I'll just continue. 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. And before we begin, I would like to point out that our presentation and discussion will include forward looking statements.
So 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 2 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 Swiss francs to CHF682,000,000 driven by double digit growth in all regions. Europe, the Middle East and Africa contributed no less than 35% of our organic growth, while 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 Keyatech, our specialist CAT cam partner in Spain, and we purchased a stake in Botis 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 Q1, 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 and L and ultimately in the value added for shareholders. Our underlying EBITDA and EBIT margins expanded by 80 basis points and 50 basis points, respectively.
And excluding onetime exceptionals, earnings per share rose 14% to CHF8.63 Looking at the historic context, we have succeeded in increasing organic revenue at an average of 12% over the past 5 years. All our markets are healthy, and we expect the implant segment to grow between 4% 5%. This is 3x lower than our own growth, and the performance gap is even wider in the premium segment. Just to highlight 2 other figures in this slide. Our underlying EBITDA margin has expanded by 5 percentage points since 2014 and our underlying net profit margin by 3.2 percentage points.
And 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 9, at this year's exchange rates, our half year revenue in 2017 would have been CHF10 1,000,000 higher, mainly due to the appreciation of the euro. In the course of the past 4 quarters, we have had 3 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. So in the 1st 6 months of 2017, the acquisition effects amounted to a total CHF24 1,000,000, bringing last year's adjusted first half revenue to CHF578 1,000,000, 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 nonpremium segments. Looking at Slide 10. You can see that in EMEA, organic growth accelerated 7 percentage points in Q2 to 17%, fueled by our premium implant and digital businesses. Benefited from nearly 2 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 4 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 the 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 nonpremium 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 circumcenter 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 in 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, and 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 nonpremium arena with Ontoge in China and Neodent in Australia and Southeast Asia. And 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 VLT implant range continues to exceed expectations. AntiDise already becomes Straumann's top selling implant line in the world's largest implant markets, the U.
S. And Brazil. Demand for our nonpremium offering was strong and 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 abotments and copings. Straumann's versatile value based range was the principal growth contributor. In digital, intraoral scanner and 3 d 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. By talking
about sales of bone graft and membrane products, revenues from Biomaterials only matched 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 €140,000,000 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 1 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 twenty eighteen, strong growth in our premium and nonpremium 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 a 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 Villeve, 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 CHF40 1,000,000 that will create an additional 16,000 square meters 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 Dent Living for the first time and increased by 2 €4,000,000 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 team through acquisitions and organically, recruiting new talents, mainly in sales, marketing and operations to increase capacity, global reach and future growth. Almost 2 thirds of our 593 new colleagues in H 1 were recruited, while the remainder were added through acquisitions.
Moving to the bottom line on Slide 20. Our underlying net profit improved by 26% to CHF 148,000,000 driven mainly by our operational progress, which amounted to CHF39 1,000,000. The financial result was CHF3 1,000,000 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 €9,000,000 mainly because of a onetime impairment charge of €8,000,000 Due to an anticipated delay in the development and commercialization of Rodos Medical Prosthetic Retention System, we lowered the book value of our investment. Before the special effect, the result from associated companies improved by €1,000,000 Income tax expenses in the first half of twenty eighteen amounted to €22,000,000 or €24,000,000 excluding the onetime tax benefit from the Gralti Group acquisition.
On an underlying basis, taxes increased €6,000,000 to 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 CHF38 1,000,000 to CHF107 1,000,000, corresponding to a solid cash conversion rate of 76%. We reinvested CHF 44,000,000 of the cash flow in production, which is CHF12 1,000,000 more than last year.
Free cash flow would have been CHF9 1,000,000 higher had it not been for increases in inventory levels and outstanding receivables. The increase in inventories was due mainly to the newly traded subsidiaries and portfolio expansion. Days of sales outstanding decreased by 1 to 59. In summary, free cash flow increased 38%, and the respective margin rose by 1 percentage point to 9%. This concludes my part of the presentation, and 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 2 corporate forums attracted great interest not just on-site, but also online, with the live streams drawing more than 11,000 views.
This was the 1st major European event where we united the Straumann, Neodent and Adentika brands on a single large strong group stand. To give you a bit more flavor of the event, I would like to show you a short video.
This is Amsterdam Euro Perio 9. 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. And 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 Stramar sand is the Neodent sand. And Europerium 9 for Neodent is all about the brand new Grandmoss implant system. Let's have a look.
So this is our brand Morse implant system featuring Helix. Helix is our unique hybrid thread implant, which is designed for immediate primary stability.
On the corner, Medentica presented its range of attractively priced prosthetics for all conventional implant systems. Medentica's own range of implants was also on display, including regular, mini and angulated designs.
This implant is mainly produced for all of our 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 2 corporate forums to share clinical insights and research findings, 1 on new regenerative treatments and the other on immediate tooth replacement. We ask some of the speakers to summarize their key findings.
We know today that extraction and immediate implant, this works. This works well. But if we want a nice aesthetic outcome, we have to respect some key aspects. And there are, 1st, hard and soft tissue management in the extraction socket, implant positioning and primary stability.
The clinical recommendations are that 4 implants work as well as 6. Parallel implants work as well as tilted. And immediate loading was used in the vast majority of the cases. So that is something that we should keep in mind when planning our cases.
My key message is that if you challenge the established protocols, it should always have more benefits than risks, and you should always try to do as little treatment as reasonable achievable to obtain the goal for the patient.
And that brings us to the end of this edition. Straumann's championship of innovations continues, of course. But 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 7 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 nonpremium 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 in the Europe, Latin America and APAC regions in 2019.
On Slide 27, you can see that in July, we acquired CreaTech, our CADCAM partner for multiplatform solutions and screw retained bars and bridges. Based in Spain, the company is a leader in high end, tailor made prosthetic solutions whose expertise in milling strategies, coupled with advanced technology, enable it to offer solutions that are beyond the scope of most CADCAM providers. Createch Solutions cover all major implant systems and more than 300 implant connections, complementing our Medentica and Etcon ranges and making the Straubman Group a leading provider of multiplatform prosthetics. Createch will become our global development center for screw retained bars and bridges and will share its expertise with our other CATKAM centers of excellence. Also in July, we acquired a 30% stake in BOTIS, 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 2 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 CATKA Milling Technology Company, Zerkontan, which offers a particularly attractive milling option for full arch solutions in conjunction with tapered implant solutions.
And that brings me to the outlook, which, as usual, is barring unforeseen circumstances. We expect the global implant market to grow at approximately 4% to 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.
And now I would like to open the question and answer session.
We will now begin the question and answer session.
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. So can we have the first question, please?
Yes. Good morning. This is Maja Partik 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 online platform. And 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. So Europe area was, I believe, in June, right? Did customer were customers able to place orders there? And 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, Majer, what we did in the 1st 6 months, we created actually the basis to extract more commercial synergies between the premium and the nonpremium businesses. We have had a very good start in Germany, where we actually launched Neodent and also Medentika Implant Systems in Q1, and the results so far are very promising. However, to be honest, in total for the 1st 6 months, obviously, the over proportionate group with our nonpremium business compared to the premium business. I'm not entirely happy with the development of our nonpremium franchise. I think we have still much more potential.
Our market share when it comes to the nonpremium business outside of Brazil is still below 5%. We're 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. So we entered a couple of European markets with our nonpremium franchise during the 1st 6 months, like France, like Belgium, like the Nordic countries. But as I pointed out, I think we are still scratching the surface. So there is much more potential.
On your second question, is Europira. Europira is not really a sales event. So yes, 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.
Great. Just a quick follow-up. So you've launched Neodent in Germany and the remaining countries that you were listing in your press release, 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. So everywhere basically that you In
Europe, in all major countries, it's launched.
Fantastic. Thanks a lot.
Marco, Peter. I have three questions. Maybe to start off just with your guidance. It looks like EMEA has been doing much better. So was this kind of the reason why you upgraded guidance?
And then in this respect, it looks like your organic growth is ahead. And 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're going to invest into expanding our production capacity. So we have a huge project ongoing in Villarend, and that actually will need quite some capital injections still this year in 'nineteen and in 'twenty. So beginning of 2021, the new site will be ready to be operational. We are continuing to expand in Curitiba. So 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. So 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, and we reinvest into the business. And there, the focus markets remain the same.
China, which is continuing to be one of the growth motors, we also will continue to significantly invest into our sales force in the U. S, a very attractive market, still a highly underpenetrated market. And there, we still have the ambition to become number 1. We are becoming closer and closer to achieve this target. And then also, as pointed out, markets like Turkey, we haven't been investing heavily because we see a lot of potential there.
Yes, so 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.
And then
another question the second question is on the clear aligner business. So you mentioned patient starts was up more than 50% kind of. So this is good guys for the run rate in sales terms as well, I guess.
It's pretty close to this, yes.
Pretty close. And can you give us an update on the registration of the product in Brazil in Patikra?
We have received ANVISA registration. We have already produced 1st aligners in Brazil, so in Curitiba. And we are ready to actually start selling or launching officially the selling of ClearCorrect aligners during Siospi in January of 2019 in Brazil.
Okay. And in Europe, you mentioned that you're recruiting salespersons. So is it the strategy to have now separate sales forces for the clear aligner business? Or is it still kind of the view that it's compact?
It's a hybrid model which we're going to apply. So we will have some ortho specialists in all these markets. On one hand, they will going to visit orthodontists, which are traditionally not our customer group. And 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's portal, etcetera, etcetera. So 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. And then the last question is actually now financial on FX. It looks like these emerging market currency now have become very volatile, and some of them are pretty weak year to date. How does this I mean, first of all, what's 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 kind of 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 caused 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 Argentine peso, you can't hedge it. Let's take the Iberian real, you can't hedge these currencies.
So we have FX exposure there that we try to minimize with respective financing streams within the company. But there's no way that due to this currency changes, we can increase the prices in these respective countries. If we have a respective inflation in these two countries we have, we can adapt the prices to the respective inflation, but that's more inflation driven and not really driven by currency fluctuations versus the Swiss francs. You could not explain that to the customer in these respective markets. But 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.
Thank you.
However, in certain countries, we actually tie the prices to the euros, like, for example, in Turkey. But as Peter pointed out, this has also certain limits. So up to now, you have actually when the Turkish lira devalued against the euro to Swiss francs, we were increasing correspondingly the prices in market in Turkish lira. So they were coupled to euros. And we are not the only ones doing this.
So this is actually common practice. But as you pointed out, it obviously has to be more and less in line with inflation. And as long as the valuation 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.
It's Oliver from Commerzbank. The first question is about new customers. So 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.
So can you just specify how much of the growth in 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. So it's actually more than 25%.
Okay. Great. And the second question is also about your business strategy. So you've acquired a lot of businesses over the last years. And from a management perspective, the requirements real how to handle the businesses, the challenges increase.
So how do you ensure that all businesses are well controlled as they were as you were 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 1 this year. Exactly one of the obviously, the thought 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. And they are both part of the digital business unit. We also have many regions.
So 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. So we also, obviously, adapt 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 having being able to be agile and to cope with complexity. So that's what we are doing constantly.
Okay. And then my last question is on your just business exposure to Turkey. Just over the last days, some news were presented in the media. So can you just give us an indication how important Turkey is, as you mentioned also a couple of times?
You want to say something?
Yes. I mean, Turkey, that's we acquired the Batigroup at the beginning of this year and the Batigroup. And usually, when we acquire a distributor, we also acquire a distributor because we want to invest in that market. We see growth opportunities there. And we heavily invested in build up in building up the sales forces and expanding the sales forces in the Turkish markets.
So 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? I mean, you can calculate the Easter effect. You can calculate the Europe period.
So what 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. So unexpected, yes. Obviously, when we started April 1, we didn't expect that the quarter will be 20% achieve 20% organic growth. So the unexpected, I don't think, should be kind of over interpreted, what we have in the press release. But to answer your question, what went really well?
We had, 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. So we sold a lot of intraoral scanners in Q2. Yes, I think these are the 2 together with ClearCorrect.
ClearCorrect also had a very strong second quarter, but it was already the Q1 was strong. So and I think what's also important, and that's why we that's what has also been mentioned in presentation. We also believe that the market itself is actually in better shape. So we believe that this year, we will see 4% to 5% growth when it comes to implants worldwide. You remember, in the past, we were talking between 3% 4%.
So we also see that the market itself is actually is better.
Okay.
And if I can add one remark, Daniel, you said we can calculate the Easter effect. Yes, technically, we can do that. We had 1 working day more in the Q2 in the EMEA region, 2 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.
Yes. Okay. Fair. And the second question, political one, maybe Iran exposure. I mean, 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
1st of all, our products are on the white list. So they are not part of the embargo. So we are actually allowed to export products into the Iran and to sell them in the Iranian market. The issues we see more today are actually more Iran generated, so 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 Schraman. So it has been quite difficult to get money out of Iran.
Just recently, we have now found a solution. So we are again getting the money out. So it's obviously, it's more difficult to do business with Iran than it has been still 3 to 4 months ago. On 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. So we are actually gaining heavily share on behalf of everybody else.
So 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.
But the exposure is, I guess, very tiny?
The exposure, 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 that we are talking 700,000 to 800,000 implants in Iran, we have to go direct. But if we would have to shut down our Iranian operations, that would not actually significantly impact the overall numbers. Okay.
Thanks.
This is Carla Vanzerg from Bank Vontobel. I have three questions related to ClearCorrect. The first one is a follow on to Chris' 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? And the third one is around the U.
S, how big of the ClearCorrect business or how much of the Clear
So 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 because 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 are proactively approaching us and asking us if they could actually also do some cases. And this is mainly due to the fact that they are not entirely happy with their current provider.
So it's an opportunity for us to also actually, obviously, get into some of the larger uses of clear aligners. But the strategy clearly is the focus is still clear clearly on GPs, lead generation, through our dental sales force and then the follow-up through the ortho specialists. Your second question was on Asia, X4 partnerships in Asia Pacific. Yes, the 2nd largest clear aligner market today is China. So after the U.
S, it's China. And we don't have our systems of ClearCorrect registered yet in China. This is actually a longer term process. It will take us another 2 to 3 years before we have registration in China of ClearCorrect. And we obviously don't want to wait 2 to 3 years before we start selling clear aligners in the 2nd largest or 2nd most important clear aligner market worldwide.
And 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. But China, we are definitely looking at potential local partnerships.
And your third question when it comes to DSOs, so far, we have not gained a single DSO yet in the U. S. So we have not sold any clear aligner to any DSO yet. We have generated quite some interest among DSOs. And 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 that.
And women here in the room. So, Corie's 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 2 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. But could you just help us understand, because you're tracking at the EBIT level a fair bit ahead of flat in H1. So it'd be helpful to know sort of what are some of the deflating factors in the second half are that make you think that the margin ends the year as flat?
And then 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, that'd be helpful to get a comment on. Thank you.
So 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, we usually if you also look in the past, we usually have a bit a 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. And 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 sales people and train the sales people 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. And then on top of that, I would also expect a lower FX impact in the second half compared to the first half of this year. And 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 Accuitec acquisition, which will increase the amortization of the acquired intangible bills slightly. So all these factors together show that we have a very fair and challenging guidance for us for the second half.
And 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. So to actually get separated from the Danaher group and to make sure that the dental business can stand alone, including all the supporting functions. So this means a lot of internal work. So 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.
But once this spin off has been achieved, we actually believe that there will be more focus again on the dental business. The Dano Group is not spinning this business off because it obviously believes that it's the ground jewel. And that also means that potential in the past, when it came to investment decisions, when it came to focusing on the different franchises, the dental business was actually not core or not in the focus. And obviously, this will change going forward. So short term, potentially positive.
Mid, longer term, a fierce competitor, but that also means potentially a stimulus to the market itself. So the market itself might grow. And what is also positive for us mid, longer term is we have again another benchmark. So we have we will have full transparency in terms of their numbers when it comes to the dental business. And we have somebody else we can actually benchmark ourselves against.
Very helpful. Thanks 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. And I'm trying to understand, if I look at the guidance that you've provided, it does imply 150 basis points, 200 basis points deceleration into the second half even when you adjust for comps. And I'm just curious, is there anything that you see that is worrying you as you look at July August that would suggest that this deceleration momentum is warranted?
Or is this you rather just being conservative as you think about 2018? So that would be my first question. My second question is on the gross margin outlook for 2018. Looking at certainly my model, but I think also consensus expectations, you're tracking a bit better there. So maybe you can talk a little bit to what you we should be expecting for gross margin in the second half.
Thank you.
Pieter, do you want to take the gross margin
question? Yes. So 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 4th quarter. So 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 1 quarter out of the 2 quarters as this impact. However, and if we look at the price volume mix that we have with the slightly negative impact there, I mean, that's not because we lose efficiency in the factories in our standard implant and department business. That is because we have our total solution provider approach and we increased the share of the 3rd party products, which come with a lower margin, as I have explained. And 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.
And to your first questions, mid teens means between 'fourteen and 'sixteen. So 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 4th quarter, too. So we are actually also comparing ourselves against a very strong Q4 of 2017.
And all this together makes us believe that actually guiding in the mid teens organic growth for the full year is actually reasonable.
The next question is from Michael Jungling from Morgan Stanley. Please go ahead.
Thank you and good morning. I have three 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? And 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 that customer base number? And then question number 3 is also on Clearliners.
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. So let me start with your question on the EBIT margin. If I understood you right, then your assumption is that the FX impact will decrease from 120 basis points to 90 basis points. I mean, obviously, it's very difficult to make the projection on the FX rates going forward. If you look at 2017, then the euro did increase at the end of July significantly.
So 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 stays stable as they are right now, then I would expect about a 50% FX impact compared to the 100 basis points that we have seen in the Q1. But that's just a bit speculative answer now under the conditions that the FX rates stay stable as they are right now.
So just to clarify, I mean, you had 120 basis points of EBIT margin tailwind in the first half. And 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 what we see so far?
So for the full year, then you will come to something like 80 basis points positive impact, correct?
No, flat. Slightly, slightly positive, but effectively a big reversal 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. So that the overall for the full year, I would expect something like 80 basis points then.
And to your second question, yes, 10% is actually 10% new customers, so 10% increase of the customer base. And obviously, the 52% case growth is a combination of new customers and making more cases with existing customers. And
So when you say new customer, are you talking about a dental practice or are you talking about individual practitioners?
New customers for us. Yes. So we have obviously practices, okay, where you have 3 or 4 dentists, and each one of these dentists is buying individually. So that's how we define customers. And in a practice of 4 dentists, 3 might be strong customers and one might be a customer of a competitor.
So we look at customers at actually the ones who buy products from us, not at the practice. So these are actually individuals who started to buy ClearCorrect products from us. And your third question in terms of incremental OpEx to actually expand the Orso franchise outside of the U. S, as already pointed out, we're 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.
We're going to start that one in October with a portfolio of preventive products, so carriers, periodontitis, prevention, healing? And this sales force will also actually promote clear aligners to GPs. But the vast majority of the business with clear aligners in Europe, in Brazil and in the Asia Pacific countries where we're going to roll out ClearCorrect will be generated through our dental sales force, supported by also specialists, as I pointed out, like we have also digital specialists to actually support the dental sales force when it comes to training customers on intraoral scanners, making sure the scanner works, etcetera, etcetera.
But Marco, it's very interesting. But to be clear, if you look at your investments that you were intending to make when you first bought it and the investments 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?
No, 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. So 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.
So here, we have actually an opportunity we will go after, and that also means certain investments. And we were also positively surprised by the great response in all European markets. So 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. So yes, we're going to invest more, but we will also generate faster more revenues than we initially thought.
Great. Very clear. Thank you.
The next question is from from MainFirst Bank. Please go ahead.
Thanks for taking my question. And yes, congratulations on great results today. So my first question is on revenue growth in EMEA. You mentioned that the performance was only partially driven by the Easter effect and partially stronger growth in Eastern Europe and the Middle East. So is it fair to assume that growth in EMEA will structurally accelerate given the increased exposure to these higher growth geographies?
And my second question would be on FX. So your major production are for non premium implants 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 sum, a falling Brazilian real is positive for your profitability?
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. So obviously, we had 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 1,200,000 implants are placed on an annual basis. Until we had actually this new data, we were always thinking about 600 1,000 to 60000 implants. And if you look at our share now based on these new insights, we are actually we are just scratching the surface. So 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. And 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.
But 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 nonpremium franchise in the German market. So 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 through we entered into the nonpremium side, but we also gained we continue to gain share in the premium space in these markets. To the second question, do you want to take this one?
Yes. 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. So a declining Brazilian real has a positive profitability impact for the international Brazil 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. So overall, if we look at the EBIT or the profitability impact from Brazilian fluctuations, then it's more or less neutral, I would say. However, on the top line, a decline in Brazilian real would have a negative translation impact, of course.
And maybe one additional comment to this. If you take the size of the operation we have in Brazil, so we're going to again, also in 2018, we're going to produce more than 1,000,000 implants in that site combined with the real. So I don't think that anybody in terms of production cost is coming close to the ones we are actually having in Brazil. So I think we have the most cost competitive implant factory on the private.
The next question is from David Adlington from JPMorgan. Please go ahead.
Good morning, guys. Most of my questions have been asked, but just 2, please. Just firstly, on MDE gain. Just wondered if you're expecting any restocking impacts. And if possible, would you be able to quantify that?
And second, just on ClearCorrect, obviously, there's some history of litigation on the clear aligners. 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.
Obviously, the impact of the Emdogain sales stop in the U. S, yes, has affected our numbers, but the impact has been less than CHF5 1,000,000. So talking here a couple of 1,000,000. 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.
But 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?
Now the litigation is actually concerning potential patent infringements of patents which have expired last year. So the litigation will actually not kind of jeopardize the business going forward. So it's about infringements in the past.
The next question is from Ian Duggan Pennant from UBS. Please go ahead.
Thanks very much. So firstly, on organic growth, obviously, 20% is very impressive. In fact, it's so impressive. It's almost dangerous. I mean, how do you think about the risk of over trading?
And where could those risks lie theoretically? And secondly, what went wrong with rather so quickly exactly that you had to write that down to such a sizable extent? And could you comment on what seems to be consistent outflows in the associated income line going forward? And then a final quick question. Could you just give me what the allowance for overdue receivables was in the first half?
Can you specify what you have in mind when you talk about overtrading?
So 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 quickly as you can grow the sales line?
So it's an interesting word. I've never heard this before, this overtrading. 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. And we have all docs in a row, starting obviously from production over logistics into finance and warehouse space, etcetera, etcetera. So I can tell you, when it comes to backlogs or not being able to serve customers, this is not the case.
And 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 you don't have the products, you have nothing to sell. So everything is 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 the 3rd parties. So 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. And we're obviously in constant contact with these 3rd party suppliers. As mentioned, we have not 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 actually the capacity which we have at hand.
Great. Thank you.
The next question is from Tom Jones from Berenberg. Please go ahead.
The second, we have 2 remaining questions open here. One was on the Rodo Medical,
if
you could specify the impairment. And the second one was on the overdue.
Okay. I take the Rodo and you take the overdue. So Rodo Medical is actually a company based in California. They have developed very innovative retention system on implants. The idea there is to actually use shade memory metals and to actually 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. Imagine no cement, no screw.
This is really potentially game changing. However, the company is financially not in best condition. So we actually decided to fully write off our investments in that company. And starting with July 1, the book value of our participation in Rodo is 0.
So let me add one comment there on the result of associate companies, Markku M. Before that write off, the contribution from the associate companies was of a negative €1,000,000 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. And 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, but part of it is above the EBIT line, as I have just described. Then on the provision for the doubtful accounts, you made rightfully the observation and that we got more conservative over the last 2 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. And due to that fact, we took a more conservative approach in making provisions for overused and doubtful accounts. In that respect, our policy in the first half twenty eighteen has not changed compared to last year, and there was no change in provision outside ordinary course of business, and that did not affect the profitability or the margins in the first half twenty eighteen.
So we are surpassing the 1 hour mark already, but we don't want to cut somebody off. So we have 2 remaining questions. That's what I'm hearing from Corey's call. Can we have Tom Jones, I believe, was on the line before? Again, thank you.
My system is open.
Perfect. Thank you very much. I had two questions. 1 was a follow-up on manufacturing costs and 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 3rd party manufacturing? Because looking at your CapEx plans, most of that capacity left, so you're going to be forced to use some 3rd parties. So it's a kind of question, 1a, is when do you think that might kick in? And then 1b for Peter is what impacts do you think that could have on gross margins going forward? And then 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. Now these didn't look like minor kind of post event true ups. These were big fundamental shifts in the value of customer relationships and brands, etcetera. Could you give us a little bit of color on the thinking behind that? When you did the 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'll take your first question, Tom. It's not completely true that the investments will only kick in, in 2021. What we said is that actually in 2021, the second factory in Villeret will be finished and will be actually fully operational. In the meantime, we are investing also heavily into Andover, where we still have enough space to add actually C and C capacity. We have just built out Neodend last year in Curitiba, and there we also have still 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 in especially in the Latin American markets we are not playing in yet. So this is actually more dedicated factory to go after part of the market we haven't been going after yet in the past. And also, when looking at the production capacity in Switzerland, we have actually in Cogemont, we have a new factory built up. So we have a new building, which is not fully occupied yet. So just what I want to say here is we are constantly adding capacity.
It's correct what you say when it comes to Villeret. Yes, Q1 2021, the building will be ready, will be fully ready and fully operational. However, in the meantime, we are actually adding capacity left, right and center to cope with
the growth. Perfect. And then
on the click rate accounting?
Yes. And 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. So in the first half twenty eighteen, we have done the respective purchase price allocation. And of course, that did change the respective asset allocation and the allocation of the purchase price to the different asset classes, but that is mainly because we have not done that at the year end 'seventeen.
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. And did it change the outlook for
Just one additional comment on this one. You might recall that 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 then to Winx. And we also clearly pointed out at that point in time that actually we have not yet finalized the purchase price allocation. So I think we were very transparent and clear.
Sure. Okay. I guess, I've got that it wasn't finalized, but I was just surprised by the degree of difference. But there we go. The numbers are all there for us to look at.
My follow on question really was, has this meaningfully changed the your expectation for amortization of acquired intangibles for ClearCorrect? Or are you sticking to your current previous estimate for that?
No, no. There has no there has not been a significant change. I mean, as I said, I cannot judge the the amortization of the acquired attention if I have not done the purchase price allocation. And that was not done at the full year result 2017, but there's no fundamental change. I only know now that the final amortization of the ClearCorrect acquired intangibles.
And
the one very particular
one. The amortization charges.
Okay. And that's a reasonable proxy run rate going forward to expect Fotilio, correct?
Yes.
Yes. Okay. Perfect.
And then one very, 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 the I prefer to businesses like the motors business, like the Ontoge business, like the Digital Equipment business.
The next question is from Keith Lee from Jefferies. Please go ahead.
Thank you for squeezing me in. I just have 2, please. First, I think you mentioned digital sales as a driver quite a few times in your release. Maybe can you quantify how much did digital equipment sales contribute to your organic growth in the second quarter? And 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 ask your second question let me answer your second question first or the second part of your question first. We have actually 2 intra portfolio. So we have the 3 shapes cameras and we have our own developed Dental Wings intraoral scanners. We have primarily sold 3Shape IntraRolls Camels during the 1st 6 months of 2018 just because we believe that the own developed the Dental Links Intrarables camera is not yet at the maturity level, that we can go out and say this is actually one of the best cameras you can get. So we are holding back on actually promoting the Dental Wings intraoral scan.
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 2 spawn restorations, but it's actually not yet seamlessly integrated for implant bone restorations. That means, on the other hand, that we have not yet really sold or or started to sell chairside milling equipment and the corresponding consumables. So if you look at our numbers in the 1st 6 months and look at actually how many Chairside Mills we've sold or materials into Chairside Mills, it's immaterial. So this obviously means that we still have a lot of potential.
So once we have the connectivity established, the seamless connectivity also for implant bone restorations, then we're going to also start to sell heavily sell chairside mills and the corresponding chairside materials. And at IDS 2019, we are also quite confident that we will present the newest version of the Dental Links Intrall 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.
I mean, more than 50% 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 nonpremium implant business.
So 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 3334 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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