I just continue?
Yes.
Okay, good. Thank you for your interest and for taking time to join us today. We are using the presentation slides that were published on our website early this morning. Before we begin, I would like to point out that our presentation and discussion will include forward-looking statements. Please take careful note of the disclaimer on Slide 2. I will begin with a quick summary of the main topics before handing over to Peter Hackel, our CFO, who will take you through the numbers in detail. Peter will explain what has been driving our strong performance so far this year, and I will follow with some examples of how we are putting our expansion strategy into action. After sharing the outlook with you, we will be glad to take your questions. As the title of this presentation indicates, there are two main themes today.
The first is sustained strong growth, and the second is continued investment. Starting with the growth. Our first half revenue rose 25% in CHF to CHF 682 million, driven by double-digit growth in all regions. Europe, the Middle East, and Africa contributed no less than 35% of our organic growth. Asia Pacific continue to be our fastest growing region, with organic growth climbing to 29%. Strong volume expansion fueled our profitability, and despite further investments into research, development, marketing, and sales, our underlying EBITDA margin rose to just under 30%. We also continued to invest in geographic expansion and technology. We acquired distribution companies in Turkey and South Africa, set up a new subsidiary in Thailand, and significantly expanded our sales organizations in emerging markets. In July, we acquired Createch, our specialist CAD/CAM partner in Spain, and we purchased a stake in Botiss Biomaterials.
Both these transactions secure access to technology that strengthens our position as a total solution provider in aesthetic dentistry. Based on the strong performance so far, we are raising our outlook for full year organic revenue growth to the mid-teen percentage range, and I will come back to that later. The justification for this upgrade is evident in Slide 5. On top of a record first quarter, we achieved a further acceleration across the board in Q2, lifting organic growth to more than 20% for the first time in 10 years. As you can see on Slide 6, our strong organic revenue growth is reflected through the P&L, and ultimately in the value added for shareholders. Our underlying EBITDA and EBIT margins expanded by 80 and 50 basis points respectively. Excluding one-time exceptionals, earnings per share rose 14% to CHF 8.63.
Looking at the historic context, we have succeeded in increasing organic revenue at an average of 12% over the past five years. All our markets are healthy, we expect the implant segment to grow between 4% and 5%. This is three times lower than our own growth, and the performance gap is even wider in the premium segment. Just to highlight two other figures in this slide, our underlying EBITDA margin has expanded by five percentage points since 2014, and our underlying net profit margin by 3.2 percentage points. With that, I will pass over to Peter for performance and financial details.
Thank you, Marco, and good morning to you all. As you can see in chart nine, at this year's exchange rates, our half year revenue in 2017 would have been CHF 10 million higher, mainly due to the appreciation of the euro. In the course of the past four quarters, we have had three significant business acquisitions. ClearCorrect and Dental Wings in October 2017, and the Turkish distribution company, Batigroup, in January 2018. To determine the comparison basis for our organic revenue growth rate, we add the respective sales or distributor markups of the acquired entities to the revenue baseline. In the first six months of 2017, the acquisition effects amounted to a total CHF 24 million, bringing last year's adjusted first half revenue to CHF 578 million, as you can see in the center of the chart.
Our first half results this year are very pleasing right across the board. All regions reported strong performances, driven mainly by solid organic growth from existing and new customers, both in the premium and non-premium segments. Looking at Slide 10, you can see that in EMEA, organic growth accelerated seven percentage points in Q2 to 17%, fueled by our premium implant and digital businesses. The region benefited from nearly two more selling days in Q2 because of the timing of Easter. The incorporation of our Turkish distributor, Batigroup, together with the contribution from Dental Wings, added four percentage points of reported growth. More than half of our 20 subsidiaries in the region posted double-digit growth, with the biggest increases in Russia and Turkey. Momentum picked up in Germany, while Italy, Denmark, the Netherlands, Portugal, and the U.K. all reported excellent performances.
Canada and the U.S. sustained a strong pace seen in recent quarters and delivered organic growth rate in the high teens, driven by further customer gains and strong demand for premium and non-premium implant systems. The continued outperformance of our North American colleagues has brought us another step closer to becoming the leading implant provider in the region. The digital business in the region also expanded thanks to strong demand for intraoral scanners and orders for Zirkonzahn milling equipment, about which Marco will tell you more in a few minutes. Bone graft and membrane products posted double-digit growth, partially offsetting the interruption Emdogain sales in the U.S., which we told you about in April. As we mentioned then, this is a temporary setback that concerns the U.S. only, we expect to resolve it in the near future.
APAC posted another dynamic performance in Q2, with organic growth climbing to 33%. This was fueled by the continuing success in China and lifted by strong results in Japan. The fact that all our subsidiaries delivered good growth was particularly pleasing. We strengthened our foothold in the highly competitive, non-premium arena with Anthogyr in China and Neodent in Australia and Southeast Asia. Finally, a few words on Latin America, which achieved organic growth of 20% in Q2 despite the social upheaval, price inflation, currency devaluation in some markets. We still managed to post solid growth in Brazil, and with strong demand in Mexico, Colombia, and Chile, the region succeeded in sustaining double-digit growth. Looking at slide 12. From a business perspective, our first half performance was led by implants, which continued to grow at double-digit rate and generated more than half of our overall growth.
Demand for our BLT implant range continues to exceed expectations and today has already become Straumann's top-selling implant line in the world's largest implants markets, the U.S. and Brazil. Demand for our non-premium offering was strong and it grew faster than the premium business, albeit from a lower base. Growth was pronounced in the U.S., Germany, Turkey, Iberia, China, and Latin America. The restorative business posted similar growth to implants, driven mainly by demand for standard abutments and copings. Straumann's versatile value-based range was the principal growth contributor. In digital, intraoral scanner and 3D printer sales progressed well, endorsing the group's strategy to offer a complete digital workflow for dentists and laboratories. The ClearCorrect business grew.
Ladies and gentlemen, please hold the line. The connection with the moderator has been lost. The conference will continue shortly. Thank you.
Sales of bone graft and membrane products, revenues from biomaterials only match the prior year level, reflecting the Emdogain interruption in the U.S. Slide 13 provides you with an overview of the key figures for this and last year, together with the adjustments for exceptionals to determine the underlying performance. This year's exceptional effects relate to inventory revaluation expenses in connection with the acquisition of Batigroup and the respective tax benefit. All these items are presented in a separate column. To facilitate the comparison, we have shown all key financial figures on a reported basis and excluding exceptionals. The key message is that we made further profitability improvements despite significant investments in geographic expansion, innovative technologies, and production capacity. Our underlying EBITDA margin rose 80 basis points to just less than 30%, while the EBIT margin improved by 50 basis points.
Underlying net profit increased 19% to CHF 140 million, bringing the corresponding margin to 20.5%. This is 100 basis points lower than in the prior year, due solely to an impairment charge in one of our associated companies, which I will explain in a minute. Looking at the gross margin development in Slide 14, our first half gross margin in 2017 amounted to 76.9% on a reported basis or 77.8% adjusted for currencies and exceptionals. In the first half of 2018, strong growth in our premium and non-premium implant solutions expanded our gross margin, but this was offset by our strategic expansion in digital dentistry and the increased share of third-party products, which all have lower gross margins. In addition, we have stepped up our investments in production capacity and have increased manufacturing personnel in all our implant facilities, resulting in higher production costs and depreciation charges.
Collectively, these factors lowered the gross margin by 60 basis points. The inclusion of clear aligners, which is still a relatively small business and expanding dynamically, reduced the gross margin by another 50 basis points. Our current need for more capacity is exemplified in our latest expansion project in Villeret, the group's premium implant facility in Switzerland. We are currently running at full capacity there and need to raise output to meet increasing demand and to cater for projects in our pipeline. We started the planning phase some time ago and began construction in May. This is an investment of CHF 40 million that will create an additional 16,000 sq m of production space and many new jobs in Switzerland.
On the next slide, you can see that our underlying EBITDA margin improved to 29.8%, which is 80 basis points higher than last year, but 30 basis points lower if we exclude the strong FX tailwind. Both our distribution and administrative expenses increased under proportionally reflecting the sound operational leverage of the business. This nearly offset the unfavorable mix effect at the gross margin level. The change in other income had no impact on margin development. Slide 17 shows the changes in depreciation and amortization broken down into regular and acquired intangible assets. Depreciation and amortization expenses include ClearCorrect and Dental Wings for the first time and increased by CHF 2 million and CHF 4 million respectively. The following slide represents a similar picture of the operating profit, with additional information on the acquisition-related amortizations. The cumulative effect of increased depreciation and amortization charges reduced our reported EBIT by 40 basis points.
We have continued to expand our global teams through acquisitions and organically recruiting new talents, mainly in sales, marketing, and operations, to increase capacity, global reach, and future growth. Almost two-thirds of our 593 new colleagues in H1 were recruited, while the remainder were added through acquisitions. Moving to the bottom line in Slide 20. Our underlying net profit improved by 26% to CHF 148 million, driven mainly by our operational progress, which amounted to CHF 39 million. The financial result was CHF 3 million lower than in the prior year, mainly reflecting higher hedging costs due to increased foreign exchange volatility and some FX losses. The result from associated companies was a negative CHF 9 million, mainly because of a one-time impairment charge of CHF 8 million. Due to an anticipated delay in the development and commercialization of Rodo Medical prosthetic retention system, we lowered the book value of our investment.
Before the special effect, the result from associated companies improved by CHF 1 million. Income tax expenses in the first half of 2018 amounted to CHF 22 million or CHF 24 million, excluding the one-time tax benefit from the Bati roup acquisition. On an underlying basis, taxes increased CHF 6 million. The underlying income tax rate was stable at 15%. As a result, our underlying net profit margin reached 21.6%, in line with last year. Before I hand back to Marco, I would like to mention our progress in cash flow generation. Thanks to the aforementioned earnings improvements, our EBITDA increased by CHF 38 million to CHF 107 million, corresponding to a solid cash conversion rate of 76%. We reinvested CHF 44 million of the cash flow in production, which is CHF 12 million more than last year.
Free cash flow would have been CHF 9 million higher had it not been for increases in inventory levels and outstanding receivables. The increase in inventories was due mainly to the newly created subsidiaries and portfolio expansion. Days of sales outstanding decreased by one to 59. In summary, free cash flow increased 38%, and the respective margin rose by one percentage point to 9%. This concludes my part of the presentation. I'd like to hand back to Marco.
Thank you, Peter. Can you hear me? Okay. In the next few slides, I would like to highlight some recent initiatives that reflect our strategies to target unexploited growth markets and segments and to become a total solution provider in aesthetic dentistry. EuroPerio, which took place in June, is a key dental congress with a strong scientific and educational character, making it an ideal platform to present new techniques and results. Our two corporate forums attracted great interest, not just on site, but also online, with the livestreams drawing more than 11,000 views. This was the first major European event where we united the Straumann, Neodent, and Medentika brands on a single large Straumann Group stand. To give you a bit more flavor of the event, I would like to show you a short video.
This is Amsterdam, EuroPerio9. You're watching Straumann Group Connections for a championship of innovations. EuroPerio is one of the world's largest dental congresses and attracted more than 10,000 participants from all over the world, eager to catch up on the latest techniques, research, and technology. Well, here we are on the Straumann stand. Behind me is the virtual reality cube, complete with a virtual reality soccer table. Is it a gag? Well, not at all, because Straumann is using virtual reality technology for education and training purposes.
This is the new TRIOS MOVE with the new Digital Smile Design and treatment simulation for the patient.
Well, right next door to the Straumann stand is the Neodent stand. EuroPerio9 for Neodent is all about the brand-new Grand Morse implant system. Let's have a look.
This is our Grand Morse implant system featuring Helix. Helix is our unique hybrid thread implant, which is designed for immediate primary stability.
On the corner, Medentika presented its range of attractively priced prosthetics for all conventional implant systems. Medentika's own range of implants was also on display, including regular, mini, and angulated designs.
This implant is mainly produced for All-on-4 cases, especially for the placement of implants on the posterior area in English.
The Group's educational workshop was fully booked and provided hands-on training on periodontal regeneration with Emdogain in a minimally invasive approach. Straumann held two corporate forums to share clinical insights and research findings, one on new regenerative treatments and the other on immediate tooth replacement. We asked some of the speakers to summarize their key findings.
We know today that extraction and immediate implant, this works. This works well. If we want a nice esthetic outcome, we have to respect some key aspects, and they are, first, hard and soft tissue management in the extraction socket, implant positioning, and primary stability.
As the clinical recommendations are that four implants work as well as six, parallel implants work as well as tilted, and immediate loading was used in the vast majority of the cases. That is something that we should keep in mind when planning our cases.
My key message is that if you challenge the established protocols, you should always have more benefits than risks, and you should always try to do as little treatment as reasonably achievable to obtain the goal for the patient.
That brings us to the end of this edition. Straumann's championship of innovations continues, of course. For now, from Amsterdam, it's goodbye and thanks for watching.
Moving on to slide 25. Throughout Straumann's history, the key to successful geographical expansion has been to establish local country organizations in attractive growth markets. Over the past 18 months, we have established no fewer than seven new distribution subsidiaries and numerous local offices around the world, bringing us closer to customers and enabling us to invest in growing the market. We opened our newest subsidiary a few weeks ago in Thailand, where 70,000 implants are placed annually. Straumann has been present there for 16 years through a distributor whose sales team we have been able to incorporate. This, and the fact that we recently launched Neodent, provides us with an immediate setup to address both the premium and non-premium segment through a coordinated Straumann Group approach. We are very pleased with the development of our new orthodontics business, which continued to grow dynamically in Q2.
ClearCorrect case numbers increased by more than 50%. The business is currently focused in North America, and we have been running pilot studies in other markets. These all have been positive, and we have entered a second phase, adding further markets and preparing for full market releases into Europe, Latin America, and APAC regions in 2019. On slide 27, you can see that in July, we acquired Createch, our CAD/CAM partner for multi-platform solutions and screw-retained bars and bridges. Based in Spain, the company is a leader in high-end, tailor-made prosthetic solutions with expertise in milling strategies, coupled with advanced technology, enable it to offer solutions that are beyond the scope of most CAD/CAM providers. Createch solutions cover all major implant systems and more than 300 implant connections, complementing our Medentika and Etkon ranges, and making the Straumann Group a leading provider of multi-platform prosthetics.
Createch will become our global development center for screw-retained bars and bridges and will share its expertise with our other CAD/CAM centers of excellence. Also in July, we acquired a 30% stake in Botiss, which has become a mainstay of our biomaterials business and enables us to offer an unparalleled range of innovative regenerative solutions. Becoming a shareholder tightens our relationship and gives us confidence to invest in growing the business further. A few months ago, we launched the brand very successfully in Brazil and plan further launches in North America and Asia Pacific in the next two years. We have exclusive distribution rights for many countries and will increase the number in the coming years. Moving on to slide 29.
In Q2, we entered a distribution agreement with the CAD/CAM milling technology company, Zirkonzahn, which offers a particularly attractive milling option for full-arch solutions in conjunction with stapled implant solutions. That brings me to the outlook, which as usual, is barring unforeseen circumstances. We expect the global implant market to grow at approximately 4%-5% this year, and we are confident that we will continue to outperform it. Based on our first half results, we are raising our expectation for fully organic revenue growth from the low double-digit to the mid-teen percentage range, with further improvements in the underlying EBITDA margin, in spite of further investments in sales, marketing, and research. With the continued high level of investment in production and the amortization of acquisition-related intangibles, we expect the underlying EBIT margin to remain stable. Now I would like to open the question and answer session.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their.
As usual, we will give our guests here in Basel the opportunity to put their questions before we open the lines to our webcast participants. If you are dialing by phone, please make sure you have a good phone connection. Webcast participants who wish to ask questions anonymously can use the tool in the audio webcast, which you can find in the bottom left corner. Can we have the first question, please?
Yes. Good morning. This is Maja Pataki from Kepler Cheuvreux. My first question is relating to your change in strategy that was announced in Q1, where you said you're bringing the premium and the non-premium brands closer together in Europe with the launch of Neodent and the online platform. In your press release, you stated you've seen really good growth in Denmark and some Nordic areas. Is that already the first impact or the first signs that we're seeing of the successful launch? My second question is more a question for understanding. EuroPerio was, I believe, in June, right? Were customers able to place orders there? Shall we see that or shall we expect that to come in Q3 or was that already reflected in Q2? Thank you.
To your first question, Maja, what we did in the first six months, we created actually the basis to extract more commercial synergies between the premium and the non-premium businesses. We had a very good start in Germany, where we actually launched Neodent and also Medentika implant systems in Q1. The results so far are very promising. However, to be honest, in total for the first six months, obviously, the overproportionate group is our non-premium business compared to the premium business. I'm not entirely happy with the development of our non-premium franchise. I think we have still much more potential. Our market share when it comes to the non-premium business outside of Brazil is still below 5%. We are actually getting closer to the 5%-6%, because we are gaining share in the markets where we're already present, and we are entering new markets.
We entered a couple of European markets with our non-premium franchise during the first six months, like France, like Belgium, like the Nordic countries. As I pointed out, I think we are still scratching the surface. There is much more potential. On your second question, EuroPerio is not really a sales event. Obviously we also generated a couple of orders, but the impact in the half year numbers has been insignificant, and it will also not have a major impact in Q3.
Okay, great. Thank you. Just a quick follow-up. You've launched Neodent in Germany. The remaining countries that you were listing in your press release, shall we expect that to happen within 2018, or will that
Potentially also come into-
No, we have launched also already in France. We have launched in Belgium. We have launched in the Nordic countries.
Okay. Everywhere, basically, that you stated up there.
In Europe, in all major countries, it's launched.
Fantastic. Thanks a lot.
Hi, Marco. I'm Peter. I have three questions. Maybe start off just with your guidance. It looks like EMEA has been doing much better. Was this the reason why you upgraded guidance? In this respect, it looks like your organic growth is ahead. Obviously there is a bit of incremental dollar to spend from the incremental contribution relative to your original budget. What are your intention to spend the money on? That would be my first question.
I think Peter highlighted quite clearly, that a lot of the cash we generate, we are going to invest into expanding our production capacity. We have a huge project ongoing in Villeret, and that actually will need quite some capital injections still this year, in 2019 and in 2020. Beginning of 2021, the new site will be ready to be operational. We are continuing to expand in Curitiba, we're going to build a completely new factory, and we're going to start during the second half of this year. Also Andover, we are in expansion mode. A lot of the cash we will actually obviously use to make sure that we can cope with the growth of the future. Because at the end, if we don't have products to serve our customers, it will be difficult to grow.
However, we will continue what we have done already for many years now. We will take some, obviously, of the margin improvements, we reinvest into the business. There, the focus markets remain the same. China, which is continuing to be one of the growth motors. We continue to significantly invest into our sales force in the U.S., a very attractive market, still a highly under-penetrated market. There we still have the ambition to become number one. We are becoming closer and closer to achieve this target. Also, as pointed out, markets like Turkey, we have been investing heavily, because we see a lot of potential there. We are taking part of the margin, and we are reinvesting it into the markets where we see obviously potential to further increase our share.
The second question is on the Clear Aligner business. You mentioned patient start was up more than 50%, kind of. This is a good guide for the run rate in sales terms as well, I guess.
It's pretty close to this, yeah.
Pretty close, huh?
Can you give us an update on the registration of the product in Brazil, in particular?
We have received Anvisa registration. We have already produced first aligners in Brazil, so in Curitiba. We are ready to actually start selling or launching officially, the selling of ClearCorrect aligners during CIOSP in January of 2019 in Brazil.
Okay. In Europe, you mentioned that you're recruiting salespersons. Is it the strategy to have now separate sales forces for the clear aligner business, or is it still the view that it's combined?
It's a hybrid model which we're going to apply. We will have some ortho specialists in all these markets. On one hand, they were going to visit orthodontists, which are traditionally not our customer group. Then we have lead generation from our GP sales force to the ortho specialists, and then they follow up with our normal dental sales force to walk the customers through the first case to make sure they understand also the software, the doctor support, et cetera. It will be a combination of lead generation through our GP or our dental sales force, supported by a specialist structure in the most important markets.
Okay. Then the last question is actually financial on FX. It looks like these emerging market currency become very volatile, and some of them are pretty weak year-to-date. Can you remind us of your strategy with respect to any hedging also you have on this currency and basically, is there an opportunity for you to raise prices in such markets or how do you intend to cope with this situation?
Yes, Chris, I think you made the right observation that especially the currencies in the emerging markets, that they were very volatile over the last 6 months, and that mainly cost more than half of the increase of the FX loss compared to 2017. We usually hedge these currencies as long as you can hedge them. Let's take, for example, the ARS, you can't hedge it. Let's take the IRR. You can't hedge this currency. We have a FX exposure there that we try to minimize with these respective financing streams within the company. There's no way that due to these currency changes, we can increase the prices in these respective countries. If we have a respective inflation in these countries, and in these two countries we have, we can adapt the prices to the respective inflation.
That's more inflation driven and not really driven by currency fluctuations versus the CHF. You could not explain that to the customer in these respective markets. We also need to see from a pure revenue point of view, these countries that we have just mentioned do not have a significant part of our overall group revenue.
Okay.
However, in certain countries, we actually tie the prices to the EUR. Like, for example, in Turkey. As Peter pointed out, this has also certain limits. Up to now, we have actually when the TRY devalued against the EUR, the CHF, we were increasing correspondingly the prices in market in TRY. They were coupled to EUR, and we are not the only ones doing this, so this is actually common practice. As you pointed out, it obviously has to be more or less in line with inflation, and as long as devaluation, inflation go more or less into the same direction, we were able to actually pursue this policy. If this is also still the case going forward, we will see.
Good morning, it's Oliver from Commerzbank. The first question is about new customers. You mentioned a couple of times that you were very successful in gaining new customers. In particular, that's a topic, in particular for the U.S., where, basically, your market position is weaker than in other regions, particularly Europe. Can you just specify how much of the growth in the U.S. were derived from new customers? That's the first question. Just as a very rough indication.
Yes. I don't give you a specific number. I give you a range. It's actually more than 25%.
Okay, great. The second question is, also about your business strategy. You've acquired a lot of businesses over the last years and, from a management perspective, the requirements, how to handle the businesses, the challenges increase. How do you ensure that all business are well controlled as they were as a much smaller organization than you are right now?
We are constantly, obviously, adapting our organization, like for example, the creation of the digital business unit as per January 1st of this year. Exactly, one of, obviously, the thoughts was we have to make sure that Dental Wings and ClearCorrect. We manage them tightly, and we integrate them as fast as possible into the Straumann world. They are both part of the digital business unit. We also have many regions. We have Latin America, we have North America, we have Europe, we have Middle East, we have Asia Pacific, we have also the DSO business. We also, obviously, adapting the leadership structure in line with the growing business and with the increasing complexity to cope with, as you pointed out, with the increased demand for being able to be agile and to cope with complexity. That's what we are doing constantly.
Okay. Thanks. Then my last question is on your just business exposure to Turkey, just in the last days, some news were presented in the media. Can you just give us an indication how important Turkey is, as you mentioned this also a couple of times?
You want to say something?
Yes, Turkey, we acquired the Batigroup at the beginning of this year. Usually when we acquire a distributor, we also acquire a distributor because we want to invest in that market. We see growth opportunities there. We heavily invested in building up the sales forces and expanding the sales forces in the Turkish markets. It adds a nice growth contribution in the first half. If we look at the total exposure that we have, then it's in the low single percentage points of total revenue that we have.
, in the press release, the quote was that Q2 was unexpectedly strong. Well, obviously it was very strong, but, at least to all of us, it was extremely strong, but was it unexpectedly strong to yourself? You can calculate the Easter effect, you can calculate the EuroPerio, so w hat were the elements for you that it was, even for you, much higher probably than you had expected? The main elements.
Obviously, during the course of the quarter, it became more and more clear that it will be a stellar quarter. The unexpected, yes, obviously when we started April 1st, we didn't expect that the quarter we'll achieve 20% organic growth. The unexpected, I don't think should be over interpreted, what we have in the press release. To answer your question, what went really well? As Peter pointed out, we had more selling days in Q2, so the Easter effect for sure played a role. Secondly, we had a very strong uptake of the intraoral scanners. We sold a lot of intraoral scanners in Q2. I think these are the two together with ClearCorrect. ClearCorrect also had a very strong second quarter, but already the first quarter was strong.
I think what's also important, that's what has also been mentioned in the presentation, we also believe that the market itself is actually in better shape. We believe that this year we will see 4%-5% growth when it comes to implants worldwide. You remember in the past, we were talking between 3% and 4%. We also see that the market itself is better.
Okay.
If I can add one remark, Daniel, you said we can calculate the Easter effect. Yes, technically we can do that. We had one working day more in the second quarter in the EMEA region, two working days more. However, that's a technical calculation. The important question is how long are the practices shut down and how long are the dentists going on vacation? That's something that you cannot really quantify and calculate.
Yeah. Okay, fair. Thanks. The second question, political one maybe, Iran exposure. I'm not concerned about this tiny portion probably, but, if the gentleman over the ocean totally freaks out, with U.S. sanctions, what is your plan B with this country? Is that-
First of all, our products are on the white list, they are not a part of the embargo. We are actually allowed to export products into Iran and to sell them in the Iranian market. The issues we see more today are actually more Iran generated. To get actually the products out of custom into the country, to actually get our bills paid here at headquarters, because we obviously invoice Iran, out of Institut Straumann. It has been quite difficult to get money out of Iran. Just recently we have now found a solution, we are again getting the money out. Obviously it's more difficult to do business with Iran than it has been still three to four months ago.
The other hand, for us, this is a great opportunity because we are the only company with a subsidiary in the Iranian market, and we still have products to deliver. We are actually gaining heavily share on behalf of everybody else. On one hand, obviously, we don't like the situation, but on the other hand, it's also a great opportunity to actually gain share.
The exposure is, I guess, very tiny.
The exposure?
Yeah.
We started from scratch in Iran. That's why we said, to really start to become also a significant player in this very attractive market, we are talking seven to 800,000 implants in Iran, we have to go direct. If we would have to shut down our Iranian operations, that would not actually significantly impact the overall numbers.
Okay, thanks.
This is Carla Bänziger from Bank Vontobel. I have three questions related to ClearCorrect. The first one is a follow-on to Chris's question regarding ClearCorrect launch in Europe. Did I understand it correctly that you intend to sell primarily now to orthodontists at the beginning, or do you still pursue the GP strategy there? The second one is around the APAC strategy. You mentioned in the presentation that you explore partnerships. Could you please give an indication what you mean by that? Do you not intend to go direct there yourself? The third one is around the U.S. How big of the ClearCorrect business or how much of the ClearCorrect business is generated with DSOs in the U.S.? How important are DSOs for you for ClearCorrect?
To your first questions, no. That doesn't mean that we are now focusing entirely on orthodontists. Our strategy is still to primarily go after GPs because the offering of ClearCorrect is actually more geared towards the GP, as we are not able yet to actually do the really complicated cases with the ClearCorrect system. However, we also got a lot of positive reaction from orthodontists, when they actually became aware that the product is available through the pilots in the different countries, and they were proactively approaching us and asking us if they could actually also do some cases. This is mainly due to the fact that they are not entirely happy with their current provider. It's an opportunity for us to also actually obviously, get into some of the larger users of clear aligners.
The strategy clear is the focus is still clearly on GPs, lead generation through our dental sales force, and then the follow-up through the also specialists. Your second question was on Asia-- explore partnerships in Asia Pacific. Yeah, the second largest clear aligner market today is China. After the U.S., it's China. We don't have our system, so ClearCorrect, registered yet in China. This is actually a longer-term process. It will take us another two to three years before we have registration in China of ClearCorrect. We obviously don't want to wait two to three years before we start selling clear aligners in the second largest or second most important clear aligner market worldwide. That's why we are, as we speak, actively looking at partnerships.
When it comes to other markets in Asia Pacific, there the strategy is actually to go with ClearCorrect, to import the products out of the U.S. and sell them in markets like, for example, Korea or Japan. China, we are definitely looking at potential local partnerships. Your third question when it comes to DSOs, so far we have not gained a single DSO yet in the U.S. We have not sold any clear aligner to any DSO yet. We have generated quite some interest among DSOs. Hopefully, still this year, we will be able to actually communicate the first major DSO we were able to convince that ClearCorrect is the right solution for them.
With this, we would like to move on to the webcast and telephone participants. If you have any question, please press star and one on your touchtone telephone and join the queue. You can leave the queue by pressing star and two. Kindly limit your questions also to two, like the gentlemen and women here in the room. Chorus Call, can we have the first question, please?
The first question from the phone is from Patrick Wood, from Bank of America Merrill Lynch. Please go ahead.
Perfect. Thank you very much for taking my questions. I have two, if I can. The first would be on the EBIT margins, where obviously, appreciate that some of the amortization charge steps up in the second half, and the FX moves. Could you just help us understand, because you're tracking at the EBIT level, a fair bit ahead of flat, in H1. It'd be helpful to know what are some of the deflating factors in the second half are that make you think that the margin ends the year as flat. The second question is really, I know it's difficult for you to comment, but have you guys had any thoughts internally around the proposed Danaher spin of their dental business?
If you think there's any impact or change, or you've seen any change in competitive intensity or anything like that'd be helpful to get a comment on. Thank you.
Thank you for the question, Patrick, on the EBIT margin. Let me start with that. You are right, we are slightly ahead compared to being flat that we have in our respective full-year guidance. In the second half, if you also look in the past, we usually have a bit slightly lower EBIT margin due to, on the one hand, we have slightly lower sales in the second half of the year due to the summer vacation period and also the short months in December over the Christmas period.
On top of that, usually when we invest in our sales force and we ramp up our sales force, we hire the people for next year, usually in the second half, so that we can onboard the salespeople and train the salespeople already this year, so they are present in the market right away from the beginning of next year, which usually leads to a slightly higher cost base in the second half. On top of that, I would also expect a lower EBIT impact in the second half compared to the first half of this year. The third point, I would say, I would expect slightly higher depreciation and also slightly higher amortization because we also need to do the respective PPA for the Createch acquisition, which will increase the amortization of the acquired intangibles slightly.
All these factors together show that we have a very fair and challenging guidance for us for the second half.
On Danaher, I think short term, this is actually in a way positive for us because to do a carve-out, that's normally quite an ambitious project. To actually get separated from the Danaher Group and to make sure that the dental business can stand alone, including all the supporting functions, this means a lot of internal work. Short term, we believe this might be positive for us. Of course, the dental business of Danaher will be focusing a lot on internal issues. Once this spin-off has been achieved, we actually believe that there will be more focus again on the dental business. The Danaher Group is not spinning this business off because it obviously believes that it's the crown jewel.
That also means that potentially in the past, when it came to investment decisions, when it came to actually focusing on the different franchises, the dental business was actually not core or not in the focus. Obviously, this will change going forward. Short term, potentially positive. Mid, longer term, fears are competitive. That also means potentially a stimulus to the market itself. The market itself might grow. What is also positive for us mid, longer term is we have again another benchmark. We will have full transparency in terms of their numbers when it comes to the dental business. We have somebody else we can actually benchmark ourselves against.
Very helpful. Thank you for the answers, guys.
The next question is from Veronika Dubajova from Goldman Sachs. Please go ahead.
Good morning, gentlemen. Thank you for taking my questions. Both of mine are actually on the 2018 outlook. I'm trying to understand, if I look at the guidance that you've provided, it does imply 150, 200 basis points deceleration into the second half, even when you adjust for comps. I'm just curious, is there anything that you see that is worrying you as you look at July and August that would suggest that this deceleration momentum is warranted? Is this you rather just being conservative as you think about 2018? That would be my first question. My second question is on the gross margin outlook for 2018. Looking at certainly my model, I think also consensus expectations, you're tracking a bit better there. Maybe you can talk a little bit to what we should be expecting for gross margin in the second half.
Thank you.
Peter, do you want to take the gross margin-
Yes
question?
Thank you for the gross margin question, Veronika. When we look at the second half, we need to be aware that we started to consolidate ClearCorrect and Dental Wings in the fourth quarter. You see in the first half this year, we basically have 6 months impact of ClearCorrect and Dental Wings on the gross margin compared to last year's. In the second half year, we only have one quarter out of the two quarters as this impact. However, if we look at the price volume, it's that we have a slightly negative impact there. That's not because we lose efficiency in the factories, in our standard implant and abutment business.
That is because we have our total solution provider approach. We increase the share of the third-party product, which come with a lower margin, as I have explained. I would also expect such a similar trend, maybe not such a big impact as in the first half year, but a similar trend in the second half year for this negative impact of the product mix changes that we are following.
To your first questions, mid-teens means between 14 and 16. Obviously, we don't guide if it will be rather 14% or rather 16% growth. As also pointed out, in Q2, we had a very strong quarter when it comes to digital equipment sales. Last year, we had a very strong fourth quarter too. We are actually also comparing ourselves against a very strong Q4 of 2017. All this together makes us believe that actually guiding in the mid-teens organic growth for the full year is actually reasonable.
That's very helpful. Thank you.
The next question is from Michael Jüngling, from Morgan Stanley. Please go ahead.
Thank you. Good morning. I have 3 questions. Firstly, on the EBIT margin for the second half. Is it reasonable to assume that the foreign exchange transactional EBIT margin compression will amount to around 90 basis points compared to the 120 basis points of expansion that we saw in the first half? Question number 2 is on clear aligners. Can you comment on the base expansion or customer base of 10%? Can you comment on how you define this? Are you talking about an entire practice, or are you talking about individual practitioners in a customer base number? Question number 3 is also on clear aligners. How are you thinking about the investment needed to grow this business versus when you first bought it? Do you feel that you now need to make more investments given the strong start that you've had in the business? Thank you.
You want to take the-
Yes, Michael. Let me start with your question on the EBIT margin. If I understood you right, your assumption is that the FX impact will decrease from 120 basis points to 90 basis points. Obviously it's very difficult to make the projection of the FX rates going forward. If we look at 2017, the EUR did increase at the end of July significantly. That shows that we have a significant higher FX impact in the first half year compared to the second half year. Let's say if the FX stay stable as they are right now, I would expect about a 50% FX impact compared to the 100 basis points that we have seen in the first quarter. That's just a bit speculative answer now under the conditions that the FX rates stay stable as they are right now.
Sorry, just to clarify, you had 120 basis points of EBIT margin tailwind in the first half. If you use the spot rates today for the rest of the year, effectively you have a reversal of 90 basis points in the second half. Does that make sense to you based on-
Yeah.
What we've seen so far?
For the full year then you will come to something like 80 basis points positive impact, correct?
No, flat. Slightly positive, but effectively a big reverse in the second half for the EBIT margin reversal.
I would not expect a reverse in the second half. I would expect a more stable development in the second half. Overall for the full year, I would expect something like 80 basis points then.
Okay. Thank you.
To your second question, yes, 10% is actually 10% new customers. 10% increase of the customer base. Obviously the 52% case growth is a combination of new customers and making more cases with existing customers.
Sorry, when you say new customer, are you talking about a dental practice or are you talking about individual practitioners?
New customers for us.
Yes.
We have obviously practices, okay? Where you have three or four dentists, and each one of these dentists is buying individually. That's how we define customers. In a practice of four dentists, three might be Straumann customers, and one might be a customer of a competitor. We look at customers at actually the ones who buy products from us, not at the practice. These are
Just individuals.
Individuals, yeah. Individuals who started to buy ClearCorrect products from us. Your third question in terms of incremental OpEx to actually expand the aligner franchise outside of the U.S., as already pointed out, we going to leverage as much as possible our existing dental sales force. By the way, we have also started what we call preventive or GP pilot, or we're going to start that one in October, with a portfolio of preventive products, so caries, periodontitis prevention, healing. This sales force will also actually promote clear aligners to GPs. The vast majority of the business with clear aligners in Europe, in Brazil, and in the Asia Pacific countries where they're going to roll out ClearCorrect, will be generated through our dental sales force, supported by also specialists, as I pointed out.
We have also digital specialists to actually support the dental sales force when it comes to training customers on intraoral scanners, making sure this scanner works, et cetera.
Marco, it's very interesting. To be clear, if you look at your investments that you were intending to make when you first bought it, and the investment that you intend to do now after you've owned the business for a while, what's the tendency here? To invest more than you first thought, or you think you're okay with what you first thought?
I think we're going to invest more. As pointed out already, initially we thought orthodontists, that's actually out of scope. It's still out of scope. Not fully out of scope anymore, I have to say, in the U.S. We actually saw some real interest also from large users or customers of clear aligners that they really want to change from their current provider to us. Here we have actually an opportunity we will go after, and that also means certain investments. We were also positively surprised by the great response in all European markets. We didn't actually anticipate that we would actually be able to roll ClearCorrect out that fast in Europe and also in some of the countries in Asia Pacific. Yes, we're going to invest more. We will also generate faster more revenues than we initially thought.
Great. Very clear. Thank you.
The next question is from Markus Golla from MainFirst Bank. Please go ahead.
Thanks for taking my question. Yeah, congratulations, great results today. My first question is on revenue growth in EMEA. You mentioned that the performance was only partially driven by the East effect and partially stronger growth in Eastern Europe and the Middle East. Is it fair to assume that growth in EMEA will structurally accelerate given the increased exposure to these higher growth geographies? My second question would be on FX. Your major production hub for non-premium implants is in Brazil, but you generate more and more sales outside of the country. Given that you are able to compensate for the weaker sales within Brazil with price increases, is it fair to assume that in some, a falling Brazilian real is positive for your profitability? Thank you.
Interesting question, especially the second one. We are actually clearly communicating on the corresponding slide where the growth was coming from in Europe, Middle East, Africa in Q2. Obviously we had a very strong growth coming from Turkey, but also from Russia. In Russia, our market share is still relatively low. We have now new insights into the Russian market. We believe that in Russia, roughly 1.2 million implants are placed on an annual basis. Until we had actually this new data, we were always thinking about six to 650,000 implants. If you look at our share now based on these new insights, we are actually just scratching the surface. No wonder that actually we have been able to grow our business in Russia since we have taken over the distributor very nicely and considerably.
In Turkey, obviously with the acquisition of Batigroup and the switch from some of the customers they had before to our implants, also this helped. We also had nice growth in markets like the ones who are listed here, Denmark, Italy, Portugal, Netherlands, the U.K. I mentioned the nice uptake of the non-premium franchise in the German market. It was really a combination of obviously some of the emerging markets where we have lower shares or we were actually investing into feet on the ground, like in Turkey, and actually more mature markets where we entered into the non-premium side, but we also continued to gain share in the premium space in these markets. To the second question, do you want to take this one?
A very interesting comment on the impact of the Brazilian real to our profitability. If you look at the Brazilian real, we have a pretty good natural hedge within the company, as we are producing Neodent in Brazil and we are selling Neodent in Brazil, but also more and more outside Brazil. A decline in Brazilian real has a positive profitability impact for the international Neodent business. However, also our Brazilian operations are very sizable, and there, of course, they would have a negative impact on the group profitability because Neodent is still a very, very profitable business within Brazil. As we have pointed that out also when we acquired Neodent. Overall, if we look at the EBIT or the profitability impact from Brazilian fluctuations, then it's more or less neutral, I would say.
Very interesting insight. Thank you.
However, on the top line, a decline in Brazilian real would have a negative translation impact, of course.
Yeah.
Maybe one additional comment to this. If you take the size of the operation we have in Brazil, we're going to, again, also in 2018, we're going to produce more than 1 million implants in that site, combined with the real. I don't think that anybody, in terms of production cost, is coming close to the ones we are actually having in Brazil. I think we have the most cost competitive implant factory on the planet.
Thank you.
The next question is from David Adlington from J.P. Morgan. Please go ahead.
Morning, guys. Just two, please. Just firstly on Emdogain, just wondering if you're expecting any restocking impacts, and if possible, would you be able to quantify that? Secondly, just on ClearCorrect, obviously there is some history of litigation on the clear aligners. Just wondered if that was having-- it doesn't appear to be having any impact at all in terms of customer appetite. I just wonder if you're hearing anything on that front. Thanks.
Obviously, the impact of the Emdogain sales stop in the U.S., yes, has affected our numbers. The impact has been less than 5 million CHF. We're talking here a couple of millions. We are actually anticipating that we will be able to sell Emdogain again in the U.S. in a couple of weeks, and we obviously hope that we're going to actually get back what we lost during the course of the remainder of the year. Your second question on the litigation of Align against ClearCorrect. As pointed out when we talked about the acquisition, we have actually a part of the purchase price consideration in an escrow, and that amount is earmarked for the litigation.
I suppose the point I was trying to get across is, do your customers, are they aware of that litigation, and does that concern them at all in terms of moving across from Align to yourself?
The litigation is actually concerning potential patent infringements of patents which have expired last year. The litigation will actually not jeopardize the business going forward. It's about infringements in the past.
Understood. Thank you.
The next question is from Ian Douglas-Pennant from UBS. Please go ahead.
Thanks very much. Firstly, on organic growth, obviously 20% is very impressive. In fact, it's so impressive it's almost dangerous. How do you think about the risk of over-trading, and where could those risks lie, theoretically? Secondly, what went wrong with Rodo so quickly that actually you had to write that down to such a sizable extent? Could you comment on what seems to be consistent outflows in the associate income line going forward? A final quick question. Could you just give me what the allowance for overdue receivables was in the first half? Thank you.
Can you specify what you have in mind when you talk about over-trading?
I was thinking, do you have sufficient manufacturing capacity, for example, to be able to deliver continued sales growth like this? Do you have sufficient support at the back end being built out quickly enough for stuff like receivable collection or admin support for the sales staff? Can you grow the support functions as quickly as you can grow the sales line?
It's an interesting word. I've never heard this before, this over-trading, but this is actually what we are actually employed for. To make sure that we manage the company in a way that we can cope with the demand of our customers. We have all ducks in a row, starting obviously from production over logistics, into finance and warehouse space, et cetera. I can tell you when it comes to backlogs or not being able to serve customers, this is not the case. As pointed out by Peter during his presentation, we are heavily investing into bringing our production capacities up to the next level. Of course, we are fully aware, at the end, if we don't have the product, we have nothing to sell. Everything's under control.
If I could just follow up on that, how quickly can you bring new capacity on?
We had, for example, in the past, we were working also with third parties. We have still a network of third parties who can, if necessary, jump in and manufacture some of the parts for us, like they did in the past. We are obviously in constant contact with these third-party suppliers. As mentioned, we did not have the need so far to actually outsource a lot of the production, but this is actually our plan B. So far, we are coping with the nice demand and the nice growth through the capacity which we have at hand.
Great. Thank you.
The next question is from Tom Jones from Berenberg. Please go ahead.
What is the question?
One second. We have two remaining question open here. One was on the Rodo Medical.
Yeah.
If you could specify the impairment, the second one was on the overdue.
Okay. I take the Rodo, and you take the overdue one. Rodo Medical is actually a company based in California. They have developed a very innovative retention system on implants. The idea there is to actually use shape memory metals and to be able to fix the crown on the abutment without a screw, and also without having to use cement, which potentially is a revolutionary new fixation system when it comes to putting crowns on abutments. We have invested into this company. We have, for example, also exclusive distribution rights outside of the U.S. We are still confident that actually, we will be able to bring this product to market, not within the next couple of quarters, but this is still a development project which is ongoing, because we believe this is really something revolutionary. If you imagine, no cement, no screw, this is really potentially game changing.
However, the company is financially not in best condition. We actually decided to fully write off our investment in that company, and starting this July 1st, the book value of our participation in Rodo is zero.
Let me add one comment there on the result of associate companies, Marco. Before that write-off, the contribution from the associate companies was a negative CHF 1 million. That's our fair share of the net profit of the associated companies after the amortization of the acquired intangible of these companies. However, from several of these companies, we are distributing the products, we are acquiring the products, and selling the products. If we add that profit generated by that part of the business, the business with the associated companies is a very profitable one for us. Part of it is above the EBIT line, as I have just described. On the provision for the doubtful accounts, you made rightfully the observation in that we got more conservative over the last two years in that respect, mainly because we expanded our business to new geographical areas.
We acquired new customers. We went into new business areas where we don't know the customers yet. Due to that fact, we took a more conservative approach in making provisions for overdues and doubtful accounts in that respect. Our policy in the first half 2018 has not changed compared to last year, there was no change in provision outside ordinary course of business, that did not affect the profitability or the margins in the first half 2018. We are surpassing the one-hour mark already, but we don't want to cut somebody off. We have two remaining questions. That's what I'm hearing from Chorus Call. Can we have Tom Jones, I believe, was on the line before, again. Thank you.
Mr. Jones, your line is open.
Perfect. Thank you very much. I had two questions. One was a follow-up on manufacturing costs. The other was on ClearCorrect. On the manufacturing costs, I know, Marco, you just very kindly said you aren't currently relying to any great extent on third-party manufacturing. If you maintain growth rates similar to the kind of growth rates that you are currently, at what point will you have to start to more heavily rely on third-party manufacturing? Looking at your CapEx plans, most of that doesn't kick in meaningfully until 2021. If you're growing volumes in the 10% to 15% plus range, I can't imagine you have an awful lot of spare capacity left, so you're going to be forced to use some third parties. Question 1A is when do you think that might kick in?
1B for Peter is what impact do you think that could have on gross margins going forward? The second question is on ClearCorrect. I noticed in the back of the release you made some fairly substantial revisions to the purchase price accounting. These didn't look like minor post-event true-ups. These were big fundamental shifts in the value of customer relationships and brands, et cetera. Could you give us a little bit of color on the thinking behind that? When you got hold of this business and thought about it a bit more deeply, did you just see greater opportunity and therefore thought that these assets were worth more than they initially were? It was such a big revision. I'm intrigued to know what the background to it was.
I take your first question, Tom. It's not completely true that the investments will only kick in in 2021. What we said is that in 2021, the second factory in Villars-sur-Glâne will be finished and will be fully operational. In the meantime, we are investing heavily into Andover, where we still have enough space to add CNC capacity. We have just built in last year in Curitiba, and there we still have space for a lot of CNC machines, so we can increase capacity there too, pretty easily. What we are doing, we are building a new factory in Curitiba because we believe that there are still segments, especially in the Latin American markets, we are not playing in yet.
This is a more dedicated factory to go after part of the market we haven't been going after yet in the past. When looking at the production capacity in Switzerland, we have in Cossonay a new factory built up. We have there a new building, which is not fully occupied yet. What I want to say here is, we are constantly adding capacity. It's correct what you say when it comes to Villars-sur-Glâne. Yes, Q1 2021, the building will be ready. Will be fully ready and fully operational. However, in the meantime, we are adding capacity left, right, and center to cope with the growth.
Perfect. Then on the ClearCorrect accounting?
Yes. I think that there's no change in our view on the business or in the valuation of anything, Tom. When we published our full year result 2017, I think we clearly stated that the purchase price allocation for ClearCorrect was not done at that point, and all the acquired intangibles were temporarily allocated and reported as goodwill. In the first half 2018, we have done the respective purchase price allocation, and of course, that did and changed the respective asset allocation and the allocation of the purchase price to the different asset classes. That is mainly because we have not done that at the year-end 2017. There's no change in the development of the business or in our view on the business or the valuation of the business.
Okay, perfect. Does it change the outlook for-
Tom, just one additional comment on this one. You might recall that actually, when we actually talked about the guidance for 2018, that the EBIT margin will stay stable, we actually hinted at this. That we will have additional amortization on ClearCorrect and Dental Wings, and we also clearly pointed out at that point in time that actually we have not yet finalized the purchase price allocation. I think we were very transparent and clear.
Sure. Okay. I guess I got that it wasn't finalized, I was just surprised by the degree of difference. There we go. The numbers are all there for us to look at. My follow-on question really was, has this meaningfully changed your expectation for amortization of acquired intangibles for ClearCorrect, or are you sticking to your current previous estimate for that?
No, there has not been a significant change. I said, I cannot judge the amortization of the acquired intangibles if I have not done the purchase price allocation, and that was not done at the full year result 2017. There's no fundamental change. I only know now the final amortization of the ClearCorrect acquired intangibles.
Okay. One very quick follow-up.
Respective amortization chart you see on the chart number 17, you see the respective amortization charges.
Okay. That's a reasonable proxy run rate going forward to expect for ClearCorrect?
Yes.
Yeah.
Okay, perfect. Then one very quick follow-up. In the release, you talked about a higher share of trading goods. That's not a term I've ever heard in 20 years of this game. Did you just mean distributor type sales? Is that what you're referring to with that?
That is correct. This is.
Okay, perfect.
I refer to businesses like the Motus business, like the Anthogyr business, like the digital equipment business.
Sure. Perfect. That's very clear. Thanks very much.
The next question is from Kit Lee from Jefferies. Please go ahead.
Thank you for squeezing me in. I just have two, please. First, I think you mentioned digital sales as a driver quite a few times in your release. Maybe can you quantify how much the digital equipment sales contribute to your organic growth in the second quarter? Then the second question is still on digital sales. Have you rolled out your offering now to your customer base, or is that still an ongoing process?
Let me answer your second question first, or the second part of your question first. We have actually two intraoral scanners in our portfolio. We have the 3Shape scanner, and we have our own developed Dental Wings intraoral scanner. We have primarily sold 3Shape intraoral scanners during the first 6 months of 2018, just because we believe that the own developed, the Dental Wings intraoral scanner is not yet at the maturity level, that we can go out and say, "This is actually one of the best scanners you can get." We are holding back on actually promoting the Dental Wings intraoral scanner. We also don't yet have full connectivity in place between the 3Shape intraoral scanner and our C series, chairside mill. It's actually working for tooth- borne restorations, but it's actually not yet seamlessly integrated for implant- borne restorations.
That means, on the other hand, that we have not yet really sold or started to sell chairside milling equipment and the corresponding consumables. If you look at our numbers in the first six months, and look at actually how many chairside mills we've sold or materials into chairside mills, it's immaterial. This obviously means that we still have lot of potential. Once we have the connectivity established, the seamless connectivity also for implant bone restorations, we're gonna also start to heavily sell chairside mills and the corresponding chairside materials. At IDS 2019, we are also quite confident that we will present the newest version of the Dental Wings intraoral scanner with much better functionality and with an equipment that is actually matching customer expectations. On your first question, how much of the growth was due to digital equipment?
I would say a couple of percentage points, not more.
More than 50%.
Okay
of the growth in the first half was generated by the implant business, and especially by the Straumann implant business with the BLT franchise, but also by the non-premium implant business.
Okay. That's great. Thank you.
In closing, I'd like to draw your attention to the investor relations calendar and our latest analyst talk recording, which you can find on slide 33 and 34 of the slide deck. If you have further questions, you are welcome to contact our colleagues in investor relations and corporate communications. Thank you for your interest and your questions. Have a good day, and goodbye.
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