Ladies and gentlemen, welcome to the Straumann Group Full Year 2023 Results Conference Call and Live Webcast. I am Moira, the chorus call operator. I would like to remind you that all participants will be in listen-only mode, and the conference has been recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. 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, sir.
Thank you very much, and good morning or good afternoon to you all. Thank you for joining this conference call on Straumann Group's Full Year Results for 2023. After almost four years, it's great to hold this full year presentation in a hybrid format, again with some of you joining us in person here in Basel at our headquarters. Please take note of the disclaimer in our media release and on slide 2. During this conference, we are going to refer to the presentation slides that were published on our website this morning. As usual, the presentation discussion will include some forward-looking statements. The conference will follow the usual format. As shown on the agenda on slide 3, I will share with you some highlights of our strong results. Then our CFO, Yang Xu, will dive deeper into the financial details.
After that, I'll update you on our key strategic initiatives and the outlook. The presentation will follow by a Q&A session where Yang and myself will be happy to answer your questions. Let's start with our highlights and move directly to slide 5. In 2023, we kept our focus on our perform and transform strategic agenda. We continued innovating, adapting, and further expanding, which led to another very strong year. Despite the macroeconomic challenges and geopolitical tensions, the team achieved organic revenue growth of 9.8% or CHF 2.5 billion in revenue for the full year. Taking the strong currency headwinds into account, revenue growth in CHF was 3.9%. The fourth quarter was strong with CHF 624 million in revenue, corresponding to an organic growth of 13.2%.
It was also a strong achievement to deliver a high profitability of 25.1% for the year, despite the significant currency impact on our business and considerable investment in our future growth. In partnership with dental professionals, our dedicated and customer-focused teams helped 5.6 million smiles globally, compared to 4.4 million in 2022. With this remarkable growth, we are on track to achieving our goal of 10 million smiles annually by 2030. One critical point of 2023 is our performance in China. The implant volumes in both the premium and challenger segments significantly grew after the Chinese authorities introduced a volume-based procurement process early in the year. I will come back to that later in more detail in the presentation.
Another major highlight is the 81 engagement score that we achieved with our employment survey, which is three points above the global Glint benchmark, placing the Straumann Group in the top 25% of companies worldwide. We are strongly convinced that culture is and will continue to be instrumental in the success of our company short, mid, and long term. While we expect geopolitical and microeconomic uncertainties to continue having an impact on the business in most geographies, the overall patient flow is expected to keep a positive dynamic. In addition, our continued investments in innovation, education, digital transformation, and the skill set of our team members worldwide are laying a solid foundation for the future.
As a result, in 2024, the group aims to achieve organic revenue growth in the high single-digit percentage range and profitability at around 26% at constant 2023 currency rates, or between 24% and 25%, including expected FX headwind. With this, let's move on to Slide 6. In 2023, we gained market share in all businesses and across all regions. The patient flow was dynamic with distinct regional differences. The two largest regions, EMEA and North America, reported high single-digit organic revenue growth. Latin America showed a remarkable consistent growth rate of around 20%. And as previously mentioned, Asia-Pacific stood out with its performance driven by the implant volume growth in China. EMEA, as the largest revenue contributor, showed good patient flow, resulting in organic revenue growth of 7.6% for the year or 5.8% for the fourth quarter.
Both premium and challenger implant business segments showed strong growth, and the digital business remained at very good level. For the orthodontic side, on the one hand, the doctor-led direct-to-consumer business Dr Smile performance has been impacted by a softer consumer demand, which affected as a consequence the EMEA overall regional results. On the other hand, the group significantly gained traction with its orthodontics B2B offering in EMEA through its ClearCorrect brand activities. North America showed a solid 6.7% organic revenue growth for the year and had a strong fourth quarter with 7.2% growth. This despite some more challenging market conditions that slowed demand progressively over the year, especially on the large implant-based reconstructions and orthodontic treatments. The digital business is growing fast, and our Straumann AXS platform is now driving our Smile-in-a-Box service solution through an improved customer ordering process.
The implant business remained the primary growth driver, with both the Straumann Premium and the Neodent Challenger brands growing. LATAM consistently delivered around 20% organic growth, with Brazil as the region's largest revenue generator thanks to the implant brand Neodent, and Peru being the fastest growing country in the region. Nationwide, educational events helped attract new customers and expand market share in the region. Highlights were the 30-year Neodent celebration and the ITI Congress held in Chile in the fourth quarter. Looking now at Asia-Pacific outside China, the region showed good performance, with Australia, Japan, and India driving growth. While the performance in China was impacted by COVID-19 at the beginning of the year, the significant volume increase starting from Q2 onwards supported APAC to reach an organic revenue growth of 15.8% for the full year. Let's have a closer look at the development in China on slide 7.
Early 2023 was marked by the consequences of COVID-19 and the introduction of a volume-based procurement process by the Chinese authorities. This was followed by a strong pent-up demand in the second quarter and increased patient flow, a result of both the postponed treatments due to COVID-19 and the implementation of the VBP, which is significantly reducing prices. The team on the ground quickly adjusted the setup and the sales strategy and was able to more than offset the considerable price reduction. As a result, 2023 was marked by remarkable volume growth in implant volumes in both the premium and challenger segments, notably the Straumann and Anthogyr brands. With this, I hand over to Yang for a deep dive into the financial details.
Thank you, Guillaume. Good morning and good afternoon, everyone. So let's move directly to slide 9, where you can see the revenue development. At 2023 exchange rates, our full year 2022 revenue would have been CHF 145 million lower. There was significant year-over-year currency impact, mostly driven by US dollar, euro, and Chinese renminbi. To put the currency impact into perspective, it is more than three times higher than the previous year's currency impact, which amounted to CHF 43 million. The M&A effect in 2023 added CHF 20 million to our adjusted revenue base. This was largely related to the acquisition of Plus Dental and our distributor in the Baltics. As previously mentioned by Guillaume, our two largest regions grew high single-digit, while APAC and LATAM reported strong double-digit organic growth for the full year.
On the right-hand side, you will see the contribution of the regions to the organic revenue growth of CHF 216 million. Almost two-thirds of our growth was generated by EMEA and APAC. Based on our estimates, we gained market share in all regions. Slide 10 leads us to our performance by business segments. Straumann's Premium and our challenger implantology business both performed very strongly with double-digit growth in volume. Premium implantology was primarily driven by BLT and Straumann's immediacy portfolio. The challenger brands continued to expand their global footprint with strong double-digit growth in all regions. Neodent stood out as the leading challenger brand, celebrating its 30-year world tour and sustaining very strong growth momentum across the regions. In orthodontics, our ClearCorrect B2B business reported double-digit growth. We remain dedicated to strengthening its geographical presence in existing markets and introducing new solutions and further increasing our educational effort.
In our direct-to-consumer orthodontics business, namely DrS mile, slower consumer demand significantly impacted the growth of the business, which also led us to book an impairment charge. Our digital solution business continued with its growth contribution to the group's overall performance. In particular, the Virtuo Vivo scanner performed very well. The division posted almost double-digit growth, primarily led by the North American region. With the recent acquisition of Allied Star, we expect to further expand our installed intraoral scanner customer basis, which will help us to increase market penetration through our multi-brand and multi-price approach, which is the backbone of our strategy. Looking at gross profit development on slide 11, our gross margin for core and reported amounted to 74.3% and 74.1%, respectively, in 2023. Currency-adjusted, this represented a margin contraction of 30 basis points. The portfolio mix represented a headwind of 40 basis points.
High utilization in our production facilities, combined with continued efficiency improvements to minimize cost increase, partially offset negative portfolio mix and China VBP pricing impact. The strong CHF impacted the gross margin by 110 basis points. Now, let's move to slide 12. Driven by top-line growth and efficiency gains, the core EBIT margin reached 25.1%, which is 90 basis points lower than the reporting number in the prior year. Considering the substantial currency headwinds of 200 basis points, our 2023 core EBIT performance represented a significant improvement in terms of operational profitability. In fact, looking at our core EBIT at 2022 currency rate, it would have been at 27.6%. As previously mentioned, our doctor-led direct-to-consumer DrS mile business was impacted by the challenging macro environment and the reduced willingness of health consumers to seek aesthetic treatments. In addition to that, Dr.
Smile is switching its marketing strategy from paid to organic demand generation to prioritize profitability over revenue growth. As a result, we have incurred one-time non-cash impairment charges for the DrS mile business. Such goodwill impairments, combined with amortization of acquisition-related intangible assets and one-off restructuring costs, result in a reported EBIT margin of 17%. Now, let's have a closer look at the cash development on slide 13. Our free cash flow was CHF 316 million, CHF 95 million higher compared to a year ago. Overall, the free cash flow as a percentage of net revenue increased from 9.5% to 13.1%. Cash flow from operating amounted to CHF 504 million, CHF 89 million higher than 2022, primarily driven by slower increase in net working capital versus a year ago. Capital expenditures reached CHF 189 million, which continues to be at a high level to support our future growth.
During the year, we had a cash outflow of CHF 117 million for our M&A investments, such as for GalvoSurge, Allied Star, and our distributor in the Baltics. Cash from financing activities was primarily driven by the repayment of our bond of CHF 280 million and the dividend of CHF 127 million, which brings us to an ending cash on hand of CHF 410 million at the end of 2023 and a net cash position of CHF 172 million. Turning to slide 14, let's take a look at our core financials. For full clarity, you will find the year-on-year comparison on a reported IFRS basis, as well as the core reconciliation table in the appendix of this presentation. More details can be found in the annual report.
As mentioned before, the main difference between the core and reporting numbers are one-time non-cash impairment charges, mainly related to goodwill recognized for the Dr Smile business, amortization of acquisition-related intangible assets, and some one-off restructuring costs. The strong CHF was a very strong headwind for our revenue and profitability in 2023. Net financial expenses amounted to CHF 54 million, reflecting increased currency hedging costs as well as currency loss in the group's main exposure in US dollar, euro, and Chinese renminbi, as well as in emerging currencies. For 2024, we anticipate the currency volatility to persist, impacting both EBIT and financial expenses. Core net profit decreased by 8.5% to CHF 441 million, resulting in a margin of 18.3%. FX-adjusted basic core earnings per year increased by 9% to 2.76 francs. Now, on slide 15, we wanted to outline our longstanding successful capital allocation priorities.
As a growth company, our first capital allocation priority is to reinvest in organic, sustainable future growth, keep maintaining a strong balance sheet through cycles, and to deploy capital on mergers and acquisitions to accelerate our strategy. Lastly, we also intend to maintain and continuously increase the absolute dividend amount with earnings growth. This leads me to slide 16. Based on the 2023 results, our board of directors proposed a dividend of CHF 0.85 per share, which is subject to shareholder approval and payable on April 18, 2024. 40 of the CHF 0.85 are proposed to be paid from Capital Contribution Reserve. This year's dividend represents an increase of about 6% and a Core EPS payout ratio of about 30%, which is fully in line with the capital allocation priorities I just presented. With this, I hand back to Guillaume.
Thank you, Yang. Let's move on to slide 18 straight away. As we grow, so did our overall addressable market, which we estimate to have grown to above CHF 19 billion in 2023. Starting with implantology, which is our core business, the market grew from CHF 5.4 billion-CHF 5.6 billion, which is about 4% growth. We were able to win many new customers and hence increase our market share from about 30%-32% during the course of the year. At the same time, as you can see on the slide, there is still a lot of room for us to grow. To ensure we keep capturing a significant share of this market potential, we must continue to invest in our future growth. Let's move on to slide 19.
With the clear objective to become more resilient to potential macroeconomic downturns, we have transformed our organization over the past years and diversified strongly in terms of geography, business segments, and solution offerings. As we significantly increased the revenue share of North America, Latin America, and especially Asia-Pacific, our global footprint is much more balanced today. We also estimate that the number of general practitioners who can place implants has doubled since the financial crisis in 2007, which is also improving our resilience in case of challenging microeconomic conditions. Our business mix is also more resilient today. We invested in the digital business segment, entered orthodontics with the acquisition of ClearCorrect in 2017, and have expanded into the non-premium segment of implantology, where there is still a lot of growth potential.
Finally, we have also significantly diversified our implant brand offering in order to cover the different price points and ensure our competitiveness in those different segments. Next to our iconic Straumann brand in the premium segment, we have our Neodent, Anthogyr, Medentika, and NUVO challenger brands. Now, let's move on to slide 20 and have a closer look at our global company strategy. As mentioned before, people are the key to success and the ultimate lever to deliver performance through flawless strategy execution. Culture is the main driver for any transformation and business growth, and this is why we ask our employees every year for feedback. I am pleased that in 2023, we again achieved a high employee engagement score of 81, three points above the global Glint benchmark, which is a sine qua non condition for strong execution. This puts the group in the top 25% of companies worldwide.
Now, let's move to slide 21 and dive into our strategy, which will support our future growth. Our group strategy is illustrated with the strategy compass. It shows our business priorities with customer centricity at the heart and defines the everyday priorities of all teams. Our key pillars to success across all our business areas are innovation, education, and clinical evidence. As an example, in 2023, we demonstrated our focus there by increasing educational activities by another 15% globally across all brands. Now, let's have a closer look at how this is applied to premium implantology on slide 22. Innovation is the critical pillar of our double-digit volume growth in the premium implant segment, which was mainly driven by our immediacy portfolio, such as BLX, followed by the BLT line.
Apically tapered and fully tapered implants that are designed for immediacy approaches are growing faster as they offer shorter time-to-teeth treatment options, which are preferred by many health consumers. This is why we are also excited about the prelaunch of our new premium implant system, TLX, for both bone and tissue-level treatments. It offers the unique benefit of four distinct implant designs with the simplicity of one single implant system, empowering surgeons to select the ideal implant during surgery. The first full market release was in January 2024 in the U.S., and we will share the learnings with you when we present the first quarter results. We innovated again in the implant preventive segment through the acquisition of GalvoSurge in 2023. We can now offer a unique medical device that helps to treat peri-implantitis and protect against implant loss without harming healthy soft and hard tissue.
As this dental implant cleaning system can be used regardless of the implant brand, it also offers a great opportunity to keep supporting our strategy to partner with new customers. Next to innovation, education is another key pillar of growth. Combined with our scientific approach, which sets us apart from the competition. A good example of demonstrating our dedication to offering evidence-based quality solutions is the recent 10-year data showing that the Roxolid unique material performs better than titanium. In addition, during 2023, we renewed our partnership with the International Team for Implantology, called ITI, which is the world's largest education community in implant dentistry with more than 22,000 members worldwide. Let's move to our challenger brands on slide 23. In the value segment, geographical expansion combined with innovation and education are our strategic imperatives.
We launched an expanded import of innovations such as the Neodent Zi ceramic implant and Anthogyr X3 solution for immediacy in the challenger segment. In addition, education is very important to ensure market access and market share gain. In 2023, the 30 Years Neodent World Tour was a huge success, combined with a global congress in Brazil with more than 3,000 international attendees. As you can see on the slide, there is still plenty of growth potential for challenger brands across all regions. Let's move on to slide 24 to review our orthodontics progress. As for the implant business, innovation and education are also key success factors for orthodontics. Our ClearCorrect brand introduced many new features through our several software releases in 2023, which helped to treat a larger number of indications.
Due to the increased number of cases, we opened a new treatment planning site in Costa Rica that will support our growth. Moreover, significant investment in education is of utmost importance to continue to build on the brand's recognition, awareness, and reputation globally. We train thousands of clinicians on orthodontics, which is an important part of the geographical expansion of ClearCorrect. Let's move to slide 25. Digitalization transforms all aspects of the dental industry, from patient communication and practice management to diagnostics and treatment. The entry point to any digital workflow are intraoral scanners. They are the foundation for driving more users to our Straumann Access platform, and therefore I am pleased that we could further increase the installed iOS customer base in 2023 through our successful partnership with 3Shape and our own device, Straumann Virtuo Vivo.
To continue building our installed base of intraoral scanners, we acquired Allied Star, which will allow us to continue offering attractive solutions at different price points. As a highlight, Allied Star is being launched in China as our only group intraoral scanner in the country. As digitalization is evolving, we are investing in applications supported by artificial intelligence to provide increased efficiency to clinicians, Smile Cloud being a good example of such a solution. But we are also investing in our own AI development, like our coDiagnostiX AI Assistant. Launched in the fourth quarter of 2023, coDiagnostiX is a software clinicians and dental technicians use to plan implant surgery. The AI Assistant helps with the digital planning of implant positions, providing various measuring and planning functions such as automatic nerve canal detection, distant measuring, and monitoring features.
This leads to more predictable results in both simple and more complex implant surgical cases. The AI Assistant has been developed together with implant specialists and addresses important pain points of surgical planning, which are mainly anatomy visualization and available time to plan. This leads me to slide number 26, where you can see how everything will be connected. Building our digital platform, Straumann Access, we aim to create a unique customer experience through integrated cloud-based clinical workflows for implantology and orthodontics, driving efficiency in dental practices. The platform plans to integrate all our software applications, services, and solutions, encompassing the spectrum from initial patient engagement to pre-treatment diagnostics, followed by comprehensive planning, treatment, and monitoring through the post-treatment phase.
In 2023, we further built the infrastructure of our digital platform, Straumann Access, and made major progress in adding new solutions such as Smile-in-a-Box and the implant registry on the platform. Following the successful introduction in North America, we plan to launch Straumann Access in more regions this year. Let's move to slide 27. Culture is key when it comes to our digital transformation, as it is not only about technology. Key to success is, as always, through the people dimension. We believe that fostering a digital mindset in our organization will help us become the digitally powered oral care company we aspire to be. Not every employee needs to learn how to code, obviously, but every employee needs to be literate in digital skills. This is why we launched the initiative AgeUp worldwide.
AgeUp provides a platform for employees to explore, engage, and improve their digital skill set. We designed a specific cultural AgeUp workshop to develop further agile working methods inside of our organization. We also encourage on-the-job and peer-to-peer learning. Talking about our people, this is a good transition to slide 28. Wolfgang Becker, the head of EMEA, will retire this June after 40 years of service with the group. It is hard to overstate all that Wolfgang has done for the company and all his colleagues over so many years. He has played a key role in the company's success in all the positions he has held and is a truly outstanding and highly respected leader role-modeling the Straumann Group culture like no one. He has been instrumental in building a loyal, expanding, and trusting customer base and delivered outstanding performances together with his teams.
On behalf of all colleagues, I want to thank him for his dedication, infectious optimism, energy, and leadership. We wish him a happy and fulfilling retirement from June onwards. With Wolfgang leaving, Holger Haderer, the current head of Implantology Business Unit, will take the lead of the EMEA region. Holger joined the group in 2006. He is an experienced leader and has an excellent track record in marketing, sales, and innovation, coming from the various roles he has held in the group, whether it was as managing director of the German subsidiary or as regional head of marketing in Western Europe. Most recently, he has led and transformed the core business unit of the company, implantology, over the past four years. He strengthened a newly established strong partnership with key opinion leaders in dental implantology across all our regions.
As a strong culture ambassador, Holger is the perfect fit to lead our largest revenue contributor, the EMEA region. With this, I'm also very pleased to announce that Andreas Utz, an internal talent who is currently Managing Director of Straumann Group Germany, the third largest subsidiary in terms of revenue contribution, will lead the Implantology Business Unit and also join the Executive Management Board. Andreas joined the group in 2004 and has an outstanding track record in leading global innovation programs, marketing initiatives, commercialization, and sales organization to success. We are convinced he is an excellent successor with the right experience and passion for leading our implantology business, as well as being a role model for our company's culture. We wish both Holger and Andreas all the best and a lot of success in their new roles. With this, let's move to the next slide.
Slide 29 shows our progress on our sustainability goals. As mentioned before, I am proud that we, together with dental professionals, helped to create 5.6 million smiles in 2023. I am pleased that we reached a score of 77 with regards to employees saying that they have good opportunities to grow and learn in our organization. It is also great progress that we are using 93% of electricity from renewable sources today compared to 80% in the prior year. And on top of that, the Science-Based Targets Initiative, SBTi, validated our ambitious commitment to achieve net zero emissions by 2040. The bold sustainability ambition we set in 2021 is definitely a journey. We achieved 40% for women in leadership positions.
The global education activity is increased by 15% worldwide but decreased to 28% in the low and middle-income countries due to the VBP process in China, which temporarily reduced our education activities in the countries. You will find more details on our sustainability progress on page 44 of our annual report published today. Let's move now on to slide 30. As mentioned earlier, to ensure we keep capturing a significant share of our market potential, we must continue to significantly invest in our future growth. In 2023, we invested CHF 189 million, mainly focusing on the expansion of production capacities in Switzerland, Brazil, the U.S., and China, and the financing of the initial digital transformation phase. As already mentioned by Yang, we also acquired our distributor in the Baltic States, as well as innovative companies such as GalvoSurge and the intraoral scanner brand Allied Star.
Furthermore, we continuously invested in the capabilities of our team members worldwide and hired new team members who drive core activities or contribute to the group's digital transformation. As a result, our global workforce grew to more than 11,000 employees. And with this, let's go directly to slide 32 to speak about the outlook. While geopolitical and microeconomic uncertainties continue impacting consumer confidence in different geographies, we expect the overall patient flow to keep a positive dynamic overall. Thanks to our differentiated value proposition in all key business segments, combined with strong execution from all our team members worldwide, we remain confident that we will continue to gain market share within the estimated global addressable market of above CHF 19 billion. Our geographical diversification, catering to different price points, and our extensive training efforts result in more clinicians being able to perform implant and orthodontic procedures.
In the meantime, we continue to invest in growth and transformation to maintain the competitive edge of Straumann Group going forward. Taking all of this into account, in 2024, the group aims to achieve organic revenue growth in the high single-digit percentage range and profitability at around 26% at constant 2023 currency rates or between 24%-25%, including the expected FX headwind. With this, we also confirm our 2030 long-term ambition. And now I would like to open the question-and-answer session. As usual, we will first take the question from our guest here in Basel before opening the lines on the phone. If you have a question, please press star and one on your phone to join the queue. Kindly limit yourself to two questions. This will give all participants a chance to ask a question within the available time.
So please, can we have the first question from the room? Please.
Good morning. Anja Pomrehn, Mirabaud Securities. You mentioned China a few times, also reflecting last year ago when the VBP program sort of kicked in. And Guillaume, you mentioned at that time that pricing was coming down by around 40%-45% in China as such. Could you elaborate a little bit more on the progress of volumes in China in 2023? I assume, but maybe you can enlighten us there, that pricing has remained stable. And what are you expecting for 2024 in China? Thank you.
Yeah, I think when we started same place last year, it was difficult to predict what the total year is going to be. But that's also one of the reasons we spent a lot of time on the field to be able to then understand the trends and the consequence of those decreased prices, especially at the health consumer side. We have been very pleased to see that it has obviously unlocked a significant additional addressable patient segment in China and thus driving a massive patient flow within the Chinese dental practices. With this, then we decided to invest and play offense instead of defense and being able to support our teams with then more people on the field and also supporting local solutions and customizations in order that we can really trigger the right solutions to the local needs. Then our volume in China has significantly increased.
Then I would say it has been a massive volume development. We have seen something like more than 30%-40% more patient flow coming in. And we believe that the reservoir of patients that has been unlocked by this new pricing is far from being fully addressed. Then we believe that 2024 and in the years to come, it will still be a significant driver of growth in the Chinese market. We have been expressing, and I would confirm, that expectation for China in the next 18-24 months would be a CAGR between 15%-20%. That's the way we are seeing that as of today. We'll be in China again in March, and we'll be able to try to confirm again this on a regular basis. But this is currently what is the perception from the market feedback we are receiving.
From a pricing standpoint, Anya, to also address this point, we have not seen any further change in pricing after the new VBP implementation, neither on the patient price nor on the industry player price.
Yeah, Daniel Jelovcan and Stifel. The first question is about North America. The interesting slide 23 with your market share in the Challenger brands. I was a bit surprised that your market share in North America is below the market share of EMEA. And in that is the question, I guess you are probably not really happy with your organic growth in North America below the EMEA growth over the full 2023. I mean, I understand complex treatments, consumer slowdown. But what is the possibility to address growth reacceleration in North America? That's the first question. And the second, I mean, Latin America is stunning, around 20% organic growth. How much inflation is in there? Or I think you have a special reporting in Latin America adjusted for inflation. But maybe you can clarify. Thanks.
Thanks, Daniel. Could you specify exactly what is leading you to think that we are not happy with Challenger growth in North America?
No, with the overall growth.
With the overall growth.
It's below EMEA growth. North America should grow more, I believe.
What's the rationale for this? No, that's interesting. I think what would be the rationale of why North America would be needing to grow faster than the EMEA?
Because the penetration in EMEA is probably much higher, especially in Germany and so on.
Okay. Then thank you for the precision. I can address then all those points. Let's talk about market penetration first, because I think it's a very interesting point. I would say those numbers are somewhat comparable, where I would agree that because Italy and Spain are, for example, much more penetrated in implant treatment, when we look at still UK, France, Germany as an example, we still have way to go for market penetration, like North America. Then I would say from a pure implant penetration standpoint, the US has even more room to grow, but it's pretty comparable. I don't think that we can really differentiate the two regions from that standpoint. The second aspect is pricing.
Healthcare and dentistry as part of healthcare is very expensive in North America, much more than in Europe, meaning that when you have high interest rates, like it is the case in the US, and when you have, of course, a lot of the North American population used to leverage credit for paying different treatments, then you have more impact of macroeconomic conditions in North America, at least on the short term, than in Europe. That would explain some of the different growth rates that you can be seeing here. We have seen more slowdown of the demand for large reconstruction in North America than we have seen in Europe. That's one of the explanations that you can see in between the two different growth rates. Now, with regard to how happy are we with the growth in North America, we are actually very happy.
7.2% is more than two times the overall market growth in the U.S. Then we believe that we have been taking very significant market share in North America during 2023. Then if interest rates would decrease, and we are expecting many different industry players, some sign from central banks to reduce interest rates, we believe that it would have a bigger impact in North America than in Europe, for example, in growth rates if microeconomic environment would ease. But as a conclusion, we are pleased with North American results. We are pleased with EMEA results because both are driving significant market share growth.
I'll take the second question then about the inflation in Latin America, Danielle. Let me unpack a little bit. We're quite pleased, actually, for the Latin American growth, both in terms of the revenue but also in volume. Our volume has always been consistently growing at double digit as well. So to put into perspective, our Latin America is primarily led by our Brazilian business. So if you were to proxy, you can see the Brazil inflation. And then that will be a good proxy for you to model it out.
Daniel Buchta from ZKB first. Two questions, maybe. The first one on the margin guidance. I mean, the long-run 2030 guidance was for 25%-30%. Now, for this year, 2024, you're guiding, including FX, obviously, to be below that range. And given what the Swiss franc has done over the last 10 years, I mean, how realistic is it that you get into this range again and maybe even closer to the midpoint of that range? And how can you influence getting in that direction? And then the second on the ortho business. I mean, we see that the market leader in the B2B business is performing weaker than it used to be. And I also guess Dr Smile was not showing the greatest performance in 2023. What's your outlook here going into 2024?
Can we expect both businesses to accelerate again and be back to a normal growth pattern even? Thank you in advance.
Yeah, I think for margin guidance, when we have done our capital market day and we presented our EBIT corridor of 25%-30%, it was at constant FX rate. If you apply the 2021 FX rate to our EBIT 2023, you will find 29% EBIT. Then with regard to the guidance we gave at that time, we are really spot on or even better than what we were potentially thinking to be at the current stage of our development cycle until 2030. Then what is very important when we look at EBIT is we want to make sure that we are delivering very significant operational EBIT performance as an organization. And when you look at this year, we have gained 110 basis points from an EBIT at constant FX rate. And that's what we want to reproduce in 2024, then moving from 25.1%-26%.
Then that's where we are focusing on what we are controlling. And we are also then not wanting to decrease investment and our capability to drive double-digit growth in the future by just trying to reduce investment by then compensating the FX rate. Then we believe that FX rate will, of course, be a challenge again for 2024. But we think it would ease in the long term as soon as we see inflation really significantly going down in all the different countries, and especially the ones that are very important for us, especially the North American dollar zone and the euro zone. When it comes to ortho. Orthodontics are very two different trends here, at least as far as we are concerned. We have the B2B side, ClearCorrect, which is having a double-digit performance, growth performance. We are really pleased with the development.
We think that we want to continue accelerating here because this is, of course, our core activity to be able to support clinicians performing treatment. When it comes to Dr Smile, the Dr Smile is more targeting simple treatments, what we call the Social Six treatments. This is more into what we can call the aesthetic treatments. That's the ones that are impacted by the microeconomic situation because people are, of course, then rescheduling or at least postponing treatments that are really not so much important for their overall health and for their oral health. That's what we see globally in the orthodontics market. We see that the treatments that are functional are still done. We see that the treatments that are aesthetically driven, mainly adults, Social Six, have been not here or at least significantly decreased from a volume standpoint with those current microeconomic conditions.
Finally, for 2024, how do we see this? We see B2B continuing to grow significantly thanks to the investment we are doing on training and education, on feet on the ground, and also, of course, in terms of technology, while we see Dr Smile trying to stay a little bit where they are in terms of performance but increasing profitability because this is what we have decided as an overall strategy, less relying on paid marketing for increasing top line, but making sure we create that organic traffic in order to drive a similar number of cases but at a better profitability standpoint.
Sibylle Bischofberger from Vontobel. I had two questions. First, could you say something about the first two months, January, February? How they developed, and especially the U.S. and the two beauty countries, Brazil and Turkey? And secondly, you invested heavily in CapEx last year. Is this now over? Is CapEx coming back to lower levels now?
What we can say in January, February, it's that nothing major has changed and that we cannot comment specifically per month for each country. But I would say so far, so good that we see the patient flow being dynamic in the different regions. Then, of course, I think there will be still the uncertainty that we know from the regions that we have expressed already. But I would say no surprise for the time being. When it comes to CapEx, we are here to invest in growth. And when we are continuing to grow almost double-digit like this, we still need to develop our infrastructure. Then we are going to keep having CapEx above CHF 200 million in 2024. On the one side, infrastructure, when it comes to manufacturing, we have our China campus, which is in really full swing in terms of investment and development.
We hope to be able to manufacture already some first part for testing in the second part of 2024. This is a lot of investment in terms of machines still going there. When you see the volume that we are delivering in China and worldwide, we still have a lot of investment that we need to do in machines and people from a manufacturing standpoint, also on Brazil, expanding what we want to do in Neodent and challenger volume, which is growing, and infrastructure also on the digital transformation. Everything which is cloud-based from a technology standpoint is requiring significant investment. With all the Straumann Access platform, there is a lot of software development that we are doing that is capitalized and that are also included into the CapEx side.
CapEx will still be in the same kind of area that we have been this year, actually a little bit above because we will be at CHF 200-220 million, something like that.
That's right.
Yeah, fine.
The first question from the phone is from Hassan Al-Wakeel from Barclays. Please go ahead.
Hi. Good morning. Thank you for taking my questions. I have two, please. Firstly, can you talk about EMEA growth in the quarter? What growth would have been without the DTC effect? And when you expect to see an acceleration here, what have you baked in for EMEA as part of your 2024 growth outlook? And is this more H2-weighted with iEXCEL ramping? And then secondly, can you talk about the margin building blocks in 2024 at the EBIT level? And to what extent China and clear aligner growth and mixed headwinds to the margin in 2024? Thank you.
EMEA growth, yeah, actually, that's a good point. If you look at EMEA without Dr Smile, we would have had a really pretty exciting growth of double-digit. Then EMEA is really delivering really strongly when we look at what the fourth quarter has been, especially very strong performance in digital on the fourth quarter in digital in EMEA because this is really the quarter where digital is making a difference. How do we see EMEA in 2024? Still healthy, not so much backloaded because, of course, TLX will have an impact. But it's going to be launched in a phased process for all the different countries. And you will not have then the major contribution to growth will potentially not be TLX for EMEA in 2024.
This being said, we still expect EMEA to perform also really significantly well and a little bit in line with the overall guidance into high single-digit because this is, again, the largest contributor of the group. When it comes to the margin EBIT level with the growth of clear aligner and China, yeah, I think China had an effect already this year. But we have been able to compensate it by all the additional volumes. Then as we are expecting that a lot of additional volume will still come from China, when we look at absorbing the local cost as an example, I think it will not be too much detrimental to the overall group margin. And clear aligners is growing, but it's still low double-digit for our total organization.
While we are increasing also in volume, it's allowing us to absorb more of our structural costs that we have been developing significantly for ortho business. I'm thinking, for example, about sales reps in the field and also the investment we are doing on the software development side. It will not be so much detrimental to the overall EBIT if you compare 2024 versus 2023.
That's really helpful. If I can just follow up on growth, overall, should we assume that your growth guidance for the group is more front-end loaded given the easy comp in China for the first quarter?
Yeah, I think one can see that. At least I would say for quarter one, it would be yes. But for quarter two, it's not the case because we had the pent-up demand. Then I think it's pretty balanced in between first half and second half. That's the way. But it will not be balanced from a quarter standpoint. Quarter one last year was weak, but quarter two was strong. And that's where it will be balanced from that standpoint. And we don't have so much front-end loaded or back-end loaded budget. I think it's much better than it was last year, actually.
That's really helpful. Thank you.
The next question from the phone comes from Maja Pataki from Kepler Cheuvreux. Please go ahead.
Yes, good morning. Thanks for taking my questions. There would be two. I would like to start with the clear aligner treatments, Guillaume, post the impairment of Dr Smile, and your commentary around the softness in aesthetic treatments. You also have the exposure in Latin America through SmileLink. Owning those businesses now, obviously, for two years, has anything changed in how you regard that part of the business, this direct-to-consumer-oriented aligner business? That would be my first question. Second question would be, you talked about your 2030 guidance before, and you elaborated on the ethics impact. Now, if we look at the top-line growth that was very strong in 2023 given the environment and the guidance for 2024 is also strong. But what is it really? What is the key metric that is going to push your top-line growth back into the double digits?
Is it the better interest-rate environment that is going to support, again, the full-arch treatments, or is it a pickup on the aesthetic side, on the clear aligner? Is there anything that you could pinpoint to because loads of your pockets of business are delivering very strong growth? So I'm just trying to understand what is missing to get you to the double digits. Thank you.
Thank you, Maya. Then to your two questions. First, when we do doctor-led direct-to-consumer orthodontics, we only have Dr Smile because we have stopped SmileLink already quite some time ago. It was a very, very small business. It has been integrated within our activity in ClearCorrect Latin America. We have continued to deliver then the treatment to the patients. But we have resumed our direct-to-consumer distribution then from that standpoint. When you look at Dr Smile, I think we have done Dr Smile for two reasons. The first one has been and the most important one in our eyes in the long-term perspective, it was being able to understand how to address the health consumer directly.
It was a lot about learning and integrating additional expertise on how to address these direct-to-consumer activities, whether it's, of course, including the clinicians at the beginning of the process or only during treatment time. And this is really, really important for us because we are leveraging a lot of this knowledge in some of the digital activities that we are doing right now. The second reason for then investing in Dr Smile was, of course, potentially seeing that it would represent a significant part of the orthodontic treatment market in the long run. What we are seeing is that, obviously, it has been not resilient at all to the microeconomic environment because the Dr Smile business is mainly focusing on simple treatments that are aesthetically driven and that are being impacted by the current economic situation from the capability of people to invest with their available income.
The reason of actually our impairment of Dr Smile is just we have just driven the business case. We have seen that the business case is not fitting exactly what we were having in 2020 when we have done the acquisition. This being said, we do believe this model is interesting as soon as you are able to drive a much more sustainable strategy, which is organic growth versus paid marketing. That's why impairment is a sign of resizing the expectations. We still have a commitment to the DrS mile team and to our Dr Smile activity to drive this business moving forward and to also help then our teams to create additional patient flow to the dental practices because that's one of the aspects of direct-to-consumer, which is interesting. For a lot of practices, the Dr.
Smile partnership is helping them to meet new consumers that they would have never met if they would not have been then supported by the Dr Smile initial contact. And this from a customer-centricity standpoint, supporting clinicians to increase their patient flow is still a very significant request we are having from them. When it comes to your second question, what would it be? We are not far away from double digits still this year. But I just want to put things into perspective. Our overall market is estimated, we have said, at around 3%-4% growth. That means we have delivered more than 2.5 times the overall market growth. Then from a performance standpoint, it means that a lot of the things that we have done have been running very well.
The implant side, whether it's premium and whether it's Challenger, our digital business has been running very well. Our B2B orthodontics business has been running very well. Then for getting back on the double-digit growth, we just need a little push from the microeconomic environment. And I think if we continue being able to deliver on all our different initiatives how we are doing today, I think there is no reason that we cannot get back there in the future. But once again, it's all about focusing on quality and execution in order that we can keep market share gain, which is going to help us then continuing leading our market and especially leveraging our size afterwards for driving then revenue in the different segments we are in.
Thank you very much.
The next question is from Susannah Ludwig from Bernstein. Please go ahead.
Great. Good morning. And thanks for taking my questions. I have two. I guess first, could you just provide some color on sequential performance of Dr Smile and EMEA and then the full-arch business in North America? Are you seeing continued deterioration on a quarter-on-quarter basis in Q4 and into Q1, or is it more that you're stabilizing at a lower level? And then second, more long-term, I guess you've talked a lot about the strides you've made in digital investments with Straumann Access and the improvements in coDiagnostix. Can you maybe talk a little bit about your monetization strategy for these digital investments? Is this sort of primarily going to return through the pull-through of implants, or do you expect to generate SaaS revenues in the future? Or maybe it's just that greater efficiency and simplicity will help drive increased penetration, particularly in the GP segment?
Yeah, thank you, Susannah. Quickly, what we can say on Dr Smile from a sequential quarter performance is Q4 has been then weak based on the fact that Dr Smile was driving a lot of performance marketing. Then Black Friday is one of the big events that is happening in Q4. And then a lot of those activities on paid marketing were happening around Black Friday, Q4, which we have decreased this year significantly to make sure that we are really driving the profitability approach that we have been talking about. Then I think that's where Q4 has been showing a significant weakness for Dr Smile in Europe in the fourth quarter. But we don't plan to see the same trend in the first quarter, even though it's too early to say right now.
On the digital side and Straumann Access, actually, yeah, you are asking what's basically the underlying business model of Straumann Access. There are two, exactly the one that you mentioned. The first one is driving seamless workflow that are supporting clinicians to become much better clinically and much faster in driving procedure. Then this is what you are having with being able to integrate seamlessly all the different processes about diagnostic, planning, surgical design, surgical guide design, and treatment, and also, of course, monitoring of the quality of the treatment. And as soon as you are able to do this, you are generating what we call a customer experience, which is going to drive significant competitive advantage. Okay? That's what we have been saying in the vision we have when it comes to digitalization. We are investing significantly in innovation in two different dimensions.
The first dimension is what we call the hard stuff. We still need to innovate into implant design, implant surface, implant material. And that's what we are doing with a ceramic implant, with a TLX-specific design. And this is the core and the strength of Straumann and the Straumann Group with all its brands. But on the other side, now, 50% of the value proposition will come from that customer experience because everyone is used to that Amazon one-click experience. It has to be easy, simple, reproducible. You don't want to put your credit card numbers and your email address all the time for every single patient you're asking for. And how do you integrate all those data all over the treatment process? It's going to be a critical request of all clinicians in the future.
Of course, if you are looking a little bit beyond this with all that specific customer segment, which is created, which is the DSO, they are also willing to have an integrated view of what's happening in their environment. Without having this kind of a platform, you will not be able to give them the visibility that they need in order to see how they are performing. One very important driver of revenue from that digital access is, as you said, then, of course, the use and the growth in our implant treatment and in our clear aligner treatments done through the platform. A second part of the revenue will be some new revenue streams that are going to be then license fees for some of the very advanced and unique software capabilities. This Smile Cloud is a very good example.
coDiagnostiX is another very good example. But I still believe that while they are going to represent interesting recurring digital revenue, the major impact will come from market share gain on the core businesses of consumables that we are having.
Great. Thanks. That's very helpful. I guess just one quick follow-up on the first question was in terms of the sequential performance of the full-arch business in North America. I guess has that deteriorated throughout 2023, or is that sort of stabilizing at lower levels just and you don't think that will return until interest rates return lower?
We have not seen that deteriorating more. Now, afterwards, it's not easy to see afterwards on a month-by-month basis. It's more like a quarter-on-quarter basis. Then we have seen that still same kind of level then Q3 and Q4. We will see in the months to come how this is evolving for the beginning of 2024.
Great. Thanks. Very helpful.
The next question is from Anchal Verma from JP Morgan. Please go ahead.
Hi. Good morning. This is Anchal Verma from JP Morgan on behalf of David Adlington. I have two questions, please. One, can you please confirm your guidance for net financials and for tax following Pillar Two for FY 2024? And then secondly, on your top-line guidance, can you please provide what your outlook is for pricing and also talk through your growth assumptions by regions? You've already touched upon EMEA, but how should we be thinking about APAC following a very strong comp in 2023? And also, should we expect any acceleration in North America?
Yeah, yeah. I will take top-line, and then you can do the first question. Just for top-line, yeah, I think top-line, from a pricing standpoint, we're expecting around a little bit around 2%, a little bit I would say that's what we have been able to deliver in the past years, except the year before where we have been able to increase more because of inflation. But that's a little bit the overall perspective we have, 1.5%-2% pricing. And the rest would be volume growth and market share gain. When it comes to the different geographies, we think that EMEA should be then on the high single digit. We still see some interesting potential to grow still in North America. We are not giving here then precise statement, nor we will give precise statement per regions for the time being.
We are seeing double-digit in LATAM and Asia-Pacific still as really one of the goals that we're having here. We see single-digit in EMEA and North America, double-digit in LATAM and Asia-Pacific. That's the way we are looking at 2024 right now.
And if I may go back to the first question, we don't provide precise guidance on financial expenses and taxes. But let me just help to put into a little bit of context. So our financial expenses, most year-over-year drivers are the foreign currency valuation. So as you may imagine, 2023 has been a headwind. And we also anticipate that the volatility continues to persist to what level, yet to be seen. But we see the volatility is not going away. Secondarily, on the tax, I think if we remove all the impairment, one-time non-cash impact, and some related to tax losses related to that subject, I think our normalized tax rate is still in our normal range in 2023, 16%-17%. In 2024, there's going to be some small headwinds related to the minimum tax rate. So I will just add a notch on top of that.
Perfect. Thanks. So just is it fair to zoom a bit of a touch up in net financials and in tax, mainly related to Pillar Two?
Yeah. For modeling purposes, financials, I wouldn't say necessarily higher. I think in the neighborhood, maybe.
Perfect. Thank you. That's helpful.
The next question is from Veronika Dubajova from Citi. Please go ahead.
Hello. Good morning. This is [uncertain] speaking on behalf of Veronika. Most of our questions have been answered, actually. I just want to clarify that when it comes to North America expectation in 2024, you touched upon the potential for lower interest rates. What is safe in the guidance with regard to this topic or topic of consumer and macro in North America?
I'm sorry. I'm not sure I understand your question. You're asking us what is our expectation of North American consumer trend for 2024? Is that the question?
Yeah. So when you talk about single-digit growth for North America, what exactly is your assumption when it comes to the consumer activities for the year, whether you're expecting it to ease for the year or whether you expect the headwinds to last for the full year?
For our current guidance overall, anyway, it does not only represent that for North America, but is that the overall macro environment will not change significantly, neither on the improving side nor on the worsening side? We are taking into consideration that the overall environment stays almost the same with a potential improvement by the end of the second half of the fourth quarter. But that would have a limited impact on our total 2024 year results anyway.
Okay. Thank you.
The next question is from Hugo Solvet from BNP Paribas Exane. Please go ahead.
Hi. Hello. Thanks for taking my questions. I have two. As we move into 2024, could you maybe emphasize the tailwind from the acquisition of distributors in the Baltics and Poland and also the new partnership with DSOs? You mentioned, I think, the double-digit growth in Europe ex Dr Smile in 2023. So I mean, what's the contribution of that into 2024? And second, on the long-term margin targets, you obviously had stepped up investment in 2022, in 2023, and should continue in 2024. Just wondering how much of the contribution from local manufacturing in China should enable you to get to that 30% by the end of the decade if you can, or should you think more about a back-and-loaded margin growth profile? Thank you.
I'm not sure. Hugo, I got the second question, but not the first one. Could you ask it again, please? Sorry for that.
Yes. Of course. No worries. Just if you could help us size the tailwind on growth in Europe from the acquired distributors in the Baltics and Poland, please.
Okay. Yeah. I think Baltics and Poland is a very good support for us for EMEA. It has some. It's honestly not really super significant from the growth rate of EMEA. I would say it will not add something that you would immediately see top-line. It has some impact, but versus the big countries like Germany, France, Spain, I think it still has a marginal impact from a growth rate percentage point standpoint. However, I think this is where, in the future, those markets are very significant growth potential because from market penetration, there is a lot of work still to be done in education and development, and especially something which is speaking a lot, I would say, from our corporate culture, the entire distributor team wants to stay in.
That's what is really strong from our perspective: that those distributors we have been discussing integration for quite some time, we have been able to, and congratulations to the EMEA team that has been able to do that under the leadership of Wolfgang once again. He has been able to convince the distributor to join, to stay. We are going to have a pretty stable team and business which is going to come with the Baltic and Poland integration. We believe that it will help us to keep the current performance of the EMEA for 2024 and beyond. When it comes to long-term margin, I don't think you should expect too much about China manufacturing.
Then, of course, one would be from a pure growth margin standpoint, it's much more a localization strategy to drive performance and China market penetration much more than optimizing COGS because, as you know, costs in China are increasing. Then that's not where you want to set your manufacturing strategy if you want just to drive low COGS and low pricing. However, of course, it has an interesting impact from hedging our COGS from a Swiss franc standpoint because we will be able to manufacture in China for the Chinese market. And we will drive some of our Swiss franc cost of manufacturing in RMB, which is going to be interesting for us to drive a little bit of our Swiss franc exposure to the China RMB. That's one point.
The second point, if you look at our 2030 standpoint, it's also the fact that we believe a lot of our investment that we have done on our new businesses that are orthodontics, that are digital, are also going to pay off and deliver much more top-line with the same level of investment or potentially a bit lower investment that we have needed from now. Then this is the way where we will drive operational leverage and a better absorption of our structural cost, especially in all our new businesses. And that's the way we will be able to drive our EBIT profile.
Okay. Thank you.
Today's last question from the phone is from Falco Friedrichs from Deutsche Bank. Please go ahead.
Thank you. Good morning. Two quick questions from my side, please. Firstly, can you provide the latest sales split for your Clear Aligner business between the B2B and the Dr Smile business? And then secondly, how much of a sales growth contribution do you expect in 2024 from your iEXCEL platform launch? Thank you.
Yeah. We don't provide, Falco, as you know, the exact split in between B2B and B2C. We were used to say that it's really close 50/50. I will reiterate that. It's not far away from this. Then, of course, this year, it went more on the B2B side than the D2C side because of the current performances. But there are no significant huge changes yet in that ratio. When it comes to then the TLX platform, it's going to be, as I said, a phased launch process. Then I think for 2024, it's not going to be the major growth driver. Obviously, we'll have some impact. But the way I prefer to highlight more the overall potential in the 4-5 years to come more than just the one for 2024 because if we look at the structure of our premium implant market, premium implant market is CHF 2.7 billion.
That's what we are showing. We know that 25% of this is fully tapered. Then it's around, big picture, CHF 700 million. 55% of those CHF 2.7 billion, it's apically tapered. Then you can add another CHF 1.5 billion. And the rest, the remaining 20%, is parallel wall where we are having 80% of the market that are going to be the remaining CHF 500 million. The iEXCEL platform, thanks to its design of BLC, TLC, and BLX, TLX with one single surgical kit, one single prosthetic platform, one single then connection, is targeting apically and fully tapered segment altogether. Then it's an average market value of CHF 2.2 billion, okay, based on what I just said. We have right now round about 40% market share. Our goal in the four to five next year, we are planning to add another 10% here to reach at least 50% market share.
Then we are considering here then 10% of a CHF 2.2 billion, meaning CHF 220 million incremental business directly from the iEXCEL platform. That's, I think, the way that you should look at it to evaluate what's the potential of iEXCEL moving forward. I think what we have been able to deliver with BLT, what we have been able to deliver with BLX from past execution is showing us that this is really a realistic perspective from a market share gain standpoint on the premium implant market.
Thank you.
Well then, thank you with this. Then I would like to thank you with all of your questions and for joining us today also in Basel and on the line. Then if you need further information, you will find it in our annual report which is published online today. And of course, you are welcome to contact our colleagues in investor relations and corporate communication. That concludes our conference today. We look forward to meeting you at one of the upcoming roadshows. And our schedule is outlined on slide 35. We wish you, your colleagues, and your families all the best and have a nice day and goodbye from Basel.