Straumann Group: letter to investors from the CEO and CFO
The corona virus has radically changed the way we do business and almost everything else. With life changing by the minute, this is a disorienting time for the global investment community, especially when the magnitude of immediate events makes it difficult to see the long-term picture. In view of this, we thought it would be helpful to share some perspectives with you and to let you know what we are doing to get through this storm together with our people, customers and stakeholders.
With more than one third of the world’s population now locked down, the coronavirus pandemic is having a significant effect on most industries including ours. Many dental practices have been forced to close temporarily or are restricted to providing emergency treatment only. In places where dental services are able continue, patient traffic is reduced, as some people are hesitant to visit healthcare providers for non-essential treatment.
Understandably, these factors have significantly constrained the global market for tooth replacement and esthetic dentistry, but we do expect procedures to pick up when lock-up restrictions ease and practices begin to re-open. There are initial signs of this in China and other parts of Asia although the time to full recovery is difficult to predict – not least because the pandemic has triggered economic issues around the world. At present, we are unable to quantify the business impact for 2020, nor is it possible to predict how the macro-environment in general, and consumer confidence in particular, will evolve.
At the Straumann Group, our response to the corona virus has focused on the following priorities:
- People safety
- Business continuity
- Mitigating financial impact
- Preparing for the market to rebound.
Our key focus has to be on safety and doing all we can to protect people and to prevent virus spreading. Thanks to the protective measures and personal responsibility of all our staff, the number of confirmed COVID-19 cases in our global team since the initial outbreak has been extremely small – and thankfully none has been serious.
To ensure business continuity, we have adapted production capacity to meet demand and have no supply issues. Our customer services, sales teams and internal functions are all working well, remotely. Our Straumann CADCAM services are operating and our warehouse teams are processing orders on time.
We have taken a number of initiatives to offer additional help and support to customers. The most significant of these are on-line education and training, including virtual conferences and webinars. These are allowing many dental professionals to use the break in order to learn about the latest techniques, treatment solutions, products etc. For further details, please see #TogetherStrong, our dedicated online customer portal at www.straumann.com/covid19. These and other initiatives enable us to generate customer leads and extend our networks.
With regard to mitigating the financial impacts, we are working hard to adapt our cost base to current and near-term demand, ensuring that we retain flexibility and skills and do not compromise the exciting projects and roll-out programs that will drive future success. We are also making concerted efforts to reduce personnel-related costs, including voluntary pay reductions for our leaders and short-time work for other staff, depending on local legislation. Wherever possible and appropriate, we are applying for government subsidies and support in this respect.
To ensure liquidity, we successfully placed a CHF 280 million straight bond on 27 March 2020, which will mature in 2023, and we increased our committed credit lines. We are using the proceeds to refinance a maturing bond – issued in 2013 to finance the Neodent acquisition – and for general corporate purposes.
Despite the present challenges and disruptions, we are confident that the fundamentals of our business remain valid and promising in the mid and long term. We are also confident that the aforementioned initiatives in combination with our strong Group culture of agility, embracing change and creating opportunities will keep us in good shape.
We look forward to sharing more information with you in our first-quarter report and analysts’ conference on 30 April 2020.
Thank you for your continuing confidence and trust at this challenging time.
Guillaume Daniellot Peter Hackel
Chief Executive Officer Chief Financial Officer