Eurofins Sci Se Unsp/Adr

And good morning ladies and gentlemen and thank you for your patience, your conference will begin shortly. And once again thank you for your patience, your conference will begin shortly. Sci Se Unsp Good day, everyone, and welcome to the Eurofin Scientific Third Quarter Conference Call. At this time, all participants are placed on a listen-only mode. If you have any questions or comments during the presentation, you may press star 1 on your phone to enter the question queue at any time, and we'll open the floor for your questions and comments after the presentation. It is now my pleasure to hand the floor over to your host, Andrew Swift.

Sir, the floor is yours. Ladies and gentlemen, welcome and thank you for joining Eurofins' nine-month 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 a listen-only mode. 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 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, The Orphan CEO. Please go ahead.

Hello, everybody, and thank you for joining our quarterly call. I guess you have all read our press release, so I will not repeat everything that's in there. There is a short slideshow online. We only discuss organic growth during this quarterly call, so it's a short presentation. You can read the slides, so I will not comment all of them. What we see is that we continue to make progress. The organic growth is what it is. Unfortunately, we have some clinical programs that we thought would start in Q4 of this year that won't start this year. We do have good signatures of different programs, which makes us optimistic for next year that we're going to start seeing some improvements, for example, in our central lab and hopefully in our bioanalysis, which has been hurting us for a few quarters. The growth is what it is. And of course, one can extrapolate it at infinitum at a current growth or the derivative of the current growth. But in any case, the main thing about Eurofins is that we are building a very strong company that is and that is making good progress. The building of our hub and spoke laboratories network has been continued. We are inaugurating a new large site. We just did it for a biopharma product testing business in the Netherlands. We have moved to a new site in the Netherlands, very modern for environmental testing that some of you will see the day after tomorrow. And we are confident that we are going to complete that program on our current scope by the end of 2027, the end of this five-year building phase. On the digital side, which is even more important because our type of business delivers data numbers, we generate massive amounts of data every day. That is also making good progress with the deployment of our new generation of a suite of IT solutions for food and environmental testing businesses. We are confident that the deployment will have been Completed or quasi completed by the end of next year as planned and and those things will will bring massive benefits in in the quality of our service to our clients in the traceability of everything that happens in the speed of delivering service. More importantly, this phase of five years will prepare us for the next phase where we can deploy at scale automation and AI solutions. So if you as a preview to what's beyond the 2027. That's going to be more than the main thing that will happen after that. We will have the footprint. We won't have to shut down labs, close down move with massive double cost of facilities while we do the move. Massive, of course, capex to build those sites that will be behind us. And we can then optimize our network, improve A I can bring a lot in many aspects of our business, especially in the area of quality control to make sure everything that we do is performing well and automation, of course. So that's the building phase, which has been a long one. I do acknowledge because we've been consolidating a very, very large numbers of small mom and pop labs. that were subscale and we're all doing a little bit of everything. This phase will be. And of course, this brings benefits. It brings benefits. That's why, even though the growth this year is a little bit below our objective, we will achieve, we believe, our profit improvement objectives. And also next year, we're confident that we will achieve the profit growth objective that we have been planning. So overall, things are going well. We are building. The economy is not as great as we would like in Europe, especially France and Germany are struggling with growth. We see it a little bit in our numbers in this quarter for life, for example. But overall, we have some areas that have been affected over the last few quarters, but we've hit bottom, we believe, in the ancillary activities like agro-science, genomics, etc. And we believe that is the much firmer base to grow going forward. Also, this deployment of limb system has been really hurting our labs and costing us growth. And once this is behind us, our teams can much more focus on growth, winning new clients, rather than fielding complaints because we are behind because Due to limbs changes and so on, we have some backlog. So all of that make us optimistic for the coming years. What you can see on page four, some breakdown of the growth and breakdown by activity. Again, I caution everyone on extrapolating a quarter, especially if you look at just one area, because one area can be affected by some large programs disproportionately. But overall, the trend is positive. You see on page eight a bit of color on biopharma. We still have some areas that are a bit challenged. But we think now in Q4 of this year, we will hit the bottom in some areas. And therefore, we should have a much easier base to grow from next year. I spent a bit of time on acquisitions on page seven. I think over the long term, our sector will consolidate around category leaders like any other industry. And specialized companies will be able to carry out much more focused investments in the areas that I mentioned, being automation, AI, digitalization, footprint. And this is happening and many leading companies in our sectors, not all, have recognized that and are going away from being conglomerates and being specialized. We've had a very good transaction with Element where we were able to have 27 labs that fit very well with our core segments of biopharma and environmental testing to join our network. At the same time, We transferred to UL also a number of our labs that were doing electrical and electronic product testing. This is a number of years, but where we were maybe worldwide number in the five to ten with very little prospects over the next two or three years to become number one globally. And therefore, we decided that there could be a better owner. UL is leading in that area, and it makes them stronger, which is good for them. It's good for our teams that are joining UL. And we can redeploy. We started actually with Element to redeploy the resources that we obtained from this transaction into our core business. The good thing is that we have the digital platform to welcome those new labs, and it's going to be for us an incremental Small incremental costs to integrate those labs. They can have access to our clients. We can have access to their clients. So this is a good transaction. And this is something we will probably continue to do as the sector consolidates. But we are focusing, of course, on the assets that we think add value and are at the right price. And that doesn't mean we will be buying all assets. There are many assets that we think are either overpriced or don't bring really differentiated value. And this is something we can rebuild ourselves.