Straumann Holding AG ($STMN)

Ladies and gentlemen, welcome to the Straumann Group Q1 2026 Results Conference Call and Live Webcast. [Operator Instructions] And the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Guillaume Daniellot, 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. 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 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 5. I'm pleased to present to you today a strong start to 2026 with a solid performance across regions and business segments. We delivered revenue of CHF 673 million in the first quarter, corresponding to an organic growth of 7.1%. All regions contributing to this successful being 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 the strong customer engagement we are creating through education. In implantology, we are further expanding our leadership through innovation, driven by the continued rollout of iEXCEL and the development of our clinical education and research activities with exciting new initiatives, including the launch of a new specialist network, more on that in a moment. In orthodontics, the transformation is progressing very well. The transition to Smartee 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 6 and walk you through the regional performance in more detail. 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. 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, VBP. However, underlying trends are stabilizing with improving patient flow and distributors slowly restocking from low inventory levels. Overall, this resulted in a stabilized regional development of 0.5% 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 implants 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. 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 2026. Let me start on Slide 8 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 CHF 53 million. This was mainly driven by the U.S. 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%. 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 of currency movements, the underlying business performance remains strong and well diversified. At the same time, we continue to actively mitigate external headwinds through our operational excellence measures, which I will walk you through on Slide 9. 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 Villeret, where some volumes have been reallocated as part of our global manufacturing setup. In orthodontics, the transition of production to Smartee in EMEA and APAC has been successfully completed and the ClearCorrect production site in Markkleeberg has been closed. This marks an important step towards 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. Neodent is further strengthening its manufacturing capabilities with the expansion of its site in Curitiba 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. These measures strengthen our ability to mitigate external headwinds, including foreign 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. We operate in a large and growing market of around CHF 20 billion, 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 implants 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 are still relatively low and where we see significant upside potential. This includes clear aligners, where the market size is around CHF 5 billion, and our current share is around 5%, highlighting the opportunity ahead as we continue to transform our orthodontics business. In addition, we are building strong momentum in digital equipment, particularly intraoral scanners and CADCAM 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. Supporting our premium implant growth, iEXCEL 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 iEXCEL 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 iEXCEL is increasingly becoming the system of choice, further supporting our market share gains. Importantly, iEXCEL is the most successful product launch in Straumann's history despite being on the market for just over a year. Building on this success, we are now clearly doubling down on it. All new premium innovations will be built on the iEXCEL platform, further strengthening its value proposition and driving continued adoption. Let me highlight a few examples. We are launching iGuide for iEXCEL specifically designed for full-arch treatment, enabling faster and more efficient guided surgeries in higher-value indication. At the same time, we continue to expand the platform with new prosthetic solutions. This includes the introduction of the new enhanced Variobase XC line, featuring a laser-treated surface designed to further improve performance and clinical outcome. 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 ITI, we have a leading global network for based education and research with more than 25,000 members across over 100 countries, gaining 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. Building on this, we are now further expanding our reach by supporting the launch of AOMI, a new global specialist network focused on advanced oral and maxillofacial implantology. With AOMI, 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 AOMI create a very powerful and complementary education system, 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. 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, improve scalability and profitability through our Smartee 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 Smartee in EMEA and Asia Pacific. This strategic partnership allows us to significantly improve our manufacturing efficiency and variability, creating a strong foundation for future profitable growth. 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 a leading position among general practitioners. In these targeted growth markets, we are already seeing great progress in case conversion translating into solid growth for ClearCorrect. 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 clear correct value proposition. Let me highlight a few key examples. First, the integration of CBCT data into the workflow, enabling more comprehensive diagnostics and improve treatment planning particularly for more complex cases. This is then strengthening our clinical capabilities. Second, the outcome simulator, which allows clinicians to visualize treatment results with the patient directly at the chair. This significantly improves patient communication and drives higher case acceptance. Third, the introduction of scalloped trimline, 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 positive feedback, especially from general practitioners as it reduces chair time and improves treatment consistency. Overall, all these innovations, combined with our improved operating model and focused go-to-market approach, significantly strengthens 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 SIRIOS X3 intraoral scanner, which has been on the market for 6 months only. Since its launch, we have seen very strong growth with overwhelming customer feedback and high demand across regions. 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 MIDAS Signature 3D printing solution. Here, we continue to expand our offering with new features being introduced this spring. This include expanded indication such as new advanced materials with a higher ceramic and inlay and onlay application. 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 billion with significant growth opportunities across our core and adjacent segments. At the same time, market conditions are expected to remain volatile with ongoing macroeconomic and geopolitical uncertainties. 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 rate. With this, we are happy to move to the Q&A session to answer your questions. As usual, we kindly ask you to limit the number of questions to two in order to leave other participants a chance to pose their questions within the available time. Chorus Call, can we have the first question, please?

Sure. The first question comes from Hassan Al-Wakeel from Barclays.

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 make its way to your cost lines this year or next on the back of the Middle East conflict? And what steps are you taking to mitigate be it pricing or otherwise?

Thanks, Hassan. A lot of questions into two. Well, let me comment on the North American side. Most of our improved economic is coming from stronger execution and capability to materialize on the innovation we launched in 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. We have seen strong traction of our iEXCEL innovation on the premium side. We have seen a good development of our challenger brand a lot also through our DSO partnership. And we have seen also for our new transform areas, a significant growth on the digital side, thanks to the complete value proposition we have with SIRIOS for the entry and mid-level but also with 3Shape as a higher-end offering of the iUS market. And finally, we see orthodontics also then being able to getting traction versus what we had in the past year. Then one of the good confidence we are 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. 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 demand, we are not seeing impact for the time being. If you remember, in 2022 and 2023, 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 treatment are not immediately impacted by the lower level of inflation. What has 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 on 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 have taken, let's say, the measures in order to mitigate any potential increased cost 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 group because it's a 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.

The next question comes from Susannah Ludwig from Bernstein.

I have two, please. I guess, just first on China. Is there any update on the timing of VBP. It sounds like, I guess, the patient flow has started to get better and there's less maybe a little restocking, so how you're thinking about through the trajectory of that business until we hit VBP. And then second, can you talk a little bit about sort of the headwinds and tailwinds for margins in 2026? I guess, versus when you gave the guidance, we've had tariff cuts in Brazil, potentially sort of further delay in the VBP and, hence, delay to the price cuts. And then through the start of the Middle East conflict, how should we think about the magnitude of the potential tailwinds versus potential headwinds?

Yes, of course. So Susannah, thanks for the question. China VBP, then the -- well, what we can say is that no news, okay? And that's 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. Then what we can say, what does it mean for us? It means 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 VBP could happen. We have then, as a consequence, distributors that are also slowly restocking in line with current implant 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 low negative low single digit to flattish for the second quarter and, obviously, with a pretty good growth in the second half because we have seen the start of significantly destocking at that time. Still VBP would be coming. What does it mean? It means that we would have, of course, a lower volume in the 3, 4 weeks of implementation, much higher afterwards, and that's why we would still see growth, we believe, in the -- And we are also then higher pricing for a longer period than expected, versus our initial plan. Then I would say the fact that VBP 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. 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, Susannah. So 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 Guillaume already elaborated, we continue to carefully monitor and manage the factors. We do have volatility, tariff developments, timing of the VBP, oil pricing, what have you. So this is something we're very aware of on continuously monitor. And just to remind you, what we said in the beginning, what we assumed for our guidance is a 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, it's our orthodontics transformation. The Smartee partnership improves the economics of our aligner business and margins with that, so primarily driving COGS down due to the lower COGS per aligners, the automation and manufacturing and scale Smartee 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. A lot of the products we sell in China are now produced in China. Adding to what Guillaume said, we can hold on to the higher pricing for a longer time, but at lower COGS from our Shanghai campus. We see a stronger digital mix with our own scanner portfolio, namely the SIRIOS 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 impact in the first half year and, now, with the current announcement, a little bit lower impact in the second half, obviously. Still to be seen how it really turns out after the 150 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. Environment, however, remains a little volatile, particularly with the geopolitical macro uncertainties. So what I can say, so far is early trends are encouraging to what we see. Phasing 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.

The next question comes from David Adlington from JPMorgan.

Most of my questions have been asked. Maybe just firstly on LatAm. I just wondered if you could pull out how much the growth was due to pricing. And if it was due to pricing, how much is that sustainable? It sounds like the market has been strong, but I just wanted to get a pricing impact and then 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 potentially would highlight as a potential problem as we go into the second half and into next year.

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. 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. And 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.

On the cost inflation side, and David, I think what we can say so far, it's well under control. First, Guillaume 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 1, 1.5 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.

The next question comes from Hugo Solvet from BNP Paribas.

I have two, please. On EMEA first. 8% organic in Q1. Could you maybe discuss the impact from pull forward of plan? 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?

Yes, Thank you, Hugo. EMEA, I think I expressed that on on a 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. On the one side is, of course, the fact that we are present in the entire Western and Eastern Europe, again, with subsidiaries 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 [indiscernible] implant 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, the Q4, then the very significant 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%. 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 to low double digits, but it's still having 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. And when it comes to profitability, Isabelle will give more color on this. But yes, it's more an improvement of what we saw in the first half that we are seeing from a trend standpoint than some of the second half 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 second half.

So thanks, Isabelle, for the segue. I mean, very good question, Hugo. So 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. And there's majorly two factors that go into this. It's, on the one hand side, the tariff impact. So we 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 the assumptions for the full year or to point to any specific upside, especially since it's yet to come, what will happen after the 150 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 2. And the 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 how 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 a 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 COGS side. And we see some tractions that might be a little bit earlier than planned, on automation being done, on 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, 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.

The next question comes from Julien Dormois from Jefferies.

Guillaume, Isabelle, I have two, and they are actually -- one is follow-up to your comments, I think, it was on China. But I 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, I guess. 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 maybe the impact -- the headwind has come down a little bit from when we last discussed.

Yes, thank you, 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 then better contribution to the overall group growth in the rest of the year.

Yes. And to put a little bit more color on to 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. Going into liberation day, especially the U.S. dollar was particularly stronger than it was this quarter 1, so as indicated roughly 10% and 4% for the euro. And we would 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're operating in a very volatile environment, and I think we somewhat 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 FX impact will be slightly below what we've seen last year.

I'm sorry, just to follow up. We're talking about margin impact, right?

Both actually. Both. So what we currently see for the margin impact would be roughly 100, 120 basis points at end of March quarter and lower impact for the top line as well.

The next question comes from Graham Doyle from UBS.

Just two questions, please. On China, so can you just maybe talk a little bit again about that phasing to the extent you can. I understand it's like VBPs 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 VBP out there? Or should we expect, like, say, more moderate growth in the second half than, I think, consensus models more like kind of 20% in the second half. Just to understand, is it just kind of balance phasing there now as well? And maybe if you could just comment on the U.S. Obviously, the comps get a bit tougher 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, I don't know, 5 quarters or something. 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.

Well, 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 a patient flow normalization without being potentially in the 25% from a patient flow standpoint. But on our side, if you have a normalization of the patient flow with the very low second half that we had, which was around minus 20%, then, obviously, we expect to have some double-digit growth for the rest of the year. Then when it comes to the VBP, if there is a VBP in the second half, then you will see in a much higher volume potentially at a lower price. Then this, it still remains 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 a VBP 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 VBP or not, we are still expecting growth for China in the second half. 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's our iEXCEL innovation on premium, that's our business partnership capabilities on our challenger brands, and also then, all the development we do on digital and the orthodontics space with significant new value proposition here on the orthodontics side, as expressed with all the new innovation we are coming up in May, but also with our own intraoral scanner that have just been 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 are seeing right now.

That's really helpful. Maybe just a quick cheeky follow-up. On VBP, 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 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 on moving in term of dates, if you remember, the first VBP, it has been announced even 18 months or 2 years before it has been actually implemented. I guess what's happening in the Chinese authorities, there are also some priorities sometimes that are changing, and one has a higher priority than others, then 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's playing on our agility culture of our organization to try to make the best of the solution out of the situation. And I think we have a lot of solutions to be able to leverage the current situation with the normalization of the patient.

The next question comes from Oliver Metzger from ODDO BHF.

First one is in China, so versus the private public market. So obviously, the VBP delay. Does it mean let's experience a stronger support at private practices and corresponding also a positive volume price mix? And second question is about the comments you made about the regain of lower-priced implant customer for iEXCEL platform. For the 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 this 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 product mix is already as becoming significant? Or is it just, say, an initial trend which doesn't have any meaningful impact yet?

Yes. Thank you, Olivier, for the question, when you look at the Chinese market, private and public. 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 then 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 align with the VBP, 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 2.0 will drive different trends in between the public and the private, but they will try to influence the market in the same way. And that's where we don't know exactly what will be the priority of the VBP rules moving forward because we know that the authorities are also very focusing on the quality of care and that 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 truly 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. But once again, we have to see what will be coming when it's there. When it comes to iEXCEL, and thanks for picking that up, yes, we see that we are able 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 expressed during our Capital Markets Day, it's 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 2 or 3 appointments for achieving the same treatment solution. 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 1 implant, you have a consumable that allow you to scan the implant at the moment of surgery, which means that you don't need to ask the patient to come back, postponing doing the prosthetic process. And then time is money for all the clinicians. 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 iEXCEL, that we have been able to transform some value users. Is it significant that we see? I would not say significant, but it's more and more the case. Why is this? Because now that intraoral scanner are having a price point which is favoring a significant market penetration, GPs are all going to be equipped. And when you have a SIRIOS at a price that allows you to get started with digital workflow, then you have immediately access to the iEXCEL workflow. And that's where we see an initial trend but we are going to promote, of course, very significantly, by demonstrating that the return 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. Then we are really looking forward doing this, and you will see more of us promoting now our workflow that are delivering significant benefits and value for clinicians.

The next question comes from Brandon Vazquez from William Blair.

Congrats on a nice 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, I 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 are the commercial changes that are resonating well, what are the commercial changes that are leading to better results in North America, just 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. You are totally right. And when you are having a strong commercial-oriented leader, then you are building up then 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 entering the right productivity, the right targeting. And this needs to have significant monitoring 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. 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 when you have more success, we are obviously more energy within the team, and you have also the capability to overachieve some of the target that has been assigned. Then it's also a virtuous circle that you need to implement, and this is what we are seeing in North America right now. And that's where we need also to support this with some additional investment we seek 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're also giving them the means to differentiate themselves in the marketplace, and this is what we're able to do with the different enhancement of our value proposition across our businesses that we are doing on a regular basis.

Got it. And then maybe, Isabelle, for you as my follow-up here. 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 push your expansion potential in 2026 higher? Why the reiterated guide despite both of those coming in, I think, more positive? But correct me if I'm wrong.

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, 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 orthodontic 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 I already said, will look a little differently with a stronger first half. 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, VBP, will actually play out throughout of 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.

the next question comes from Falko Friedrichs from Deutsche Bank.

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. 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 '26 or even early 2027?

Well, it's -- you're right. It's difficult to say. But I don't see a potential air pocket because you will have still people that will now see that VBP, it is less likely to happen in the coming months, then they will come to practice and get their treatment done. But as there will be no change into pricing, people will not reconcile like, oh, I was not planning to do any implant, but I'm going to do one, like it was the case for the VBP announcement with significant price change. Then 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. We see, as we speak, things really normalizing. But it's a step-by-step approach. Then I don't expect if VBP will be postponed to later any specific air pocket from a patient flow standpoint. However, obviously, because of the low comp base, we'd 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.

The next question comes from Richard Felton from Goldman Sachs.

Just two for me, please. I just wanted to follow up on iEXCEL. Are you able to give us a rough sense of how much of your premium customer base has now been converted to iEXCEL? And then second question, we've heard feedback that 2 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?

What I can say with the success of iEXCEL is so much that it's now representing more than 20% of our total volume of premium implants. Then in a kind of a 16 to an 18-month start, it's a very, very significant achievement in a conservative market. But this is where we see -- and this is also why we have decided to double down on it, that all innovation that we are going to do on the prosthetic side, as an example, on the digital workflow side will be everything connected to the iEXCEL platform and especially that specific unique connection, which is what we call the top feed connection, which is bringing really a lot of benefit from a clinician standpoint in order to continue to push than our iEXCEL penetration and being really the reference implant system within the industry. 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.

The last question we can take today comes from Julien Ouaddour from Bank of America.

The first one, you 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 losses of ClearCorrect 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 a quick one on China for the second one. Could you maybe comment just about the positive landscape you're seeing in the country and especially on the zirconia, 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, included in the next VBP run?

Yes. Good question as well here on go-to-market for ClearCorrect. Then we are indeed investing and have invested significant money in then driving our value proposition up with our partnership with, on the one side, Smartee, but also with Dental Monitoring and rewiring highly manufacturing approach for EMEA and 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 reasons we can generate. Then that's why we are really excited about what we are doing right now because we were having in all the growth countries that we have selected, the market reach 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 with our force without the need to add additional feet on the ground for the time being. 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, especially with our intraoral scanner offering as an example, with AlliedStar and our SIRIOS 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 Roxolid. They are naming a product. Then with the zirconia and titanium combination, we are testing it. I don't think that it will reach 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 products. But only at this point, this is just pure speculation and nobody knows really. Then I think we will see what we will be from there, and our goal will be, once again, to be able to differentiate significantly from any other competitors and bring this 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.

I mean, if I can quickly come back like on the clear aligner. So if you don't need more investment, I guess, you're pretty in line to reach the '26 ambition you have on the margin side, which means like lowering the losses profit by half for ClearCorrect, right?

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. Yes. 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. Goodbye from Basel and from all of us.

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