Ladies and gentlemen, welcome to the Straumann Group Q1 2026 results conference call and live webcast. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. 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. 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 Adelt will then cover the financial details. 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 am pleased to present you today a strong start to 2026 with a solid performance across regions and business segments.
We delivered revenue of CHF 673 million in the first quarter, corresponding to an organic growth of 7.1%. All regions contributing to the successful beginning of the year, I'm particularly pleased with the very solid momentum in North America with continued growth quarter after quarter. Importantly, this performance is clearly driven by strong execution. We continue to gain market share across key segments, supported by our innovation pipeline, our digital offering, and a strong customer engagement we are creating through education. In implantology, we are further expanding our leadership through innovation, driven by the continued rollout of 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 smart 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. Despite a 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 details. 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, underlining trends are stabilizing, with improving patient flow and distributors slowly restocking from low inventory levels. Overall, this resulted in a stabilized regional development of 4.5% against a very strong prior 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 challenging 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 CHF, 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% with the CHF compared to the prior year period, as well as the EUR, 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 from 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 a more scalable and cost-efficient operating model, with further benefits expected to materialize over the course of the year.
In addition, for our challenger portfolio, we continue to expand our global production footprint. 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 implant segments, where we hold a market share of above 35%. The unique combination of our innovation capabilities with our global footprint and our deep clinical engagement will enable us to keep gaining share.
On the transform side, we are targeting high-growth segments where our market share is still relatively low and where we see significant upside potential. 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 in CAD/CAM 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 treatments, enabling faster and more efficient guided surgeries in higher value indication.
At the same time, we continue to expand the platform with new prosthetic solution. This includes the introduction of the new enhanced value-based iEXCEL line, featuring a laser-treated surface designed to further improve performance and clinical outcomes. 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 evidence-based education and research, with more than 25,000 members across over 100 countries, training more than 200,000 clinicians every year. This very strong foundation allows us to drive adoption of our solutions at scale and support clinicians across all levels of experience.
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 ecosystem, allowing us to engage with clinicians across the full spectrum, from general practitioners to leading experts in complex cases. This is a key strategic differentiator, supporting both adoption and long-term customer loyalty, and ultimately driving further market share gains. Let me now move to the transform side of our strategy, starting with orthodontics on slide 14. Our orthodontics transformation is built on three key dimensions. First, a more focused go-to-market approach targeting high-growth countries. Second, improved scalability and profitability through our Smartee technology partnership.
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 scalability, 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. This is exactly where our upcoming innovations come into play. Starting from May, we will introduce a series of new features that significantly enhance our ClearCorrect value proposition. Let me highlight a few key examples.
First, the integration of CBCT data into the workflow, enabling more comprehensive diagnostics and improved treatment planning, particularly for more complex cases. This is 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. Finally, RemoteCare, which enables integrated remote monitoring of treatments. We are seeing very strong customer interest and highly initial positive feedback, especially from general practitioners, as it reduces chair time and improves treatment consistency. Overall, all these innovations, combined with our improved operating model and focused go-to-market approach, significantly strengthen our competitiveness and position us well to scale in the orthodontics market.
Let me now move to slide 15 and show you how we are building strong momentum in digital equipment. This very strong momentum seen right now in our digital equipment business is primarily driven by the successful launch of our new Sirios X3 intraoral scanner, which has been on the market for six months only. Since its launch, we have seen very strong growth with overwhelming customer feedback and high demand across regions. This success is significantly increasing the number of users adopting our digital workflow solutions and driving increased demand for consumables. This growing install base is a key driver for future value creation. As more clinicians adopt our scanners and connect to our cloud-based platform AXS, we are seeing increasing usage of integrated workflow, including our Midas signature 3D printing solution. Here we continue to expand our offering with new features being introduced this spring.
These include expanded indication, such as new advanced material with a higher ceramic content 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 rates. 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 give other participants a chance to pose their question within the available time. Corey Skoll, can we have the first question, please?
Sure. The first question comes from Hassan Al-Wakeel from Barclays. Please go ahead.
Good morning. Thank you for taking my questions. Firstly, if you could just expand on the strength in North America, the extent of any market improvement, if at all, versus share gains and how this progressed throughout Q1 and into Q2. Are you observing any changes in demand or consumer sentiment? If you could talk to the confidence that you have on continuing this momentum, particularly as comps get tougher throughout the year. 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? What steps are you taking to mitigate, be it pricing or otherwise? Thank you.
Thanks, Hassan. A lot of questions into 2. Well, let me comment on the North American side. Most of our improved dynamic is coming from stronger execution and capability to materialize on the innovation we launched on the market. We have seen a rather stable patient flow. We don't believe that our strong results has been mainly coming from tailwinds, but a lot, and we see from where you were asking from where this is coming from, it's coming from all businesses. We have seen strong traction of our iEXCEL innovation on the premium side. We have seen good development of our challenger brand Neodent also through our DSO partnership, and we have seen also for our new transform areas significant growth on the digital side, thanks to the complete value proposition we have with Cerec for the entry and mid-level,
but also with 3Shape as a higher-end offering of the IOS market. Finally, we see orthodontics also being able to getting traction versus what we had in the past year. One of the good confidence we have moving forward for North America is the fact that our growth is coming from all the different franchises then bringing some resilience to this performance. We have not seen a particular different trend in the different months. We see more a kind of a stable than the performance capabilities, and that's the way we are seeing that moving forward in 2026. You know, the inflation side, when it comes specifically to North America demand, we are not seeing, you know, 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 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. I would say that would be with a significant increase of interest rate that would we would see more impact on the demand side from our perspective if we look at the history. From our cost side, I think, as Isabelle rightly said in the initial presentation, we aren't taking the, 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 CHF 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.
Very helpful. Thank you.
The next question comes from Susannah Ludwig from Bernstein. Please go ahead.
Hey, good morning, and thanks for taking my questions. I have two, please. I guess just first on China, is there any update on the timing of VBP? It sounds like, I guess, the patient flow has started to get better, and there's less, maybe a little restocking. How you're thinking about sort of the trajectory of that business until we hit VBP. 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, a potentially sort of further delay in the VBP and hence delay to the price cuts, sort of the start of the Middle East conflict. How should we think about the magnitude of the potential tailwinds versus potential headwinds?
Yes, of course, Susannah. Thanks for the question. China VBP, what we can say is that no news. Okay. They have been, it has been postponed, but there is no official information on when it's going to be implemented. Potentially second part of the year, potentially a bit later, I would say. We don't have a clear view here. What we can say, what does it mean for us? It leads to a normalization right now of the patient flow, even if it's at the low side. 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, as a consequent distributor, that are also slowly restocking in line with current implant consumptions, meaning that we see more activity also for us on the sales side. What does it mean if we look moving forward on the rest of the year? Because of the very strong comparison rate, you know, we were growing more than 20% in Q2 also last year in China. We see something like, you know, maybe slow, negative, low single-digit to flattish for Q2. Obviously, with a pretty good growth in H2 because we have seen the start of the significantly destocking at that time. If VBP would be coming, what does it mean?
It means that we would have, of course, a lower volume in the three, four weeks of implementation, much higher afterwards. That's why we would still see growth, we believe, in the second half. We are also then higher pricing for a longer period than expected versus our initial plan. 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 costs and higher pricing than anticipated. This is actually a good segue for your questions on then the different building blocks for the overall margin. Isabelle, if you would like to take this one, we have some different moving pieces that are really interesting to explain.
Definitely. Thanks for your question, Susannah. I think since we last talked, the main building blocks behind our 2026 EBIT development are broadly unchanged, although obviously there are a few moving parts I would like to go through step by step. On the external side, as Guillaume already elaborated, we continue to carefully monitor and manage the factors. We do have FX volatility, tariff developments, timing of the VBP, oil pricing, what have you. This is something we're very aware of and continuously monitor. 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.
I think more importantly on the internal side, there are a few things we see developing very positively. To start with, it's our orthodontics transformation. The Smartee partnership improves the economics of our line of business and margins. With that, primarily driving costs down due to the lower costs to align us to automation and manufacturing at scale Smartee brings to this partnership. It's as well, basically all the things I already mentioned during my presentation. 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 being produced in China. Adding to what Guillaume said, we can hold on to the higher pricing for a longer time, but at lower costs from our Shanghai campus.
We see a stronger digital mix with our own IOS scanner portfolio, namely the Straumann SIRIOS X3 we launched half a year ago. 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. On the flip side, what we will see in terms of phasing is obviously higher tariff impacts in the first half year. Now with the current announcements, a little bit lower impact in the second half, obviously. Still to be seen how it really turns out after the 150 days. 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.
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. What I can say so far is early trends are encouraging, so what we see. Phasing between the first half and second half will obviously depend how these factors evolve. I think especially due to the VBP timing, will be a little bit more even than initially expected. Overall, we remain very confident in the margin progression implied by our guidance.
That was very comprehensive. Appreciate it.
The next question comes from David Adlington from JP Morgan. Please go ahead.
Morning, guys. Most of my questions have been asked, but 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 issue has been strong, but I just wanted to get a pricing impact, I know that's been a historic driver. I thought maybe just on the cost inflation side, just any particular areas you would pull out that you are potentially would highlight as potential problem as we go into the second half into next year. Thank you.
LATAM pricing is actually limited. A lot of this is coming from volume. We have done really, really well on our implant development, and especially now, not only Brazil, but also we have a very, very good progression in all the, what we call Hispanic countries. I want to again explain one of the major difference we have with a lot of competitors is that we have our own subsidiary. We are not going through distributors in many of those markets, in Argentina, in Peru, in Colombia, in Chile. 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.
Yeah, then the mainly volume, and we are looking on having still then the, this, really good development in LATAM moving forward. Might not be at the 19%, which is exceptional. We've also some strong digital market adoption, but still, you know, promising for this part of the world.
On the cost inflation side, David, I think what we can say so far, it's well under control. As 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. Just to give you a reference, energy is a very low single-digit percentage of our total costs. Those prices are usually secured 1.5 years in advance by our procurement department. We are very much on the safe side there. Similar picture we see for shipping costs. With a lot of the big suppliers, we do have running contracts where pricing is secured. I think this is very well under control.
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. 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.
Very clear. Thank you both.
The next question comes from Hugo Solvet from BNP Paribas. Please go ahead.
Hi, guys. Thanks for taking my questions. I have two, please. On EMEA first, 8% organic growth in Q1, could you maybe discuss the impact from pull forward of demand, and would it be a realistic scenario to assume a return to possibly low double-digit growth from Q2 onwards? Second question, clarification on profitability. Isabelle, when you mentioned similar margin level in H1, could you maybe clarify whether it's H1 getting better than what you initially anticipated or H1 better but more uncertainty on H2? Thank you.
Yeah, thank you, Hugo. EMEA, I think very, we expressed, and I think I expressed that 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 factor 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 surgeries, and have been investing also on our go-to market, on the challenger and premium side in order to keep developing our market share. Secondly, we have also the fact that when it comes to the resilience versus, for example, the current environment, GPs are placing implant, and it's a gold standard of treatment for replacing teeth.
We see that despite a little bit, some of the, you know, turbulence that we see around, this is going to be also resilient moving forward. 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%. 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 double digit, but it's still having this very, very strong growth in, you know,
the biggest part of our business because it's represent 48% or 47% of the group sales. Very confident moving forward, still going to be in between the high single digit to low double digit. This is really the confidence in those numbers that I think is really the strength of the EMEA for our overall performance. When it comes to profitability, Isabelle will give more color on this, but it's more an improvement of what we see in the first half that we are seeing from a trend standpoint than some of the second half that will come to the first half. It's not so much it's a rebalancing by the fact that the first half will be higher than expected versus our, you know, second half.
Exactly. No, thanks, Guillaume, for the segue, and I mean, very good question, Hugo. What has changed since we last talked? Let's go through that. 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. There's majorly 2 factors that go into this. It's on the one hand side, the tariff impact. We set 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.
At this stage, it's still early to reflect this into our assumptions for the full year, or to point to any specific upside, especially since it's yet to come what will happen after the 150 days. This is why the first half year will be slightly better than expected due to lower tariffs we will see come through, especially in Q2. 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 all we see now, this will move into the second half, and we see a very stable, solid performance in China as we speak, so we will likely have a timing effect there as well.
Maybe what I would add to this that was part also of the presentation, we have made a lot of investment and efforts on our cost side. We see some traction that might be a little bit earlier than planned on automation being done on our premium side by the fact that we are manufacturing in China for premium by the strength of our own scanners versus third-party product, which is helping the gross margin. Obviously, when you are also then driving performance in North America versus what was, of course, past year, then 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.
Next question comes from Julien Dormois from Jefferies. Please go ahead.
Yes. Hi, good morning, Guillaume. Good morning, Isabelle. Thanks for taking my questions. I have two, and they are actually, one is a follow-up to your comments. I think it was on China, but just want to make sure I clearly understood. I think you referred to maybe flat to low single digit growth, but is that for China, or is that for APAC, in the second quarter? That would be helpful to get a clarification on that. 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 or the headwind has come down a little bit from, when we last discussed. Thank you.
Thanks, Julien, for helping us to precise this. I was mentioning China. China will be low single digit to flat in the second quarter based off the very high comparison base and the normalization of the patient flow on the rather low side. Which means that then it will help Asia Pacific to come up with then a better contribution to the overall group growth in the rest of the year.
To put a little bit more color onto the FX impact, I mean, obviously the impact we've seen in the first quarter was massive, but this is more, you know, an equation of the spot rates now compared to the spot rates last year, is going into Liberation Day, especially the U.S. dollar was particularly stronger than it was this quarter. One, Seth indicated roughly 10% and 4% for the euro, we will see a little bit of a turnaround. We already see that coming in for Q2 actually as we speak. Looking at the full year guidance, as previously said, we're operating a very volatile FX environment. I think with some I have to take it as it comes as the year evolves.
Just to give you an indication, we actually rerun our forecast for this year with the March spot rates. As it seems, the overall FX impact will be slightly below what we've seen last year.
I'm sorry, just to follow up, are we talking about margin impact, right?
Both, actually. Both.
Yeah. Okay.
What we currently see for the margin impact would be roughly 100 to 120 basis points at end of March spot rate. Lower impact for the top line as well. Yeah.
Yeah. Thank you very much.
The next question comes from Graham Doyle from UBS. Please go ahead.
Morning, guys. Thanks a lot. Just 2 questions, please. On China, could you just maybe talk a little bit again about that phasing to the extent you can. I understand it's like VBP's still a little bit sort of up in the air. 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? Should we expect like, say, more moderate growth in the second half than I think consensus and models more like kind of 20% the second half? Just understand, is it just kind of balanced phasing there now as well? And maybe if you just comment on the U.S.
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, five quarters or something. Are you seeing better underlying demand sequentially as well, which kinda 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, it'd be really good. Thank you.
When it comes to China, Graham, I think there are two scenario. 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 20%-25% from a patient flow standpoint. On our side, if you have a normalization of the patient flow with the very low second half that we had, which was around the -20%, then obviously we expect to have some double-digit growth for the rest of the year. When it comes to the VBP, if there is a VBP in the second half, you will see a much higher volume, potentially at a lower price. We still remain to be seen. 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.
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 from China in the second half. When it comes to U.S., I cannot say that we have seen once again a sequential improvement of the patient flow. I expressed the fact that we see the patient flow being rather stable, but our capability to generate much more growth is coming from our capability to execute on the opportunity that we have at hand, that are our iEXCEL innovation on premium, that our business partnership capabilities on our challenger brands, and also all the development we do on digital and the orthodontic space with significant new value proposition here on the orthodontic side as expressed with all the new innovation we are coming up in May,
but also with our own intraoral scanner that has just been launched in October last year. 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 a current trend that we are seeing right now.
Awesome. 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, you know, this sort of trade-off between education and price, for example, or are there other things happening?
At this stage, Graham, I would prevent from any speculation. I think that we have seen and known through experience that the regulation in China are moving in terms of dates. If you remember the first VBP that's been announced, even, you know, 18 months or 2 years before it has been actually implemented. I guess that what's happening in the Chinese authorities, there are also some priorities sometime that are changing, and one is more has 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, that's where I think it's playing on our agility culture of our organization to try to make the best out of the solution, out of the situation.
I think we have a lot of solutions to be able to leverage the current situation with the normalization of the patient flow.
Awesome. Thanks a lot, guys. Really appreciate it.
The next question comes from Oliver Metzger from Oddo BHF. Please go ahead.
Good morning. Thanks for taking my questions. First one's in China. Versus private and the public market. Obviously there's the VBP delay. Does it mean that you experience a stronger support at private practices and corresponding also a positive volume price mix? Second question is about the comment you made about the regain of lower price implant customer for iEXCEL platform. For first time you made this comment at your CMD. Today, you reiterated that. Initially it was just a ray of hope. Now you confirmed it again. 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 already as becoming significant, or is it just, let's say, in initial trends which doesn't have any meaningful impact yet?
Yeah. Thank you, Oliver, for the question. When you look at the Chinese market, you know, 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 than smaller practices. One of the specific approach of the VBP has been that the Chinese authorities have been able to bring the private sector to be aligned with the VBP. 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.
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. That's where, you know, 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, you know, the high quality product still going to be available for the public sector, but also for the private sector. Allowing also the patients and the clinicians to be able to run their practice with offering the best potential care.
We know that Chinese, speaking, they want to favor also the local Chinese companies as soon as they are ready to be able to scale for this kind of volume in the market. 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 a premium versus value. 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.
This, especially based on what, one of our customer has been expresses 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 two or three appointments for achieving the same treatment solution. This is exactly what some of our workflow are offering, and it was, you know, the specific Fast Molar workflow that we have presented, where you use one 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 for starting doing the prosthetic process.
Time is money for all the clinicians. They can see more patients, and they can do more cases. That has been one of the reason, thanks to the digital efficiency of our workflow associated with iEXCEL, that we have been able to transform some value users. Is it a significant that we see? I would not say significant, but it's more and more the case. Why is this? Because now that intraoral scanner are having a price point which is favoring a significant market penetration, GPs are all going to be equipped. When you have a series at a price that allow you to, you know, to get started with digital workflow, then you have immediate access to the iEXCEL workflow.
That's where we see an initial trend that 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. 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.
Okay, great. Thank you very much.
The next question comes from Brandon Vazquez from William Blair. Please go ahead.
Hey, everyone. Thanks for taking the question. 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 U.S. 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 to also get a better understanding of how durable these improvements in U.S. and North America growth can be.
Yes, we changed leader in May last year. You're totally right. You know, when you are having a strong commercial-oriented leader, then you are building up trust within the organization that they will be supported to be able to achieve the best possible results. You know, I think success from a commercial traction is coming on the one side by systems. That means, you all know commercial excellence, then that mean ensuring the right productivity, the right targeting, and this needs to have significant monitoring from the sales management side. 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 a 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. When you have more success, you have obviously more energy within the team, and you have also the capability to overachieve some of the target that has been assigned. It's, it's also a, a virtuous circle that you need to implement, and this is what we are seeing in North America right now. That's where we need also to support this with additional investment, with some additional investment with feet on the ground, with marketing promotion, and above all, with further innovation, because that's still the name of the game.
Then a strong commercial team is going to really drive a very strong performance as soon as you are also giving them the means to differentiate themselves on the marketplace, and this is what we're able to do with the different then enhancements of our value proposition across our businesses that we are doing on a regular basis.
Got it. Thank you. Maybe, Isabelle, for you as my follow-up here. You know, in the 30 to 60 basis points 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's doing better, and you're getting some of the benefits of manufacturing there. Just kinda curious, why wouldn't that push you maybe on the core EBIT margin expansion? Why wouldn't those two 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. Thanks.
Excellent question, Brandon Vazquez. Thanks for that. I mean, what we see how the year started, we are very satisfied with the top line development and the margin development as well. I think it has been a really good and strong start to the year. As already indicated earlier, you know, we see a lot of moving parts right now. We have the macroeconomic volatility we somehow have to manage. We have to monitor the tariffs a little bit closer. All of the things we did internally with the orthodontics transformation, with the new factory in Shanghai, all of this is now falling into place. The trends we currently see, they are encouraging. The phasing, as already said, will look a little differently, with a stronger first half.
Of course, I think for the full year, it's still a little early to be too enthusiastic about it right now because it still will depend a lot on how all of those factors I just talked through, so the tariffs, the macro environment, the VBP, will actually play out throughout of the year. I think we are confident that the margin progression we indicated, we can do this. It's still a little early to reflect all of this in our assumptions and point to any specific upside potential. Things remain. We are very confident, but I think this is something to be discussed later in the year.
Okay. Thanks for the questions.
Next question comes from Falko Friedrichs from Deutsche Bank. Please go ahead.
Thank you. Two questions from my side, please. The first one is another clarification. Guillaume, you meant to say that China in Q2 is flat to a low single digit decline, correct?
I said low single digit decline to flattish. Yes, that's correct.
Okay. Got it. Thank you for clarifying that. 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 2026 or even early 2027?
Well, it's. 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, and they will come to practice and get their treatment done. As there will be no change into pricing, people will not reconsider 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. I think it will drive to the practice, the people that are waiting, but that they were planning to have treatment. There are some.
Is it going to be, let's say, a significant push? I don't think, I don't think so. We see, as we speak, things really normalizing, but it's a step-by-step approach. 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 should be able to see, then a potential good growth from China. Not so much from an extraordinary patient flow, but mainly because of normalization and a lower comp base.
Okay. Thank you.
Next question comes from Richard Felton from Goldman Sachs. Please go ahead.
Thank you very much. Good morning. Just two from me, please. First one is just a 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? Then second question. We've heard some feedback that the two Korean competitors in implants are trying to be a little bit more assertive on competition in Europe. Is that something that you're seeing? Does that have any impact on market structure or competitive dynamics in Europe? Thank you.
What I can say with the success of iEXCEL is so much that it is now representing more than 20% of our total volume of premium implants. In a kind of a 16 to a 18-month start, it is a very significant achievement in a conservative market. This is where we see, and this is also why we have decided to double down on it, and that all innovation that we are going to do on the 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 TorcFit connection, which is bringing really a lot of benefit from a clinician standpoint in order to continue to push 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, you know, 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. I don't feel in Europe having more constraint coming from our Korean competitors than what we had in the past period. Not less, but not more.
Great. Thank you again.
The last question we can take today comes from Julien Ouaddour from Bank of America. Please go ahead.
Hey, thank you very much. Good morning, everyone, and thanks for squeezing me in. The first one, we 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. Are you still aiming to reduce by half the losses at ClearCorrect by year end? Or have you identified some areas where you would prefer maybe to invest the money on? That's the first question. Quick one on China for the second one.
Could you maybe comment just about the competitive landscape you're seeing in the country, and especially on the zirconium titanium implants from Chinese competitors? I mean, do you see players having this kind of technology, and do you expect this category to be, I mean, creating or, let's say, included in the next VBP round? Thank you.
Yeah, good question as well here on the go-to market for ClearCorrect. We are indeed investing and have invested significant money in driving our value proposition up with our then the partnership with on the one side, Smartee, but also with Dental Monitoring and rewiring entirely our manufacturing approach for EMEA and Asia-Pacific. Could we even drive faster results with more feet on the ground? The answer is not yet because with regard to the investment we have done before on the sales and marketing side, we were really ahead from our feet on the ground with regard to the results we can generate.
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. 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. That's where as we as we are speaking right now, they will be able to deliver a lot of growth with regard to the new setup that we have without for us to have 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, you know, we have, 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 Straumann SIRIOS X3. 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 with zirconia and titanium combination. We are testing it.
I don't think that it 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 product. Only at this point, this is just pure speculation and nobody knows really. I think we will see when we will be from there and our goal will be, once again, to be able to differentiate significantly from any other competitors and bring the best product at the best price, with then all the Chinese clinicians taking into consideration that our significant differentiation is 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.
Thanks, Guillaume Daniellot. I mean, if I can quickly come back on the ClearCorrect, if you don't need more investment, I guess you're pretty in line to reach the 2026 ambition you have on the margin side, which means lowering the losses roughly 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.
Perfect. Thank you very much.
Okay.
Thank you.
Yeah. Thank you also. Thank you for joining us today and for your continued interest in the Straumann Group. 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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