Good morning, everyone. Thank you. I very much hope that you, your families and your colleagues are well. And thank you for joining this conference call on Straumann's 20 2Q1 results. We'll be referring to the presentation slides that were published on our website this morning.
And as usual, we kindly ask you to take careful note of the disclaimer on Slide 2 regarding forward looking statements. At customary, I will run through the highlights and then Peter Hackon, our CFO, will review the business and regional performances. After that, I will give you an update on our recent achievements and our strategy regarding COVID-nineteen. I'll conclude with some thoughts on the outlook, after which we will look forward to answering your questions. So beginning with Slide 5.
We made a promising start to the year, continuing the solid growth trend of 2019. But this was severely disrupted by the outbreak of coronavirus in China and it spread through Asia, Europe and the Americas. Towards the end of the quarter, the majority of dental practices in most of our markets were either locked down or limited to emergency treatment only. Even in places where practices did remain open, patients stayed away in fear of infection. These circumstances brought the global market for implant and aesthetic dentistry almost to a standstill, and our sales dropped significantly.
However, thanks to the good performance up to the middle of March, our Q1 revenue reached CHF357,000,000 which, in term of organic terms, were just 1% off the comparative period in 2019. Revenues declined sharply in Asia Pacific and remained flat in EMEA, while both North and Latin America posted single digit growth. Across the Straumann Group, we responded quickly to the emerging pandemic, ensuring the safety of our people and the continuity of our operations and key functions. We also took prompt measures to mitigate the financial impact by adapting costs and capacity in addition to securing liquidity. The shutdown restrictions have not diminished the passion and creativity of our people.
Working from home, we have built and strengthened relationship with customers and creating new opportunities. We have also used the shutdown as an opportunity to train our staff. All of these initiatives will help our business to rebound when countries reopen and dental practices will get back to normal. Very importantly, we have not relaxed the momentum on key innovation projects and have pressed ahead with exciting projects in our R and D pipeline will help drive future growth. We are fully confident that our underlying business fundamentals are intact.
But in view of the continuing uncertainty, we are withdrawing the financial guidance we issued in February, and we will not be able to provide you with a new forecast for the time being, as you can understand, looking at the uncertainty of the current situation. Moving to Slide 6. Our original results reflect the different phases of the pandemic. Asia Pacific, which has suffered the longest, reported a revenue decrease of more than 20%, in stark contrast to its dynamic growth in 2019. EMEA slipped from growth in the low teens to 0, while North and Latin America dropped to the upper single digit range.
And now for the details, I will hand over to Peter.
Thank you, Guillaume, and good morning, everybody. The outbreak of disease and subsequent lockdown in China had a substantial impact on our growth throughout Q1. Most European markets and North America were heavily affected in the second half of March. Excluding China from the results, growth February year to date would have been in line with the previous year. And even including China, we would have reached the double digit growth rate for which we guided in February.
Obviously, this fact does not embellish the numbers, but it does give us confidence in our ability to continue growing strongly under normal conditions. As you can see in Slide 9, our reported 3 month revenue in 2019 amounted to CHF 372,000,000. We have to contend the steep FX headwinds that amounted to a negative impact of CHF 22,000,000. The acquisition effect, mainly of Vontagie, added almost SEK 12,000,000, bringing the adjusted revenue base in 2020 to €362,000,000 As you can see, our 2 largest regions, EMEA and North America, together with LatAm almost made up for the large decline in APAC. As mentioned, the strong Swiss franc weighed heavily on our reported revenue and you can find more information on the impact in Slide 32.
Looking at Slides 10 11. The regional performances in detail, our largest region, Europe, the Middle East and Africa, posted good initial growth, driven by premium and value implant solutions. Clear aligner sales were initially promising, but the rollout program and sales in general were interrupted by the pandemic. Dental Clinics remained partially open in Germany throughout the quarter, but focused increasingly on essential treatments. While Italy, Spain and France were the 1st large markets to suffer, growth remained intact in Russia, Turkey and parts of the Middle East until late in March when the pandemic started to take its toll.
As a result of these factors and currency headwind of almost 7 percentage points, regional revenue remained more or less flat at €162,000,000 corresponding to 45% of the group total. North America contributed almost a third of our total revenue, having delivered double digit growth for all but the last 2 weeks when Canada followed by the U. S. Went into lockdown. The growth was driven by premium implants and Neoten with additional lift from our digital business.
In total, revenue increased 8% in organic terms or 5% in Swiss francs to 116,000,000. The business disruption in China was in line with our expectations. Also digital equipment sales were better than expected, thanks to the range of intra hour scanners we offer under the Straumann brand. In the meantime, both China and Korea have begun to emerge cautiously from the crisis, but consumer confidence is more reserved than before the crisis. Taiwan has hardly been affected, while Japanese customers purchased more than usual in anticipation of the shutdown, which came in April.
Other countries in the region are also locked down. As a result of these various factors, our revenue in Asia Pacific declined 22% organically or 26% in Swiss francs to €54,000,000 With an improvement in the economic environment, the year started well in Latin America. All countries delivered good performances in the 1st 2 months, driven by premium and value implants and lifted by sales of Straumann's competitively priced virtual Vivo intraoral scanner. However, with Brazil and the region in various stages of lockdown and with patients anxious about visiting clinics, sales were generally modest as the quarter ended. Organic growth reached 7%, but a strong negative currency impact reduced this in Swiss bank terms by almost 20 percentage points, bringing regional revenue to €26,000,000 Driven by increased demand for fully tapered and apically tapered implants, the group's largest franchise, implants and restorative grew strongly initially, but declined over the full period due to the interruption in March.
The value implant line, especially in Neodent, Medentica and Xenodent grew throughout the quarter, while Oncogene was constrained by the early lockdown in France, its home market. CAT Chem prosthetics sales were positive throughout the quarter following the strong implant sales in the prior quarter. Demand for digital equipment was strong, driven by sales of intraoral scanners. ClearCorrect posted double digit growth with additional lift from the recently acquired thermoplastic business. Projects to expand production in the U.
S, Brazil and Germany are on track. And in spite of the challenging environment, sales of Biomaterials remained stable, thanks to the group's attractive bone regeneration portfolio. And with that, I'll hand back to Guido.
Thank you very much, Peter. With regards to our achievements and strategy, I would like to start by adding some details on the businesses. Peter referred to the strong pre crisis demand for our innovative Straumann BLA implants, which continued to gain traction and consequently gained further share in the premium segment. BLX, together with the broad range of fully tapered implants offered by Neodent, Entokyr and Medentika, positions us strongly in the area of immediacy. Our strategy to lead in immediacy is exemplified in a collaboration with we have with Southern Implants to bring a new zygomatic implant solution to market.
It combines proven implant design features with the advantages of our BLX and BLT prosthetic systems. In addition, it can be used with the Straumann Care serial workflow to plan the implant position by computer. This increases flexibility and efficiency for clinics, providing advanced implant procedures. In addition to increasing our access to maxillofacial surgeons, our new implant creates opportunities for treating compromised patients. Zygomatic implants have been used for several years to offer an immediate treatment options to people with insufficient bone in the posterior upper jaw who would otherwise be unable to have an implant solution.
As you can see in the illustration, they are much longer than conventional implants, so they can be anchored in the cheekbone. Clinical evaluation of the new system is underway in 8 international centers, and we are working with various centers of excellence to increase education in this area. Another highlight in Q1 was the launch of Nuvo, our new implant brand aimed at the lower value segment. We introduced it at CIO SPE, the largest annual Congress in Latin America and are planning its international rollout to address the increasing need for affordability. Moving on to Slide 15.
In our Digital business, a substantial contribution to growth came from internal scanners, which will be the gateway to download practices in the future. This is why we have been working hard to connect various scanners seamlessly with our digital workflows. It explains the urgency of restoring production at Dontalwings, which was disrupted by the fire last year. I am pleased to say that we have reestablished capacity, including production of our competitively priced Virtuor Vivo and Tra oral scanners. As you can see on Slide 16, our orthodontics business performed well, although its progression was interrupted by COVID-nineteen and a change in the marketing approach of certain customers.
We are looking forward to continuing the international rollout of our ClearCorrect product portfolio. We are also excited about the new software we have in development as well as the new high performance Zendra thermoplastic that we plan to have ready by the end of the year. With the next few slides, I would like to share our perspective of COVID-nineteen with you and to tell you about our initiatives to mitigate its impact and to create new opportunities. Slide 18 maps the progression of general restrictions triggered by the coronavirus, together with its impact on normal practices and patients. Based on insights from our local team, we have plotted our key markets in the chart according to where they are in the chain of events.
As the middle line indicates, we don't anticipate an immediate rebound in our market as soon as lockdown restrictions are lifted. The reason we see for this are as follows: electric procedures depend on disposable income, which may be reduced in the post COVID-nineteen economy. Secondly, patients need to feel confident that there is no risk infection before they go to the dentist, especially their treatment can be postponed. And thirdly, dentists will need to wear personal protection equipment and change it with each patient. They will also have to take additional hygiene measures, which can reduce the number of patients they can treat per day.
And the main concern for us is the expected economic recession, which will lead to low consumer confidence and reduced disposable income. This in turn will cause people to certainly put off elective dental treatment. Although China, Korea and the initial countries in Europe are opening up, we are cautious about the form and extent of the recovery. Fortunately, with our broad geographical footprint, our ability to address all price levels and our strong balance sheet, we are equipped to prevail and come out strongly. Slide 19 provides more insight into the current phase of the pandemic.
Of the largest markets, Italy, France and Spain are closed, while fewer than 20% of practices are currently open in the U. S. And Brazil. At the other end of the scale, 80% or more are open in Germany, China and Korea. So that gives you a brief overview of the situation.
Now let me tell you about some of the things we have been doing to come through it together with our customers. We have often told you in the past about the importance of our culture journey in driving growth and high performance. Our player learner mindset and calm behaviors like being agile, focusing and supporting customers, creating opportunities in the marketplace, taking ownership and building trust are even more important in those difficult times. They have truly enabled us to respond quickly to the COVID-nineteen crisis and will help us to stay in control of our destiny. To weather the storm, we have been focusing on the past 2 months on the priorities listed in Slide 21.
1st, people's safety secondly, business continuity then mitigate the financial impact and finally, supporting customers and preparing for a strong rebound. With regard to people's safety and preventing the spread of infection, our quarantine, social distancing, hygiene and other protective measures have been very affected. Thanks to this and the responsibility of our entire team, the number of confirmed cases in our global team since the outbreak has been extremely small, and thankfully, no non admin service. To ensure business continuity, we have adapted production capacity to meet demand and have encountered no supply issues. Our e shop, customer services, sales team and internal functions are operating remotely and are all working very well.
Straumann CATCAN Services are running, and our warehouse teams are processing orders in time. We have been working hard to adapt our cost base also to current and near term demand, ensuring that we retain our flexibility and maintain capabilities without compromising projects that will drive Tudor's success. In February, we implemented an immediate short term cost reduction plan, putting travel, hiring, consultancy and non clinical initiatives on hold. We also took measures to reduce personnel costs, including voluntary pay cuts by the Board and global leadership team. The details of this are presented in Slide 24.
In addition, we began to implement global reductions in working hours and pay, applying for government support wherever possible. We have reduced CapEx until demand picks up. And we are evaluating further measures to adjust our cost structure based on mid- to long term scenario planning. On Slide 25, you can see some of the innovative things that our staff are doing to create opportunities in order to rebound strongly. The most significant of these are 2 dedicated web portals offering valuable information and COVID-nineteen, supporting customers as well as educating opportunities, virtual conferences, webinars and more, all free of charge.
The aim is to enable dental professionals to learn about the latest techniques, treatment solutions, products while their practices are closed. So far, the platforms have attracted more than 200,000 visits. 1 masterclass on immediacy with Straumann Bialik drew 7,000 attendees. Being fully integrated in our digital platform, the portals have generated no fewer than 220,000 leads. And finally, Slide 26 shows how inspirational we can be.
In response to the urgent need to sanitizing agents, our colleagues at ITER Biomaterials in Brazil started producing a hand sanitizer gel, which is named NeoGel. Ener specializes in resin for 3 d printer, and before long, it has inspired a number of customers to use their equipment to print clips for attaching protective face shields. Across the world in Germany, manufacturing equipment for our clear aligner business was reprogrammed to produce protective face shields for dental professionals. We offer these free of charge or at cost and encourage recipients to make donations to support COVID-nineteen relief. And that brings me to the Slide 27 and our thoughts on the outlook, which, of course, are bearing unforeseen circumstances.
Although China and South Korea are now open and initial markets in Europe are beginning to reopen, key countries elsewhere remain locked down. We therefore expect the impact since towards the end of Q1 to continue in Q2. In view of the trends and uncertainties, we are withdrawing our guidance for full year revenue and earnings. As noted in our press release, the pandemic has triggered economic issues around the world, and we have to be prepared for weaker microeconomic environment with reduced consumer confidence and lower disposable income, factors that we believe we've lengthened the time to fully recover. With our broad geographical footprint, wide range of solutions covering all price levels and strong balance sheet, we are well positioned to address all customer preferences and needs through the crisis and beyond.
Nonetheless, we still have to adapt as an organization to the new realities without compromising our ability to innovate, manufacture, supply and sell winning products and solutions with service excellence. The underlying business fundamentals of the Froman Group remain intact, and we are confident that when the economy and consumer confidence return to normal, we will emerge as an even stronger brand and partner of choice for our customers. And now I would like to open the question and answer session. As usual, I would kindly ask you to limit the question your number of questions to 2 and return the queue in order to give everyone else a chance to put their questions. So for response, can we have the first question, please?
The first question from the phone comes from the line of Chris Kretler from Credit Suisse. Please go ahead.
Thank you. Good morning, Guillaume, Peter. Hope you're doing fine as well. I have two questions. The first with respect to the exit run rate at the end of Q1, could you indicate to some degree kind of how that level was relative to kind of a normalized plan?
And that will be very helpful so that we can get a base of where we can expect a recovery from. And then the second is on the drop through rate. Could you maybe give kind of an overall indication what level of drop through we should expect from these lower sales relative to the original plan, for example, for the first half. I know obviously the visibility is still very clouded, but maybe kind of an indication whether it should be kind of above 100%, for example, given additional cost or so that would be very
Let me address your first Let me address your first question, the exit run rate of the Q1. I mean, if you look at the Chart A, that gives you a certain indication there. You see these bars are in relation the size of the bar in relation to the full year growth 2019. You see approximately what was the growth. And until mid March, more or less, in most of the countries, we had a softening business in March, but it was still generating growth.
So especially in the second half of March, most of the countries went into a lockdown around the globe. So you can see the negative impact here in March that was mainly from a good half month. So that gives you a certain indication how April could look like. And as we said, COVID-nineteen has created a lot of insecurity, but the visibility going forward is very limited. So we are working with different scenarios in that respect there.
But you cannot give us kind of a first indication about April maybe?
Yes. If we take the growth rate here for March and if we basically that was for a half month, if you extrapolate that for a full month, then you would see it basically double the amount of March. So in April, as most of the countries in Europe, in North America and in various places also in Latin America were in a lockdown, business in April was rather soft than I would expect there For the April alone, it declined something like 17%, that order of magnitude.
That's very helpful. Thank you. And on the drop through rates?
What do you mean, Chris, exactly by the drop through rate, if you can express that?
Yes. Basically, let's say, you expected kind of sales in order to grow in our 15%, and now we are basically 100% to 115%. And now we are basically at 100%. So the incremental 15% kind of what kind of margin on this 15% should we assume? Basically, I mean, your gross margin is really high.
So I guess, it could be as much as pretty much 100% that will drop through your operating profit line. That was my or I mean, just to get a sense about, on the one hand, we have additional costs kind of given all the measures now that have to be put in place. On the other hand, you have some savings, maybe some as you indicated, just to get a bit of a sense kind of on a net net basis, how that kind of equals out?
I mean, Chris, that's a very tricky question, I think, because I assume you are referring to the full year drop rate at the end and not especially in April now. I mean in March, we were able to cut all the incremental short term costs such as travel, promotion activities and so on and so forth. And obviously, as most of the dental practices were locked down in April, We see a bigger positive cost impact in April from these reduction. On top of that, we are in short time work. Some people have taken vacations.
So currently, I would expect a bigger savings, especially in April. And in the future months, we will adapt the savings that we can generate also a little bit to the top line development in this month. But for the full year, we are able to generate a significant amount of savings, which is in at least in the high double digit million amount. Okay.
And then maybe just one last question, if I may. Could you maybe elaborate on the next trigger the next triggers that you basically have in your scenario planning that would kind of result in some action?
The scenario planning is obviously based on trying to understand the rebound or the recovery of the different markets. And one of the trigger is obviously Asia Pacific and China in particular. First, because China has been the first one into the crisis, and it gives a lot of indication on how we can get out of this crisis and especially how dental practices can create a new normal for treating patients with implant therapy. And the second one is obviously the consumer confidence after the outbreak and how much the patients are going to come back to the practices and use a part of their disposable income for implant treatment. And while we don't think that we can 100% apply to the rest of the countries what's going to happen in China, at least it will be giving a very good indication on how we can rebound in Asia Pacific, which has been for us a very strong driver for our growth overall.
Thank you. I appreciate your comments.
Thank you, Chris.
The next question comes from the line of Tom Jones from Berenberg. Please go ahead.
Hi, thanks for taking my questions. I have 2 kind of in a similar vein really. Maybe one for Peter and one for Graham. Peter, I was just wondering what if you could give us some indication of what percentage of your labor cost you think you might be able to offset or have compensated through various government salary compensation schemes, furlough programs, etcetera, both as a percentage of your labor cost and a percentage of your total cost? That will be helpful for us to try and understand.
And then the second is kind of a follow on question to Chris's and a big picture one for Guillaume. I mean, Straumann probably could have been accused in the past in 2008, 2009, 2011, 2012 of being a bit slow to adapt its cost base. And I'm sure that's playing on your mind now. But equally, this is not a normal recession. This is not a sort of financially driven recession.
This is something new. So I wonder if there's a risk that if you do adapt your cost base more aggressively in the short term, you then get caught out by a rapid market recovery and end up having to rehire all those people at effectively higher cost. So I guess the question for you is how are you thinking about balancing those 2 risks, the risk of going too early or against the risk of going too late, just kind of some general thoughts as to how you're thinking about that balance would be useful, I think.
So thank you for your questions, Tom. Let me address the first one in terms of savings for percentage charges in terms of personnel cost and overall cost savings. I mean, I want to say you have seen what kind of savings are we achieving on the personnel expense side. You have seen these are, on the one hand, voluntary pay cut as listed in the chart number 24. In addition, some we have encouraged the people to take vacation, which comes on top of that.
And in some of the countries where we are on short term work, we also get respective government subsidies. Assuming that all these measures will stay in place for the full second quarter and especially on the short term that that's my current planning assumption, but we don't know that. We could also probably lift that once business is coming back. But assuming that will stay in place for the full second quarter, then the positive impact we can achieve with these measures is a high million single digit figure, which would be a good 10% to 15% of the personnel cost. And on top of that, if we take that to the total cost in the second quarter, that will be something like 5% of the total cost in the second quarter.
Okay, that's useful. Thanks very much.
But of course, that's a very dynamic situation going forward, and we will adapt that depending on the top line development.
Of course, of course. Yes, Tom, thanks for the question. Yes, I think that's obviously a very important question that we have on our mind. Would see there is 2 dimension of it. It's you have the when and you have also the how much and the magnitude of those kind of decision.
First one on the when, that's what I was just saying. I think for us, it's very important that we are having the right timing in evaluating exactly the recovery in our key markets. And key markets, especially for growth, has been Asia Pacific and North America. And as you can imagine, we are following the situation with our local teams very, very carefully in order that we can have the best potential sense of how the recovery is going to look like. We've how much would we be taking some measures to avoid being not being able to capture a faster recovery, one very important decision we took is first on the manufacturing side.
Manufacturing side, we have done a lot of short working time, and we are planning short working time also moving forward in order to be able to adapt the manufacturing to the demand very quickly. Again, I think this is a very important point for us not to be facing any back orders in case we were, for example, seeing a better situation than we could be planning at this moment in time. On the other side, it's much more a good opportunity also of having this crisis to reassess all our priorities in terms of development and making sure that we invest in all the critical innovations and projects for the future, be it digital, be it clear aligner, be it all our core business on the value and premium side and still keeping what is going to make the difference tomorrow, but maybe easing some of the nice to have that we were having in the period of double digit growth. And I guess we are having a lot of commitment from our team to really look at that in detail and as our scenario planning, which are run and designed along those kind of guidelines that I just shared with you.
This might sound like a slightly perverse question given it looks like revenues in parts of your business are currently down 70%, 80%. But is there any intention, scope, opportunity to actually increase investments in certain areas, whether that's in internal projects, hiring good quality people from perhaps some other companies, you've got an opportunity to poach some good people or perhaps on the M and A front, clearly that some companies are going to be struggling at the moment and looking for a way out of their current situation. Is there any opportunity to actually go the other way and find some places to put money that you might not otherwise have done?
That's a very good question, Tom. And actually, yes, we are doing this. We have been pleased to hire a couple of very good people that we think are going to help us also through the rebound about the specialty expertise that we were not having internally that are going to be very useful. We are looking at the M and A opportunities in different segments to be able to either capture additional market shares or again adding some specific expertise of technology that we would not have. And this is really present in our rebound plan, and those are things that we are evaluating as we speak.
Good. That's very encouraging. I'll get back in the queue.
The next question comes from the line of Michael Jungling, Morgan Stanley. Please go ahead.
Thank you and good morning. I have two questions. The first one is on earnings for the first half of twenty twenty. If sales were down, let's say, minus 50% in Q2, would you be loss making on an EBITDA basis in the first half? Or if you can't answer that, maybe you could highlight what sort of the sales breakeven number would be for a flat profit in the first half?
And then question number 2 is in relation to orthodontics. You commented that you saw some changes in the marketing approach of certain customers. Could you please explain what you experienced? Thank you.
Yes. I will start with the second one, while Peter will give you some color on the first one, Michael. Yes. On the ClearCorrect side, what we have seen then at the ring the second half of Q1 is that some large customers of ours have been, well, trying to reduce also their operational expenses and decided to be much less active in promotions and direct spend in advertising towards patients and health consumer as this is something which is very, very dynamic in North America and especially in the U. S.
We have seen a direct correlation in some of our key customers in between their direct promotional spend and their new cases generated. And this has impacted some of our growth within our overall ClearCorrect in the domestic market. Peter? So coming to your question concerning loss making in
the first half, given the situation that you assume a sales decline of about 50 percent in the Q2. As I said, we have different scenarios there, but if that would be our scenario, then I would not expect that we are loss making on an operating level in for the first half year in that scenario.
Okay. So if minus 50% does not cause loss making, at what point does that happen? Is it I mean, if April was down 70% and let's say we go down the route of May June being a little bit better, would 60% or 65% in Q2 cause you to become loss making?
Well, Mike, I think that's a typical question because as I said, we will adapt our cost base also to the revenue development. And we are right now in a critical phase, I would say, where Eum has alluded that some of the countries are easing their lockdown. We see some business coming back. So if that will be strong and unexpected, then we could spend a bit more on the promotional activities to create opportunities and capture business. If that would be weaker than expected, we would spend a little bit less.
So we see and it's also a question of how much short time we have. But on a full year basis, then we are able to significantly save cost in 2020, and I would expect we are at least able to save a high double digit very high double digit million figures for the full year this year.
And Michael, maybe to give some color also about how we see the trend on the net sales side for well, for the months to come, while Q2 is going to be strongly impacted because of the April results and obviously, May as well, looking at well, if the situation is not unlocking, we still see, well, China doing much better. Germany is getting back to already on our core business pre COVID-nineteen implant volume. We are seeing and expecting also that the North America will open state by state. And we see the announcement in Texas being already reopening now, then we don't expect afterwards Q2 getting worse than what we have known in April. And that's why we believe some of the situation here is going to ease as Q2 is moving forward.
The next question comes from the line of Julien Dormois, Exane BNP Paribas. Please go ahead.
Hi, good morning, Guillaume. Good morning, Peter. I would have basically also 2 questions. One relates and elaborates on your previous answers, but could you I think China is probably the country in which the market has reopened to a higher degree so far. Could you just comment on what kind of volume you see on the year on year basis?
Are you still down 10%, 20%, 30% compared to the pre COVID level? That would be interesting. And then the second question, and I know you don't have a crystal ball and you're working on different scenarios, but some companies have already started to say that they would not expect the 2021 levels in volume terms to be at the same level than 2019. Is it what's your best guess at this point in time? Would you expect 2021 to be below 2019 levels at this stage?
Yes. Julien. Yes, some additional input on China. Then China is also, I would like, I would say, a bit like the U. S.
It's a very wide country with a lot of different provinces. And what we see right now is that the business is coming back differently based on its geography. When you look at the provinces that were less impacted by the outbreak, Shanghai or Guangdong, we are already having a really, really nice run rate. Our DSOs in those areas are also very dynamic in getting the patient flow. And we are close to a pre COVID-nineteen level.
Now you have provinces like Beijing and Yubei, obviously, where the outbreak started, where then first, the unlock rules have been stricter. And we see then the run rate, which is much more lower as it has been quite conservative in the way they have started to reopen dental practices. Then all in all, we are seeing China in April, and we can share that we do in order to see a little bit the trend. We believe it's going to be around 75% of last year level already in April. Then that's why the team in Asia Pacific and China is pretty confident that it's going to get better and better as Q2 is moving forward.
When it comes to your 2020 one question, as we are not able to give guidance on the base for 2020, then it's not the moment for us to give any idea of 2021 because it will depend on a lot of different factors based on not only the fact that the pandemic can come again if the unlocking rules are not follow strictly enough in some geographies, but also with that global recessions that we are seeing and the latest information being given by the U. S. With their GDP going down minus 4.8% in Q1, then we are going to be following this North American number very carefully because this is a this has been also a big base for growth for us in the past 4 years. Then 2021, it's difficult to say which level it will be. We believe it will be obviously much better than 2020.
It should not be so difficult. Are we going already to reach to a 'nineteen level? There are some chance if everything goes well, but there are also a lot of factors that could prevent us to be there.
That makes perfect sense. Thank you very much.
Next question comes from the line of Veronika Dubajova, Goldman Sachs. Please go ahead.
Yes. Good morning and thank you for taking my questions. I have 2, please. One, I was just hoping Guillaume, you could elaborate a little bit on your comments around the European performance And just to give us a little bit more insight into what you're seeing in some of the large markets in April. You alluded to Germany, maybe seeing some pretty decent recovery.
If you can share some of those data points for some of the other European larger European markets, that would be helpful. And then just on kind of back to the P and L question, can you help us understand in particular for the savings that you are looking at, which areas are you targeting? Where do you see the biggest opportunities? And I guess how durable those savings would be? So if the business does return back to normal fairly quick, do you see those expenses coming back?
Or is this something that you think offers you some opportunities on a more sort of sustainable basis to improve your profitability?
Yes. Hi, Veronica. Thanks for the question. When it comes to European performances, Germany has been, I would say, even surprisingly doing very well through the crisis. They never closed fully their practices.
They have been the dental practices have been seen part of the fight against the COVID-nineteen crisis and have been seen as health professionals in order to try to help a little bit the control of the pandemic. And we see that now most of them are starting elective treatment again. Then we are very confident to get back to a 2019 level as soon as April is over. Obviously, you have some Latin European country, which are in a very, very different state. The pandemic has hit very strongly, Italy and Spain, as you know, and France as well.
And U. K. Is really in the middle of the storm right now. And in those countries, I think we have seen almost no activity because all general practices have been closed, they have been seen as a vector of the pandemic progression, then they will need to follow some strict rules to reopen. We see in some countries, especially like Spain, the possibility to reopen, to do classic dentistry.
But we think on this side for us, this is going to be the part where the recovery will be slow in markets like Spain, Italy and France. While in the U. K, we believe that the activity can resume quicker because they have that capability to do elective treatment. We've also addressing them directly to the patients and doing downfall procedural promotion, which is not allowed in some of the Latin European countries. Last but not least, we see the Scandinavian countries being able also to come back to a decent level rather quickly.
Sweden never closed all its practices. Then I think there is a as you have seen in the press, there have been some comments about was it a well handled crisis or not. I think I will let everyone judge the situation. But when it comes to the economics, they are still active and we are having still practices in Sweden that are doing activities. While it was not the case in Norway nor Finland and Denmark has been also active, reopening right now, and we hope Denmark to be also active quite strongly during the month of May.
Talking about the second part of your question, the cost savings, Veronika, it's important to say that we don't want to compromise on our ability and position to develop innovative products to produce these products and also to launch these innovative products at the end to have a successful winning portfolio that allows us to gain further market share once we are back to normal. So it's important that we don't want to compromise on these abilities at the end also for the patient benefit. So all the savings that we have taken is basically that cutting incremental costs, be it on the promotion marketing side, be it on the travel side, be it on the consulting side. We have not stopped our major R and D projects. We continue to invest in these projects and push these projects.
But obviously, we have reviewed out the portfolio on the we have delayed one of the minor, what we currently consider less relevant projects we have postponed. But given the fact that I have said we have cut and are still cutting this incremental cost, once we would see a bouncing back of the business, it's rather easily to increase our spend rate again in these areas.
That's very helpful. And Peter, can I qualify just when you say the double digit high double digit million saving, is that versus the original budget or versus the spending levels that you had in 2019? I just want to make sure I get that right.
That would be the top 2019 level, Veronika.
That's really helpful. Thank you very much.
The next question comes from the line of Daniel Genovka, Mirabaud. Please go ahead.
Good morning as well. Two questions. Also, the first more a big picture. Can you quantify maybe of your implant portfolio, how many treatments are really non essential? Again, your best guess is not so easy to assess that.
And the second question is in the United States. I mean, I learned from other companies that it's also quite heterogeneous over the country. For instance, in New York City, people are afraid to go to the streets. So I can understand that there is probably severe activity. But in other regions like Texas or California, which are very wide, the business is still okay in general?
And then how is that for Straumann, let's say, in that area? Is there also no activity or are there some dentists which are open? Thanks.
To the question about Ryan, especially on the downhole implant side, I would say what is nonessential, I would say, well, it's either all of them or none of them. I will explain myself. It's still an elective procedure. Then in most of the case, then if you want to wait, you can wait for an implant treatment. If you have an infection, then what is very important is to treat the infection and remove the affected tooth and make sure that you are creating a good ceiling site for future implant.
Now all implant treatment, I would say, are essential for two reasons. The first one is that if you don't replace a hole in your mouth, then you will have all the rest around which is going to move because the occlusal teeth, that means the teeth, which is if you have a hole in your lower jaw, then the tooth in the upper jaw will not have any one to chew on, and it will start to have the bone on the upper side, which is going to diminish. Then that's why we're always saying that you really never have to leave a tooth without being replaced because it will have some very significant impact mid term to your adjacencies or to your opposite tooth. And that's why we this implant treatment is now becoming golden standard because this is the way to keep a very good oral health situation for the future. And having a good functional oral health is helping your overall body in order to have the right metabolism and the right nutrition and so on and so forth.
And in that sense, all implants are essentials, and that's why also treatment are continuing quickly after the different crisis, but it's how fast it's going to come back. But we believe that the business fundamentals of implants are still very strong and that every situation for an implant then will be covered and there will be an implant placed. The only question is when this is going to happen at 100%. When it comes to the U. S, Daniela, I think the U.
S, we have seen, yes, very strict rules being applied. And we have seen really 0 activity whatever the states because there have been little activity in the central states because, well, they have been the one the less impacted by the crisis. But if you remove Texas or the northern state like Illinois or Michigan, then the rest in the middle of the U. S. Who have very, very low populations and very low business, then that means that if you are impacting both cost and Texas as it has also followed the rule, then you have almost 0 activity in the U.
S. And it has been very, very low in April. And then we are looking at how they will unlock state by state in order to see the performance that we can create and generate within the U. S. Obviously, New York will be one of the slower states to come back looking at the impact that the COVID-nineteen had in this particular city and this particular state.
Okay. So in other words, the U. S. Is even was even weaker in April than Europe because in Europe we had important markets like Germany partially open, correct?
Yes. Let's even though it has been, yes, mainly Europe and Sweden that were active in Europe, In U. S, it was a very, very low activity in April, very low activity, lower than Europe. That's true. Thanks.
Next question comes from the line of Maja Pataki from Kepler. Please go ahead.
Good morning. Guillaume, I have a bit troubles to consolidate some of the statements that you've made and that are also in the press release, and I'd hope that you can maybe help me understand. How am I supposed to read the words strong rebound and long lengthy recovery? And how does that go together? Is it are you expecting to see a strong rebound from the very low levels that we're here, but do you see a lengthy recovery until we're at 2019 levels or until we're seeing double digit growth?
It's just something that I find a bit difficult to consolidate. 2nd of all for you, Peter, in the past couple of years, the focus has been very much on top line growth and you've been very successful with that. How will or how could your thinking change if indeed we are going into this difficult time from an economic perspective, top line growth remains for a few years in the single digits. Are you going to then follow the same path on the margin progression, I. E, flattish to slightly positive margins or margin improvements?
Or are you going to be more focused on delivering better margin improvement? Thank you.
Yes. Thank you for the question, Meyer. Yes, I will let you to reconcile those 2, let's say, perspective. I agree that that's also a good question. When we are talking about lengthy recovery, we are talking about our environment.
Then we are more of the belief that it will take some time for the industry and the overall market to get where it was, 18 months, maybe 24 months, that the overall market had before the COVID-nineteen crisis. That's why we are using the term lengthy recovery on this side. We are using rebound for us as an organization because despite the fact that we could be in a flattish market, there is no reason for us not to gain significant share as we have done in the past. And this is why we are saying that we are really looking at preparing us for a rebound in order to get back significantly some of the things we are some of the net sales we have lost, not only by benefiting from some of the recovery of the market, but also gaining significant share from competitors that would get out weaker from that crisis. That's the way we are looking at the rebound for us and lengthy recovery for the environment.
I hope it's
Thank you. Yes, yes, that's helpful. Thank you.
Okay. On the second question, Majer, a very visionary question, interesting question and you can be sure we also have discussion on this. I think once we would really face a very pessimistic outlook with a strong recession, no top line growth, then obviously we would need to think how we would react on that. And obviously in such environment, we would need to think more about our OpEx structure than what we are currently doing. I would not expect a year over year margin increase in that situation.
Probably, we will be at the lower margin level that we are currently. But nevertheless, I think the fundamentals of our business, even after such a recession period are intact, we have a very innovative portfolio I'm convinced that we have with our portfolio and our sales organization also in such a scenario, once the recession will be over, we have abilities to gain market share. We will be very careful in compromising our position in that respect because I think in the not in such a scenario, not in the midterm, but in the long term, we have good opportunities to generate further growth again. But obviously, sales and margin would be both at a lower level in such a scenario.
Thank you, Peter. And if I may just add, I think something first, as we have commented most of the environment with the COVID-nineteen crisis, what we want to express still is that BLX is just at the beginning of its launch, and the immediacy segment is still only for us a complete new business segment. We have not launched in LATAM yet, not launched in APAC yet. We are just active in Europe, and we have started North America for months now. Then Bialyst is a huge potential growth for us on the premium side.
Value is also the same with our GM line for new and some very interesting projects that we are preparing at the moment to help it to develop its value proposition. We have obviously, Nuvo that we are just starting that COVID-nineteen will, I would say, delay a little bit its introduction in some markets because of the regulatory side that has to be done and that has been put on pause because of government being shutting down those activities for a moment. And without mentioning the digital and ClearCorrect. And our four area of growth that we started with at the beginning of the year are still there and are still owning the same opportunity from market share gains. And we are pretty confident to have the opportunity to continue being a growth story, to be really honest with you.
Sure. Peter, just to double check, you said like margins would be lower. I'm assuming you're referring to 2019 levels, right?
I didn't understand the second part of your sentence, my apologies.
So you just said in a recessionary environment, growth would obviously be lower, but also margins would be lower. And I guess you're referring to the margin lower than 2019, not to what you're expecting to see in 2020?
Yes, you're right, Maher. Yes.
Okay. Thank you very much.
The next question comes from the line of David Edlington, JPMorgan. Please go ahead.
Hey, guys. Thanks for taking the question. So 2 reads, slightly different tax. So just wanted to get your thoughts on Densus appetite for capital spending in the current environment and
how we might be looking at
it over the next few quarters? And secondly, just picking up on the hygiene procedures that are going to be required between procedures, how much do you think that impacts a dentist's capacity for procedures during an average day? Thank you.
Yes. Thanks for the question. Interesting questions as well. I would say the appetite for dentists for capital equipment, very often, we always say in term after a crisis, dentists is going significantly down because they would like to reduce, obviously, their purchasing. Now I believe that COVID-nineteen is also driving significantly this digital dentistry and being as less contact as possible or as less analog as possible.
And we see an oral scanner being still, although less dynamic than it has been pre COVID crisis, but still being an area for some investment by a significant number of practitioners because you don't put then your hand in the mouth of the patients. You don't have this gummy material with the saliva. You just have to use an intraoral scanner, which is much cleaner and then drive a better protection for staff and dentists. And we still see some dynamic in this segment. However, we believe that cost effective solution will be prioritized by practices much more than the high premium most expensive equipment.
This is a perspective, still has to be verified, but that's the way we are seeing the capital equipment, especially from an intraoral scanner perspective. Secondly, when it comes to hygiene, we are actually monitoring this very carefully in order to see and to support our customer to keep the same level of efficiency and productivity despite the different PPE that they have to use for them and their staff. The first evaluation that we run-in China with some of our key customers is that they could potentially see, for example, between 15% to 18% less patients than they had before due to the reason of changing PPE in between each of them when you are doing surgical procedures.
That's very interesting. Thank you.
The next question comes from the line of Keith Lee, Jefferies. Please go ahead.
Thank you. I have 2, please. Just firstly, just a similar question to the CapEx budget. What are your thoughts on ASP and also your product mix going forward? I guess, our dentists more willing to take down cheaper implants now if they were to do promotions to win back customers or get people to visit clinic again.
Just any thoughts around that, that would be helpful. And then the second question is on the DSOs and the large customers. Just wondering, have you heard any sort of financial difficulties or the situation they are in now? And how do you think about potentially offering some solutions to them and some sort of changes in payment terms? Thank you.
Yes. When it comes to ASPs, I think this is where we, as an organization, are much better positioned than we have been in the past and with the past crisis of 2,008 because we are offering all the different price points from an implant perspective. Then we don't expect our ASP for each product line to change much because we are then going to support customers wanting to have a more cost effective treatment than to use a higher mix of less expensive treatments or less expensive implants than what they were used to do at the beginning. Then we are expecting the value implant to grow faster than the premium implant and that this strength would be accelerated by the crisis. Now to which extent?
It's difficult to say at the moment because we have also seen that a lot of our growth is coming from expanding the boundaries of the implant treatment in some cases where they would not have supported implant treatment before. That means needing to use higher quality implants for these particular advanced cases. Then And we have seen also in the Q1 that premium was growing much less or was not growing, whereas value was growing much faster. And as we will see that impact on ASP, and we'll be able to evaluate more after the first half. When it comes to DSO, then DSO are exactly like other organizations.
I would say the ones that entered a crisis with a weak financial situation are in significant difficulties right now that we have heard about, not a lot of them, but some of them in Spain as an example. Otherwise, we see DSO also being backed up by strong PEs having the capability to survive the crisis, even though we can see some potential consolidation here as well with some of the weaker one. But we still believe CSO will be a strong growing customer group after the crisis as it was before COVID-nineteen.
Great. Thank you.
The next question comes from the line of Oliver Metzger, Commerzbank. Please go ahead.
Yes. Good morning. Thanks a lot for taking my question. My first one is how to think on catch up effects. So you already commented that a certain degree of normalization in China takes place.
Obviously, the demand for dental implants is there. So there are no this does not decrease just the way how you treat it. So when do you think that potentially some catch up effects will compensate even for previous experience losses? My second question is also on M and A similar or in addition to the question which was asked. Over the last year, M and A was just a major part of your G and A, and you're still in a quite comfortable position with regards to cash and also cash generation.
Over the last years, you executed your strategy with a long term horizon. And in that context, the discount segment was named quite often as the next big area for M and A. So I assume that the share of DISCO players going into financial troubles might potentially be higher than for the average dental implant market in the current crisis. So would you regard it as prudent even to be more aggressive in that field on such opportunities? And because also prices might be much attractive than a couple of months ago?
Oliver, Peter speaking. Apologies, but I didn't really understand that your first question about the cash out. What is the question really?
Yes. It's at the end, there is currently a disruption in the market. And this the underlying demand for dental treatment is basically intact. So people postpone their dental implant procedure, but at the end, they still should do it. And I would assume that we should not only see a normalization of market, but also to a certain extent some catch up effect of the previously experienced losses.
So do you when do you think these catch up effects might take place?
Obviously, if we have said now in April that sales are pretty much down. And obviously, I would also expect a certain delay or increase of our days sales outstanding in that respect. And obviously, we will have a different operating cash flow this year than in the previous year linked to all the financial topics we have been discussing. However, we have a very strong balance sheet. We were also on a net debt perspective positive.
We have renewed or issued another bond to repay accidental 2 days the outstanding bond and we have increased our credit line significantly. So even if we would not have any cash inflow and that's just a hypothetical scenario now, we could from a liquidity base point of view, we could finance all the activities for quite some months. So I'm not sure if I have answered your question in that respect, to be honest.
I asked it more towards the overall cash up effect of the dental implant market itself, but I will leave it by best.
On the second part, and that is also true for the second part. Obviously, in such a situation, there might be M and A opportunities. We don't know. We will see that. But based on our strong balance sheet, on the credit lines and the liquidity that we have, we could also if that would be the case, we could also take these opportunities.
On the other hand, we have a long term strategy and all the M and A activities in the past we made on the long on our long term vision. And as I said before, we don't want to compromise on our long term vision and our ability to launch and develop innovative products and extend our business. So there might be opportunity and we would have the means to do so, but we could also not deviate from our long term strategy.
Okay. Thank you very much.
Next question comes from the line of Falko Friedrichs, Deutsche Bank. Please go ahead.
Good morning. Thank you for taking my questions. I also have 2, please. Firstly, could you talk about the effectiveness of virtual interactions between your sales force and dentists in this current environment? And then secondly, are equipment orders usually binding via contracts?
Or can they be canceled currently? And do you tend to receive a down payment when these orders are placed?
Well, when it comes to the effectiveness of virtual contact with customers, actually they are very effective because you can really get quality time with the doctor. Very often when our sales rep walk in the office, he has a very limited time because this is obviously during surgery time, then being able to address a customer or a dentist or even the entire staff about an innovation requiring them really to have a focus on what we are going to deliver as a message and being able to prepare to change some of their routine because of the new technology or the new procedures or the new approach to care, then this is not so easy. Here, thanks to the fact that the practice is on pause mode, then we are able to address not only the dentist but also his entire staff, having them fully focused on the message and being able to plan introduction of future innovation. And so far from what we have seen, we have been very pleased with those interactions. And we are planning to continue and capitalize on the experience for the future.
Peter, do you want to do the next question?
The second question was about down payment for digital equipment, if I go that's right. And there's no general rule for down payment. That depends from market to market, also a little bit according to the market characteristics in the different countries. In the Q1, we have not seen any change in that respect, but you also need to be aware that we have tight links to our customers. So we have most customers we know very well, and we also know the payment history of these customers.
So that's also one of the reasons why we are not generally asking for down payments for digital equipment.
Okay. Thank you. And have you noticed any cancellations of existing orders so far?
No. We have not received any consolation of orders so far.
Okay. Thanks very much.
Next question comes from the line of Markus Gola, MainFirst. Please go ahead.
Yes, great. Thank you and good morning. Just one question left from my side. The market leader Align reported a fairly strong recovery in China. So do you think that there could be generally a development where we see a faster recovery of clear aligners compared to dental implants given the less invasive nature of these procedures?
Thank you.
Yes. Thanks, Markus. Yes, we have seen also the activity being strong, it seems, from a line in China. Honestly, I don't see clear aligner having on the midterm the capacity to recover faster than implant. But what is clear is that being a less invasive procedure, it's first easier to implement quickly than reopening surgical procedures, where if you look at how it has been how China has been unlocked or resuming activities, they have started with what I would call noninvasive procedure and surgery has been allowed afterwards.
And I think there have been a kind of a 2 weeks delay into this based on some of the rules that have been defined. But we believe that the dynamic of Clearliner will be the same that the one we will know on the implant side with a couple of weeks difference because of the different rules that we have known. But when the different practices will be ready, whether it's clear correct or whether it's clear aligners or implant therapy, we'll see a lot of promotional activities and a lot of direct to patients activities to create inflow, which is going to be the same in the both market segments.
Very clear. Thank you.
Next question comes from the line of Lisa Klee, Bernstein. Please go ahead. Hi. I have just a
few questions about the patient profile of the customers that are coming back. Can you just remind us of the average age of a dental implant recipient? And are there any particular characteristics in the patients who have been coming back? Are they generally the younger patients, so in their 50s or 60s versus 70s 80s? And also any observations from your sales force and whether it's mainly single tooth cases versus the more complex and extensive multi tooth restorations?
I think it's a very interesting question, Lisa. We don't have answers on all of them. For your information, we see an average patient's age for implant therapy. It's going to be starting for 40 5% to 65%, I would say, average, then that's what we see, generally speaking. Now who are the patients that are coming back?
1st, that I don't know. We can say we don't know. We don't have seen any evaluation nor study on this, but we will evaluate what we see in China with a question we can ask to our customers. For the time being, the only feedback we received is that the people that have been whatever their age, the people that have had planned surgeries are just rescheduling them, but we don't see major consolation. Then I don't feel that it's going to be a question of age because as you don't see any consolation, it's going to be much more a question of time.
But we are going to look into this because that might be interesting question for us to learn from.
Great. Thanks. And I was just thinking I was thinking about it particularly in light of the fact that here in the UK, the restrictions for elderly people sort of age 70 and over may be significantly more prolonged. So yes, any information you can learn about that would be very helpful. Thanks.
That's correct, actually. And we see in many European countries that there is still recommendation for elderly people not to ease the lockdown. That might have an impact. But implant therapy is, in average for younger patients than above 70s, 70s, but we still have a lot of post patients in as well.
Great. Thank you very much.
Next question comes from the line of Daniel Buchta from Tobel. Please go ahead.
Yes, thank you very much. Two questions from my side, please. The first one may be a bit unusual as well. I mean, do you have an idea about how the income distribution is of your end customers? Because I would assume implants and clear aligner treatments, they are rather expensive.
And that's why I would assume that a good part of your patients at the end has rather high incomes. And if we see the situation on the labor markets in various countries and especially U. S. Here stands out with a huge increase in unemployment. I would assume that these are rather the people with lower incomes working in service industry, hotels and everything and things like that.
So is that something that may help you a little bit coming out of the crisis that's a good part of your potential customers or the bit more wealthy ones are the ones that still have their jobs and thus their disposable incomes? Is that something you see? And how is your distribution? And then on the second part on BLX, I mean, in the past, you talked quite openly about your expectations in terms of gaining market shares. And you said like BLX BLT Now, 35% is something you would expect as well after 4 years for BLX.
Is this still valid? Or do you see it more difficult now to gain market share over the next, I would say, 6, maybe 12 months? Or are your plans here still unchanged? Thank you very
much. Thank you, Daniel, for the question. When it comes to well, I would say, the resilience of the implant business when it comes to crisis, we have seen in 2008 that the implant is considered as a standard of care now. Then there is not only the highest income category that can afford adult infant treatment, it has been really placed in all the different income categories. Then we are having an impact on the overall volume when it comes to the implants because of the crisis, then we don't believe there will be any, I would say, support on this side unless the fact that as a clear leader on the premium side, these are more the high end practice that are also working a lot and the specialists with our premium implants.
And very often, they are having the higher income patients category. But other than that, I think to be honest and be transparent, the fact that implant is a standard of care now, we will have an impact with the recessions, and that's what we have clearly expressed. For clear aligner, when you see the average of clear aligner adults, and I'm not talking about the teens here, the clear aligner adults, they are a lot into the young population, the young active population, the 25% to 35%, meaning that they have a lot of disposable income to do a lot of leisure activities or taking care of their appearance, which is a very high in their spending ranking. And then we believe that Clearliner will still be an area where these young adults are going to spend their disposable income. When it comes to BLX, yes, we still have a very bold ambition with BLX.
It will obviously, the market penetration will be delayed and the market share gain will be delayed with the high impact of the crisis period. But as soon as we can start again visiting practices, we believe that VLX will gain significant shares. And the attractivity of all our digital courses, digital educations and digital events on immediacy and VELIX attracting more than 7,000 people, as an example, for one event, is really showing the appetite for clinicians for this new solution.
The last question is a follow-up one from Michael Jungling. Please go ahead.
Great, great. And I have 2 more. Firstly, on foreign exchange. I think for one over a decade now, we observed the margin contraction at Straumann because of the deterioration of the euro and the dollar. And my question really is, with a new CEO in place, could we see more action with respect to more of a fundamental change in the location of your cost base?
And question number 2 is on the distribution of revenues in 2019 for implants. Could you give us a sense of what proportion of your implant business was in the end for the customer a single tooth solution, a multiple tooth solution, maybe 2 to 3. And then for the fully indentulous patients, Just a basic share split of 20%, 30%, 40%, 50%, that
would be useful. Thank you.
Let me start with your first question on the FX side. I think over the last couple of years, Michael, you might have noted that our exposure did improve not because we have reduced our cost base in Switzerland, but basically because we have built up more cost in the outside Switzerland due to some of the acquisitions such as Ontogere, Medentica and Neodenther some years ago. So I think we have a better balanced FX exposure nowadays than a couple of years ago. However, we always said that we want to keep for strategic purposes also our headquarter in Basel as well as we are investing significantly into the expansion of the production in Villeret because we want to keep this business of the brand not only from a marketing perspective, but still that's a big marketing asset in Latin American countries and the nation countries. So due to the current situation, we will not on a short term basis change our strategy in that respect.
When it comes to the share of our sales in 2019 for single partial identical use case and full adult cases. I would give you a very rough estimate. I would say 70% single tooth, 20% partially adventurous and only 10% for the full arch cases. And that's the reason why we are very excited by the potential of Bialik because we have historically been weak in penetrating this fully tapered segment where it's very much oriented towards full launch reconstruction.
Okay. Great. Matt, briefly follow-up on the foreign exchange. Since really since the beginning of 2000, you guys have been subject to a 78% depletion of the dollar against the Swiss francs, 56% depreciation of the euro against the Swiss francs. And literally, for most of my time following the stock, there's been downgrades on margins or transactional margin exposure.
And yet, the focus on building up production in Switzerland continues to be at a high rate. Why is that the right thing to do? I understand you want to keep the Swiss brand, but there's also other manufacturers out there who keep the Swiss brand that have the majority of their production offshore,
and it
has not impacted their image or their ability to do business. Why is it such an important part of chasing down or chasing up a Swiss currency that keeps on benefiting from the uncertainties that we're facing on a global perspective?
I think that's a good point. We believe in our success on the marketplace has been built on the Swiss reliability and the Swissness and the quality of our manufacturing and the location of our manufacturing has been a big part of our brand story. And if you look at our capability as a premium leader to sell our ASP, we believe at the moment that a big part is linked to our location of manufacturing when it comes to our Schromman Swiss premium implant. This does not mean that we are not evaluating other manufacturing side because we have seen also the crisis. Localization of production in order to be more resilient to supply chain, potential crack is important.
But I think this is a big part of our brand and story, and our brand is a huge asset for us as an organization.
If I may ask you, all what we have said about business of the brand is true for the stronger brand. If we look at the other value brands, we don't have any manufacturing activities or big R and brand. So from Identica in Germany, if you're Ontogere in France or for Brazil, for Neodent in Brazil. So if you look at the FX exposure for these brands, then not the Swiss highest exposure for the value brands, only for the strong home brands.
Yes. And in the future, we can expect to have faster growth on value versus premium. We will have anyway some way to adapt this cost base over the long term. But there is no clear view on our side to accelerate that in the short term.
Great. And finally, could you comment on what the what you think the transactional EBIT margin headwind will be for this fiscal year because of the strong Swiss francs? Are we talking about a 200 basis point margin headwind?
Well, if you look
at the full year presentation and Michael in the backup, you see the impact on the EBIT with the fluctuation of the major currencies. And depending on the assumption of your currencies that you have, you can make that calculation. In the current presentation, we only have the sensitivity for sales in. But the sensitivity on the EBIT side has not changed since the closing of 2019. That is more or less the same.
Okay. Thank you.
Okay. Well, thank you, Daniel, for your interest and questions. If you need further assistance, please get in touch with our colleagues in Investor Relations and Corporate Communication. In closing, I would like to draw your attention to our next reporting dates, which you can find on Slide 31 and on our website also, of course. Thank you again for joining us.
Have an excellent day. Stay healthy and goodbye.