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Good day ladies and gentlemen and welcome to the Eurofins H1 2026 conference call. At this time all participants are placed on a listen-only mode and the floor will be open for questions and comments during the presentation. It is now my pleasure to turn the floor over to your host Mr. Andrew Swift. Sir, the floor is yours.

Thank you for joining the Eurofins H1 2026 conference call. Please note that this call is being recorded and will later be available for replay on the Eurofins Investor Relations website. Throughout today's presentation, all participants will be in the listen-only mode. The presentation will be followed by a question and answer session. If you would like to ask a question, you may press star followed by one on your touchtone telephone to register for questions. And for operator assistance, please press the star key followed by zero. During this call, Eurofins management may make forward-looking statements, including but not limited to statements with respect to outlook and the related assumptions. Management will also discuss alternative performance measures such as organic growth and EBITDA, which are defined in the footnotes of our press releases. Actual results may differ materially from objectives discussed. Risks and uncertainties that may affect Eurofins' future results include, but are not limited to, those described in the risk factors section of the most recent Eurofins' annual and half-year reports. Please also read the disclaimer on page two of this presentation, subject to which this call and Q&A session are made. I would now like to turn the conference over to Dr. Gilles Martin, Eurofins' CEO. Please go ahead.

Hello, everybody, and thank you for joining our half-year result call. We have a small presentation. I guess some of you could download it. So we've had a strong H1 2026 with very strong improvement of results, 29% EPS growth. That's a continuation of the progress we've seen on margins and profit in the last year. If we go to the summary that we have on page four, On page 5, you can highlight some numbers. The growth is still not at our mid-term objectives, but it has been improving between Q2 and Q1. In our life sector, especially in environment, we've seen the growth accelerating as we recovered some of the weather effects that we saw in Q1. We had not flagged a particular catch-up. In biopharma in the second quarter, we think the later part of the year, especially Q4, we should see much more effect from the positive comparable and potentially some restart or start of some important programs in our clinical business and also the end of some of the constructions of some areas in agro-science, for example, where we have rationalized also the capacity. So, no big surprise on the top line. On the margin, on the other hand, we are above our objectives, we are above what we are expecting. In what is traditionally the lower margin part of the year, we have achieved 23.7% on the adjusted margin, EBDA margin, which is quite good and it shows what our business can deliver. Overall, we continue to reduce our separately disclosed item and as we finish the integration of all the companies we acquired, we are moving forward in the building of the hub and spoke model and we start to see the benefits. We're not there yet. We still have enormous expenses in IT, enormous disruptions to our business in deploying our new IT solutions in our environmental testing businesses in Europe. all of that is progressing so we are positive that by the end of 27 we will complete those programs and we'll have a very efficient completely digital network with the latest technologies and start to deploy some AI tools for being even faster and more efficient in some areas those programs are are going well and we start to see the faster than we thought so that's on the uh and we also Our investments are done, so we have to invest a little bit less. The other thing is to continue to focus our business. We've already discussed that we agreed to divest our electrical and electronic testing business. It's a good business that we built over the last 15 years, but it's not necessarily core to our testing for life business. UL will be a better owner, so we were able to divest it. We announced that on Monday to acquire a business of similar size in North America, which is an area that is actually growing better than Europe, focused in the core of our business, mainly biopharma product testing, but also environmental and some food testing. So this is an example of two transactions that are in line with the The goal to focus, of course, the more we focus on one area of activity, the more efficient we are, the better we can deploy our IT solutions. We haven't started developing a whole suite of IT solutions for the electrical and electronic testing business, which is slightly different than our other businesses. But in that business we acquire, we have all the tools that we can deploy almost from day one and make it more efficient. So that's an example of how we intend to continue to allocate capital Going forward. On page six, you see some of the reasons for the margin improvement. But if I summarize it, as I just said, it's basically we are starting to see the benefits of all the efforts we did. And we also have the end of some of the costs for duplicate sites and et cetera. The exceptional costs are also going down because we... We are still doing some new sites, moving to new sites. In the Netherlands, we are moving to a new environmental testing site, where we will be moving also to a pharma testing site to bring together four different sites. All of that is, of course, costing still a lot of money, but a lot of those programs are behind us, and we see the benefits. On page 7, you see the various evolutions. on organic growth. So our live business is still slightly below where it should be, but it's doing well overall, close to, in mid-single digits, close to 5%. Biopharma is a bit soft. Even biopharma product testing in Europe has been softer than in previous periods. We've had a couple of large contracts that ended. We are working on replacing them, and some parts will be replaced, but It had an impact, especially in Q2. Diagnostic business was doing well in Europe. In North America, we still have the impact of some regulatory changes. One affected our transplant business. We've already covered that several times, but we still have the base effect in the first half of 2025 in the change of reimbursement of the transplant rejection test that we have, and that we also have a change of the mix of tests required For donor product testing, which impact our growth, we've had negative growth in diagnostics in North America, which affect the overall growth. But here again, as soon as the time passes, the comparable will ease and that should improve. And consumer has been doing well. We have a bigger exposure to Asia in consumer than to Europe and North America. And Asia is doing well. And also we have a material testing business. We have some nice developments with AI and semiconductors. And that business is progressing very positively. On page eight, we gave a bit more color on the components of our biopharma sector. And as you can see, we still have, unfortunately, Some areas which have negative growth. Discovery is still slightly negative. That's the early phase of biopharma. We see some green shoots. The funding of biotech is improving. We have requests for quotes, but we haven't seen a big impact on the actual numbers yet, although that should materialize at some point. Agro-science and genomics are still challenged on the top line. We are rationalizing sites, we are rationalizing capacity, and we also do believe that this will hit bottom over the next few quarters. So the opportunity there is the impact of those areas that are negative is getting smaller and smaller every quarter, and at some point we get to the core that will not decrease anymore. And of course, that leads to rationalization in the market. There are fewer and fewer players in agro-science, and a lot of companies are closing or rationalizing also. So that's the outlook on biopharma. continued to do very well, double-digit in North America and in Europe for the reason . Laurent will now give you some more details and more color on the financial numbers.

Thank you, Gilles. Good afternoon. It's my pleasure to walk you through our half-year results. On slide 10, despite a moderate revenue growth, we delivered a strong improvement of margins and earnings per share. Our reported EBITDA recorded a 190 bps improvement year-on-year, reaching 23.3%, including a 50 bps exceptional gain from legal settlements. Our adjusted EBITDA increased by 130 bps year-on-year reaching 23.7% with reduced SDI which are now waiting only 0.4% of revenues. So overall we saw a very strong increase of our earning per share at plus 29% year-on-year reaching the level of 1 euro and 55 cents.

On slide 11

As you can see, our moderate revenue growth was a result of mostly two factors, an organic growth of 2.7%, but also a very strong FX headwind of 2.9%. The M&A contribution in H1 was very limited. On slide 12, if we look at the breakdown of our H1 results by region, we see a very strong growth of revenues in the rest of the world, plus 9% organically and plus 5% in reported figures. and we see a very good improvement of margins across all regions with Europe recording a plus 210 bps improvement North America a plus 230 bps improvement if we exclude the one-time gain from settlements it's still a 90 bps improvement and a plus 130 bps improvement in the rest of the world On slide 13 if we look at another breakdown of our H1 results between mature and non-mature scopes We see a mature business, which is reaching 25.3% margin, well ahead of our group objectives. And we see also a non-mature headwind decreasing year after year, with SDI at only 0.4% of revenues. On slide 14, in line with this strong margin improvement, we also had a very strong cash flow improvement. We saw free cash flow to the firm increase by 46% year on year, and reaching 403 million euros. We also had a record cash conversion of 47%, which resulted in a very stable leverage versus December of 2.2. All this enabled us to increase our share buybacks by another 200 million in the first half. On slide 15, if we zoom at the levels behind this strong improvement of cash generation, of course, it's due to the improved margins, plus 500 bps in the last three years, but also to reduce capex. 240 bits less in the last three years and a much decreased networking capital intensity by 190 bits in the last three years. All in all, it's notable to see that we were able to multiply by five our free cash flow to the firm in the last three years. Now I will give back the mic to Gilles.

So a bit more color on this focus on our core business. On slide 17, we talked again about the divestment or electrical and electronic product testing. So this was a transaction that was also generated, as you can see from the numbers, at a much, much higher multiple than the overall multiple at which Eurofin shares are trading, almost double. And this business doesn't have a higher margin, and it's not growing faster than the rest of Eurofins. just a small indication of the value that is within Eurofins and that actually can be realized by those transactions or at least shown and it generates some cash and with this cash we can reinvest in our core business which we did and you have some details on page 18 we have the agreement to acquire Element Material Technologies Life Science Testing Services Elements is a business that was formed by private equity by a number of acquisitions over the years. It was sold to Temasek. And like many, many tick players, when markets become more advanced and the companies like Eurofins that are very specialized become more competitive, it becomes harder for conglomerates that are serving a large number of verticals to be very good in all verticals. and to invest in the digitalization, in the robotics, in the AI tools that are bespoke for each type of activity. And so it does really make sense for Element to dispose of an activity where they will never have had the global or local leadership in North America. Like UL is a better owner for the electrical and product testing that Eurofins used to own, Eurofins is a much better owner for the life science testing that belongs to Element. So it's win-win deals for both parties in both cases. Over time, we think we can create significant value of that business. We have a very clear integration plans. We know what tools we can develop. We can deploy our IT solutions for BPT, our world class. And this business is growing well for us in North America where those businesses are are present. We have a large food testing, a large environmental testing business in North America, so we can easily add the few labs that Element add in those areas, and they can fall under our leadership team and our IT solution. So this is a very good fit acquisition for us, and I think you will see over the next few years that the most successful TIC businesses will be the very focused TIC businesses, as it's difficult to be the best in all areas. That applies to TIC like it applies to any other industry. On the side of those large acquisitions, we continue with our M&A, where we have a target to add about 250 million euro revenues per year from a number of Bolton acquisitions. And we continue to do that in the first half of this year with several transactions, including some that we are working on and that will close over the next few months. On page 20, we give a couple of examples of the new sites that we have been building. Building new sites to create hubs and to consolidate the smaller labs that we acquired over the years is not something that is done overnight. The lab in the Netherlands is a project we started three years ago. We needed to buy land to obtain planning permission to get it built and now we're getting it qualified. For one year, all our businesses that are in the Netherlands into that building, we need to qualify the businesses after the move. So all those moves are very costly, disruptive. They dilute our margins, and of course, they dilute our return on capital employed while we do them. But once they are done, they provide significant scale advantages for a decade or more, or actually much more, because On those sites we have extra land, so if we need to grow, we don't need to move the site, we don't need to add disjointed buildings, we can just add a wing to the buildings we have built. So we still have a few to do. The last one will be an extension of our Lancaster campus in North America that will complete in 2028. But with that, we will be by the end of next year, with that exception, Pretty much complete to integrate all our network into the right footprint with very large hubs with scale effects, automation, robotics, etc. And the spokes to do the time-critical assays closer to our customers, but only when it's required. On technology, we don't talk very much about that because it's more in the trade journals that we talk about it for the clients that are interested in each area but our labs continue to invest a lot in R&D developing new solutions that are in the testing world usually quite advanced compared to the rest of their industry so we can talk a few we presented a few on page 21 and we are proud to have some of the most innovative labs in our sector If we look at how we see the future, we are not changing our outlook. It is obvious that to hit mid-single-digit organic growth for this year, we need to have a significant pickup in H2. We believe we will have a pickup in H2. How big the pickup will be, we will see. But we still think mid-single-digit is achievable. Whether we will achieve it or not will depend on a number of factors. But we have decided to keep that objective. Our margins, we think the margins, we keep our objectives. Basically, we haven't changed anything. Our margins will improve this year. And we also confirm our objectives for next year. If you look at the numbers for the first half of this year, it probably makes very credible our objectives for next year. And we confirm also our objective for next year. And we do think the softness in biopharma is temporary. It is shown in all numbers as bigger than it is for the core of a biopharma, which is BPT. So clearly, at some point, all those ancillary activities in biopharmas will stabilize, will start growing, or we will shrink them to a point where they don't matter. So we maintain our objective to grow a bit above a mid-single digit on the secular level. And another factor is, once we are done with Restructuring our network around our hub and spoke network, deploying our IT solutions, deploying AI and robotics, our operational performance will also significantly improve. At the moment, we lose clients because we are changing limbs, because when you change IT systems, your performance decreases, you have issues, and at some point this is done. And then the opposite happens. We will be much faster, much better, much more reliable in our delivery times and pretty much anyone in the market, which should also provide the opportunity for gaining significant share, also would be much more efficient. So we are really looking forward in all of our market to being done with those programs and we are right in the middle of it in Europe at the moment in food and environmental testing. So it is a drag, but the progress is good and we are confident that we'll come out of 2027 With the best network possible in terms of footprint and in terms of IT solutions, service delivery, speed, and quality of interaction with clients. So we're optimistic for the mid-term growth once we are done with that. In the meantime, we continue to improve our margins. We continue to generate more cash flow. Our capex is kept within the objectives that we have set for our capex of 400 million per year. That can go down when we are done with this project. This program of building the urban spoke network and the digital investment program. So beyond 2027, we might be able to do with less than that. We will also be done with spending to own our own sites. And so beyond 2027, we see the cash flow that we generate to continue to increase. And we can use it to either grow organically or to return to shareholders. And even now, when we are not done with building our network, We return a lot of money to our shareholders through dividends and through share buybacks. As we continue to improve our margins and cash flow, we can increase those returns to shareholders and continue to take advantage of a very depressed share price to create long-term value for those shareholders who believe in the long-term of Eurofins. Overall, we repeat our objective, we confirm our objectives. And if I move to the conclusion slide on page 24, I think we've had a very good first half. Things are moving as we expect, actually better than we expect. Our network is coming together very well. We still have a number of lost mating units that either are startups and that are working, that are growing to profitability or are in the middle of a reorganization. The SINLAB network in Spain, the integration is going well, but it's still very dilutive to our profits. So we still need a couple of years to get to our target profitability there. We've ended a lot of loss-making contracts there that also impacts our organic growth, of course, when we do that. But then we focus on business that is profitable long-term and clients that are prepared to pay so their providers make an acceptable profit. We are, as I said, optimistic that organic growth will pick up going forward. The exact number is difficult to say, but we will go back to what we used to be, mid or high-mid single digits. We will continue to deploy capital carefully to focus on our core business. Overall, we are convinced we will finalize our five-year program by the end of next year. and that will give us a very good platform for growth of top line and profits. That is for our introduction and we can now take questions. Thank you.

Thank you. Ladies and gentlemen, at this time we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you are using speaker equipment today, please lift the handset before making your selection. Anyone who has a question may press star followed by one at this time. Thank you. Our first question today is coming from Suhasini Varanasi with Goldman Sachs. Your line is live.

Hi, good afternoon. Thank you for taking my questions. A couple from me, please. I think at the 1Q results, you had indicated that growth was coming back to normal by the end of the quarter, and therefore the expectation was for 2Q to deliver reasonable mid-single-digit growth. Just trying to understand what changed, please. And specifically in biopharma, when you talked about the contracts that ended, was it a competitive loss or was that something else? The second one, on CapEx, actually, it seems a little bit light, especially on the real estate spend in 1H. Is that a timing issue or should we expect maybe slightly less spend on real estate for the rest of the year? Thank you.

Thank you, Suhasini. Well, what we're talking about, if I remember well, was mostly the environment and the businesses that were affected by weather that were coming back, and they are back at mid-single digits. Biopharma, we have different components in biopharma. So the genomics and the agro-science, the outlook then was not good and is still not good. We don't expect a pickup in those areas, a significant pickup for short-term. Then we have Discovery. Discovery is close to zero, slightly negative in the first half. Here again, we believe it will pick up, but we haven't flagged and we still can't flag a significant pickup or timing of a pickup. On DPT, the U.S. continued with single digits. Europe was flat in the first half of the year. It depends on the countries. We have countries growing very well, double digits actually. and we have countries that are a bit more challenged France and Germany among others and there is the impact of some large contracts that it's not that we lost it to a competitor but sometimes pharma has certain programs they develop a new product or they build a new site that they need to validate so it makes it a little bit lumpy and so usually we win more contracts and it's not shown But maybe in an environment that's a bit less dynamic for biopharma, it shows more when one of those contracts end. And capex, yes, especially real estate capex is not linear. It's a bit bulky. It depends when we complete a building. So we're still guiding for more or less 200 million on our own site. Maybe some will shift to 2028 because I don't think we can complete Lancaster by the end of 2027. and the the overall other capex which includes growth and maintenance capex maintenance capex is two or three percent and and the rest is growth capex we spend as we need it so we need some of our businesses that are more challenged on growth they spend less and then and so that may be why we're a bit below but other businesses that are growing fast are are in the normal spend of capex that we have planned of course we're frugal we don't spend when we don't need to spend

Thank you very much.

Thank you. Our next question is coming from Francois Degas with Kepler Shavrou. Your line is live.

Good afternoon. Coming back on biopharma, so is it fair to understand from your comments that improvement will come mainly from easier comps? But I had in mind that you were also expecting new contracts to come. Are these contracts already signed? And are we talking about smaller number of contracts or a broad number of smaller contracts? and I have a second question if I may. Do you today consider Eurofins to be a conglomerate or already sufficiently focused? Thank you.

BPT, well we have biopharma, we have many things. We have a business which is a small clinical business where we have large contracts compared to the size of that business. That affects our central lab, bioanalysis, and also our CDMO to some extent, where a contract can make a difference. In BPT, it's much less so, but we do have 5 or 10 million a year contracts with some clients that are linked to certain projects. But BPT is mostly a lot of small contracts compared to the size of the business. They might be big in absolute terms. And the clinical business like central lab would be larger contracts compared to the size of that business. And we have some that are signed, but we're not exactly sure when they will start being implemented, pick up, when the patient recruitment will show some significant momentum. So we cannot give precise timing. We do think we'll see an impact in the back end of this year of those contracts starting. And of course, as you mentioned, we'll have the comps. How do I define focused? I would say focused is If you are three or four times bigger than your next competitor and you are the market leader, you benefit from the scale. You benefit from being focused. And you can have one or two verticals. The question is, in each vertical, how much bigger are you? Are you the market leader in each vertical and potentially in each market, in each geography? And if you're a market leader, how many times bigger than the next one are you? And that gives you scale and that gives you a benefit of your focus. So that's how I would look at focus. When I look at other companies that are more conglomerate, they sprinkle their market shares. They have a bit of this in one country, a bit of that in another country, but they are not leaders in many places, if any, and to build the efficiency, the scale, the dedicated digital tools that will make people winners. On the trade of companies, it's difficult to see because You don't get the detailed numbers of each of the verticals. You have some focused companies. And if you look at UL, for example, which is much more focused on electrical products and this type of certification activity, they do have significantly higher margins, trade at higher multiples, just to give one example. Most of the other examples you only see when you look at private companies that are sold in private transactions. So the numbers are not public. But in my experience, from what I've seen in the last few years, in the last actually decades, focus is of high benefit.

Thank you. And do you think that today your offense is already focused enough?

Well, 70% of our business is in those activities. The other 30%, we can be number one in a geography. And then the question is, in those businesses like clinical diagnostics, we are number one in Spain, for example. We're number one in Ireland. Is it necessary to be number one worldwide in that sector? That would be the question. And I think we like what we have. And we have businesses, for example, in consumer product testing. If I take our material science business, we are number one in the world in that niche. It is a niche. It is a global niche. We are number one in the world and we have a great business. We have a fantastic business working for some of the most advanced companies in the world where they need very specific advanced microscopy testing that were among the very few companies in the world that we can offer. We classify it as consumer product testing, but it is an extremely focused and extremely successful business that is global market leader and actually two or three times bigger than the next one.

Thank you very much.

Thank you. Our next question is coming from Alan Wells with Jefferies. Your line is live.

Good afternoon, Gilles. A couple from me, please. First, I just wanted to follow up on Sashini's question earlier, but with a focus maybe on visibility. I don't think any of us thought that pharma was necessarily going to get significantly better in Q2, but I think most people probably didn't expect it to get sequentially worse. Could you maybe just comment a little bit about the increase or decrease in visibility that you maybe have across the business with a particular focus on on pharma and I guess that I would have expected that you would have known that some of those contracts were ending in Q2 and that there may be nothing lined up to replace them so just try to understand that and and then then link to that is there any comment you can make on kind of June July exit rates for the for the business as a whole that's that's my first couple of questions and then and then secondly just on on biopharma Growth obviously weakened. If I then add in the prior year comp that eased as well, that's almost a 500 basis point underlying deterioration between Q1 and Q2. And if I go through the building blocks, I mean, yes, ancillary is obviously weaker, but it does feel like a lot of that is in the product testing side. The text commentary in the release first thing talked about Europe being stable and the Well, how do I reconcile between the text and the numbers? And maybe you can quantify some of the building blocks within the product testing business. How much was the contract exits of that almost 500 basis points underlying versus whatever else was in there that was moving against you? Just so we can understand the moving parts. Thank you.

Yeah, thanks, Alan, for your question. Visibility, you know, we're not in the business of making... I would say rolling forecast or things like that. So we only look at the results at the end of the quarter. And frankly, there are so many contracts we can win or we can't lose that can start where clients can send samples wherever they want. It would be actually very hard to do that. Also, we think the impact is immaterial on the long-term prospect and the long-term value of the company. Because we know what we're doing, we know what we're doing and you see it on the profitability and whether we are 1% or 2% above in the quarter doesn't change anything on the mid-term outlook in our opinion. So we could put a lot of effort in very fine planning and all of those things which would be extremely difficult to do. I don't know if we could actually do it but we don't do it. I'm not sure I follow the 500 basis point that you mentioned, but is 500 basis point between what and what for what period, what activity?

So, yeah, I mean, maybe this is, again, focused on quarterly movements more than anything else, but I was just looking at growth was minus 1.1 in Q2 from plus 1.1, but then the prior year comp... Sorry, growth of what? In biopharma, sorry. What? Oh, biopharma.

The whole of biopharma. Yeah, so you say there is 220 basis point difference in the total of biopharma.

Yeah, and the prior year comps got easier as well. So I'm just trying to work out like sequentially the growth eased, but the prior year comps got easier. So you should have got a benefit. But again, I think it probably comes back to your point. If you're not managing quarterly by quarterly, that's not something you're going to comment on.

Yeah, 2025 we were at 0.3% organic growth in Q1 and 1.5% in Q2. And so this year we are a bit higher in Q1, 1.1%, and Q2, minus 1.1%. But, you know, in that thing in Q2, just to give you an idea, we are at minus 16% in our Phase I clinics in Europe and 20% in our European CDMO because some contracts ended in CDMO. And in North America, those negatives can have a big impact. Our biopharma and bioanalysis is minus 20% compared to the comp of the same quarter last year, and that has a big impact. Now, that can revert also to plus 40% once your contract starts in those activities. The bigger impact between Q1 and Q2 are basically Our BPT Europe was at zero, which is a substantial business in the first half of the year, while the U.S. was mid-single-digit growth. We don't think this is a long-term trend for Europe, but indeed we had the impact of a couple of contracts, and we have a bit of a software activity, for example, in France. That's a lot of numbers, lots of small activities that go in different directions. but the bigger impact is mostly the European BPT this half year and some of those ancillary activities having very significant negative but at some point they bottom up and they grow again. Agro-science was 20% down in Europe in the second quarter, in North America in the second quarter. Not big numbers but still it's an impact.

Okay, thank you. Could I just have one quick maybe bigger picture follow-up? Coming back on the CapEx side, CapEx was obviously down 15% I think year on year. At the same time, obviously growth is coming down. Can you just maybe just comment on how confident you are that this level of CapEx is sufficient to support growth acceleration within the business as we move through this year into 2027?

I think less CapEx should give more growth because a lot of that CapEx is just building the basics in those new sites we have been building and it's not the capex we have now should sustain much more growth than we have at the moment in some areas but some areas were growing at 10-15% so if you look at the of a lot of components that are moving in different directions but you know overall if you look at our business so we split it between There is a slide that gives you a bit of a breakdown, I think Laurent mentioned on page 10. Adjusted results, so we have our mature business, 462 million in the first half, so it's a 7 billion business. which is turning 25.3% EBITDA margin on mature revenues, reported 23.7% and reported EBITDA margin of 17.5%. So we have a very strong, very good business that is well invested, that doesn't need so much more capex and that will grow for years to come. And of course the biopharma at some point will pick up. and the businesses that are still being integrated including Synlab which is a big chunk of the 240 million of the SDI at some point they will get there and this part of SDI will become immaterial so overall you know that explains why I'm quite happy about the results and I'm not too concerned about one quarter being a bit down or a bit up in one component or the other and the things you know what we've also done we have a number of businesses which are indeed hurting our growth We are closing some. We sold some of those clinical businesses we had in the Netherlands that have been dragging on our growth and profitability basically since COVID. So we have no hesitation to sell or close the businesses where we don't see the potential to have long-term good growth and good profitability. Of course, it takes time. Nothing changes so much from one quarter to the next. But We're confident we will execute and we'll get a very, very strong business, which is for the most part already quite strong now. Because if you compare those performance of our mature business with many other companies in the sector, they are extremely good.

Thank you. As a reminder, ladies and gentlemen, if you do have questions, please press the star key followed by one. Our next question is coming from Delphine Lallouet with Bernstein. Your line is live.

Thank you very much. Gilles, I'm going to push you a little bit. You know that most of your investor base is focusing into the top line and the mid-term guidance, 6.5%. We are very much far away from that. Lots of questions coming out of why you're not giving up on this guidance. And second question will be more broadly about the picture. You never had, and you're talking about this mature revenue, you've never been in such a comfortable position when you look at the cash flow, the free cash flow, operating cash flow, the pure accretion that the business is giving up now in terms of a mature business. Why don't you accelerate massively the cleanup of the portfolio and be very active when it comes either to spin-off or sell or acquisition? What about that? What is lacking currently in your comex not to be more active?

I think we are quite active but you know you don't run a company like you run a portfolio. Portfolio, it's easy to go to the market and sell shares and buy shares if you have liquidity. When you have a large business, to buy a business, well, first you have to have sellers, and we buy a number of businesses every year that fit very well with what we want to own long term. If we want to dispose of a business, it's a one-year process. We prepare at least six months, and until it closes, it's at least a year with all the regulatory clearances. So we are doing that. Building a network of hub-and-spoke labs is unfortunately very long. I mentioned the lab in the Netherlands we built for BioPharma. We haven't yet moved in, and we started three years ago that program. Everything in a highly regulated business like Eurofins takes a long time. The good thing is it's highly regulated, so it's hard to build a BioPharma product testing. It's hard to get all the validation and certification and client approval once you have it. Clients don't change. They don't change because somebody comes and offers a 10% lower price. They have their studies there, they have the history of their studies there, and they stay. So it's a very recurring business, very stable business, and it takes time to change. And why don't we give up the 6.5% or meet too high? I think this is what our business can give historically. It's, of course, a secular objective. If you take the average over many, many years, that's where we've been. I think that's where we should be. Now, it will depend on the mix. Maybe clinical diagnostic is a bit lower. In the end, I don't think any of that matters because the business is valued now at such a low multiple compared to the component that all of that is basically irrelevant. Investors decide. They put a number in their plans and Basically, they decide what the business is worth. We buy a lot of shares, as much as we can. If we look at our leverage, we want to stay within our leverage obligations. We want to have headroom to do acquisitions if we need to. But, you know, in the long term, the market will decide and the market will see. And we'll see what growth we achieve. We think there's no reason to change that at the moment.

All right, okay, if I may follow up regarding possibly more pragmatic on the consumer and technology product. You had a positive base effect last year, but you also deliver a very strong performance driven by the semiconductor. So as you do mention the stickiness of the clients when it comes to some of the testing, Do you think that you open a new, in a way, a new door or a new window for the semiconductor industry to go probably more actively with Eurofin when it comes to testing or is it really a quarter effect related?

No, it's a mix. We also do very well in our Soft line and hard line testing. We have more exposure in consumer to Asia which as you see rest of the world is growing faster than Europe and North America overall considering the mix we have. It's also medical device, it's also aerospace, it's also military. So anything with advanced material we are the leader in the world in this type of testing. It's not exactly testing for life, but it's a very good business that is doing very well within Eurofins and where we could invest more indeed.

All right, thanks. Thank you. Our next question is coming from Arthur Trostlove with Citi. Your line is live.

Thank you very much for taking my questions. The first question was just on how you've done so well on the margins. Obviously, you know, with organic growth coming in a bit soggy. So I guess, you know, we just wondered how you've done that. You know, have you reduced head count? How many people have you taken out? Has it been compulsory redundancies and sort of whereabouts regionally? Has that happened? Second question I had was, Are you able to just highlight the contribution to the EBITDA or the adjusted EBITDA margin progression from ending weak profitability contracts? And also, could you just tell us how the abandonment of those contracts has impacted organic growth in both Q2 and the first half? And then finally from me, just in terms of the BPT activities, obviously you know significantly lower organic growth in H1 than the H2 last year. Are you able to just say sort of bottom up within the business what's going to make that recover? Thank you.

Thank you very much. Well, the margin is mostly stopping things that cost money. You know, we've made no secret that for the last three and a half years, we've been building the network. We've been building hub labs, moving things from labs required to new labs. Every time we do that, we become more efficient, and that reduces costs. You mentioned SYNLAB. Yes, by SYNLAB, we took out a lot of costs last year and this year because there was duplication of our existing network in Spain, and there is still some more to do. Also, we mentioned that post-COVID, in our clinical business in Europe, we had much too much capacity and potential for rationalization. So we've done that. Every time we finish a HubLab, after integration, we get more operating leverage in that HubLab. We also have a number of companies I mentioned that we have been closing and we've been either integrating the business in other labs. We've sold a couple in the Netherlands or closed one. So all of those things flow into a higher margin and we're not done. We still have a lot to do. We still have a lot of things that will improve. And coming back to what Delphine is saying... Maybe it's too slow, but you find it too slow, but we are doing a lot on that, and we see the impact. We even see the impact on the margin faster than probably you expected, because nobody believed we would do 24% margin next year. Very few people believed that, and now it seems like a lot of people are much more credible. So we're doing that, and we still have a very long list of things we are working on, and we'll complete by the end of next year that go in that direction. And that doesn't even take into account the much better competitive position we'll be in when we have finalized our digitalization program, which takes a long time, but it's a big network and it's a lot of applications. And on BPT, well, we continue to do very well in the US. It's just in Europe that we've had a bit of weaknesses, in France and Germany mainly, and some... That ended, but every day we talk with clients and we sign new contracts. I don't think it's a normal situation that what you've seen in BPT Europe for the first half of this year.

Thank you.

We will take our last question today from James Roland Clark with Berkley's. Your line is live.

Hi, good afternoon. Thanks for taking my question. So firstly on the biopharma business excluding product testing, you mentioned earlier to a question that you're not in the business of providing rolling forecasts regarding visibility, but you flagged that you've got confidence in the improvements in the second half in bioanalysis and North American CDMO. So I just wonder what gives you that confidence to make that comment? And then where end markets look? quite slow still in discovery genomics and then also the CDMO business in Europe where you haven't yet replaced contracts and also central labs too can you just comment on the underlying market activity and you know just sort of what's what's happening down the pipe and my final question is just on the margin you know obviously very strong margin growth in the first half and you've Previously mentioned in Q&A that you think a lot of your business is to deliver over 30% margin, but the group will never be there. You're very close to the 24% margin that you've guided to for 2027. Is now the time to talk about what you could do beyond that and where are you on the programs? You know, if you were to sort of say out of 100%, where are you in the programs and delivering all the cost savings that you expect and what could drive margins beyond 24%? Thank you.

Thank you, James. So a number of questions. We have activities where we have thousands of small contracts compared to the size of the business. That's food, that's environment, that's biopharma product testing. And then we have the clinical phases, central lab, bioanalysis to some extent, where the contracts are much larger and CDMO, where the contracts are much larger relative to the size of the business. So what we have in central lab, bio and CDMO is a bit of a base effect because we've had a lot of and some of them are signed to restart but we don't know when they will restart. When they do, this will be material in the growth as the end of those contracts was in the decrease of revenues. So we have more visibility if you want on that because once we get those contracts and we see them start, we know the impact will be significant. because it just takes two or three programs to have a major impact on our central lab business, for example. Discovery, genomics is smaller. It's more like lots of small businesses, so it's really harder to forecast. It's a law of large numbers, more to play. It's more the general outlook. Genomics, the outlook has been affected by the reduction of research spend in North America, NIH cuts, et cetera. Business Outlook is not great. We don't think it will continue to go down because at some point you get your core volume of customers. Unless there's even more cuts and more reductions in spending and funding, we don't see that continuing to go down. So we get to a base effect there. And discovery is mixed. We have some good signs, but it's really hard to know when those orders will really... Translate into samples. So it's hard to give you more visibility on the discovery business than saying, okay, we don't think it's going to get much worse. When will it start to be much better? I don't know. It's not a huge business for Eurofins. It's 100 million. And on the profit, once we've adjusted the cost to the level of revenues, we still can make very good margins at those level of revenues.

Thank you.

Ladies and gentlemen, this is all the time we have for today's question and answer session. We would like to turn the conference back to Dr. Gilles Martin for closing remarks.

Thank you very much. Thank you everyone for your questions and your research and your homework. We'll be meeting some of you in London tomorrow and follow up one on one. As I said, we are Building a very strong network of laboratories, as you can see by the result of our mature business, this is a very profitable activity. We still can improve that. We are not done where we are. We think all those actions will also have a positive impact on organic growth. We think we're in a good market, regulated market, where scale and regulation make it very hard for new entrants, and the Thank you very much for your support. I wish you all happy summer breaks if you take some, and looking forward to meeting you in person soon. Goodbye.

Thank you. Ladies and gentlemen, the call is now concluded and you may disconnect your telephone. We thank you for your joining and we hope you have a pleasant day.