have with SprintRay. We are creating innovative workflow on this one. And I think that stay tuned in the third quarter on the digital equipment side, we will continue to have innovation that we will bring in order to make sure we are ready also for the peak period that will come in Q4. But also to the future IDS that will come in March 2027, where we'll be really, really coming up with a really interesting solutions in line with what we have done, I would say, for the past 18 months now. Coming to NAM, North America, yes, I think we are benefiting obviously from an easier comp for the first half. The second half will be a higher comp. But I still believe that we said that NAM should be in between the 6% to 9% growth rate. This is the way I'm seeing that's the bracket 6% to 9% more in the high single digit, I would say. I think if the market is not supportive, I would say we would be on the high end of the mid-single for the second half. But I still believe when I see the current trend and what we're able to achieve that we will be on the high single digit. And at least that's what we aim for. We have good opportunities on the field. We have a strong leadership in place in North America. We have strong customer relationship as well with also a very good dynamic DSO segment and then a lot of arguments, thanks to the digital workflow to continue to differentiate versus competition. And that's the way we are seeing it. And then yes, that will allow us to close the year strong. Thank you for joining us -- thank you, Veronika, and thank you for joining us today and for your continued interest in Straumann Group. We look forward to seeing you again soon. Wish you a very nice day, and goodbye from sunny Basel.

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