Coltene Aktie

Dear investors, we welcome you to the COLTENE Media and Financial Analyst Conference for the half year 2026. My name is Dominik Arnold, CEO of COLTENE. With me today is Markus Abderhalden, the CFO of COLTENE.

Please note the safe harbor statement, as always. When we come to the agenda for this call today, I will start with the key highlights for this first half year. Then I will hand over to Markus for a deeper view on the financials. I will then conclude the presentation with some key learnings as well as the outlook before opening for you to ask questions and for us to answer.

We, at COLTENE, see the first half year as a solid performance, but not exactly to our expected target. We achieved roughly the market growth, so we didn't lose significant share, but we also didn't gain shares, which is clearly our long-term goal. Profitability, while not yet at expected level, clearly improved in sequential quarters.

We move into the second half year with more tailwind and confidence as last year and the reasons for us are the following: our EBIT improved in quarter 2 significantly. We kept our cost and our net working capital in an inflationary environment under good control. We start to see encouraging results from our investment in digital marketing and more and more revenue starting to be generated by new launch products and workload solutions, in particular, starting with the infection control business.

Organizationally, we are in the middle of some key changes, mainly in the marketing and sales organizations to really drive customer and market orientation and ultimately help us on the profitable growth.

Now I'm handing over to Markus for a deep dive on our financial performance.

Thank you, Dominik. Dear investors, dear ladies and gentlemen, I also welcome you to today's media conference. I'm pleased to present you the financial performance of the first semester 2026 of the COLTENE Group, which can be summarized as follows. In a challenging market environment, COLTENE slightly increased net sales by 0.8% in local currency, achieved an operating margin of 5.1%, suffering from a lower gross margin. And last but not least, substantially improved the free cash flow to CHF 4.8 million, thanks to a better financial result and a further optimized net working capital. With that, the financial performance, as we already heard from Dominik of the first half year was not fully satisfying, but shows positive signs for the second half of the year at the same time.

Let me begin with an overview of the income statement. Net sales reached CHF 112.8 million. This represents a slight increase in local currency, but a decline by 4.4% in the reporting currency, especially the U.S. dollar, but also the euro and Canadian dollar further weakened against the Swiss franc and as a consequence, negatively impacted sales by 5.2%. The EBIT amounted to CHF 5.8 million, represents a margin of 5.1%, which is 1.3 percentage points lower compared to last year.

More details on the performance will follow on the next page. Starting from the top, let's have a look into the sales development of the different product areas. On the left side, you see the share of the 3 product areas with only minor changes. Treatment auxiliaries is with 39%, still the biggest product area, followed by the Infection Control with 34% and Dental Preservation with 26%. On the right side, you see the development of the 3 different businesses.

Important to know, while the bars show the absolute amount of net sales in the reporting currency, the growth rates are indicated in local currency. In Infection Control, we could further gain market share, mainly thanks to the recent launches in the U.S. and Canada of a new HYDRIM instrument washer and products from the OPTIM family within the surface disinfection area.

The Dental Preservation business unit declined by 1% in local currency. Product launches such as the CalciSeal root canal sealer were positively received and the OGSF file sequence continued to deliver above-average growth. But the business unit was affected by a destocking of a major distributor in the U.S. Treatment auxiliaries was also affected by this inventory reduction and recorded a decline of 1.5% in local currencies.

Now we changed the view from product areas to the regions. North America remains the largest region, but slightly decreased its share from 48.3% to 46.4%, mainly as a consequence of a decline by 8.3% in the reporting currency. However, in local currency, the region was with minus 0.3% at the prior year's level. A change in the supply chain by one of our customers led to a slight shift of sales from the North America to the EMEA region. But more important, the positive effects from Infection Control were unfortunately offset by substantial destocking within the consumables of one of our major dealers in the region. For that reason, the second half of the year is expected to be improved again.

EMEA, the second largest region, strongly increased by 6.8% and with that, outperformed the market growth, especially in the DACH and Benelux countries. Further to be noticed is a slight growth in the region, Middle East despite the geopolitical development. Asia's share declined to 10%, with sales down by 7.3% in local currency due to a challenging market situation in China and the timing effect for individual large orders in Japan.

India, by contrast, showed a strong development. Latin America recorded a sales decline of 9.9% in local currency with a share of group sales at 5.5%. In individual markets, political uncertainties at the beginning of the year led to order delays, which are expected to be recovered in the second half of the year.

With this slide, I would like to show you the development of our operating results from the first half of 2025 to 2026. Hence, the starting point is 2025, where we achieved an EBIT of CHF 7.5 million. The volume effect is mainly driven by the stronger Swiss franc as we have seen before. The gross margin decreased from 66.4% to 65% due to the following reasons. Firstly, the effect from the unfavorable exchange rate development and especially the weakening of the U.S. dollar but also euro against the Swiss franc. Secondly, due to a temporarily unfavorable product mix. And last but not least, the higher energy prices caused by the Middle East conflict partly -- led to partly higher material and logistic costs.

Countermeasures have been implemented so that we expect this effect to be compensated in the near future. The personnel expenses benefited from the foreign exchange development as well, but also from a further cost reduction program, which resulted in 26 lower FTEs on average. With that, we were able to more than offset the inflation-based salary increases.

And finally, also the other operating expenses benefited from foreign exchange development, but also from additional cost savings. The financial result in the reporting period amounted to a minus of CHF 0.6 million and were significantly better than the previous year. While the interest expenses were stable, the losses from foreign exchange rates significantly improved by CHF 1.3 million compared to the prior year period. The tax rate was 20.7%, down from 24.1% in the first half of 2025 and benefited from lower sales in countries with higher tax rates and a one-off tax refund from 2 subsidiaries.

With the expected development in the second half of the year, we expect the tax rate to be in our target range of around 22% to 24%. As a result, the net profit amounted to CHF 4.1 million compared to CHF 4.3 million in the previous period and represents the same -- and represents a net profit margin of 3.6%. Cash balance temporarily increased by 29% and will be used to substantially reduce the financial debt in the second half of the year. Thanks to our operational excellence, the stock level further reduced by 5.4% or to CHF 54.4 million. Net debt increased due to the payout of the dividend in April.

The shareholders' equity of COLTENE Group as of June 30, 2026, amounted to CHF 93 million. The equity ratio dropped from 51% to 49.4%, mainly due to the increased balance sheet as a consequence of the temporarily high cash balance. The total assets of the group are stable at CHF 190 million. As a result, the balance sheet of COLTENE Group continues to be extremely sound and provides room for organic growth.

The operating cash flow for the reporting period substantially increased and reached CHF 7.6 million, primarily driven by an improved net working capital. The cash flow from investing activities is above prior year, driven by higher investments in property, plant and equipment, but still kept below our target range of around 4% of net sales. As a result, the COLTENE Group achieved a free cash flow of CHF 4.8 million. Cash flow from financing activities was CHF 1 million, heavily impacted by the payout of the dividend of CHF 11.9 million and the increase of financial debt of CHF 13 million.

With that, I'm at the end of my comments to the financial performance and hand over again to our CEO, Dominik.

Thank you, Markus. Our strategic direction remains to preserve the natural teeth. This connects us at the hip with the dentists and the patients alike. We have further fine-tuned over the last year the message and the value we create in our 3 distinct segments. These segments, which all serve via dealers have all a distinct value proposition to dentists and an opportunity for growth.

This different business units also gives some stability in a more and more volatile market environment. While we are utilizing digital and AI for internal process improvement, which indirectly benefit dentists and our business model has a low disruption potential, specifically coming from AI. The Dental Preservation is focusing on enabling dentists to preserve natural tooth longer, safer, reliable and more economical. We decided, as COLTENE, to focus on the preservation of teeth, but not to pursue pure aesthetic technologies such as teeth whitening.

We stay invested in this business, however, indirectly, but see the go-to-market very differently to be successful. In Treatment Auxiliaries, we deliver day-to-day consumable product to dentists. While not directly impacting the dental treatment outcome, they make a big difference indirectly to supporting the dentist in its daily performance. They are loved by dentists in their daily work, such as we love our own detergent, toothpaste, et cetera. The Steri-Centre is a unique room at a dentist with a unique requirements, which we serve with SciCan as the only pure workflow provider.

In the next few slides, I would like to show you some examples on how we make progress on delivering true values. Here, we start with Dental Preservation. Next year, we are launching our next-generation Jeni, endodontic motor, which is further helping the dentist to shape the root canal in a much safer and faster way and enabling actually the preservation of tooth. This is particularly focusing on the general practitioner, our target market and is critical to expand this business further and see this significant growth potential.

Another example is the just launched Brilliant Bleach Shade, allowing us to restore not just natural teeth, but also whitened teeth. Here, we see the Treatment Auxiliaries benefits or improvements we have made in the last year. I would like to start with dental hemostasis. This is to stop the bleeding. We are one of the top 3 provider in Europe, and we strengthened our positioning in the market and also the margin improvement by in-sourcing it and expanding the portfolio, but also now we are looking into expanding into new markets beyond Europe.

Another example is the Dental Dam, which more and more dentists prefer synthetic material due to allergies or tearing. And here, we just have launched our new SyntX Dental Dam, which is actually growing faster than we expected and really shows the benefit to the dentist.

The last one is to be competitive and to have local production becomes more and more important in today's market situation. We will do this pragmatic and nimble. With this, we have set up a joint venture in China as well as a local assembly and filling in India to serve the local needs better.

Now we come to the last business, Infection Control or better -- actually the SciCan business, we call where we are the only full workflow provider in North America. All starts with a secure supply of the right water quality and the management of the waste. For this, we have just launched the latest water and steam management system unmatched in the market. The HYDRIM washer we launched last year in Canada and this year in the U.S., and Markus already told you about the successful launch and the significant growth we have achieved with these new products. Besides, also the OPTIM OS1 wipes, which is new launch last year, is continued to grow in double digit. This is just a few examples on how we work on innovating and provide value to the dentist.

Now I'm coming to the focus areas for the remaining of the 2026. We have built the foundation to bring value to the dentists with innovative workflow solutions and also digital marketing. Now we need to improve our commercial execution to ensure we bring this value to the dentist through our sales organization. We didn't move as fast as planned with our commercial organization. Hence, we made some adjustments, which we are convinced will help us to drive the growth we're expecting and fulfill the potential from our workflow solutions. The financials show that we continue to improve our cost efficiency through processes.

We will continue on this journey and see further cost improvement in the second half year and beyond. Due to our global setup, we are anchored with local manufacturing setup in all our key markets, except China and India, where we are now on a good track to produce a significant portion of our business growth in the country itself in the next years to come.

I'm concluding here with the outlook. We are not yet where we want to be on our financial performance. However, we are confident that we have built the foundations, and we see this lays a strong customer-centric innovation focus together with a customer-facing organization, which really brings this value to the market. This, we see as the key for our success, but it takes more time and effort in this highly regulated market.

We are convinced we can get back to a slightly outgrow the market, which we believe is growing in the range of about 1% to 3%. A sustainable EBIT of 13% to 15% remains our midterm target. We achieved this step by step and mainly through growth. Our aim is to create investor confidence with a stepwise improvement over time. We see this as the only sustainable way. COLTENE remains and is financially sound. This allows us to continue with an attractive payout ratio to our investors. With this, I conclude, and I would like to open up for Q&A.

[Operator Instructions] there are no questions at this time. I would now like to turn the conference back over to Dominik Arnold for any closing remarks.

It seems that we have answered all the questions that you have. I thank you for the participation and the support and trust in COLTENE. And I wish you all a wonderful summer and hopefully see you again for a successful report out for our financial year results. Thank you so much.

Dear analysts, dear investors, welcome to the COLTENE Financial Conference 2025. My name is Dominik Arnold. I'm the CEO of COLTENE. Together with me is Markus Abderhalden, the CFO. We start with the safe harbor statement for you to note. Then we come to the agenda, the highlights. I'm starting with the highlights for 2025, then Markus will go deeper into the financials for 2025, and we give you an outlook, forward-looking, and then conclude with the Q&A.

So let me start with the key figures and the highlights. In overall, the dental market was flat in 2025, and COLTENE was flat as well. We neither won significant market share, nor we lost it. This is not satisfactory because we want to grow faster than the market. That's our aim, that's our goal, and we have achieved that in the second half year. A mix of flat growth, strong Swiss franc, the tariff-related costs all impacted our EBIT in a negative way. Markus will provide you more details around this in the financial results.

How did we execute? COLTENE is a very large -- has a very large and diverse product portfolio, not a large company, but a diverse product portfolio. To drive the focus on these products, what we have done in last year is to create a pull and push strategy. What does that mean is we want that our sales team is focusing on the high-value product, where we have a high-value proposition and create the demand of the customer with a pull. On the other hand, we work through the dealers, which is our push that really we have the full portfolio and provide their activities to drive also on the full product portfolio. This helped us actually in the second half year in improving our results. However, again, this is a lag phase, and we hope now with the good performance in the second half year, this helps us also in 2026.

Our business is heavily loaded on consumables. We have about 75% of our business in consumables and 25% in equipment. In North America, the equipment part is significantly higher, closer to 50%. Particularly in the equipment business, we saw the economic uncertainty having an impact. Equipment and capital investment can get delayed when there is uncertainty.

Also there in the second half year, we saw some positive movement, but that came not so much through the market, but actually through our own activities. We launched in Canada our new washer. I will tell you more about this washer, which helped us really to significantly grow, and we have very strong and positive customer feedback.

Margins, we already mentioned that we had currency impacts, tariffs, et cetera, that helped -- that actually didn't help us. And we have worked on cost reduction and also price increases, but there is always a lag phase. And again, we saw some improvement in the second half year, but not full for the year.

New exciting products that are critical for the future for us to make sure that we are growing in the long term. We have changed our process on how we go after the innovation and changed our process to improve this as such. One biggest investment was for us in digital marketing. Now we have a fully AI capable and cloud-based CRM system, which we're now connecting digital marketing, the education that we give to the dentists, and our sales organization.

I already mentioned, on the Infection Control side, some new innovations, which I'm going to share more later on. Organizationally, our focus was a lot on digital marketing. Now we have the organization in place. We have the process in place. Now we go into the execution. Operationally, on the organization, we focus mainly on North America. And there, our focus was really to ensure that we have a leadership that has a strong mindset of operational excellence and lean manufacturing.

With this, I'm happy to hand over to Markus for providing more details.

Thank you, Dominik. Dear investors, dear analysts, dear ladies and gentlemen, I also welcome you to today's media conference. I'm pleased to present you the financial performance 2025 of the COLTENE Group, which can be summarized as follows. In a market with major or a lot of uncertainties, COLTENE kept net sales at previous year's level in local currencies. Operating margin decreased from 10.7% to 8.8%. Free cash flow of CHF 8.1 million, significantly below prior year. And the equity ratio decreased from 58.2% to 54.9%. At this point, I would like to emphasize that after a weak performance in the first half of the year, the performance in the second half of the year was strong and expected with a growth of 4.7% in local currencies and an operating margin of 11%. This demonstrates that the implementation of the strategy has a positive impact.

Let me begin with an overview of the income statement. Net sales reached CHF 240 million in 2025. This represents a slight decrease of 0.2% in local currencies. While the higher-priced devices suffered from the reluctance of investment behavior in the U.S., we were able to gain market share in Europe. The U.S. and Canadian dollar, in particular, but also the euro further weakened against the Swiss franc and negatively impacted sales by 3.8%. As a consequence, net sales decreased 4.0% in the reporting currency Swiss franc. The EBIT amounted to CHF 21 million and represents a margin of 8.8%, which is 1.9 percentage points below or lower compared to last year. More details on the performance will follow on the next pages.

Starting from the top, let's have a look into the sales development of the different product areas. On the left side, you see the share of the 3 product areas. With regard to our new strategy, the allocation of the 3 product areas was slightly revised again in 2025. For comparison reasons, we adjusted the previous year accordingly. Treatment Auxiliaries is with 39.8%, still the biggest product area, followed by the Infection Control with 33.5% and Dental Preservation with 26.7%.

On the right side, you see the development of the 3 different businesses. While the bars show the absolute amount of net sales in the reporting currency Swiss franc, the growth rates are indicated in local currencies. Infection Control slightly increased by 0.1%. This is very encouraging given the fact that the market is currently investing cautiously due to the geopolitical uncertainties. The launch of the new HYDRIM instrument washer positively contributed to that performance. Dental Preservation remained unchanged and benefited from the recently launched file system with OGSF Sequence. Last but not least, Treatment Auxiliaries slightly decreased by 0.6% and suffered especially from a destocking of dealers in the area of impression material and wound treatment.

Now we change the view from the product areas to the regions. With sales of CHF 113 million, North America remains the largest region, but slightly decreased its share from 48.9% to 47.1% as a consequence of a decline of 7.5% in the reporting currency Swiss francs. However, in local currency, the decline was only 1.3%. After a strong growth in the previous year, a destocking of one of our major dealer in the first half of the year, coupled with the current reluctance of investment behavior in higher-priced devices negatively impacted this region. EMEA, the second largest region, increased by 1.5%, mainly thanks to the market share gains in France, the Benelux countries and the Swiss domestic market. On top of that, U.K. recovered from the low base in 2024, while the Middle East suffered from the political development. Asia, the third largest region, suffered especially from the market in China due to an announcement to purchase a product in wound treatment through government tender or a so-called VBP program. Latin America, the smallest region, slightly increased by 0.4%.

With this slide, I would like to show you the development of our operating results from 2024 to 2025. Hence, the starting point is the year 2024, where we achieved an EBIT of CHF 26.8 million. The volume effect is mainly driven by the stronger Swiss franc, as we have seen before. The gross margin decreased from 66.2% to 65.5% due to the following main reasons: Firstly, the effect from the unfavorable exchange rate development and especially the weakening of the U.S. dollar. And secondly, the expenses related to the U.S. tariffs. The countermeasures took effect with a time delay. We already saw a positive impact in the second half of the year, and therefore, it is also expected to have a positive impact in 2026 as well.

The personnel expenses on the other side benefited from the foreign exchange development at the group level. The inflation-based salary increase could be offset by reducing 6 FTEs on average through efficiency gains and by lower variable compensation due to a lower company performance. And finally, also the other operating expenses benefited from foreign exchange development, but also from additional cost savings, while investments relating to our go-to-market activities increased, namely, we further increased expenses for product launches, for marketing campaigns and participating in several trade shows, all with a clear target to grow.

Financial result in the reporting period amounted to a minus of CHF 0.5 million (sic) [ minus of CHF 2.6 million ] and was significantly lower than the previous year. While the interest expenses were further reduced, the financial expenses significantly suffered from the result of the foreign exchange rate differences. The effective tax rate was 19.0%, down from 22.7% in 2024, and benefited mainly from lower sales in countries with higher tax rates and to a lower extent, from a one-off effect in the previous year. With that, the tax rate is lower than our target range of 22% to 24%. The net profit as a result decreased by 27% to CHF 14.9 million, which represents a profit margin of 6.2%.

The cash balance with CHF 20.6 million slightly decreased, but still ensures a stable liquidity. The increase in receivables by 9.8% is mainly driven by the higher sales in the last quarter of 2025. The inventory decreased by 4.9%, thanks to the foreign exchange developments, while in local currency, we saw a slight increase. Net debt significantly increased due to the weak cash flow. The shareholders' equity of the COLTENE Group as of the end of year amounted to CHF 101 million, and the equity ratio decreased from 58.2% to 54.9%, mainly driven by foreign currency differences. The total assets of the group are stable and amount to CHF 183 million, also mainly decreased by currency effects. As a result, the balance sheet of COLTENE Group continues to be extremely sound and provides room for inorganic growth.

The operating cash flow for the reporting period substantially decreased by 51.8% and reached CHF 13.8 million, caused by a lower net profit base and a temporary increase in net working capital. The cash flow from investing activities is below prior year. However, considering the previous year's financial investment in a stake in Cobea AG, the investment would have been at the same level as last year. As a result, COLTENE Group achieved a free cash flow of CHF 8.1 million.

With that, I'm at the end of my comments, and I would like to hand over back to our CEO, Dominik Arnold.

Thank you, Markus. So we come to the strategic direction. It remains to preserve the natural teeth. This connects us really at a hip with dentists and with patients alike. We have fine-tuned our messaging, our value proposition for this market in these 3 distinct segments. These segments, we all serve via dealers and have a distinct value proposition. And while we value AI as such, all of those segments are not directly impacted from AI disruption, and we can only value through our internal processes for such.

In the Dental Preservation, we are focusing on saving the natural tooth. And we have, in particular, in the next slide, some examples on how we do that. On the Treatment Auxiliaries, treatment auxiliaries are more general consumables, very similar to what we have at home as well with your tissue, with your razor blade, with your detergents, which normally the dentists really love the same brand for a time. However, we need to produce that at the right price and the right performance. The Steri-Center is a unique room, very different to the dental office or the dental chair, with its unique value proposition, unique benefits that we can provide to that market. So you can see we have 3 different segments, which also gives us some opportunity for balancing our business case.

Now I want to give you 2 examples on showing how we're driving value proposition, not just on a product level, but actually on a treatment level, which the dentists mostly can benefit. This is around saving the natural tooth, a big significant business on a global level, which in general grows, unfortunately, not so much in last year, but there is tendency for future growth to come. This is mainly through aging society. Root canal treatment comes mainly at older age, so does also implants. Now the implant market is significant with more than 10 million implants set every year. And if we can help the dentists to save some of those tooth or prolong or delay an investment into an implant, this can further give significant improvement for growth.

One example I want to give you here is our OGSF file treatment. Now our OGSF file is simplifying the root canal treatment for the dentist. You can imagine, in the past, the dentist had 20 to 30 different files. He had to measure up and select what kind of file he takes for the next step of his procedure. This is time consuming. This requires a lot of decision-making while you do the treatment. With our sequence, you can reduce it to 5 files, a very clear sequence of one after the other. And together with our CanalPro Jeni motor, it allows a very guided treatment, which the dentist gets guided into the canal, ensures that the file is not breaking up, helps the dentist to decide how deep into the canal he needs to bring the file. All this will help not just an endodontic specialist, but our goal and aim is, with this, to provide a general practitioner an opportunity to do a proper root canal treatment in a faster, in a simpler, in a more reliable and ultimately more economical way.

Another example I'll bring you from the Steri-Center. So as you can see, it's very different to a dental office that you normally see. When you look at the left upper corner, this is a well-equipped Steri-Center, and it looks much more like a kitchen. And there is a connection to the kitchen. I assume most of you on the call as well as here in the room have, in the kitchen, a dishwasher, right? Now normally, dishwasher gets used maybe once a day, but still we have one. In North America, in the U.S., in particular, 70% of all the Steri-Centers currently not have an automated washer. Even though when they have an automated washer, they run normally 3 to 10 times a day. This gives amazing amount of opportunities for future growth, to simplify the process at the dentist, to provide value in speed, in faster turnaround of their tools that they are using, in lower infection risk, in higher compliance, and ultimately with an economical solution.

We mentioned before, Markus and myself, about the HYDRIM washer. Here, you can see as a picture, it's a little bit dark here, this is an automated washer specifically made for the dentistry. It is significantly faster than previous models. So it turns around the tools faster and requires 40% less water. We had a tremendous resonance in Canada, and we are going to launch it as we speak in this very month in North America. With this, we not only have the equipment, but they are all connected to the cloud. Like all our SciCan equipment are connected to the cloud. This gives further improvement for the customers, because he can improve his performance of the system, he can ensure the training of his staff, he can ensure that the service can log in and potentially help with troubleshooting, et cetera, et cetera, ultimately, all helping to economically run the Steri-Center with a high uptime.

Now what are our focus areas moving forward to 2026? We continue on our journey on digital marketing and education and sales. Now having the new CRM system, our focus will be on how do we execute. We have the tools in place, we have the people in place. Now we need to ensure that we deliver the execution and actually bring this unique workflow opportunity to the market and get a return in additional sales growth. The special unique value proposition in the Steri-Center, where we focus on North America, creates tremendous opportunity, in particular with DSO. DSO are conglomerates in dental offices, because they are not just buying one washer, one sterilizer, but very often dozens, and obviously have additional value by bringing them all together in the cloud.

Now this is on the value creation. On the value delivery side, we are looking at optimizing our process further. We are running on the operational excellence. Markus showed you the improvements we already made. We continue on that journey, in particular, with the focus on North America, as I mentioned. And we are going to utilize some AI tools. And our focus there is certain things that really bring an applicable value. There, we see priority on documentation, on regulatory documentation, as well as service support for our equipment business.

Come to the outlook. While we're convinced on our strategic approach that it enables us to achieve a growth beyond the market of 1% to 2%, we see still massive amount of market volatility out there and geopolitical situation. This has an impact on our business in one way or the other. And this gives us challenges to give a proper outlook for the future. We see, in a stable market, that we can continue to grow and we can achieve, again, above-market growth. That's why our outlook is a low single-digit growth target for the year.

The swing in ForEx and all the patient sentiment, which are limiting the growth at this moment, makes it also very unpredictable on the profitability. Again, there, we see an improvement over last year as such, and we aim for 9% to 10%. Again, with higher volume, our margin can significantly improve. And therefore, we see ultimately that on the long term, we can, with a volume effect, also achieve our ultimate target of 13% to 15%. Unfortunately, with the 2025, we are giving this outlook with a 1-year delay in 2028. We remain an attractive dividend with a strong payout system. We are in a solid business here. We are a long-term partner for the future.

With this, I'm concluding with our mission, which I think not only as a business has a substantial value, but also as in a society to preserve natural teeth.

With this, I conclude and open up for Q&A.

[Operator Instructions].

All right. Let's get started maybe here in the room with questions. Yes, Daniel.

Maybe on the DSO exposure, at the Capital Markets Day, I think you mentioned you have a certain percent of sales with DSOs. And I don't remember, was that U.S. only or also in Europe, because in Europe, we also have quite some chains like in Spain and so on. Is that still ballpark the right number?

Yes. So the question was around DSO exposure and how much do we do business in DSO. So our major focus, obviously, the biggest percentage of DSO is in North America, right? And there, we have an organization that really focuses on DSO. As a percentage of sales, it's still actually lower than with dentists. That means we have a lower market share with DSOs as such in COLTENE products. With SciCan, it's different.

Now to your question about Europe, we have established last year an organization that's particularly focused on DSOs. We have been underrepresented in DSOs in Europe. This is now going to change. We have now experts in U.K. that is focusing on this, where it's a big DSO market, and another one that is the Nordics, where we have a strong focus on DSO as well. Did I answer your question?

Across the board, it's roughly a certain percentage...

Yes, there's a certain percentage. Now from our business, it's still -- when we see -- it depends on the country, right, how much is DSO business. It's between 0 and 25%, 30%, right? Our exposure to DSO is significantly lower. It's more like in the 0% to like 15% target. So we have about half of that.

And the second question is on China, I mean, the output is 10% roughly. And I guess China is, as Markus was saying, probably not so. So the second question, then, of course, a follow-up would be the VBP program, which is quite prominent for the dental implants, everybody knows. What is the VBP for consumables? Or is that, I guess, different to dental implants?

Markus, why don't you answer the first question, I will answer the second.

Good. So the China market is the big majority in APAC. It's not half of it, but close to half of the market in APAC. Shall I?

Yeah, you can take.

So what the VBP program is concerned, they picked now one product of our consumable product portfolio, which we sell in the market in China. And that's where they issued or announced now a government tender. And for that particular area, the dealers started to destock because they don't want to have the material at the high price on their stock and then need to sell it to the government, because even if there is a government tender, it still goes through the dealers. That's the reason why. But so far, for COLTENE, only one product is considered in this VBP program, rest is not. It's in the wound treatment, which is in the Treatment Auxiliaries.

Yes, Sibylle.

I had a question about North America, which is a very important market for you. Could you tell us how much tariffs you have to pay?

So the question is about tariff in North America, how much we pay, right?

Yes.

Well, we don't provide an exact number of what we pay. But what I can tell you is that, of course, starting with the Liberation Day, we had this exposure. At the beginning, I think it was 10%. And then it went up, obviously, with this 39% for Switzerland, in particular, and the European area was then negotiated to 15%. And then later, also Switzerland came down to this same level of 15%.

So to answer your question, we started to pay these U.S. tariffs with this Liberation Day, which was in the first half of the year. And then we started our countermeasures, which consists of price increases as well. So we reacted on that with price increases. But I think we did it very smart in the way that we made these price increases over the whole product portfolio that allowed us to make these price increases to a low single-digit level, and that was absorbed by the market very well. But that came with a time delay. And for that reason, we had a negative impact, in particular in the first half of the year, because we did the price increases only in the course of the second half of the year. That's where we then realized the positive impact.

Now one important message which I would like to give as well is we do not want to take advantage out of this system. So what we try to do is to really carefully increase prices to cover our exposures and to hand that over or put that through the market.

And the second part of my question is we have now January and February of this year. Could you tell us how you see trends? Are the markets coming back, plus the markets also important for you?

Yes. So how has the market now in 2026 developed for us? It's still too early, honestly speaking, how it is after 2 months. In particular, for us, important are the sell-out data, and sell-out data are always a little bit delayed as such. Now sell-in data are depending on dealers, and dealers very often, beginning of the year, don't order a lot, because they have fulfilled their requirements end of the year, and they are normally starting with a good inventory. Not that we have, in general, a significant higher inventory than last year, that's not the case, but it's always a soft start.

Now when you look at the regions, I think North America had a better start than last year, and that's encouraging. We hope it will stay so. Anything to add, Markus?

Nothing.

Yes.

The gap between your 2026 EBIT margin target and the one in 2028 is 455 basis points, which is kind of huge. You implied a growth rate of 3% to 5%. I don't think that's enough to make that gap possible that you get up like that with higher volumes. What exactly do you need as growth or measures to make this 455 basis points up in these three years?

Well, one of the biggest parts will be the growth, because we have infrastructure ready, which allows us to produce more without investing. So this is clearly one of the biggest contributors. So the EBIT margin heavily depends on whether we achieve this year-over-year growth rate. That's part number one. But as you mentioned, this is not enough. Second, what I would like to mention that the base of 2025 is maybe now not the right base, because we suffered from this U.S. tariffs, which we hopefully will not see again in 2026, or it is expected not to be seen anymore. So the base is now lower than where it should be. The third and also important thing is that through the global purchasing organization, we also will -- and we have a funnel where every year, we have a lot of projects which we put in a funnel to save on the supply chain. That's another point.

Then what also is relevant, we will increase prices again in the future, which we believe will be absorbed by the markets. And that will also help to increase especially the gross margins. And then the last point is we have a strong commitment. And also here, we have a funnel where we put every year projects into it to gain efficiencies within the operations. I think this is also -- and Dominik mentioned that on his slide, on the value delivery side, that's where we commit a year-over-year gain, efficiency gain of 5% within the operations. And then last, also at COLTENE, we want to make advantage out of AI development. That means also in administration -- not always only in operations, but also in the administration, we would like to benefit from this development. And with that, we can bring the structure cost further down. Does that answer?

Yes. That means that in time, this 3% to 5% growth you see in the midterm could be enough to reach this [ 14% to 15% ] EBIT margin by 2028?

Well, maybe I'll answer it in different words. It's one of that. So we say -- like Markus said, it's several things. When you look at the second half year of last year, with growth, we get to 11%, even though some of the other costs were still in there, right? So for our perspective, this is possible from a volume effect, improve our cost as well. And we need, obviously, also a little bit of headwind from the market, right?

If the market is not positive, it will be challenging. It also has a challenge if the Swiss franc increases in value over time, this is natural. We need to adjust to that. But if it increases so dramatically like more than 10% and so on, that is obviously making it more challenging. So that is probably more the big question mark out there on how we improve the EBIT margin. I'm happy to share maybe next year that we show you more about how do we get there and the kind of a waterfall and how do we achieve that target.

You kind of already have answered my question. I guess one of the reasons you mentioned that the last year wasn't too successful was because of headwinds and tariffs and uncertainties in the Middle East. In my perception, these problems are still going on. Do you think that all the points that was mentioned before can overcompensate the uncertainties?

So the uncertainty and how we can overcompensate the uncertainties in this year. The market, in order to invest and patients go to dentists, they need some certainty and some stability, right? Now this very often means very close to home, okay? Now let's assume Middle East remains a Middle East topic, then the impact for North America might be very limited. Now if obviously, then the inflation increases significantly also in North America, then that might have an indirect impact, right? So it is hard to tell how this is evolving. So far, what we have seen on the uncertainty, we see a positive trend and hopefully, some more stability.

I think people are also a little bit more used to disruptive situation and maybe that helps also. But honestly, it's a crystal ball, and I have not all the answers to the question what 2026 will bring. What we are focusing on is what we can impact and what we can deliver. I think we are also better set up to achieve growth. Some of it is beyond the market growth with new product sales that we see, right, and then be more agile in responding to that adversity that we see.

So when I look at 2025, your cash flow was quite weak. Your net debt went up. You reduced dividend. What has to happen then in 2026 that this will not happen anymore, so we have stronger cash flow, net debt is going down again? Is it enough when you grow only low single digit?

So cash flow and net debt, and how do we get there with a low single-digit growth. So maybe that's for Markus.

Well, it all relates with the cash flow. The cash flow, we need to identify what is the reason for the low cash flow to answer this question. One of the major reason is the low profit, which we had this year. And I think we will see definitely a better performance next year by having this low single digit growth. And then with this guided EBIT margin of 9% to 10%, that alone will lift this profit or the base of the cash flow quite substantially. That's certainly one of the effects.

And then the other effect was quite significant as well now with the investment into the net working capital, which, in my opinion, is a clear extraordinary and temporary effect in 2025. Because if you look at that, we have 2 things which caused that and by far the most was the accounts receivables that was because we had the major business towards the end of the year. And here, it's important, we talked about the dealer management, the improvement of the dealer management. When we talk about this dealer management, also we talk about managing a better timing of ordering with our dealers. So that means also here, we hopefully won't see this negative impact from this effect in 2025 (sic) [ 2026 ]. That will definitely make the cash flow situation better than what we have seen.

And then the other part is the inventories. That is a part which we actively can manage. And I think also here, we have a clear program to reduce our inventories and increase our turns. On the other side, we will have certain areas where we invest strategically, and I think we communicated already, I think, midyear last year that we in-source certain product production. And to make that transition very smooth, we have to increase these inventories in that particular area. But if you take that out, then we definitely will strive for another improvement of inventory management.

And the other question is, in the first half where your sales were down -2.9%, and in the second it was +4.7%, which is quite a dramatic difference. What changed between the first half and the second half?

I'll take this. So what has changed between the low performance in sales in the first half year versus the second half year, right? So several things have changed in this regard, and it's not one or the other. One thing was the dealer contracts. We are currently in transition to make those dealer contracts more structured over time. We are still on the journey there. It's not something that we can do once in one year. Sometimes it takes several years to manage these contracts. Because fundamentally, we believe it's a benefit for both the dealers and for us to have a much more linear consumption and not having everything at the end of the first half year and the second half year. Now, what that means is, some of the contract and agreements were not finalized by mid of the first half year, and therefore the dealer didn't purchase as much in the first half year as in the second half year. Okay? So that is more about the dealer management.

The other part that we see is our strategic execution. I mean, the changes that we did on our push-pull strategy, on our sales focusing on more on some focused products. Now some of the product that they were not focusing on were not immediately taken over by the dealer and really made sure that we have the activities around it. This was mainly on the Treatment Auxiliaries products, and that's where we saw some significant decline as well.

Last one has to do with equipment business. And you saw a decline on the equipment that has mainly to do with sterilizers and so on. And in particular, in this quarter 2 and quarter 1 as well, we saw a decline of the equipment purchase in North America for various different reasons. Some had to do with price increases, but also a lot had to do with the uncertainty, and they were just delaying some of the investments for those equipment. And then in the second half year, they released the brake a little bit more, and we saw some positive improvement there. So it's a mix of these 3 things: dealer agreement, our sales execution, strategy execution, and the sentiment of the dentist.

Just a follow-up to this question from Sibylle. Does that mean that in this year, we will have a higher growth rate in the first half compared to the second half since here it is negative in the first half last year?

I would not really 100% say that at this moment in time. It depends again on the -- well, on the sales execution, I think we are much better, but on the sentiment in the market, particularly with what is happening right now, I think that's a little bit hard to tell, and I would not foresee that we can now say, "Oh, the first half year will be much better and the second half year will be lower." I wouldn't see it that way.

But for sure not again this really negative first half, while second half then comes up with high growth rates?

Correct. We don't foresee that, yes.

Maybe just on the washer. You were quite enthusiastic about it. Is that really moving the needle within this segment? Is that very important, and where is the competition there? We have a big differentiation factor. I think peers are competing with Miele, right, I'm not sure, if I'm not mistaken.

Yes. So around the automated washer, why do we believe that we can substantially grow? We are by far the market leader in North America, okay? But we are not that high that we cannot continue to grow and take market share. Secondly, I showed you that so many dentists still don't have any automated washer. And the value that we can bring is significant. Lastly, again, the DSOs, they want to make sure they are compliant, that they have standard operating procedures. They want to probably standardize on a certain equipment, because then it's easier to train and so on.

Also for the dealer it's easier, because then they have the dealer, they have the same unit to service again and again. This is a great opportunity for us. And we have truly only a total Steri-Center equipment. So Miele, you mentioned as one of our competitor in that market. They only have a washer, but they don't have a sterilizer. We can provide both solutions as such. And we know the North American market better than our German competitor. And I think that brings us value as well. So I think we have a great setup. We also have, besides what I just mentioned, also on the product side, significant benefit over our competitors.

With the penetration in the U.S., I guess a normal workshop, a normal one-person dentist will not have this. It's too expensive. I guess it's more for the bigger chains or the dental practices with 10 shops.

Correct. Yes. So normally, every dentist should have one. And honestly, in Europe, that's much more the standard. And it's happening now more and more overseas as well. There is also a trend, not yet in America, but in Canada that wants for regulatory compliance to ask for automated washing, which absolutely makes sense, because if you have one person washing on Monday and then the other person on Tuesday, I don't know when you want to go to the dentist yourself. You want to have a consistent process in there.

Yes, there is other questions, I think, from the back there. Okay.

So some of your competitors, [ Brazil-based ] dental implant company mentioned that the currency effect in 2026 will be quite strong. So my question is, could you give us any hint about influence on the top line, and additionally, on the EBIT margin, because if you're suffering on the top line, also the EBIT margin will not be supported by [ consequence ].

Yes. So that's a question for Markus. So the question is around how the currency in 2026 will impact our top line as well as our EBIT margin?

So what I cannot do or what I don't do is to predict where the currencies are going this year, because if I would be able to, probably I don't have to work anymore. But what I would like to mention is, we are relatively good naturally hedged at COLTENE Group. And this is because of our great setup where we have factories in all these different currencies. So this is really a good setup to be naturally hedged.

Now we still -- I mean, we are not at 100% naturally hedged. And this is mainly caused by the headquarters factory in Switzerland. Here, we have an exposure. And if we see again such a development, as we have seen in 2025, it still are going to hurt us also on the profitability. If we look at 2025, then we can clearly say this is above the average of what happened in the past years. But if we look into the past, then there were also years like in 2025. So that will probably happen again. Whether this is going to happen in 2026, we don't know.

So what we definitely are doing is even trying to limit or reduce this exposure from the factory side in Switzerland. We can do that in a couple of different things, but we started quite a while ago with switching suppliers into different currencies. So we don't have a lot of supplies as a raw material in Swiss francs anymore. We have already changed that. And then we have headquarter functions, which we also try to not only hire in Switzerland, but in other sites, which we have.

And then a significant part is we are going to analyze where we can more automate in Switzerland, in particular, because this will help us to reduce this exposure, because the big majority in Switzerland, of course, is the employees, which we pay in Swiss francs. So long story short, we don't give a prediction what happens in 2026 on the foreign exchange rates. We believe that the Swiss franc will independently become stronger and stronger. That is probably very clear. And we try to limit the exposure, which we still have to be better, even better than naturally hedged.

So my question is, because I take the currency effects today -- or the currencies of today when I calculate for 2026, I get a negative currency effect on the top line of minus 4% also on the EBIT, I don't know if it will be 100 basis point, just to understand your outlook, I mean, what are the headwinds?

Well, you have a translation risk and you have a transaction risk. The translation is, I fully support and agree with what you have said. We will see from that, if that continues at the same level, then we will see a further decrease in sales. But at the same time, we will see a decrease in cost, because we have this setup. And then translation doesn't then have an effect on the EBIT margins. Okay? The transaction risk that is because that's priced in, because always if you have a transaction, you do it at the current rate. That means if it stays where it was somehow in the second half of the year, and the second half of the year showed even we had a better profit, then we should not see a significant impact on the profitability.

Shall we give a chance also to the people on the phone if there is any questions? I don't know if there is any questions.

There are no questions over the phone at this time.

Are there any further questions here in the room?

Maybe just on the big customers, let's say, the big distributors, Schein, Patterson, Benco, do you see an ongoing trend that they do more in-house manufacturing like in the past few years, like especially Schein, I think. Do they more, you know, go along with the value chain or is that trend maybe stopping a little bit because it's also more expensive for them, I guess, in the end?

Yes. So the question is, are the big dealers, in particular in North America, pushing more their private label products, right? Okay. Good. Yes, we expect that trend to continue as such. This is what they announced, at least Henry Schein, that is also on the stock exchange. If this is going to change with the new CEO, I don't know. There's a CEO change as such. Now when you look at the overall market analysis and trends there, we don't see a significant uplift of private label. So the private label is growing faster than the branded product as such, right? So how successful they are, this is what the dentists want, we need to see. Our goal is obviously to make sure that the dentists continue to be interested in branded products, to see the value of it. And I think when you look at our product portfolio, some of those products are exposed to private label, but quite a significant, in particular, the growth product that we are focusing on are not significantly targeted by private label products. Did I answer your question?

Yes. Maybe Patterson is the one who's not private label, right? If private equity or debt equity, they focus on costs a lot, and maybe we see that as well, or is there another trend now with Patterson?

Patterson specific, we don't see a specific trend on private label product. What we saw, particularly in 2025, and maybe we should have mentioned it, a little bit was the destocking. So what private equity is looking is obviously to create cash. And particularly at the beginning of the first year, they just reduced the inventory to the barebone minimum. And obviously, we felt that as well. And then we had to restock a little bit again back in the second half year of 2025.

Any further questions? If there are no more questions, I thank you all for the very interactive discussion and for the participation. Thank you so much. With this, I conclude.

Thank you very much.