Alk-Abello As B Shs New

Hello, everyone, and welcome to this presentation of the case Q2 results. Thank you all for joining us. And let's turn to slide number two with an intro to the agenda and the speakers. My name is Per Plotnikoff. I'm head of investor relations. With me today are CEO Peter Helling and CFO Klaus Stenchen-Sølje. We'll first share a couple of highlights from the quarter, and then we will take a closer look at the markets, product trends and financials. We'll also provide an update on the Allergy Plus strategy implementation before we cover the full year outlook. As usual, we'll end the presentation with a Q&A session. And to get started, I'll now hand you over to Peter and slide number three.

Thank you, Per, and thank you all for joining this call. The current performance is strong and Q2 sales, particularly in Europe, exceeded the forecast that we gave back in May. This will have a positive carryover effect into the second half, which is why we have further upgraded the full year revenue and earnings outlook on 21st of June. Today, based on our current performance and the outlook for the remainder of the year, we have upgraded both our revenue and earnings outlook. We'll come back to this later. Looking at Q2, Q2 revenue was up 21% organically on double-digit growth in all AIT vaccine categories, tablets and injection-based SCID at sub-legal drops. Tablets stood out with 32% sales growth globally and 35% growth in Europe, but in all fairness, also measured against a weak quarter last year. Priority number one in recent quarters has been to solidify the momentum in European tablet sales after the difficult first half of 2023. And these efforts are on track. We are pleased that we managed to further build on the momentum in Europe in Q2, and as Claus will elaborate on in a short while, this has been a strong quarter. Based on prudent cost management and capital allocation, we've succeeded in raising the EBIT margin by 10 percentage points year-on-year, from 9% to 19%. The EBIT results include 38 million Danish kroners in one-off cost to optimization and reprioritization initiatives, in line with our new AllergyPlus strategy. Looking at the strategy, the implementation continues well and is well underway. AllergyPlus is where it needs to be. Focus in Q2 has been on initiatives to extend the respiratory tablets reach to new patients and on initiatives to optimize LK's business platform, enable scale and free up resources to support growth and future scale. Now we are looking into a busy second half. where we expect business activity to be roughly on par with first half. Still, we remain confident that we'll be able to deliver a robust full-year growth across all sales regions and all product groups. We'll further detail this in the presentation shortly, but first I'll hand it over to you, Claus, and the Q2 market trends on slide four.

Thank you, Peter. Before going through all our regions and product groups, let's dive into European sales. Our European sales were up 25% on double-digit growth in all product lines. Particularly, sales of tablets and slip drops exceeded expectations. Tablet sales grew by 35% against the soft quarter last year. Growth was driven by higher volumes linked to the robust inflow of new patients in the past year, both in the pollen segment and in the house dust mite segment. Growth was also positively influenced by pricing and rebate adjustments, including the reversal of the 2023 mandatory rebate increase in Germany, which added more than two percentage points to growth. In additional, Q2 sales continue to be less influenced by trading patterns at wholesalers than in 2023. In Germany, Europe's largest AIT market, both tablet sales and skid sales grew by high double digits, as we benefited from competitive dynamics and the accelerated market transitions towards evidence-based registered AIT products. Court rulings previously confirmed that private payers may reject reimbursement for non-registered ART products, and this is now impacting the clinical practice to the benefit of tablets and our SCID products. This trend is also supported by the recent recommendations from the German Allergist Association, who published a wide list of registered products recommended to be used for new patients. France, Europe's second largest ART market, also did well. Both sales of tablets and slit drops grew by a double digit after higher patient inflow to both existing and new doctors. In France, we have seen a more positive market development emerging recently. Part of this is likely linked to higher burden of disease and patient activation last year, as well as increased clinical capacity at certain doctor offices, meaning that they are able to treat more patients. We have also seen good effects from our commercial activities, such as medical events, prescriber expansion and so on. Performance was also good in the Nordic and Benelux countries, where we benefited from the focused sales and marketing initiatives, which we developed last year. We have been able to activate more payers and more patients, and we have also broadened the prescriber base and managed to increase the depth with current AIT prescribers. Finally, we continue to work with doctors to extend the initiation season to mitigate conflicts with common respiratory infections and other external factors during winter initiation season. We saw small improvements outside the main initiation season last year, and the upcoming initiation season will show if we are tracking towards further improvements in this area. Let's now turn to slide five, please, and the regional performance overview for the second quarter. Europe accounted for 65% of total revenue in Q2, while the remainder was evenly split between North America and international market. Total sales in North America grew by 3%, while tablet sales were up 29%, driven in part by volume growth, in part by higher realized selling prices in the US. Sales of skid bulk extracts increased by 4%. It has been impacted by previous loss of a customer, but growth is improving compared to first quarter. Sales of other products, so our business of diagnostics, prepin and life science, fell short of expectations with a 9% decrease, primarily due to prepin. Revenue from international market was up 32% and positively influenced by timing of product shipments to both China and Japan, the two largest markets in this region. In-market sales in both countries continue to grow by double digits, underpinning the commercial potential in these markets. Now let's turn to the product categories on slide six. Global tablet sales increased by 32% on strong double-digit growth in all sales regions. Tablets accounted for 52% of total revenue in the quarter. Global sales of skid and slid drops grew by 16% after robust growth for both skid and slid drops in Europe, combined with increasing skid shipments to China. Finally, sales of other products and services, including Jext, increased modestly by 1%. Global JEC sales grew by 17% as market supply continued to normalize after last year's shortfall in supply. But this progress was offset by a weak performance in other products in North America, especially the prepin. The integration of the prepin operation progresses as planned. However, sales continue to be impacted by stocking at wholesalers prior to ALK's acquisition in January. Let's now move on to slide seven and the six months financials. Half year revenue were up 15% in local currencies to 2.7 billion Danish kroner. Growth was mainly driven by tablet sales, particularly in Europe. A gross profit of close to 1.8 billion Danish kroner yielded a gross margin of 64.4% and improvement of close to one percentage point. This improvement was due to changes in the sales mix, volume growth, improved pricing, production efficiencies, and the reversal of last year's rebate increase in Germany. In line with our expectations, these factors were partly offset by inflationary pressures on input cost. When including one-offs restructuring costs in Q2, total capacity costs were unchanged at 1.2 billion Danish kroner. R&D expenses were down 20% after the completion of last year clinical trials of the respiratory tablets. Sales and marketing expenses were up 7%, while admin costs increased 8%, and this increase was mainly due to costs related to the AllergyPlus strategy process. Optimizations and savings contributed to the overall cost development, and it remains a priority to lower the capacity cost to revenue ratio. The operating profit, EBIT, was 580 million Danish kroner, an improvement of 84% in local currencies and 78% in Danish kroner. The EBIT margin increased from 14 to 21%, and when excluding the 38 million Danish kroner one-off restructuring cost, the underlying margin was 23%. A clear indication that we are moving in the right direction towards the 25% margin target in 2025. Finally, free cash flow improved to plus 272 million Danish kroner as higher earnings offset changes in working capital and investments, including the pre-print acquisition. So all in all, a good set of results, the best half-year performance so far. I now hand it back to Peter for an update on the Allergy Plus strategy on slide 8. Perfect.