Straumann Holding AG

Good morning or good afternoon to you all. Thank you for joining this Conference Call about Straumann Group's Full Year Results for 2021.

I very much hope that you, your families, and your colleagues are well. We are meeting online today, but we hope to be able to hold events in person again.

We are continuing to take actions to keep our people safe and are grateful to report that we had very few cases within our global organization in the recent weeks. Please take a note of the disclaimer in our media release and on slide two.

During this conference, we are going to refer to the presentation slides that were published on our website before. As usual the presentation and discussion will include some forward-looking statements.

The conference will follow the usual format. As shown on the agenda on slide three, I will first give you an overview of our group performance.

Then our CFO, Peter Hackel will share details about the business performance across all regions. After that, I'll have an update on strategic initiatives and on our outlook for the future.

Finally, we will both be available to answer your questions at the end of the presentation. Let's start with our highlights and move directly to slide five.

In 2021, while the pandemic was of course still present, dental practices were largely able to keep operating with strong growth which was naturally positive for our businesses. Straumann Group revenue reached just over CHF2 billion in 2021.

This is an outstanding result which was only possible because of our entire team who did a tremendous job of focusing on customer needs and delivering on the high level of demand. Revenue increased organically by 41.7% in 2021 compared to the previous year.

Q4 2021 was our strongest quarter in revenue ever. The group saw sales of CHF540 million and this was up 21.1%.

Premium and value performed very strongly in 2021 being the core of our business, while Orthodontics is making great progress in building its value proposition. In 2021, we achieved a core EBIT margin of 27.4% and operating margin which was inflated by fewer-than-usual travel and marketing expenses during the first half.

Investing in sustainable growth was our focus and it will remain so going forward. Straumann Group impacted 3.7 million smiles in 2021 on our road to achieving 10 million smiles by 2030 fulfilling our purpose to unlock the potential of people smiles.

This is one of our most important goals that we laid out in our evolved business strategy and new sustainability framework at our latest Capital Markets Day in December. One of the main contributors to our 2021 commercial success was the strong performance of our leading region, EMEA, which grew 41.3% organically.

The region accounted for CHF892 million in revenue, thanks to healthy patient growth and a strong performance in Germany, the UK, France, and Spain. Highlights were also the strong growth in Russia, Turkey, as well as a significant growth contribution from our DrSmile business.

In June, we gained market share by improving our volume proposition in the different business areas, growing the existing customer base and winning new customers across all regions. In addition, we expanded our education efforts and geographical reach.

We are very pleased, that our employee engagement score was 80 in 2021. People and culture are key factors for our success, which is reflected in our results.

In order to strengthen this further, we have de-locked a new cultural architecture which we will talk about later. Looking at our guidance for 2022, we see the future positive.

We aim to achieve low double-digit revenue growth, against a strong part of the year. And including investment discipline growth, we expect profitability to be around 26%.

This is in line with our long-term ambition to achieve revenue of CHF5 billion by 2030. Let's move on to slide 6.

The stronger performance in 2021 was driven by all regions each growing at least 40%. When looking at the growth rate, please note that the base here in 2020 was of course heavily impacted by the pandemic.

Overall, patient growth remained healthy around the world in 2021, with a tailwind for specialty dental treatments that supported growth. Our customers kept reporting that they saw patients are prioritizing healthy and specialty treatments over other expenses.

As already mentioned, our EMEA region which is the largest revenue contributor was leading very strongly with organic growth of 41.3%. North America reported full year organic growth of 40%.

And Asia Pacific and Latin America saw organic growth of 40.6% and 56.8%, respectively. Overall, the strongest global performance in 2021 leads to a very solid full year CAGR of 16.3% for the group.

Moving on to slide 7, we now employs just over 9000 people through to the world adding more than 1600 people compared to 2020. Most of the new positions were in production and sales related jobs.

The group invested in largely in pension program that is in present clear aligner manufacturing sites to meet the growing demand. And with this, I will hand over to Peter to provide more details about our business performance.

Thank you, Guillaume, and good morning or afternoon everyone. Looking at slide 9, you can see the revenue development.

At 2021 exchange rates, our full year 2020 revenue would have been CHF20 million lower, mainly because of unfavorable currency effects that were mostly related to the depreciation of the U.S. dollar, the Turkish lira and the Brazilian real.

The favorable development of the Chinese renminbi only partly offset the negative currency effect. However, as you might remember, in previous years currency headwinds were considerably higher.

The acquisition effect in 2021 added CHF21 million to our adjusted revenue base of CHF1.4 billion. This was largely related to DrSmile.

In the middle of the chart, you can see that all our regions reported more than 40% organic growth for the full year. The absolute organic growth of CHF595 million was mainly driven by EMEA and North America which remain our biggest region.

On slide 10, you will see that EMEA accounts for 44% of the group's full year revenue; and North America 29%. In absolute terms, EMEA contributed CHF892 million; and North America CHF591 million revenue.

The variation in the growth per quarter and the huge spike in Q2 in both territories can be ascribed to the pandemic. Starting with EMEA.

In the fourth quarter, the region delivered revenue of CHF244 million with organic growth of 25.8%. Germany, UK, France and Spain were the leading markets.

Russia showed strong growth with BLX performing well and the immediate and free shape into our scanners being launched. In addition, the registration of our digital solution Virtuo Vivo was submitted in the fourth quarter.

Orthodontics grew rapidly across the entire region in 2021, supported by the strong growth of DrSmile. Fourth quarter revenue in North America amounted to CHF151 million with organic growth of 15.1%.

Both the US and Canada posted solid double-digit growth with the latter growing at a higher rate. The performance was driven by our premium implants such as TLX as well as the challenger implant brands with Neodent growing strongly supported by the dental service organization business and the group's full portfolio of intraoral scanners, driving uptake in digital solutions.

On slide 11, you see the quarterly growth for Asia Pacific and Latin America. Asia Pacific accounted for 20% of group revenues and contributed CHF409 million over the full year.

Market share gains were led by China, Japan and Australia. German's premium BLX solution was rolled out in Australia, Japan and South Asia.

In the fourth quarter, total revenue in Asia Pacific contributed with CHF109 million, which is an organic growth of 17%. One of the fourth quarter highlights was the BLX regulatory approval in China.

The Latin America region contributed CHF130 million in 2021, which was up almost 57% compared to the previous year. LATAM is the smallest but fastest growing region with revenue of CHF36 million in the fourth quarter.

The high rate of growth in Q4 can partially be explained by the fact that COVID-19 hit the region later in 2020. All countries in the region enjoyed at least double-digit growth in 2021.

Brazil remains the biggest market and enjoyed strong growth, so other territories in the region grew even faster. Neodent strong presence in its home region is proving to be an asset not only in implantology, but also in orthodontics where high levels of brand recognition are driving customer acquisition.

The strong Virtuo Vivo growth in Brazil and other LATAM countries demonstrate the ongoing digitalization in the region. Turning to slide 12, we can take a look at our performance by business.

Implants sales showed solid growth and once again contributed the largest share of our revenue. The group's premium immediacy solutions continues to be an important growth driver.

You will hear more about this exciting development from Guillaume later. Our challenger implant franchise growth outpaced the premium business.

Neodent continued to show strong growth in North America, while Anthogyr shows fast growth in EMEA. Our digital and restorative business saw high double-digit growth with a particularly impressive contribution from North America.

The trend for digital is continuing and supports our intraoral scanner sales. Our biomaterials business saw particularly high demand in Asia, so all regions grew by double-digits.

Sales in orthodontics grew strongest of all our business segments in the fourth quarter. ClearQuartz and the update software ClearPilot 2.0 drove the growth.

Growth for doctor-led direct-to-consumer clear aligner solutions was higher than the business-to-business channel. On slide 13, you will see the non-core items from 2021 and for comparative reasons also from 2020.

As usual, this includes the amortization of acquisition-related intangible assets, which amounted to CHF 8 million. In the first half year, the estimate of contingent consideration payable to the sellers of DrSmile was increased by CHF 49 million, which is posted below the operating result.

Turning to slide 14, we can take a look at our core financials. Core gross profit rose to CHF 1.54 billion and core EBIT rose to CHF 553 million with the respective margins reaching 76.2% and 27.4% over 2021.

The gross margin improved by 360 basis points, while the EBIT margin gained 450 basis points. The respective assets headwinds took 20 basis points off the gross and 50 basis points off the EBIT margin.

Core net profit increased by more than 74% to reach CHF 456 million and the margin improved by 420 basis points to 22.6%. As a result, basic earnings per share increased from CHF 16.2 to CHF 28.45.

For full clarity, you will find the year-on-year comparison on a reported IFRS basis on slide 15 followed by the core reconciliation table on slide 16. More details can be found in the annual report.

Looking at gross profit development on slide 17. Our gross margin for both core and reported amounted to 76% in 2021.

This improvement was due to the fact that we reached full capacity and gained efficiencies in our operations, which added 360 basis points and brought our margins close to the level achieved in 2019. As a consequence of a change in our portfolio mix, we saw a decrease in our margin of 40 basis points, which was largely overcompensated by productivity improvement.

Without the FX headwind, our margin would have been 20 basis points higher. As shown on slide 18, our FX adjusted core EBIT margin expanded by 450 basis points to 27.4%.

This was mainly due to operational gearing and lower expenses in distribution and administration because of fewer on-site activities such as customer and education events as well as reduced business travel activities, especially for the first half year. Non-government subsidies were requested in 2021, which explains the impact on other income.

Unfavorable currency movements cut the improvement in our margin by 50 basis points. Moving on to slide 19, core net profit improved to almost 23%.

Net financial expenses amounted to CHF22 million, reflecting interest on lease liabilities, interest payments, and currency hedging losses. Results of associates increased by CHF8 million, which was mainly driven by a higher valuation of our stake in an associate following a capital increase.

After income taxes of CHF81 million, net profit increased 75% to CHF456 million, resulting in a margin of just under 23%. Basic core earnings per share increased 76% to CHF28.45.

Slide 20 provides a breakdown of our cash flow statement. Operating cash flow increased almost 50% to CHF560 million, while the free cash flow increased from CHF295 million to CHF441 million.

The group's production expansion, acquisitions, and strategic digital transformation initiatives required investments of CHF175 million, 21% higher than in 2020, mainly driven by CapEx. With a cash position of CHF880 million at the end of 2021, the group is CHF376 million cash positive considering all debt which is more than triple the equivalent figure in 2020.

The group's balance sheet amounted to CHF3 billion versus CHF2.5 billion at the end of 2020. Moving on to slide 21, you can see some of the locations of future investments to expand our business and manufacturing capacity.

The Arlesheim site near Basel will be a new group technology and innovation center. And the China Campus in Shanghai will help us ramp up our capacity in this fast-growing market in the coming years.

To ensure future demand for our solutions can be accommodated, we will construct a new CADCAM and milling facility in Mansfield in the US and increased capacity in other manufacturing sites. Overall, the group made investment decisions of over CHF300 million in 2021 for the coming years.

Moving on to slide 22, the Board is proposing a dividend of CHF6.75 which represents an increase of CHF1 or 17% on the dividend paid out in 2021. This is in line with our aim to keep increasing the absolute dividend amount steadily if business performance allows.

The Board is also proposing a share split of one into 10 shares. As a company, with a strong focus on corporate culture and social responsibility, the group would like to give the opportunity to all private investors and employees to buy shares at a more affordable price.

Both proposals will be voted on at our AGM on the 5th of April, which will once more take place online. And with that, I'll hand back to Guillaume.

Thank you, Peter. Let's move on to Slide 24 straight away.

Our purpose and vision that you see here guides everything. As explained at the Capital Markets Day in December, our purpose is to unlock the potential of people's lives and we envision a world where oral health is a source of confidence.

To achieve this, we consider our company culture our number one priority, and in 2021 we took further steps to sharpen our culture architecture. Moving on to Slide 25, you see our core beliefs.

We know that our culture behind us over the years and brought us to where we are today. In 2021, we evolved our core beliefs to take us to the next level.

Our beliefs drive behavior, behavior drives culture, and we strongly believe culture drives results. These beliefs are what allow every employee to feel empowered to tackle any challenge and opportunity to make.

We are convinced that keeping our culture sharp will be the key potential we achieve on CHF 5 billion in revenue ambition by 2030. On Slide 26, you see the results of our employee survey.

With our employee high employee engagement score of 80, we belong to the top 25% of companies globally. This score is one of the few metrics consistently associated with business success and I'm convinced this high result is reflected in our strong financial performance.

74% of our employees told us they have good opportunities to learn and grow, which was up from 69% the previous year, despite COVID-19 challenges and of home office working. Another important metric is that today 40% of leadership positions are held by female, which is up from 35% in 2020.

And we committed to 50% of leadership positions held by female by 2026. Slide 27 shows our mission and evolved strategy compass, which had customer-centricity at its heart, meaning we are always thinking about how to make clinicians and patient's lives easier.

Executing on this strategy will make sure we fulfill our mission with the most customer-focused and innovative oral care company in the world. We estimate that in 2021, our market share in implantology rose from 27% to 29% globally and we aim to further expand our leadership in our core business.

Orthodontics showed high double-digit growth in 2021, remaining an exciting growth story for us. While we will keep growing our core businesses, we invest in shrewd trends which you can see on the right side of the compass.

Answering trends of consolidation, we focus on winning strategic target groups which mainly includes dental service organizations, DSOs and group purchasing organization. We will achieve this by being a strong and reliable business partner, offering customized services and solutions beyond products to help them achieve their own objectives -- very important and support our future products.

Let's turn to slide 28. Looking at our core business implantology we grew strongly in 2021, making progress especially in the United States .

Innovation in our premium brand was driving market share gains. With BLX and TLX, we further penetrated the immediate segment.

TLX was globally launched at ITI symposium in September and is already available in many countries, while the BLX implant, which has been launched more than two years ago it's still in its expansion phase. Key highlights were the launch of BLX Russia in the fourth quarter and the regulatory approval we received in China in December.

There’s still significant opportunity to grow in the premium implant market. The dark blue on the right-hand side shows strong performance.

The brand has a big share in traditional parallel walled, but the full year in Apically tapered insulin market, which represents 80% of all implants still presents a huge potential for our business and therefore we have plenty of space. Slide 29 shows our multiple challenger brands, which we offer in the value segment.

They all grew strongly in 2021 as our unique multi-brand strategy allowed us to cover all price points and expand geographically. On the right side of this slide, you see that we made 24 million value implants annually.

So even after our good growth as in the past few years, the group still has a big potential. Moving on to slide 30.

Our strategy in digital solutions is to offer clinicians frictionless workflows that integrate with the group's products and solutions. In 2021, we continue to focus on intraoral scanners because they represent the entry points and generate additional clinical efficiency.

We relaunched Virtuo Vivo and introduced Medit further focusing on the connectivity of all our scanners. With our range of offering, we now have a portfolio that covers all price points, which were the driver for revenue in digital solutions.

While the clinicians invest in this equipment it makes the workflow more efficient and offer the patient a much more convenient experience. On slide 31, you can see how we improved our orthodontics value proposition.

We significantly invested in new software development in 2020 where new features are now available in order to increase treatment capabilities. On top of that, our scanners now integrate with our orthodontic software, driving convenience and efficiency at the clinician side.

The adoption was fast and led to close to 90% of case starts are now submitted digitally by clinicians. Other endpoint innovations were the launch of the new clear liner material ClearPilot in most geographies, allowing to pose more positively thanks to the three-layer technology.

In order to further advance our support for clinicians and strengthen our educational offer, we also rolled out the Ortho Campus in October 2021. It is a comprehensive collection of tools and curricula for professionals to ensure treatment success.

With our geographic expansion continuing, our orthodontic solutions are available now in 46 countries and we have pre-manufacturing sites across three continents. Slide 32, shows how we are accelerating on our strategic urge to build our consumer presence due to the trend I described before.

Consumers take ownership of treatment decisions. That's why we want to make sure that we are present at the moment when customers are taking their decisions within their oral treatment.

We aim to do so by raising awareness of our brands and their related solutions with health care consumer, with the ultimate goal to drive customers to clinicians. We first updated this model in our Clear aligner business via DrSmile and then by acquiring Smile in LatAm in August 2020 -- 2021.

DrSmile is now present in 10 countries having entered six further ones during this year. Moving on to Slide 33.

We are also developing the consumer presence in implantology to further expand the market. In January, we finalized the acquisition of Nihon Implant in Japan a concierge service that connects patients with clinicians and refers patients or interim treatment efficiency clinics.

The clinician benefits from a customer acquisition, which reduces marketing activity. This business was enhancing awareness for implant treatment and drive customers to clinicians.

On Slide 34, you see our sustainability commitments related to our sustainability strategy. Sustainability is a business priority and will ensure our future growth as we are convinced financial success can only be achieved in a sustainable way.

We have expanded the scope and coverage of our reporting of the ESG metrics that we have in the annual report and I would encourage you to go to Page 39 to read more. And with this let's move to our outlook directly to Slide 36.

We think 2021 was an exceptional year in many ways and we are very pleased with the reasons. In June, let me say, that for the moment fortunately COVID-19 is not affecting our operations significantly.

We read report from some customers in Q4 that they had to deal with ongoing shortages, which translated into shortening working time. However, in 2022 patient flow is now expected to be significantly -- not significantly impacted by the pandemic should the situation remains stable.

The group will seek to anticipate and mitigate supply chain disruption inflationary and geopolitical developments and the potential impact on consumer behaviors as well as implications for treatment pricing. With our strategy and hype to maintain in place organic revenue growth is expected in the low double-digit centric range versus a strong part of the year.

Profitability is expected to be around 26% including major growth investments. And with this I would like to open the question-and-answer session.

. Can we have the first question please?

To take my questions, I have 2 please. The first on the margins on the investment side you touched on this a little bit, but I'm just curious could you give a little bit more color in terms of the key investment areas that you're looking to spend money on the OpEx side on in '22.

I appreciate large CapEx outlays on China campus and things like that. But just curious is it sales and marketing?

Is it more digital spend on DrSmile? Just any little extra color you could give around there would be very helpful?

And then second question I think a lot of people are wondering the health how you see it as the US consumer and what you guys are seeing in let's say January February trading so far. There was a lot of stimulus money that was given out last year.

Do you think the lack of that and the squeeze on some consumers is going to have any kind of effect on the business, or do you feel that you can keep growing nicely in that environment? And are you seeing any sort of let's say initial data out of January or February that would give you some insight into how you think the US consumer is looking at the moment?

Thank you.

Thank you, Patrick. Yes, I think from an investment standpoint as you have seen on our strategic compass, we have to perform on the left side which is really focusing on our key core part of our business implant and ortho.

And the right side is a lot about the transforming our organization and obviously driving capability to perform in a new environment. Then we have four major areas where we are going to invest in 2022.

The first one is to keep the lead in our core business about innovation and marketing spending. We have superior solutions.

We strongly believe both on premium and on challenger together with ortho and we want to make sure that now practitioner and clinicians are going to be exposed with much more than it has been the case in the past 18 months that were constrained by the COVID-19 crisis. The second one is about driving digital transformation.

We know that AI VR and all those first words are still fight out there, but we see a lot of direct applications. And we are also going to push significantly digital investments in the years to come and 2020 will be one of the first one.

The third area is developing our health consumer presence. We are doing that with DrSmile.

You have seen our move in Japan to try to support the increased market penetration of implant. And we believe this is also an area where we need to do more and this is where we are going to do some significant investments.

And last but not least operations and CapEx as you said the other common companies in China, but also some further development in Arlesheim in Switzerland with CHF 18 million and we have some investment that we want to do in this area. And that's the four major dimensions of investments that we are planning for 2022, preparing our growth for the future.

When it comes to US consumer trends, I think what we have seen so far for the starting weeks in 2022 which I can say positive, we have not seen a major inflection point on patient traffic or patient demand which has been really positive so far.

Very clear. Thank you for the answers.

Thank you, operator. Good morning, Guillaume and Peter.

Thanks for the presentation. I also have two questions.

First, coming back to North America. I mean in Q4, there was just if you look at comp adjusted quite a bit of a slowdown versus on a sequential basis to Q3.

Could you maybe discuss a bit more kind of what led to that? Was it basically equipment sales at the end of the quarter?

And maybe also just on whether you had seen any impact from Omicron also that would explain it's just something that kind of we observed. So that will be on the North American.

And the second question is, just on the phasing of the growth in '22 and also on the margin profile. Is there anything in particular that you want to convey to us, or should we just assume a fairly linear level of kind of growth rate, or is there anything in particular that we should be aware of?

Thanks.

Thanks, Christoph. Then we have to answer your question on North America.

I think, we have seen some -- one-off event in North America in Q4. We had, yes in the last two weeks of December some Omnicom impact that then close some of the practices.

We have also initiated some major contracts that had an impact on the end of the year that we will not see moving forward. Then it's a combination of some one-off events that have impacted with a couple of points at the North American goals, but we are very confident that North American will remain very dynamic in the quarters to come.

On the phasing side, there is no specific so far phasing expected from our side. We see '22 going back to a more normal mode or at least we hope so.

With then spending that would be in line with pre COVID time from a marketing travel and all kinds of sales and marketing activities that we had in 2019 as an example. And so far, we expect a more regular growth, than what we have seen in the past two years.

Thank you. I appreciate your comments.

Thanks, guys. A couple of questions.

Firstly, on clear aligners, I just wondered where you finished the year at in terms of revenues and what the growth was for the year. And it would be great to get your thoughts into 2022.

And then second, you pulled out some supply chain potential headwinds. I'm assuming that's more on the chip side and the intraoral scanners, but I just wanted to get your latest thoughts on that supply chain headwinds please?

Thank you, David. When it comes to then the ortho business, I think the ortho business grew very significantly in 2021.

We have been very pleased by reaching a very significant also three-digit number, three-digit numbers. We are not disclosing exactly what we are doing.

But when we said we can help you to evaluate this by saying that it has reached already a double-digit percentage of our total topline and that would give you already a very good idea of where we stand. And we're really pleased with strong growth on both B2B and B2C which is also very exciting on our side because we are benefiting from the two business segments.

And we expect the same in 2022, a very versed dynamic growth because we are really putting together a lot of investment for getting our value proposition at the right number and we hope by the end of 2022 being able also to target the very interesting orthodontics specialty segment where we are still not active in. But when it comes to supply chain on oral scanner, yes, I think especially for Vivo, there have been some -- I would say some career on some specific components chips, but also a lot of different components that you could not imagine the remaining into scanner manufacturing.

Then so far so good. The team has been very, very agile.

Our procurement team has done an incredible job to be able to finance. And we are -- we did not have any disruption of our supply chain.

And we expect now the most difficult period is behind us and we are pretty confident also for the year to come and especially now having also much more Vivo being sold than 2021 where it has been -- it's relaunched during the second half.

Great. Thank you.

Hi good morning Gui, good morning Peter. Thanks for taking my questions.

The first one would relate to what you have seen on the gross margin front because I said in your annual report at the very end that you give the details of gross margin by business. And what was interesting in 2021 versus 2020 is that apparently the gross margin went up fairly significantly for both premium implants and ClearLiner, while actually it was flat to declining to slightly declining in value implants.

So, could you maybe just help us understand what's driving this and whether you have led an unusual investment way for growing your share in value implant. So.

that would be of interest to understand what is the trajectory for margin for all these businesses. And then the second question relates to sales development by region.

You have indicated that for the group you expect low double-digit growth. Should we expect some sort of diverging trends by region?

Is there one region where you expect particular because of a specific product launch or particular strength across your businesses, or should it be again a relatively homogeneous growth across every region?

Okay. Thank you, Julien for the question.

When it comes to gross margin on the different businesses, what we have to say on premium, the premium growth has been incredible and our growth is only for some cost improvement measures that our operation and marketing team are putting together, but also by the maximization of our core capacity. And I think we have been really maximizing our different sites.

And then obviously, then our gross margin has been by consequence improving significantly. When it comes to ClearLiner, it's a lot of work done on the cost improvement.

You know that this is still, I would say, a new business for us in many ways. So we have a lot of new sites.

And with volume coming up, we are having less and less idle capacity, but especially also being able to improve a lot of processes. And that's one of the reasons that it improved significantly as well.

And on the challenger implant as 2020 has been already very strong, when it comes to our challenger side, and we have just been at the same level of maximization of our manufacturing capabilities. And that's why we have seen not so much improvement here.

But we are also doing and we have done significant CapEx on this side to increase our volume. And that would explain a little bit the difference in between the free gross margin that you have seen in our annual report.

And for the second question, yeah, we are – that's the good side of our strategy right now. We expect some strong growth coming from all regions.

We think that all regions have some very significant opportunities in front of them. And we believe obviously that potentially Asia Pacific and North America should comp more dynamic than Europe, and with the pre-COVID phase, but we still see double-digits that we will achieve in all the different regions in 2022.

Yeah. Hello.

The first question is on Germany and France, thanks that – they are not affected in 2020, so I'm astonished by that. Can you explain what were the key drivers in Germany, especially I guess across the board or any particular strength in Germany?

And the second one is for the aligner business, I'm sure you have heard Envista speaking about their Spark clear aligner last week. They do follow this followership model including DSOs.

So the recipe of Envista clearly that they have the on-core business with conventional brackets plus aligns, so they can cover the whole need of an orthodontist or GP. Isn't that kind of a disadvantage right now for you, or how do you see that?

Thanks.

Yeah. Thank you, Daniel.

When it comes to Germany then there are two very good reasons for significant growth. The first one it's the team has really good focus on new customer acquisition, when it comes to our B2B business.

And we have seen some significant market share gain on the core implant business, especially in 2021. And the second one also planning is very large absolute value number increase is the DrSmile effect which is also included within Germany.

When it comes to the ortho side and part, I don't think or we don't see not adding a traditional way of treating ortho versus in bracket as a disadvantage for us to be successful in clear aligner, but obviously making sure that we can address the orthodontics segment, the Specialty segment is very important one, which we are not doing yet not because of not having braces and brackets, but just because our indication coverage is still short of the complex treatment that should come in the second half of the year. I think one of the best examples is Align, which is not having any braces and brackets, which is having a huge leadership in GP or the specialist treatment segment.

Then all-in-all, it's more about investing significantly in our capacity on the software capability of clinicians and making sure this can relate this target to also be on our capability to grow there. Q Yes, great.

Thanks so much.

Good morning from my side. First question is on your guidance of low double-digit organic growth.

So could you share with us some of your underlying assumptions in particular for the premium dental market? Also your view how challenger will outperform compared to premium as well as you commented on the clear aligner margins is 20% growth you see for market.

So which kind of outperformance you have factored in for your respective segments? That's number one.

Number two is on the orthodontics business in the US. So could you give us a comment how the dynamic in the US compares to the overall US orthodontics market whether you see on the back of lack of B2B offering some competitive disadvantages when it comes to growth versus the market please?

Yes. When it comes to guidance, we are seeing dental the future very positively.

I think we see also supported by interesting first weeks of 2022 we are thinking that our low double-digit growth is a realistic scenario for the time being based on what we know. There are two uncertainties: one that would bring some upside and one that it brings a downside.

We don't know how much in this inflationary environment how much the patient tailwind or proportion to visit more ortho practices than pre-COVID will continue. If this very strong patient flow continues and we will have obviously an upside versus what we are doing.

At the same time, we know that COVID-19 is not completely gone. We know that the crisis is coming back always by the end of summer and early fall.

We have seen that already two years in a row. We were thinking that it was gone by summer 2021 and we have seen that coming back in the fourth quarter of this year.

And depending what kind of virus it could impact also significantly the activity. Then facing those two uncertainties that's why we are planning for low double-digit growth, but we see potential also upside based on a strong patient flow.

When it comes to premium, challenger and all franchises are going to drive a very significant increase. Premium thanks again to its innovation and its immediacy segment, we have seen that we are still major share gain to achieve.

We are almost at elsewhere versus our initial objective to gain 25% market share of those apically tapered after two years, because we believe we are now around 15% to 17% based on the market estimation of this fully tapered premium market. Challenger is very well supported in all regions.

Now with North America is the number one market for Neodent supported by very strong DSO growth, but also a regular practitioner growth and we're seeing that in Europe as well. And ClearCorrect will continue its strong growth path.

When it comes to our competitive situation in North America, both in North America and in other regions, we are at a disadvantage by not being able to address complex cases when you look at our competitors. That's why we are focusing very significantly today on general practitioners that are doing simple to moderate cases and also on the B2C segment.

But we believe that very soon during the , our technology will be able to address those more complex cases and we will start to be able to enter this orthodontics treatment.

Okay. Thank you.

One follow-up, do you see it more as a competitive advantage not being in B2C in the US or as that you don't have this more complex offerings right now?

No, we think -- well we have seen and we said that a couple of times B2C -- the B2C US, the competition intensity was way to high to deliver any promise of a regional investment and decent profitability. We have seen that with all the major players on this field that are realigning their strategy actually much more in line with what we had with DrSmile first because we believe that we need to have a clinician overseen treatment at -- on one hand and also because this is supporting a more blended customer acquisition cost, which is supporting better profitability on the second hand.

And we don't think that any yet no purely direct-to-consumer activity in the US is a handicap. Now again, not creating more complex treatment is definitely one and this is why a lot of our investments are going into our software development on the orthodontics side.

Great. Very much helpful.

Thank you very much.

Hello. Just a question on competition whether you're seeing any signs of increased focus from your competitors, particularly in the US.

I think it's been pretty remarkable over the last few years how Envista and Dentsply has just seemingly mismanaged their implant businesses, and just whether you're seeing any signs of that turning around? And then any commentary on Turkey and the hyperinflation there?

I'm just curious what -- roughly what percent of your business is in Turkey and how does that factor into your guidance? Thanks.

Well, when it comes to competition, we are usually not commenting competitive moves. We are not seeing a lot of significant activity at least when it comes to the core business on the implant side, more specifically in North America than in other regions.

We are really focusing on our differentiation and our unique value proposition, especially on immediacy, which is very critical in North America. I think this is a market where immediacy treatments are the most performed.

This is the market where this area in implantology is growing the fastest and for us is really full speed in North America on the immediacy segment. And yes, we see a lot of significant successes on the marketplace and believe that our competitors commenting also on what they see from their own perspective.

Well, the second question is about Turkey and hyperinflation. Yes, I think this is obviously one of the challenges that we have to face in this part of the world.

And we are a very flexible team here. We are revisiting our list price on a daily basis, obviously, and we are also then invoicing, potentially asking more and more in U.S.

dollars when it comes to the one that could afford this. Then for the time being we see still a healthy situation in Turkey, thanks to our value proposition, because we are able to address different price points.

And as you may recall, we have launched Nuvo which is developing well in some geographies. We are very selectively launching it for the time being.

Turkey is one of the highest seller of Nuvo, which is our lower priced implant, but still delivering really a good quality. And having that different brands and having that different price points are really supporting us to be able to pay any kind of tricky or challenging situations that could present to us so far.

Great. Thank you.

And just in terms of the size of Turkey?

For us, Turkey a significant market in Europe. But if you look at our total top line, it's low single digits here.

And its --

Okay.

-- not so much significant if we look an impact.

Okay. Thank you.

Thank you very much. I also have two questions, please.

The first one is on China, the VBP tendering program. There's been news that this could be further expanded into dental implants later this year.

Just wondering what your view is on the situation and whether that could cause a bit of a risk to your business later on and how you plan to position yourself for that. And then the second one is on your acquisition in Japan.

And my question is, whether you could potentially expand this service to clear aligners, not just dental implants. And then also, whether this model could be rolled out in other Asian markets as well, or if that's just a very Japan-specific business model.

Thank you.

Yes. Thank you, Falko.

Indeed the VBP is potentially planned in China and the VBP for everyone is that Volume-Based Procurement approach that the Chinese government put in place in some drugs some years ago and in medical devices as well. as an example.

Then we have been informed that this should happen during 2022. It's not clear yet when and it's not clear yet how it's going to be implemented.

You have the possibility to have different categories for the DDP or everything into the same bag. And it's still not yet precise enough in order for us to have a clear view on how we are going to play it.

But there are one important advantage that we have is that we are playing once again here with four different brands and four different price points. We have Straumann.

We have , but we have also locally manufactured T-Plus in Taiwan. And we have a distribution agreement with a Korean company called Warantec that we have started to distribute at the end of -- some months on.

And on this one we are able to adapt to any situation we are going to see which we see is a major advantage. Now when you look at our total sales on the hospital or the Chinese hospital because that's where the CDCs about.

It's -- I would say it's a low double-digit number versus the total Chinese sales – China sales. And where it will be coming it will have some impact like slowing down some growth percentage.

But I don't think that it would have a major, major impact that we will see on a global perspective. Now this is just assumptions because we need to see what is exactly going to be the rules of the BBB which is going to be presented in the events to come.

When it comes to then the Nihon concierge service. First we want to drive the success of Nihon in Japan because they have been rather successful.

It's a new approach to make sure that we can continue to expand implant treatment in Japan supporting customers or patients to find the right clinicians. And if this proves to be -- then developed in other geographies yes, we would consider this opportunity in the other Asian market as an example, but also potentially in other geographies.

We see that the opportunity is very significant. And this is still our continued learning about building our presence directly to help consumer.

And as soon as we believe some of the business models are expandable then we would be taking this decision.

Okay. Thank you.

And can you just briefly remind us on the share of China as a percent of your group sales at the moment?

We have -- China reached CHF 243 million this year and it is a little bit lower yes, 11%.

Perfect. Thank you very much.

Good day. Thank you for taking my questions.

I have two as well. Guillaume, you have been talking about patient traffic, which was extraordinarily strong in 2021.

And I understand it's very difficult to have the visibility of what was extraordinary due to the stimulus packages and everything. But do you have any anecdote or feedback from dentists that come back to you and say like x percent has come in because they had this excess cash or anything to get a bit of a feeling of how big that could be?

And the second question Peter, I understand we're not going to guide for 2023. We're far from it.

But your guidance for 2022 on the EBIT side is taking into account quite a step-up in investment and that's what you have flagged to the market. But shall we see this as a new level and therefore, we're going to – then we're going to see steady improvements from 2026 onwards, or is it more like it's a one-time investment we should be well above 27% again in 2023?

So no numbers attached rates, I was just want to understand a bit how shall we think about margins in the long run, up down moderately up, or if there's anything you could share with us that would be very helpful.

Yes. Thank you, Maja.

I think coming back to your question on the dynamic patient flow and how we are seeing that for 2022, yes, what I think we can say is that the 2021 second half has not been supported by the stimulus package, especially as we have seen in the US as an example, because most still on the absolute value of our growth came from the input side. And if you look at the stimulus package that has been given it does not give you the affordability for implant treatment in the US.

The price of dentistry in the US when it comes to implant treatment is very high. For patient an implant plus crown would be above $4000 then it's way beyond what the stimulus package has been able to deliver to individuals.

And it's much more the fact that consumer has been I would say less considering alternative spending like restaurants, holiday, trekking and so on and so forth that we have seen in different geographies. That will come back in 2022.

And we have seen that a little bit in direct-to-consumer in May, June in 2021, when especially the younger generation just decided to invest much more early days than on peer either from a direct-to-consumer treatment. And this year we believe that this should remain strong.

But once again that's what we kind of plan. How much of those the extra priority that was given to a healthcare industry, especially dental care, which still be given in 2022, this remains to be seen although, the first impact on dentist are rather optimistic and positive for 2020 at least in the coming months.

And on your second question, Maja, thank you for that. Let me first share some thoughts around the FX impact on the margin.

If we compare the margin 2021 with 2019, we are slightly above 2019, 30 basis points. But already during last year, we said that we don't consider that at a sustainable level because especially in the first half 2021 we had rather low business activities, low customer education events, only few travels, and in the second half the margin in 2021 is more in line with the guidance that we have provided for 2022, if you compare these two half years.

Second, if you compare that with 2019, if I would recalculate the 2019 margin with two days exchange rates then it would be 25%. So you see with our guidance 2022, we have a significant margin expansion FX exhausted despite the investments that we have foreseen versus 2019.

And also in 2022, I expect a slight FX headwind of around -- given the current FX rate level of around 40 to 50 basis points, just to put that in perspective. Now focusing on 2023, then I would say our guidance 2022 is fully in line with our ambition 2030 to reach CHF 5 billion.

And we guided there or we indicated there margin range between 25% and 30%. So you see 2022 is at the lower end of that range and that is absolutely not excluding that we see further margin increases in later years again.

Yes. Thank you very much for taking my two questions.

The first one would be on Envista and their N1. I mean they received a few weeks ago now finally in the US also the 510k clearance while in the last one to two years it was pretty quiet on that product.

Do you have any more insights now on how this whole new system how they call it compares to your BLX and TLX? Does that in any way affect your market share gain story there?

I would assume not, but maybe you can share a little bit more light on that. And then, the second question on your CMD.

You said that you started with some quite meaningful price increases this year in January 2022. How is that accepted by the market?

Is there even more to come, or do you -- would you expect that higher input costs are a factor that is also a drag for 2022 margins? Thank you very much.

Yes. Well, Daniel when it comes to N1 again, we will leave and start commenting on how they see the perspective.

But what we believe is that N1 is -- this is clearly not the case. It's not in line with what BLX would be doing, because it's not as versatile as what BLX can do.

It's all an implant for the where TLX is really a global fully-tapered solution that could be used in most of the cases in the field. We don't believe that N1 will decrease our capability to continue gaining market share on the IMS segment even though we expect very much and we start capacity to development solution for clinician.

Now we are also very much confident on our technology, its superior capabilities in terms of clinical results, thanks to the material which is unique which is solid, which nobody is adding on the market. And our implant design, which is really developing new capabilities and pushing boundary on the clinician side.

Our connection which is also very unique and providing ease of use from a prosthetic standpoint and also obviously the phase of SLR team which is also unique and facilitating most integrations. And you see we don't want to enter in much detail the clinical characteristics of BLX is really on another level from what is available today in the marketplace from our perspective and with the clinical evidence also demonstrating this.

When it comes to price increase yes, we have actually never stopped to do price increases. We have done this also in the previous year and we are planning on price increase in all geographies.

Therefore, we don't think that the inflation so far will impact gross margin. But obviously, it remains to be seen what will be the inflation in 2022 and if additional price increases would be needed during the year.

So far, we have not planned any additional one. But from an agility standpoint, I think we have proven that we can react as soon as we see that there is a need also to make sure we can compensate some of these interesting inflation rising cost on our side by also passing a part to the customers and the consumers.

Thank you very much. Very helpful and thanks for your messages.

Have a lovely day.

Hi, good morning and thank you for squeezing me in. Just I know a lot of people have asked about the consumer in North America.

But if I look at your business obviously one of the other sort of big drivers of growth has been really strong performance in some emerging markets including China, which is quite significant. So I'm just curious if you can comment on what you are seeing in China in terms of consumer demand and then maybe also just give us a where you are with the clear aligner approval there and how you're thinking about the BLX opportunity.

So just some of the moving parts for China as we transition to 2022 would be quite helpful. And then I have a follow-up after that, if that's all right?

Yes. Thank you, Veronika.

While the consumer demand in China so far, we have not seen major changes I know that when you look at the overall industry, it's not the case. There have been some slowdown in some areas.

As I think this is linked to the fact that implantology is still at the very early stage in China then there are still an amazing need for treating patients. And obviously it will potentially support more challenger solutions and premium solutions such as the premium like the Straumann brand.

But as we are very much present with four different brands covering all price points, we believe that we can still answer the consumer demand in China in a very healthy way. Then when the market will be more penetrated, I think we might see some of it.

But I would say so far so good on the implant side. PD is going to be a very strong differentiator.

There is also a premium segment in China which is expecting the same quality of treatment the immediacy treatment. And this is why BLX is an excellent news for us to keep drilling the brand reputation of Straumann in China our innovation capability and demonstrate that we are the most innovative company in our field, which is very important with again the brand in China as brands are a huge part of this market.

Therefore, yes it's going to be another very interesting move for us and help us to keep our leadership on the premium side. When it comes to clear aligner then we just missed one green light that we are seeking and we hope to have that by Q1.

We were expecting that in December, but there have been some clinical activities that needed to be finalized or at least some couple of them that we need to refocus on then some additional activities that we need to get that completion that we hope -- to do our ClearCorrect launch with treatment learning and manufacturing hold on in China directly.

That's very helpful. Guillaume I guess -- so would you expect China growth faster in 2022 than it did in 2021 or slower?

I guess, what's your best guess at this point in time around the growth outlook there?

That’s -- I would say is a challenging gesture because it will depend on the GDP that we discussed before. If you have the GDP which is going to be in place and China will go in a slower manner than in 2021.

If the GDP is going to be implemented only by the end of the year, or we're having almost very limited impact in 2022 then we can grow faster than what we have done in 2021. And I would say the GDP will be the one that will make the balance on the left or the right side.

I got it. Thank you.

And then very quickly on clear aligners, I appreciate you don't want to tell us what the revenues are but I'm going to push you a little bit on what your expectations are for growth. I think Align has stood up and as you know their guidance is for 20% to 30% growth.

They can still do that in 2022. I'm just curious, what your ambition is.

And as we think about that low double-digit growth, for the group as a whole kind of how much of that is being driven by the clear aligner business, if you can give us a bit of a bridge to that? Thank you.

I think we -- what we can say is that, coming from a much lower base than our growth on the clear aligner side will be much stronger than the 20% 30% area.

Got it. Thank you so much.

Thank you. All my questions have been asked.

Thank you.

Thank you, Christoph. Okay, then.

Thanks to all for your questions and for joining us today. If you need further information, you will probably find it in our annual report, which is published online.

And of course, you are welcome to contact our colleagues in Investor Relations and Corporate Communications. That concludes our conference and we are looking forward to meeting you, at one of our upcoming financial conferences hopefully in person or during our roadshow meetings, which are outlined on Slide.