Alk-Abello As B Shs New

Hello everyone and welcome to this presentation of ALK's Q3 results. Thank you all for joining the call 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 and with me today are CEO Peter Halling and CFO Claus Steensen Sølje. We'll be sharing a couple of highlights from Q3. We'll take a closer look at markets, product trends and financials. We'll also provide an update on the allergy plus strategy implementation before we turn to the full year outlook. As usual, we'll end the presentation with a Q&A session. To get started, I'll hand over to Peter and slide three, please.

Thank you, Peter, and thank you all for joining this call. Q3 was another solid quarter for ALK. We delivered 18% organic revenue growth across regions and product lines, and we are particularly encouraged by the robust growth rates for Taptis, 29% on global scale and 27% in our main market Europe. We solidified the momentum as volumes roughly grew in line with what we saw in the first half, reflecting the past year's strong inflow of new patients. JEXT was another source of growth in Q3. Sales of the adrenaline auto-injector rebounded and have now fully recovered from last year's supply shortages. We succeeded in raising the EBIT margin by 10 percentage points year on year, from 13% to 23%, driven by sales growth, gross margin improvements, resource optimizations, and general cost savings. These results confirm that we are well on our way to increase revenue and improve earnings as planned in 2024. And we confirm the full year outlook. Now, the implementation of our Allergy Plus strategy is progressing well. Let me just point out two initiatives. We took important steps to build new revenue streams in the broader allergy space when we, a few days ago, agreed with ARS Pharma to license the rights to their Navi nasal spray. Moreover, in China, we are about to finalize the design of the clinical trial to get the regulatory approval of the house dust mite back on track. We have also completed recruitment of patients to the current part of the phase one, two study with our peanut tablet and expect interim results before the end of the year. We'll further detail this during the presentation, but before I'll hand it over to you Klaus and the Q3 market trends on slide four.

Thank you, Peter. Let's take a closer look at the performance in our sales regions, where Europe and international markets were key contributors to growth in Q3, while growth in North America was soft. Sales in Europe were up 21% on double-digit growth in key markets, Germany, France, the Nordic countries, Benelux, the UK and other markets across Europe. Tablet sales grew by 27%. Growth was primarily driven by higher volumes, linked to the inflow of new patients in the late 2023s, particularly in North, Central and Western Europe. Volume growth was roughly on par with the first half of this year, whereas the contribution from improved pricing, including rebate adjustments, was slightly lower than in the first half year. Trading patterns among wholesalers were still a factor in the marketplace, but these movements had a lower impact than last year. Higher text volumes also contributed to growth in Q3, while combined skid and slit drop sales increased by 5%, mainly driven by slit drop sales in France. Total sales in North America grew by 3%. Tablet sales were up 13% on higher volumes. Sales of skid bulk extracts increased by 4% and remained soft. Sales of other products, so that's diagnostics, prepen and life science, decreased by 4%. Revenue from international markets was up 27%, with tablets as the key driver. Tablet revenue increased by 39%, driven by both Japan, Southeast Asia, and other minor tablet markets. The growth in shipments to Japan mirrored continued growth in our partners' tourist in-market sales of tablets. Revenue from skid product shipments to China grew by single digits, while Chinese in-market sales of skid continued to show double-digit growth. Let's turn to the product lines on slide five. Global tablet revenue grew by 29% on double daily growth in all sales regions. Global revenue from skid and slid drops grew modestly by 5% against tough comparisons in Q3 last year, which partly saw high levels of skid shipments to China and partly saw an impact from improved pricing and rebate adjustments in Europe. Further to this, Q3 growth this year weakened in Germany due to changes in the product mix, but we expect these changes to be temporary. Global revenue from other products and services, including JEXT, increased by 26%. Global JEXT sales more than doubled, and sales have now recovered from last year's supply shortages. Oppositely, we saw weak performance in other products in North America, especially pre-PEN. The integration of pre-PEN operation has been completed, but sales continue to perform below expectations. In September, however, a bill was introduced by bipartisan representatives in the House to add a Penicillin allergy verification component to the federal health insurance program, Medicare. This bill could hold a big potential for prepayment and we will keep you posted on any developments. Now let's move on to slide 6 and the financial results year to date. Nine months revenue was up 16% in local currencies and exceeded 4 billion Danish kroner. That was reflecting a strong momentum for tablets, particularly in Europe. The gross profit of 2.6 billion Danish kroner yielded a gross margin of 64.3% and improvement of more than 1 percentage point. This was due to changes in 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 higher input costs and minor one-off costs to optimizations. Total capacity costs of 1.7 billion Danish kroner were unchanged in local currencies. R&D expenses were down 22% after the completion of last year's comprehensive clinical trials. Sales and marketing expenses were up 8%, while admin costs increased 9%, mainly driven by costs related to the AllergyPlus strategy process. Optimizations and cost savings contributed positively and help us lower the capacity cost to revenue ratio by 7 percentage points, as you appreciate from the graph to the right. The operating profit, EBIT, was 886 million Danish kroner, an improvement of 91% in local currencies and 88% in Danish kroner. The EBIT margin increased from 14 to 22% and the underlying EBIT margin would have exceeded 23% disregarding OneOff's restructuring cost of 49 million Danish kroner. a clear indication that we managed to raise margins steadily towards our 2025 ambition. Finally, free cash flow improved to 425 million Danish kroner, as higher earnings clearly offset changes in working capital and investments. All in all, a strong set of results, ALK's best nine-month performance so far. So with that, I would like to hand it back to you, Peter, and the Allergy Plus strategy on slide eight.