So good morning, everyone, and welcome to Straumann's 2015 Full Year Results Conference. It's a pleasure to have you with us, and thank you for taking the time to join us here in Basel. I would also like to welcome those of you who are joining us via the audio webcast. As usual, I would like to ask you to take careful note of the disclaimer on Slide 2 regarding forward looking statements. After I have shared the highlights with you, Peter will take you through the financial details and the business performance.
Then I will review our strategic progress and the outlook. And after that, we will be glad to answer your questions. In 2015, group revenue reached CHF799,000,000. Excluding the effects of currencies and acquisitions, our organic growth was 9% over the full year and 10% in the 4th quarter. Our best performing regions were Asia Pacific and Latin America, which both reported double digit increases.
Driven by the top line and cost containment, our profitability improved, lifting underlying EBIT for a 3rd consecutive year and driving the underlying EBIT margin to above 23%. Business wise, implants were the main source of growth, and our new bone level tapered implant was the key product in 2015. Available in Rock Solid and is our SL Active Surface, Phonoid Level Tapered is a differentiated product. We launched it in all our main markets except China, where registration is still pending. At year end, every 5th Straumann implant sold was a bone level tapered implant, and we have already sold over 200,000 pieces.
We made good strategic progress in launching our footprint in high growth markets and in the value segment. We extended our reach in China with our new hybrid distribution approach. We entered new markets in Latin America and have merged the Neodent and the Straumann organization in Brazil. In a separate release this morning, we announced a partnership with the French dental implant manufacturer, Entoshier, which enables us to enter the fast growing value segment in China. These are just a few of the milestones we passed in 2015.
Overall, the performance was very robust and better than we had anticipated at the outset of the year. For 2016, we are confident that we can continue to outpace the market, And barring unforeseen circumstances, we aim to achieve organic revenue growth in the mid single digits with a further improvement in the underlying EBIT margin, but more about that later. On the next slide, you can see that the growth trend increased in quarter 4 in all regions except North America, which generated double digit growth in the first half boosted by the full market release of our BLT implant. Moving on to Slide 6. As you know, we completed the biggest acquisition in Straumann's history, underpinning our global leadership in implant dentistry.
The combination with Neodent has a significant impact, and throughout the presentation this morning, we will be looking at the numbers from 2 perspectives: the reported results on the underlying organic performance, which excludes the acquisition effect as well as the exceptional accounting factors and currency exchange movements. Peter will give you all the details in a moment. Excluding these exceptionals, gross margin improved 100 basis points. Thanks to operational gearing effective cost control and accretive income from Neodent, our underlying EBIT margin expanded 4.50 basis points. Underlying earnings per share rose 9% to CHF9.19 Consolidation in recent years has left approximately 60% of the global market in the hands of 4 leading multinationals, which make up the premium implant segment.
The remainder of the market is highly fragmented and comprises several 100 competitors, most of whom have only a local or regional focus. Some are low priced players, while others offer more advanced services and education at mid price points. Based on available data, we believe that the global tooth replacement market grew in the middle single digit range in 2015. This does not include Biomaterials and CADCAM solutions. Having achieved organic growth of 9%, we are confident that we have not just outperformed our main competitors, but have also strengthened our overall position.
Including Neodent, our revenue in local currencies rose as much as 19%. Currency fluctuations, in particular the strengthening of the Swiss franc and the devaluation of the Brazilian real, had a big impact on our reported results in Swiss francs and makes it difficult to compare with previous years. However, based on the latest available data, we estimate our share of the global market to be around 22%. Furthermore, you can see on this slide, which shows our revenue and profit development over 5 years, we have outperformed and accelerated since 2012, but not at the expense of margins, which have also expanded steadily as the chart on the right clearly shows. Neodent has not only contributed to our business and profitability, it has also added talent and diversity with more than 900 employees joining our global workforce.
The integration of the Neoten business is now fully complete. We were able to get through the currency crisis without cutting shops in Switzerland, and this year, our headcount has actually increased. Thanks to the measures taken early in the year and the support of our staff, we were able to preserve jobs in Switzerland. As a result, our global headcount now stands at almost 3,500. We integrated Neodent quickly and smoothly and are beginning to unlock the synergies in supply chain, distribution and administration in Brazil.
And on that positive note, I would like to hand over to Peter.
Thank you, Marco, and good morning, everyone. In our first half results, we shared with you the various factors related to the Nudent acquisition that affect our results. We have listed them in this chart and in our press release, and I won't repeat the details because there are no changes, with just one exception. The ongoing amortization expenses for customer related intangible assets increased from CHF2 1,000,000 for 4 months to CHF5 1,000,000 for the 10 month period since our half year reporting. In your modeling, please note that going forward, the annual run rate will be CHF5 1,000,000 based on current exchange rates.
To provide a like for like comparison in this presentation, we will refer to values excluding business combination exceptionals, which totaled CHF 73,000,000 as you can see in the 1st column of the table. Slide 13 gives you the figures with and without exceptionals for both years to facilitate the comparison. In both cases, you see growth in revenue and operating profit. And in spite of the fact that the strength of the Swiss franc cut sales by €37,000,000 gross profit by €36,000,000 and operating profit by €22,000,000 in 2015. Despite the currency headwind and investments in our value platform, sales organization and growth projects, we succeeded in lifting the underlying EBITDA margin by 2 80 basis points to 28% and the EBIT margin by 2 40 basis points to 23%.
Neodent also contributed to these pleasing results, which I will discuss later. Just for the sake of completeness, at constant exchange rates, our EBIT margin would have amounted to 25%. As a reminder, in 2014, our net result benefited from the capitalization of deferred tax assets in the amount of €27,000,000 related to the acquisition of the initial 49% of Neodent. With their exclusion, net profit increased 11% to €145,000,000 bringing the net margin to 18%. There were also some nonrecurring effects in the financial result and the associate line, which collectively amounted to €12,000,000 The combination of these factors meant that the underlying net profit margin was the same as in 2014 despite the remarkable improvement in the EBIT margin.
Looking at the gross profit on Slide 14. You can see that our reported gross margin was 78.7% in 2014. At 2015 currency rates, it would have been 110 basis points lower at 77.6%. The positive message here is that strong volume expansion, economies of scale and efficiency gains fully compensated for the negative currency impact, while the underlying gross profit margin increased 110 basis points. Niodent had a slight negative effect of 10 basis points as selling prices for value companies are lower than those offered by premium ones.
At this point, I would like to highlight some of the achievements in utilization to an average of 98% over the full year. We continue to transfer technology from Villeret to Andover, building the flexibility to transfer production volumes quickly and respond to market changes. In line with our strategic goal of becoming a total solution provider, we invested in and opened a CADCAM milling center near Tokyo, offering customer abutments and complex prosthetic frameworks for Pro Arch and other solutions. It is also our 1st center in the world to offer drill templates produced by 3 d printing technology. We also significantly extended our facility in Arlington to meet demand for screw retained bars and bridges from ClearJoyce.
All our CATKEM facilities now operate under the EDCON brand and use the same machinery, materials and milling strategies, making it easy to establish new centers with the same high quality standards in other geographies. In addition, the BOTIS Biomaterials and Medentica Prosthetic portfolio are now fully included in our corporate Supply Chain Management System. On Slide 16, you can see that last year's EBIT margin adjusted for currency fluctuations would have been 18.7%. Together with the gross margin effect of 110 basis points that I mentioned before, the other main driver was the improvement in operating expenses. Our OpEx intensity decreased to a level of 55% of sales and added 180 basis points to the margin.
These elements together improved the EBIT margin by 300 basis points on the Straumann side of the business, which also includes the international value business that we operate under the InstroGen umbrella. On the right side of this chart, you can see that the Neodent operational business in Brazil is highly accretive to our margins and added another 150 basis points to the group margin. Moving on to the next slide, let's look at the effect of all these factors on the bottom line. All the exceptional acquisition effects, which amounted to CHF 73,000,000 are shown on the right net of tax. The onetime effect related to the capitalization of deferred tax assets is shown on the left.
The main impact on the underlying numbers was the aforementioned profitability improvements, which added €37,000,000 The financial result worsened €9,000,000 compared to the prior year and was primarily related to foreign exchange losses subsequent to the sudden appreciation of the Swiss franc and fair value adjustments of various financial instruments in the amount of €7,000,000 The associate result, which includes partners like Dental Wings, Medentica, Createch, T Plus, Valoc and Neodent, was €22,000,000 lower than in 2014. There are 3 main reasons for the marked difference. Firstly, in NielDent's accretive business contribution was over a 12 month period, but only 2 months in 2015. Secondly, Neodent has booked provisions of €7,000,000 related to the termination of a local distributor agreement and an ongoing litigation case. And lastly, the carrying value of T Plus was impaired by €5,000,000 Tax difference increased net income by €7,000,000 compared to last year.
We benefited from a tax refund in Germany and the tax credit related to carrying forward of tax losses. The normalized tax rate going forward is unaffected by that, and we expect it to be at approximately 15%. All this combined meant that the underlying group net profit reached €145,000,000 bringing the respective margin to 18%. Turning on to the cash flow on Slide 18. Reported EBITDA increased by €31,000,000 and net working capital added another €37,000,000 to the free cash flow.
Please note that this slide shows the values on a reported basis and includes exceptional factors. So the adjustments for Neodent's inventory reduced EBITDA by €30,000,000 but increased net working capital contribution by the same amount. As a result, net cash from operating activities reached CHF186 1,000,000, an increase of 27% compared with last year. CapEx investment increased €17,000,000 reflecting the inclusion of Neodent and additional investments of €8,000,000 in our CADCAM 2014 related to the sellout of our Chinese distributor. As a result, free cash flow climbed to €151,000,000 and the respective margin to 19%.
Based on the results and positive developments in 20 15 and our confidence going forward, the Board of Directors is proposing a dividend increase of CHF 25 to CHF 4 per share. As you can see on this chart, we have maintained our dividend at CHF 3.75 per share since 2,008 despite challenging times. The dividend ex date is shortly after our AGM on April, the trends. Now moving on to the growth performance by region. In 2015, our reported revenue grew 12% to CHF799,000,000, of which CHF63,000,000 was contributed by Neodent.
The appreciation of the Swiss franc mainly against the euro and the devaluation of the Brazilian real meant that growth was constrained by 6 percentage points. Excluding both factors, group revenue grew 9% organically, as Marco mentioned earlier. Europe built on the recovery achieved in 2014 and lifted growth in EMEA to 6%. The region contributed almost half our revenue and nearly onethree of our growth. North America grew robustly above the market at 8%.
The region added $17,000,000 to our overall result. Asia Pacific is considerably smaller but generated 30% of growth as revenue climbed 19%, driven mainly by China and Japan. Latin America expanded 11% as Neodent and Straumann both grew strongly despite the economic turbulences. During Q4, the EMEA region grew 8% with the main contribution coming from Germany, complemented by double digit growth in Iberia and France. Likewise, the U.
K. And the Nordics recorded very satisfying growth. Despite tough competition from value and discount players, Italy achieved an encouraging turnaround from the negative past trends. Distributor markets in Eastern Europe and the Middle East also posted strong volume growth, driven by patient demand and public health care tenders, but this was offset by price reductions for distributors to compensate for the sharp appreciation of the Swiss francs. Q4 revenues in North America grew 7% organically, on top of a strong baseline in the prior year.
All business franchises contributed to the increase, but the star performers were BLT and RockSolid. BLT is particularly important as more than 70% of implants sold in North America are estimated to be tapered. By end of the year, 1 in 3 implants sold by Straumann was a BLT. Another highlight in the quarter was our excellent performance in Asia Pacific. We sustained momentum in Japan, benefited from the launch of BLT and our new CADCAM milling services.
China posted very strong results, benefited from stocking by 2 new distributors in Q4. As the new dealer network is now in place, this process is complete. Australia recorded very satisfying sales, while our Asian distributors reported mixed results. Based on available data, we believe that we outperformed our main peers in the 2 largest Asian markets in 2015. In Q4, organic growth in Latin America reached 17% and was strong in all markets, especially Mexico.
In sharp contrast to the general trend of the economy and the stagnating Brazilian implant market, both Neodent and Straumann Brasil expanded at a double digit pace and rebounded from the soft previous quarter. BAT obtained regulatory clearance in Brazil and was very well received. With Slide 23, I would like to add some more color on how the various segments contributed to our top line performance. Double digit implant volume growth was the primary growth driver. Increased sales of RockSolid and their Selective were the principal contributors.
The restorative business, including CAT Chem Prosthetics and Digital Equipment, posted solid full year and 4th quarter growth. Demand was especially strong for simple, cost effective value based abutments and also the new CARES in lab scanners, which is engineered by Dental Wings, was very well received. Revenue from Biomaterials grew vigorously throughout the year as Straumann continued to roll out the botis range in Europe and its bone graft and membrane products in North America. And with that, I will hand back to Marco for the overview on our strategic progress and the outlook. Thank you.
Thank you, Peter. I would now like to give you an update on the progress we have made with our 3 strategic priorities. It is essential for Straumann to develop a high performance culture in order to succeed in our fast changing environment and to sustain what we have achieved over the last 3 years. In 2015, we advanced our so called coach cultural journey, focusing on a player learner mindset that embraces change and drives behavior. We have defined 8 core behaviors to increase agility, build trust, strengthen a commercial mindset, promote communication, encourage collaboration and drive the high performance organization we want to be.
We are working hard to adopt these behaviors through internal campaigns and an international program of workshops and training modules. Also, transformation takes time. There is a clear sign of progress, which have been confirmed in internal and external assessments. Our strong financial results point to a growing high performance culture, and there are many other examples. The agility of our response to the currency shock, aligned strategic priorities, new collaborations and partnerships and the speed of integrating Neodent are all signs that we are on the right track.
Now let me tell you about some of our investments to extend our geographical reach and unlock growth potential. China is one of our most exciting markets, and our new organization positions us to address the fast growing private practice sector across the nation. We still need a foothold in the value segment, which is where Ontoshir comes in, but I will say more about that in a moment. In Russia, we established our own subsidiary, and we're able to incorporate our local distributor. This gives us a firm basis for investment to build the business with our sights firmly set on winning a substantial share of the large Russian implant market.
In Europe, we established Insulin subsidiaries in the U. K. And the Czech Republic in order to enter the value segments there, and we entered a joint venture to supply value implants in Turkey. We are also looking forward to launching InstaDent in Canada in midyear. The world's largest market by revenue is the U.
S, but it is still comparatively underpenetrated, which is why we have invested over proportionally there. Our latest initiative is an education focused approach for the growing number of GPs who want to offer implant treatment. Latin America is another source of growth, and we are building up distribution hubs in Argentina, Colombia and Mexico to serve local markets with both Straumann and Neodent solutions. And finally, to strengthen our position in the restorative segment, we have invested in CADCAM production in the U. S.
To cater for Clear Choice as well as in Brazil and Japan. This slide illustrates our current footprint in the Global Value segment and where we plan to expand this year. Neotend obviously has a major part in this. The beauty of our combination lies in the fact that Neotend complements the Straumann business by offering a high quality, attractively priced alternative to our peer competitors, especially in the area of immediate function, which Straumann is now beginning to address with its BLT implant and its ProArt solution. Today, we are also announcing a partnership agreement with Anter Sheer, which will open the door to the value segment in China.
Antoshier is a family owned business close to Geneva in France with annual sales of €45,000,000 It is a leading value player in France and sells internationally through 8 subsidiaries and the network of distributors. It is a particularly interesting partner for us because its implant system is established in China as a high quality, attractively priced option. The agreement enables us to acquire a 30% stake in Antares here and foresees the transfer of the implantology business activities in China to us by Medeo. And to give you an idea of the current size of the business, about 15% of their sales are generated in Asia. To address the nonpremium segment in Turkey, we have created Sinedent, a joint venture with our local distributor to supply implants and prosthetics in the domestic and surrounding markets.
There is also potential opportunity to manufacture locally. More than 350 1,000 non premium implants are sold annually in Turkey, so it is an attractive market segment. Both Antoshia and Synodent complement our InstroDent platform, which can be used to support the expansion to other markets. Some other approaches to growing customer segments are highlighted in this slide. Straumann Patient Pro is a platform we launched in 2015 to support dental professionals in educating patients and promoting their practices.
It offers materials and tools for the Internet and social media as well as for use in dental practices. Our young professional program has been running for more than 3 years and was expanded in 2015. It is offered in 10 countries and has enrolled more than 5,000 participants yet. We also expanded the so called peer to peer partnership program that was piloted in 2014. It extends from personal coaching to surgical activities, where our highly experienced implantologists share surgical techniques and experience with their peers in the operating room.
And finally, a word about the ITI's online academy, which is a new learning platform for practitioners at all levels of experience. It was launched just over a year ago and recorded 200,000 visits and more than 3,000,000 page views in the 1st 12 months. These statistics reflect the great need for education and mentoring as a number of dentists interested in placing implants keeps rising. The Engle Institute in the U. S.
Has provided training in implantology to more than 7,000 dental professionals since it was founded in 2,005. We have agreed with them that our implant system and biomaterials will be used exclusively in all Engle Institute programs. To compete against the new conglomerates in our field is to be a total solution provider in tooth replacement by offering conventional, semi digital and fully digital solutions for all major indications to dentists and to offer a comprehensive portfolio for implant borne solutions to dental laboratories. Despite the stream of launches, we have more than replenished our pipeline, and you can find details on that in the Innovation section of the annual report. Our pure ceramic implant offers a highly aesthetic alternative for patients seeking metal free solutions.
It has been made available in Europe since 2014 and gained approval in North America at the end of 2015. Also, the requirement for metal free alternatives is not a major driver of today's market. We believe that the availability of ceramic implants with similar performance, flexibility and predictability to their metal counterparts will change implant dentistry. Straumann Pure is a step in this direction. This week, at the Chicago Midwinter Meeting in the U.
S, we are launching an exciting new intraoral scanner developed by Dental Wings. Featuring next generation technology, it is a truly differentiated product, intuitive, convenient and attractively priced with no click fees. We have chosen to sell it through 2 distribution partners, Benko and Burkert, who serve 40,000 dentists and labs across the U. S. We will be rolling it out in other markets as soon as we can.
A year ago, we announced a collaboration with Armand Gierbach to offer dental laboratories a 5 axis milling machine to operate with our Cares CAT cam system and our new desktop scanners. The new milling machine is competitively priced and is now undergoing a controlled market release. In connection with our new intraoral scanner, it will offer an excellent chairside solution for larger practices with labs in house. We are also working on a compact chairside mill to combine with the intraoral scanner. And for small practices that don't want to invest in milling equipment, the intraoral scanner can be used as our scan shape service.
So we will have a whole range of chairside, in lab and central milling solutions. And as you see from the schedule in this slide, our goal is to start limited market releases this year. In November, Neodent signed an agreement to take over Amangirapass distribution business in Brazil, including its sales and customer service team of 20. Neodent began marketing and selling the full Amangirbak range last month and now covers the full workflow for dental labs to produce CAT Can Prosthetics in house. The trend among dental labs to save costs by using non original abutments has fueled the growth of companies that focus on prosthetic component copies.
Medentika has been very successful in this business and offers attractively priced alternatives for most leading implant systems. We are responding to this trend in 3 ways: 1st, by strongly emphasizing the importance of using strawman quality and precision in our original or non original campaign. 2nd, by offering prefabricated tie base and premilled blanks with Straumann original connections and third, by turning it into an opportunity to offer high quality individualized CAT scan abutments for competitor implant systems and at an attractive price through our Etcon brand and Medentica. As the column on the right of this slide shows, the two brands cover all prosthetic options. And here again, our time frame is this year.
The press and depth and quality of our portfolio make us confident that we can compete successfully with total solutions. Confident also comes through research. In 2015, an impressive body of scientific evidence on our products was published in peer reviewed journals. Perhaps the most compelling co publication came from independent investigators at Gothenburg University. It was a large retrospective study that evaluated various implant system 9 years after placement with regards to peri implantitis, which can lead to implant loss.
The results were very favorable for Straumann and revealed clear differences between implant systems. Encouraged by excellent 5 year clinical results and the very low fracture rates, we are extending the lifetime guarantee on our ROXOLID implants to include monetary reimbursement towards the treatment costs in addition to replacing the implant. This provides extra confidence and sets a new benchmark in our industry. RockSolid is a truly remarkable material, and I would like to show you a very creative, humorous video commercial that we are using to promote it through social media and other channels.
My fellow countrymen, the one who will be able to pull this very sword out of this rock shall be the righteous king. Who is brave enough
to try?
And that brings me to our outlook for 2016. We expect the global implant market to grow solidly in 2016, and we are confident that we can continue to outperform by achieving organic growth in the mid single digit range. Despite further investments into strategic growth initiatives, our expected revenue growth and operational leverage should lead to further improvements in the underlying operating profit margin. Obviously, we cannot go into all the details this morning, but you can find most of them in the preprint of our annual report, which is now available on our website. The hard copies will be sent to subscribers in 2 to 3 weeks' time.
This brings me to the end of the prepared remarks, and now I'd like to open the question and answer session. As usual, we will go we will give our guests in Basel the opportunity to ask questions before we open the lines to our webcast participants. As an additional feature, participants who wish to ask questions anonymously can use the tool in the audio webcast, which you find in the bottom left corner. If you are calling by phone, please make sure you have a good phone connection. In this case, you may press star and 1 to join the queue and press star 2 to leave the queue.
And finally, in the interest of everyone waiting in the queue, I would kindly ask you to limit the number of your questions to 2, including sub questions and follow ups. So can we have the first question from the room, please?
Yes. It's Oliver from Commerzbank. The first question is on your outlook, especially on sales growth. So you expect a solid market. That's basically the same guidance, as you said, also 1 year ago.
But now you expect only growth in the mid single digits. In 2015, you had much higher growth in the high single digits or almost double digit. So what's different in 2016 compared to 'fifteen? What makes you a little bit less confident now after having seen such a good performance? And the second question is on the U.
S. Market. Over the quarters, we saw some sequential slowdown. You mentioned the first half was impacted positively by the BLT implants in the U. S, but basically, you had also clear choice.
So would you describe that the U. S. Market is currently behind your expectations? And what's your outlook in particular for the U. S.
For 2016?
So first of all, I would like to mention what is the same like last year. We are tendentially rather conservative, so we don't want to disappoint. There are certain question marks when it comes to development of the macroeconomic environment, and I'm especially talking about Latin America, Brazil. We had a very good Q4, but I guess some of you remember the Q3, we had actually negative growth in Brazil. First signs indicate that the situation in Brazil is actually improving.
So we had and I can already say that, we had a rather good start into 2016 Brazil, but we still remain cautious about the overall economic development in this, for us, extremely important country. The second point you mentioned is North America. We just had an important management change when it comes to the leadership of our North American business. And you're right, the Q4 was okay with solid single digit growth. But honestly, I think we could have done better with the right leadership in place, with the right traditionally or what history shows is that in a transition phase of management, you have to be a little bit more cautious.
So these are actually the two points I would like to highlight. 1 is Brazil. The other one is North America. And on both markets, which are both very important to the total contribution of our business, on both markets, we have taken a rather conservative stance when it comes to growth perspectives for 2016.
Okay. Thank you.
Yes. Lefteram, well, we have just two financial questions. Your working capital has substantially improved and I think is now at 13% of sales, which is very good. Are you happy with that level or you further plan to increase that ratio? And the second one is the CapEx was roughly 1.4x depreciation level, which is very high.
What are the plans going forward, not only this year, but midterm? How much you have to invest CapEx? That's the question.
So let me start maybe with the second question, the CapEx level. As I mentioned in my comments, we invested into the expansion of the Arlington CADCAM facility, and we set up the new CADCAM facility in Japan. Basically, these were onetime initial investments that we made in these 2 CATKAM plants in the order of CHF 8,000,000. So if you take or if you reduce the CapEx level of 2015 by this CHF 8,000,000 and if we then also consider that on in addition, we now have Neodent in our group, then we come to a CapEx level, which is similar to the CapEx level that we had over the last year, so around €25,000,000 €20,000,000 to €25,000,000 including Meerden, and I consider that as the sustainable CapEx level going forward also to continuously reinvest in our production facilities and keep them state of the art without any incremental CapEx to or step up CapEx to increase the production capacity as we have done last year. The second question, net working capital.
You're right, we made quite some progress in 2015 in managing the net working capital from the different key financial ratios that's probably not the most important one. So there's a certain balance to that we need to find by managing the receivables without really harming the growth, and that's exactly the right balance that we think. But I think with the current net working capital level that we have, that's a sustainable relative level in terms of revenue going forward as well.
Two questions from me, please. One on EMEA or Europe. You had an excellent performance there despite the fact that you have a very strong market share and the market as such is not growing that much. How much longer do you think you can outgrow the market that significantly? The second question is you're sharing your views on the expansion of the value segment.
And we've seen Neodent having an accretive impact on your margin side. Now how shall we think about the InstroDent platform longer term? Can it be accretive as well? Of course, short term, you're going to have some investments or do you think it's going to be on group level? What is the if we look on a 5 year horizon, what kind of margin instradent?
You're right. You're right. Western Europe or Europe in general has been very positive. We have seen a very positive development in 2015. I can already tell you we also had a strong start into 2016.
You have to remember that actually we launched in Western Europe bone level tapered only in some countries end of Q2, in other countries even in Q3. So there's still a lot of potential to take share away from other tapered implant players in Europe. On top of that, we are now preparing the launch of our chairside solutions also in Europe. So as pointed out during the presentation, we expect that in the Q4 of this year, we will actually also start with selling chairside solutions in some of the European countries. And then obviously, we will have the full effect in 2017.
Our innovation pipeline is full. So they are we are working on a couple of other very interesting projects. Some of them we will actually obviously present at the IDS in 2017. So I'm confident that during the next years, we will, in Europe, despite the high market share, be able to continue to outperform the competitors. In terms of InstroDent, the markets where we have been present with InstroDent now for quite some time already, and I'm here particularly talking about Iberia, Spain, they are already profitable.
Our target is that next year, in 2017, if you look at all the instrument activities that we will breakeven and then continuously start to increase our contribution to group results, EBIT, EBIT margin. The fact that we can actually leverage the value business on existing Straumann infrastructure helps the business to actually at the end yield quite significant EBIT margin. So I don't see any reason why mid term, longer term, the INSTRADAN contribution should not be equal in terms of relative margins with the Straumann business.
Yes. My name is Stephane Tuplais from Betsuit Basel. I have a question regarding Autogier. Are the products of Autogier and the value products of Straumann, are they competing? Or how do you deal with the fact that they perhaps are competing?
Good question. Anter Scheer is strong in its home market in France, Currently, we do not have a value product or a value line in the portfolio yet. They are strong in China. And in China, we don't have value product registered yet. Obviously, one alternative would have been that we go with the Neodent product range also after the Chinese value segment.
Problem right now is that registration time lines in China are extremely long. So it will take us more than 2 years to get the full range or the range of the Neotem products, which we would need in the Chinese market to compete in the value segment to get them registered. And we cannot wait 2 years. That's why we were looking for an alternative. And the OnterShift product is a high quality product, which is also important because despite the fact that we talk here value, Straumann's philosophy clearly is we don't want to have any company in our value platform which is not manufacturing high quality products.
And with the They have they are looking back at more or less the same years of history like Straumann. So this is not a company which was founded a couple of years ago. This company looks back at more than 50 years of history. So we believe this is really a good fit to our philosophy. And we are not competing in the core markets of Amateurs.
So France, China, these are the 2 largest markets they are in. But you
are expanding in China with them?
Yes, yes. We are actually we are making our hybrid distribution model available to also distribute Onteryear in the Chinese market. And as I pointed out, we will start beginning of the second half of the year to commercialize the under sheer product range through the Straumann setup in China.
It's again Oliver from Commerzbank. One question on Slide 23. For Restoration, you have 1 plus compared to the implants with 2 plus and basically that surpassed performance. So a couple of time ago, you said basically it's your objective to move more forward to a solution to a solution provider, and restorative is also a very important an important part of it. Are you happy with the progress you made you have made over the last year of becoming a total solution provider?
Or has it felt something behind your expectation? And my second question is on the general market consolidation. So over the last years, we saw some meaningful deals. If you look on the respective deals from your position, how would you describe that the competitive landscape has changed? And to which extent you were able to profit from this consolidation of competitors?
To your first question, we were able in 2015 to close some significant gaps, which we had to call ourselves a true total solution provider. Importantly, on the implant side, obviously, the launch of bone level tapered, which gives us now access to an important segment, to the largest segment in our industry, which we were not able to actually compete in before. We now have with Spotty's also complete or the most complete bio materials range. So this has been a gap too in the past. We were kind of limited with our synthetic bone grafting material in Emdogain.
We have launched, as pointed out, a new generation of scanners, lab scanners. Also, this filled the gap. We have we are in a limited market release with our first full solution for labs consisting out of the Motion 2 among Gheerbach Mill in connected to our Dental Wings scanner base. So we made quite some significant progress in 2015. Now in 2016, we add to this the chairside solutions.
So the intraoral is kind of stand alone and then later during 2016 in combination with the chairside mill. And on top of that, we are also launching a full range of materials. So our vision is that by the end of 2016, we have launched products and solutions, which will allow us to fill the most important gaps and that then we can truly state that we are a full and total solution provider for dentists and for laboratories. On your second question, the competitive environment. I mentioned the situation in the U.
S. Whenever there is a transition from A to B, this is an opportunity for competition. And I think we can state without kind of stepping on anybody's toes here that one of our core competitors and the company who was actually bought out last year by one of these multinationals currently has to focus more on internal issues like efficiency improvements, process improvements, etcetera, etcetera, to raise profitability and to increase efficiency. And that at least that's what we see in the marketplace that the focus right now is not entirely on the customers and on the market side. And this is obviously an opportunity for us.
But we should not fall into illusions that this will last forever. That company reputation to act very swiftly and very fast on actually getting these efficiency improvement programs through. And then again, the focus will be on growing the business. So yes, 2015, I think some of our competitors were kind of occupied more with internal issues. And yes, this has helped us to actually take some share away.
Gentlemen, here comes a question from the webcast. The participant would like to know what is our estimate, what the CAT Chem share of the consumable part is, so how many elements today are produced through CAT Chem technology and what we estimate our growth the growth rate of that market will be going forward?
It's insofar a little bit difficult to tell because you have some markets which are already very mature when it comes to CATKAM, and then you have some markets where CATKAM doesn't play a role yet. And as an example of the second, I would like to mention Brazil, where we are actually, I would say, the ones who are actually bringing CATCOM solutions to the dentists. And we all know that Brazil is the 2nd largest dental implant market in terms of volume. So there, CATKAM is still at the very early stage. If you look at the U.
S, obviously, also Germany, these markets are CATKAM is actually daily business. So there, the percentage of penetration on the prosthetics side with CADCAM solutions is already rather high. But to give you an average throughout the whole industry is, I would say, is I don't have these numbers available, to be honest.
Good. Then a second one from the Internet. The person would like to know, given the transaction or the partnership with Ontogier, are we still trying to register Neodent in China? Or is that not something we're pursuing?
I don't know if I should answer that question. But yes, we are. Obviously, we are convinced that the Neodem product range is unique in terms of the combination of features it offers to dentists. I think I mentioned last time that my belief is that if you look at the Neodent product range, it's an optimum combination of the best available surfaces in the market. Neoporos is an SLA surface.
Aqua is an SL Active type surface combined with the most modern designs. So coming from one of our competitors, if you look at the Neodent Drive or the Alvim or even the Titan Max, the designs look pretty similar to designs of one of our key competitors, obviously, without infringing any patent to kind of make sure that that's well understood. And thirdly, if you look at the connection also there, from a connection point of view, the Neodent implants come with 2 type of connections, which are completely state of the art. And the combination of these features make the Neodent range really an extremely competitive product range in our industry. And on top of that, we can actually offer that product range at a very attractive price.
So yes, we want to have Naledent available in all our larger markets. But China, it will take quite some time.
Carla Van Siegel, Bonk Vontobel. I have a question related to China. Can you maybe comment about so you were expecting that there could be still a distribution a distributor destocking effect. Was that fully compensated by the stocking of the new distributors? And secondly, on China, can you maybe explain a bit what the bottlenecks for you are there now?
Because I mean, now you have set up the new system and the potential is huge. What is really the bottleneck for you there?
I'd like to take the second part of your question and Peter then you can comment on the stocking effect. The real bottleneck right now is registrations. That's the big bottleneck in China. Despite the free trade agreement between Switzerland and China, when it comes to non tariff hurdles, it's becoming every day more complicated. Recently, now the Chinese authority started to ask for clinical studies for implants, which was not the case before, which obviously extends the timing of becoming a product registered in this market.
So this is really this is the big bottleneck. It's the time for registering a new product in the Chinese market.
The destocking effect that you mentioned in China that is coming from our former distributor in China, Focus Medical, and that destocking has taken place over the last couple of months. And going forward, I do not expect a significant negative impact on our sales due to that destocking effect. Of course, my transparency in that question is somehow limited because it's an independent deformer distributors doing that, but I do not expect this negative impact.
Just a follow-up on the Russian market. Is that the big impact when you include, as usual in Stradman's history, the distributor margin on the group level or is it a small market? And also if you can elaborate a bit on the Russian market, the current shape obviously must be very weak, but
yes? The Russian market is actually still a very attractive market. We are talking roughly 600,000 implants. The volumes have come down over the last 1.5 years, so it used to be an even larger market. We are selling okay, I give you now some data we normally don't disclose, but I'll tell you anyway.
We are selling roughly 20,000 implants in the Russian market. So we have a little bit more than 3% share. So the key reason why we have taken over our distributor there is because we didn't actually grow fast enough and 3% is not up to our ambitions. So that also answers in a way you the first part of your question. So the impact on top line and on EBIT contribution has been significant.
Yes.
It's a smart move for sure. And just a last follow-up question on the U. S. Excise tax. Can you quantify a bit, give us an update about the impact?
I think it's this year and next year, right, the impact?
Yes, it's an impact this year and next year. So when that tax was imposed at that point in time, we always commented that we are not increasing the prices because of that additional tax. That also means that right now, we are not decreasing the prices, so we don't need to decrease the prices because of that excess tax, which is currently suspended. So we reported the respective cost in our administration costs, and it's a low single million digit number. This year and next year.
This year and next
year, yes, per year, a low single million digit number.
Our first question from the phone comes from Lisa Plythe from Bernstein. Please go ahead, madam.
Good morning. A question on the CADCAM business. Clearly, you have ambitions to grow this business very significantly and you've done a lot of collaborations and you've really expanded your scope. But if we look at the history of the CADCAM market, it's been a pretty bumpy one. And if I look at your closest competitor, they had an incredibly challenging time after frankly getting a bit overextended in the market.
Could you explain to us exactly how your strategy fits in with being an implant player? Is this really just going to be an implant focused CADCAM business? Or are you trying to reach out more broadly towards tooth borne restorations? And if the latter, there's a lot of competition out there, how can we be confident that this is the right strategic choice? And follow-up question sort of on that is if you could give us an idea of your consumable split today between sort of implant related versus tooth borne, that would be helpful.
And then second question on Patterson. Could you just remind us of where things stand? I mean, the collaboration seems to have completely dissipated. Is this going to get revisited at some point? Do you have an alternate strategy to target GP Dentists?
Or is it really just going to be through the Neodent brand?
Okay. First question will take some time to explain, but I will take the time obviously. Our ambition is not to be just an implant company. Our ambition is to be a total solution provider for tooth replacement for dentists and for labs. And when we talk about dentists, tooth replacement actually we include the 2 spawn parts of tooth replacement.
On the lab side, we clearly stated that there we want to be a solution provider for implant borne prosthetics when it comes to the lab. So there, the 2 spawn part is not in the focus. When looking at this strategy, there are actually 3 different segments we have to differentiate. 1 is the chairside workflow. So prosthetic parts, which are manufactured by the dentists themselves in their own practice.
And to actually cater for these needs, we will offer in the future an intraoral scanner, chairside mill, prefabricated blanks out of titanium or cobalt chrome. So to manufacture CATKAM based titanium or cobalt chrome customized abutments, chairside. And we will obviously also offer to the dentist a full range of materials, starting with our own glass ceramic material, which we call nice, full ceramics, etcetera, etcetera. So we will actually be able at the latest by the end of 2016 to offer everything a dentist needs to restore teeth in his own practice, starting from the equipment, all the implants, obviously, the biomaterials, up to the corresponding materials he or she needs actually then fabricate the crown or the bridge in or the veneer or whatever in his own dental practice. We are actually targeting to offer the same to dental labs.
So we already started, as I mentioned, by marketing our setup consisting out of the Armang Gjerbog in lab milling machine, which can now be used seamlessly with our DentalVinix 3 and 7 series scanners. And we offer that in conjunction with a broad range of materials, which are also Straumann branded. So also there, we are already pretty close to our ambition to be a total solution provider when it comes to tooth replacement, implant borne tooth replacement for labs. And finally, we have our centralized milling outfits, which can be used either by dentists or by labs. And more and more, we specialize on the centralized milling outfits on complicated, highly sophisticated solutions like through retained bars and bridges, on materials which are difficult to be milled either chairside or the in lab.
So this is actually another service which we provide to dentists and labs because at the end again, we want to be a total solution provider independently of how our customers choose to restore tees or full arches, we are there to provide the corresponding solution independently of them choosing to work either conventionally, semi digital and fully digital. We will have the corresponding workflows available with the corresponding products, including equipment up to materials to actually manufacture final crowns or bridges. On your second question on Paterson.
The GP strategy.
Yes, Paterson. I think I already hinted last time when we had the opportunity to talk to each other at the fact that we have not been very pleased with the development of the relationship with Paterson. We have, in the meantime, terminated that relationship. And we have now, as we believe, drawn the right learnings out of this experience. And the new strategy we are now pursuing is by partnering up with among others the Engl Institute, which I mentioned during my presentation.
The Engle Institute is the most important GP education body when it comes to surgical procedures in the U. S. As pointed out, roughly 7,000 students or dentists have undertaken a basic education program through Engle. And on the same time, we are continuing to work together with Spiro on the prosthetic parts. So Spiro is the prosthetic arm when it comes to GP Education, and Engle is actually filling the gap when it comes to the surgical part of GP Education.
And we believe that actually through these two partnerships, we have a very solid and promising base to train GPs on our products on the implant side as well as on the prosthetics side.
That's very helpful. Can I just ask one follow-up on CADCAM? Obviously, every company is different, but it seems like your competitor who was also very, very involved in CADCAM really ended up being overextended. And frankly, it is a very competitive market. You've got Chinese labs producing crowns at a fraction of what I imagine you may be willing to sell.
Now it's not high quality, but still they're out there. How can we be confident that all these investments will actually end up paying off?
At the end, we truly believe that it's not sufficient anymore in the future just to sell an implant or an abutment or a biomaterial. If you want to be competitive and a top notch company in this industry, you have to provide total solutions. And in contrary to what and I know the competitor you are hinting at, in contrary to what this company did in the past, all our solutions are completely open, okay, first of that. Secondly, we don't limit the offering just to centralized milling. We are actually giving our customers the choice how they want to work, and we support them in whatever way they actually choose to work.
What we want to make sure is that along the value chain, being it chairside, being it in lab, being it through us, through centralized milling, that in this chairside, we are in this value chain, we are present and we actually capture part of this value chain. To give you again the example on the chairside system, obviously, we make money with the Visteon Trolus Canal. We make money with the chairside mill. But in future, the big additional source of revenue and profit will come from the materials. Labs, And with the labs, it's the same.
We the move with the pre phases was clearly a move actually to make sure that in future, at least we get part of the value chain captured with Straumann products because many of these labs in the past, they milled the connection themselves. Now we are there and we can tell them, look, you don't have to milled the connection yourself. You get an original connection from us with a prefabricated blank. And many of them, they were crying for a solution like that. Obviously, we don't make the same profit like with a dentist or with a lab who's buying a standard abutment from us, but at least we are capturing part of the value which is generated in this process.
And as I also pointed out, we are also offering a wide range of materials to the lab. So in future, we will also capture part of the value by restoring a 2 through a crown or through a multiunit bridge, which we didn't have in the past. And I think what's also important is we fully realize that when it comes to centralized milling, centralized milling is not competitive when it comes to simple 2 spawn CATKAM copings. That business model is not working anymore. However, we still see that there are a lot of labs who are desperately looking for a provider who is providing to them an opportunity to get screw retained bars and bridges, potentially even based on multi connections on a screw retained bar because there are also many patients around who have different types of implants in their mouth, and that's where we are actually putting the focus on.
It's not that we all through our centralized milling outfits, we want to actually compete with the Chinese big labs or with the opportunity of now many, many dentists even to actually mill chairside a simple coping. That's not our intention.
Okay. Thank you. That's very helpful. Next question from the phone comes from Michael Jungling, Morgan Stanley. Please go ahead, sir.
My first question is on the 2016 EBIT margin guidance. If you were to grow 5% in constant currency organically, what should the natural operating leverage look like for a business like yours? And then question number 2 is on the carry forward tax losses. I think you've got an asset around 210,000,000. How can that be used in 2016 to 2018?
And my suspicion is you could be faster. And therefore, is there a possibility of having a 11% tax rate for the next 3 years rather than your guidance of 15?
Percent?
If I start with your second question on our tax rate, yes, you're right. If you look at the effective tax rate this year, it was around 11%. I'm confident that the underlying tax rate that we can achieve is around 15%. And if you look at the overall environment over the next couple of years, then we see that it gets much more difficult in all the different countries, the tax environment compared to the past year. So I'm not sure if we really have a significant improvement potential in the tax rate compared to the underlying of 15%.
I look at your question on the EBIT margin in 2016, I mean, as we have communicated in the past, the EBIT development is always a mixture between reinvesting part of the incremental EBIT that we can generate into expanding of our business and into our growth projects, be it the R and D portfolio, be it the value business, be it the expansion and establishment of new subsidiaries in other markets such as Russia that we recently have or in Latin America. We are convinced that we have a unique window of opportunity. As we have discussed earlier, most of our competitors are currently involved in some kind of merging activities. So we are convinced that we want to capture that window of opportunity to expand our business and reinvest and use the incremental profit that we generated for this expansion.
Look, I sort of understand this reinvestment potential, but what I was trying to work out is a starting point for what the margin could be in 2016. So ignoring all investments that you're intending to make for growth above and beyond of what you're doing today, what sort of operating leverage could your business produce on 5% or so organic growth? Is it 100 basis points? Is that possible?
You can make the math if you take a 5 percent growth of our top line and you extract the COGS, the additional COGS that we need to invest to achieve that 5% growth. You can basically say that 50% of the COGS is basically variable part of the COGS and the other is purely increasing the absorption of the current fixed cost. And then you can see what without any additional investments in any additional sales force or marketing activities, you could see what the operational leverage would be theoretically. Okay.
On the margin, if I look at your China sales related provision, which stands at €15,000,000 do expect to utilize this in 2016? Or is there a scope for you to write that back
or a
portion of that back?
The China on Page 42, the China sales letter provision.
Fortunately, we will spend everything. Because it shows that actually the business is developing as it was anticipating. Let me add one point to what Peter said on the tax rate. So the 15% is obviously already including the changes which you will see in the Swiss tax environment. I'm not sure, Michael, if you're aware that there is there are some quite important tax reforms coming towards Switzerland, and some of them will also impact our tax rate.
And the 15% is already anticipating some, I would say, negative impact also on our tax rate due to these initiatives.
So see, my question was very simple. I mean, if you look at the carry forward tax benefit of the asset you've got is €210,000,000 last year you used €15,000,000 Why couldn't you lose €20,000,000 or €25,000,000 per year for the next 3 years?
But we already activated and capitalized these as deferred tax assets.
Next question from the phone comes from Don Jones, Berenberg Bank. Please go ahead. Mr. Jones, your line is open. You can speak now.
Good afternoon. Next question
from the phone comes from Veronika Dubajova, Goldman Sachs. Please go ahead.
Good morning, gentlemen. Thank you
for taking my questions. I will stick to 2, please. The first one is, Marco, it's great
to hear your thoughts on where you're heading in terms of being a total solutions provider. And it might be too early to ask, but if you were to look out at your business in 3 or 5 years' time, what would you expect the contribution to revenues to be from implants versus the CAT scan business versus the restorative business? That would be very, very helpful if give us a sense for how you're thinking about it and the overall CADCAM opportunity? And then my second question is just very quickly on M and A. Obviously, you are deleveraging the cash flow was extremely healthy in 2015.
Any thoughts on what the environment looks like and what's on your drawing board in terms of pipeline of potential deals? What are the areas that you're looking at? And when might we see another acquisition from
On your first question, Veronika, it's really and I have to put apologize, I cannot give you really concrete numbers here. The only thing I can tell you is that, obviously, the percentage of the business, which we will generate with CATKAM will increase. So we will actually generate more percentage wise more of our business with CATKAM. I think that's clear. This is the objective.
How much exactly is honestly, it's looking it wouldn't be a serious answer. On your second question on M and A, I think it was pretty prominently also in the press that there is one company out there for sale. It's actually the last large independent global implant company besides the large Korean one, which is still available through an M and A transaction. We are waiting for the process to start. And obviously, is we also want to be number 1 in the value segment globally in the foreseeable future.
And an acquisition of this asset would obviously help us to achieve this target sooner than through growing our sooner than through growing organically based on the other value brands, which we have available. However, like with every M and A transaction, at the end, it has to add value to our shareholders. So we are not ready to pay just the fantasy price. It has to actually make sense financially. And again, it has to add value to our shareholders.
Otherwise, we will stay away.
Okay. Understood. Maybe I can ask the CATKAM question or the business mix question slightly differently. Would you be willing to share with us your thoughts on what the revenue opportunity for you is in CATcam on a medium term basis?
At this point in time, not yet.
Okay. I hope to try. Thank you very much.
Next question from the phone comes from Inez Silvan, Bank of America. Please go ahead. Hi, thank you for taking my questions. I have 2, please. First of all, just on Latin America on your comments that your business is currently improving over there.
I just wanted to make sure that I understood correctly. Is this an underlying improvement of volumes? Or is this due to the price increases that you've put up in the end of 2015? And then my second question is just on your gross margin. If you could, at this time, give us an idea if you're expecting any negative effect from the currency depreciation on your overall gross margin in 2016?
Thank you.
I'll take the first question. You take the second one. Brazil, you're right. At the end of 2015, we increased prices in Brazil slightly. And the growth in 2016 we have seen so far is obviously a combination of both.
So we've seen the impact of the price increases coming through, but we also have seen quite substantial volume increases in Brazil, especially in February after the large Congress in Sao Paulo has taken place.
Thank you very much for the question about the gross margin because I think that's a very interesting topic. If you look back a couple of years, then you see that basically we had currency headwinds over the last years, 5, 6 years. Nevertheless, despite these currency headwinds, we were able to keep our gross margin more or less around 78%. So that shows that we efficiency improvements in the different plants and by using the economies of scales, and I'm also confident that we can also do that going forward. At the same time, we and on top of that, we also get a certain pressure on the gross margin as we are taking on more third party products, such as the biomaterials from Votis, for example, or the CATKAM products from Dental Wings.
But I'm also confident there that we can mitigate that by achieving efficiency improvements in our different manufacturing sites.
I think it's also important, Peter, to mention that at EBIT level, these 3rd party products are not dilutive because we sell them through the same existing infrastructure, the same sales force. So we don't have to add actually a lot of incremental OpEx. So at EBIT level, they are even accretive.
Okay. Can I just have a quick follow-up on Latin America? And if you're seeing volumes increasing significantly in the 1st month of this year, then why is your outlook so cautious for organic growth for 2016?
Of course, we don't know what happens during the rest of the year. It's only we are only not even at the end of February. And we've seen again and the Q3 has kind of been a sobering experience for us in Brazil, Q3 of last year. And we are just we remain rather cautious when it comes to anticipating the development for the entire And this, again, for us, extremely important country.
Okay. Thank you very much. Next question comes from Markus Gula, MainFirst Bank. Please go ahead.
Yes, good afternoon and thank you for taking my question. I have just one on your stake in T Plus, which you have impaired due to lower value in use. I understand that T Plus has already a registration in China. So does that impairment mean that you expect some cannibalization between T Plus in China and your cooperation with Antojia? Or why did you impair at stake?
You're very well informed. I'm impressed. You know that T Plus is registered in China, which is correct, yes. However, T Plus, we have other plans with T Plus. So far, we have been talking about the premium segment, and we have been talking about the value segment.
And we have now this has been our focus over the last couple of years to regain market leadership in the premium segment, to reinvigorate the innovation pipeline, to actually reestablish the Straumann brand as the innovation brand in our industry when it comes to premium implants. And we have also put a lot of focus on actually penetrating the value segment. What we haven't done so far yet is actually entering the discount segment. And the discount segment, we should also not neglect. The discount segment is also a rather important part of the industry.
And it's in certain countries, it's a fast growing segment. Now T Plus, we've acquired with the objective to actually leverage T Plus when we have done our homework on premium and value to take the T Plus and actually to use the T Plus brand as an entry into discount segments, especially in the Asia Pacific region. However, we also have to set priorities. We cannot do everything value segment. But as I pointed out before, the pipeline of projects and initiatives is still rather empty.
And obviously, at one point in time, we will also start thinking about how to entering the discount segment. And T Plus is one of the brands we most probably will use to actually go after the discount segment.
Okay. And just a quick follow-up. So but if you didn't change your value on you, so that means something in your underlying assumption changed. So from what I understand, you just postponed the order of your projects since you're focused on premium and value for now. Is that correct?
I don't know how I should put this, but I give you now the true answer. We like light balance sheets.
Okay. Thank you.
Now we pass the 90 minute mark. Before I hand back to Marco for the closing remarks, I would like to take a last question from the Internet. This person wants to know how we avoid cannibalization between Neodent in Europe, maybe active in Spain and Italy and elsewhere and Straumann, the premium brand?
Our objective is not to avoid cannibalization. Our objective in all the markets present with a Straumann outset and an insulin outset is actually to gain market share in the premium and in the value segment. This is our objective. Our objective is not to manage cannibalization. Obviously, what we are doing, we are tracking very closely if there is cannibalization happening between the two brands.
And we monitor that by actually measuring how much of the turnover we generate through InstroDent and then obviously through the Neodem brand, how much of that turnover is actually generated with existing Straumann So we So we are confident now that, for example, in Spain, we have been present with insulin or Neodent for more than 2 years, and this percentage stays more or less stable. So it's low single digit percentages. And on top of that, this is not even full cannibalization. A large part of this business, which is generated with existing Straumann customers, is actually throwing out a second system these customers had in their practice and replacing the second system to nail that. Okay.
So thank you for your questions again. We cannot go into all the details this morning, but you can find most of them in the preprint of our annual report, which is now available on our website. The hard copies will be sent to subscribers in 2 to 3 weeks. Thank you for your questions. And should you have any follow-up questions, please contact our IR team.
At the end of the presentation, we have also included the selection of the responses from our investor perception study, which we conducted in December of last year, and we would like to thank everybody who has participated for the participation. So thank you again for coming and seeing us here in Basel, and we wish you all an enjoyable rest of the day. Thank you.