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Hello, everyone, and welcome to the Grifols First Quarter 2023 conference call. Thank you very much for taking the time to join us today. This is Nuria Pascual, Investor Relations and Sustainability Officer, and I'm joined by Thomas Glassman, our Executive Chairman and CEO, Victor Grifols-Deu, our Chief Operating Officer, and Alfredo Arroyo, Chief Financial Officer. This call will last for about 60 minutes. There will be a presentation of approximately 30 minutes, followed by a Q&A session. If you want to raise a question, press star followed by five when the Q&A session begins. We will kindly ask you to limit your questions to a maximum of two, please. As a reminder, this call is being recorded. The materials for the call are on the investor relations sections at griffols.com. And the transcript and webcast replay of the call will also be available on the investor relations website within 24 hours after the end of the live conference call. Let me turn now to the legal disclaimer on slide two. And before we start, I draw your attention to the forward-looking statements, disclaimer on this slide, of the release. And forward-looking statements on the call are subject to substantial risk and uncertainties, speak only as of the call's original date, and we undertake no obligation to update or revise any of these statements. Now, I would like to turn the call over to Thomas Glassman.

Thank you, Nuria, and thank you, everyone, for joining the call today. Before we turn to the specifics of our business performance, financials, and full year 23 guidance, I would like to make some introductory comments. Over the past few months, we had the opportunity, after many years, to meet in person with more than 80 investors and 60 investment houses in London and New York, addressing questions and concerns about performance, depth, governance, and whether any fundamental changes will be made directionally at the company of the plans that had been laid out. For me and the management team, these meetings were of great value and I would like to take this opportunity to thank all participants for their honest and often very direct feedback, which was much appreciated. We have indeed taken note of what we heard and were told. In light of that, I would also like to take this opportunity to reiterate my key messages from these meetings. First, and very importantly, Grifols is committed to creating value for all our shareholders and in restoring our credibility and trust of the financial community. As I noted in our meetings, we understand that to do so, we will need to consider to deliver on our commitments, which we are already doing and will continue to do. The priorities set with our board remain the same. We will improve our financial profile, reduce debt, execute and deliver our operating improvement plan, capture commercial opportunities, and unlock biotest substantial value. Today's Q1 results should give you confidence that we are very focused on doing just that. Third, we outlined that we would clarify governance, streamline the organization, and implement a performance culture that is aligned with our shareholders. In fact, over the last year, the senior leadership team has already made significant strides to reinforce our operational excellence, of which the most important first step was establishing a new organizational model. This involved the creation of four strategic business units and the appointment of new management under whom we have refocused our strategic efforts to accelerate growth. Upon my appointment as Executive Chairman in February this year, I quickly thought to streamline GRIFL's leadership structure, establishing a core senior leadership team with clear responsibility. And now, as yesterday was announced, my appointment to CEO further clarifies our decision-making process to accelerate GRIFL's growth and strategic progress. Victor has been appointed as the Chief Operating Officer, and Raymond Griffels has been appointed as the Chief Corporate Officer. We have now clearly defined the responsibilities of our senior executive leadership team, enabling us to continue to deliver on our successful transformation with the greatest accuracy and speed. I will return to this key topic in more detail later in the presentation. And returning to our commitments, our fourth commitment was to improve our communication with stakeholders, and we are and will certainly do so. We have our quarterly calls, and we will follow up on a regular communication with our global investor base. With the input from some of our investors, we have also decided to expand our IR footprint into the United States to better serve investors in North America. Going forward, we are also determined to expand our reach and continue to engage with equity and fixed income market participants. I hope and trust that you will walk away from this presentation with a sense that Griffles is stepping up and aggressively aligning all the needed pieces to position the company for a successful future. With that, let me turn to slide four to kick off our presentation. In 22, we set clear priorities to reposition the company and made a number of key commitments in our February 23 call. I am pleased to report that in the first quarter of 23, we are effectively meeting and exceeding our commitments while we continue to execute on key priorities. Griffles is on the rebound, and our operational delivery in this first quarter reflects this. while it also demonstrates the company's strong fundamentals in a growing market. So let me review a few highlights of the first quarter. As I mentioned earlier, we implemented significant changes to our executive governance, clarifying the leadership structure. In Q1, we also strengthened our performance culture by rolling out new short- and long-term incentive plans aligned with shareholders' interests. The new plans award participants for overachievement and for Griffill's share price appreciation in the long term. Now, turning to the numbers, we delivered a solid start to the year, meeting and exceeding on our commitments in some key metrics. Revenues grew by 23% and by 14% on a like-for-like basis, excluding biotests, driven by a strong performance of biopharma, which delivered an increase of 26% and by 15% like-for-like. Excluding biotest, adjusted EBTA margin for Q1 was 21%, exceeding the 19 to 20 guidance set for the first half of 23. Consequently, we are raising our guidance to above 21% for the first half and for the whole year to 22 to 24%. Therefore, we now expect to exceed the €1.4 billion EBTA guidance for 2023. The execution of our operational improvement plan is also exceeding our expectations, with more than 80% of the €400 million already deployed as of today. We have identified additional savings and are raising also here our target to more than €450 million. This achievement has not been easy and I would like to take this opportunity to express my gratitude to all those working tirelessly on the front lines to make this happen. The plan, as it stands today, has resulted in a reduction of our cost per liter of more than 15 percent, driven primarily by a 25 percent decline in donor compensation. Both figures compared to the peak in July of 22. We are laser-focused on further reducing cost per liter, and we expect this to contribute to EBITDA expansion in the range of 200 to 400 BIPs starting in the second half of 2023. Additionally, we continue to make good progress on several work streams to meet our debt reduction commitment in order to get to a leverage ratio of four times by 2024. Returning to our commercial and innovation priorities, we continue to see significant opportunities for our high-margin Alpha-1 Prolastin and our subcontainers IG product, Sembify. Additionally, we are making significant efforts to accelerate the approval and successful launch of the new biotest proteins. Once launched, these proteins are expected to have a substantial positive impact on GRIFL's financial performance And bringing them to market quickly is a critical aspect of our current integration with BioTest. Turning now to slide five. Over the past years, Griffles has made significant strides to reinforce its board of directors with diverse competencies, backgrounds, and experiences. The board now consists of 11 members, six independents that are led by a lead independent director. The board operates today very well and decisions are made by consensus with effective checks and balances while promoting great transparency and accountability. To further enhance its governance, Griffles is currently in the process of hiring a 12th board member who will be independent and possess strong credentials. In addition, with the latest appointments, all committees of the board are now led by independent board members. As I mentioned before, the co-CEO office has transitioned to the senior leadership executive team, which I'm honored to chair. We have now defined the responsibility of this committee. Victor, as chief operating officer, is responsible for the day-to-day operations and has all the operating units reporting to him. He will also continue to serve on the Board of Directors. Raymond, current Vice Chairman of Griffles, in addition to his board duties, assumes the role of Chief Corporate Officer, focused on optimizing the value of our corporate alliances and partnerships, as well as leading other key ad hoc initiatives. The Senior Executive Leadership Team has a hands-on operating approach and meets weekly to ensure that we deliver. Its responsibilities include capital allocation, the strategy, communication, human resources policies, overall business performance, and very importantly, oversight of critical projects and priorities. A key priority right now is obviously our operational improvement plan and delivering on our commitment to further improve our operating performance and, very importantly, reduce our debt level. Now turning to slide six. It is important to note that we have also made changes across the organization beyond the senior executive team. In 2022, a new organizational model was established to increase focus and build a performance culture that is more efficient, effective, agile, decisive, and accountable. These changes included the appointments of new management to lead the biopharma and plasma procurement business units and a new president for diagnostic. These new leaders have extensive experience in diverse industries, including healthcare, particularly biopharmaceuticals, as well as retail distribution channels. Their knowledge will be key to ensure effective product launches, especially considering the key biotest proteins, while creating the most efficient, advanced, and very importantly, donor-friendly global plasma network. Finally, as I mentioned before, we have reinforced our performance culture by rolling out short and long-term incentive plans. The new short-term variable remuneration is an important step forward as it further aligns with our current key priorities. The equity-based long-term incentive plan aims to support and accelerate the achievement of the company's long-term strategy while increasing alignment with shareholders as the stock price is a key metric. As you can see, much is happening at Griffles to reposition us across the board for the future. Let us now turn to Victor and then Alfredo, and then I will be back for the final remarks, and then we will be happy to take your questions.

Thank you, Thomas. Good morning or good afternoon to everyone. And thank you for joining us today. Let's turn now to slide dates for business performance comments. In Q1 23, Griffith's total revenue grew by 18% at constant currency. and 23% on a reported basis, reaching a record level of 1,561 million euros. If we exclude biotests, total revenue reached 1,444 million euros, an increase of 9% at constant currency and 14% on a reported basis. This growth was mainly driven by the performance of our biopharma business unit. which grew by 21% at constant currency and 10% at constant currency like for like, excluding biotest. Back by robust underlying demand, favorable pricing, and product mix. Now turning to slide number nine. We delivered a robust first quarter driven by the strong performance of our flagship product IG in both the US and international markets. It experienced a significant 14.5% growth in Q1 at constant currency. We expect this, our momentum to persist backed by robust underlying demand. Our efforts to grow The market share and revenue of our subcutaneous immunoglobulin ShenB5 are yielding positive results, with an increase of 34% in Q1 2023. Albumin growth was supported by higher demand and price increases in China, offsetting current market dynamics in the US. Looking ahead, we expect volume demand to rebound to high single-digit growth, mainly driven by China. Also, improved product mix was supported by the albumin in box container. Finally, Alpha-1 and specialty proteins delivered amid single-digit growth, thanks to the higher demand of Alpha-1 and strong demand of favorable customer mix in our Hypers portfolio. Now turning to slide 10, we continue to maintain a strong position in the IG market with a diversified product portfolio that includes Grifols and biotest intravenous immunoglobulins, our subcutaneous immunoglobulin commercialized in the US, and having received approval in several European countries and Australia for PID and secondary immune deficiency in 2022, as well as our hyperimmunes. The global IG market is valued at more than 40 billion euros and is expected to grow by high single digits in the upcoming years, mainly driven by primary and secondary immune deficiencies, which represent approximately 40 to 55% of the total IG market. Secondary immune deficiencies have notably increased due to an ageing population and the use of immunosuppressive therapies such as immuno-oncology treatments, for which IgG is often the preferred and only option. Additionally, the increasing awareness around the benefits of IgG therapy and improved diagnosis of primary immune deficiency have led to more patients receiving treatment with IgG therapies. With a broader and top market that is increasing at a pace above the rest of the IG usages, we believe this represents a substantial growth opportunity for our franchises. Grifols Immune Global Strategy is based on key three pillars. We are focused on growth in the U.S. and on prioritizing selected countries in line with our aim to leverage our geomix. We are focused on the immune deficiency market, with PID and secondary immune deficiency growing ahead of the rest of the users, while continuing to accelerate our subcutaneous GMP5 adoption, building upon the important traction gained over the last quarters. To leverage on this expected growth, among others, we are dedicating efforts to life cycle management, which includes seeking new indications. One of these lines, we are pursuing the approval of Shembify to treat patients with CLL, which is the fastest growing indication within the secondary immune deficiencies. CLL is expected to grow 9.5% from the period 2018 to 2025, with a market potential of over US$1 billion. We also aim to maintain leadership in neurology and acute care within autoimmune diseases, where IVIG remains the standard of care. Our flagship Gammon XC remains the most prescribed IVIG for CIDP as of today. We plan to build on this track record for further strengthening our leadership, especially through continued uptake of our subcutaneous GMB5, which offer an improved patient experience and a vast commercial opportunity for us. Having said all this, we are well positioned to capitalize on this IG market growth, which is expected to outpace any potential impact from new technologies within the CIDP space. On top of this, the company has a robust pipeline of 5G products in different phases of development, with several key milestones anticipated for 2023. Now turning to slide 11. As Thomas has already commented, the cost per liter trend is encouraging and reflects the significant progress we are making in the execution of our operational improvement plan. Taking the figures we reported in fiscal year 2022 results, cost per liter and donor compensation declines have notably expanded from 10 and 20% to more than 15 and 25% respectively. This positive trend will be reflected at a larger extent in our P&L starting in second half of 2023 due to the inventory accounting practices of the plasma industry. which entail a nine-month period lag. Initiatives triggering this positive cost-per-liter trend are donor compensation reduction, optimization and reduction of staffing and overheads, and the rationalization of our plasma center network. In the first three months of 2023, seven underperforming plasma centers were consolidated. As of today, adding up to 18 centers shut down in Q4 2022, we have consolidated more than 75 of the total 25 centers to minimize the impact on plasma collection volumes. Going forward, we expect this cost per liter to drop to amplify following current in development and under evaluation savings initiatives focused on implementing lean processes and digitalization. Now turning to slide 12, we continue to advance on our innovation pipeline as we are delivering on our commitments on this first quarter. Our subcutaneous alpha 1, 15%, phase 1, phase 2 study advanced from single dose to repeat dose phase. And in terms of life cycle management, we provided final results of the Chembify biweekly dosing study. and is being prepared the complete clinical study report, as well as for the IVIGPEG study, which has also been concluded, and at the same time, we are finalizing our CSR data. Additionally, we expect this patient to be enrolled and treated in the ChemB5 CLL study very shortly. In Q2 2023, we also expect to finalize the enrollment of the PRECIOSA trial, while the enrollment of the SPARTA trial will be completed during the second half of this year. BioTest milestones for its novel proteins trials in 2023 continue on track. For trimodeling, we expect study initiation in the first half and 5-binogen trial to be completed, as well as top-line study results in the second half of this year, 2023. The developments expected for 23 are very solid, are a very solid combination of life cycle management and new proteins, such as trimodulin, fibrinogen, AT3, and sepsis, which we expect to continue significantly to the company plasma economics in the midterm. Now turning to slide 13 for diagnostic and biosupplies performance. Plot typing solutions were the main driver of the diagnostic business unit, with a robust high single digit growth rate recorded in key geographies such as the US and China. Performance of the NIT technology has been impacted by the pricing concessions in exchange for extending a large contract with a key customer for 15 years. Recombinant proteins increased by 28%, including a diagnostic company commercial true-up of 19 million, which was partially offset by lower joint business profits. Excluding this true-up, revenues decreased by 32%. Biosupplies increased by 70% at constant currency and by 78% on a reported basis, following the acquisition of the remaining 51% capital of Access Biologicals in 2022. This acquisition of Access Biological was driven by the goal of achieving higher margins through vertical integration and gaining commercial footprint to expand in the cell culture market, as well as in vitro diagnostics and diagnostic R&D solutions. It also strengthened the company's offering of biological products. And now, turning to Alfredo.

Thanks, Victor. Hello to everybody. As Thomas mentioned, Grifols delivers solid results for the first quarter of 2023 across all key metrics, beating our EBDA guidance provided during our last earnings call. We're very confident to meet our updated full year 2023 guidance, as we will see later. Reported total revenues increased by 23 percent and by 14 percent on like-for-like basis, meaning excluding biotest. While reported biopharma revenues were up by 26 percent and 15 percent like-for-like, excluding biotest. FX impact with no significant, I would say, impact on this Q1 of 2023. While our gross margin is still impacted by a high cost per liter from the plasma collected in the first half of 2022 due to the nine-month lack inventory accounting, now we are in the recovery path. Operational leverage together with savings from the operational plan drove our Q1 adjusted ABDA margin to 21%, excluding biotest, which is above the guidance. Our leverage ratio stands at seven times with a solid liquidity position of $1.3 billion and also with a positive operating cash flow excluding the one-off restructuring charge. Plasma collection has increased by 11% in Q1, while cost per liter significantly declined to more than 15% by end March from its peak of last July. Good news on the execution of our operational improvement plan, which is progressing ahead of initial expectation. We have already deployed more than 80% of the initial 400 million euro cash cost savings, and now we have updated this target to more than 450 million. Next slide. Grifols is experiencing a turnaround supported by our strong financial performance. Revenue continues to show sustainable growth with a high single-digit increase in the first quarter, driven by solid plasma supply, by price increases, and by product mix backed by our SAP QIG. Regarding operating performance, as we see in the second chart, Adjusted EBITDA on last 12-month basis reached €1.2 billion on the back of operational leverage and savings from the operational plan, showing a sequential improvement both in absolute terms and in margin. This sequential quarterly EBITDA improvement is going to continue throughout 2023. Leverage ratio stood at seven times as of March, and we reiterate here our commitment to debt reduction, targeting at four times by end of 2024. We reconfirmed our commitment to the leverage and on the back of the improvements on the leverage transactions. The adjusted EBITDA bridge shows the improvement in Q1, reaching €299 million at a 21% margin excluding biotests, supported by positive performance of biopharmace and biosupplies, as well as offers reduction. As we explained in the last earnings call, the Euro 1 25 million One-off charge includes 140 million restructuring charge that has been fully booked in this quarter. We have also adjusted 19 million euros coming from the one-off commercial throw-up in the diagnostic revenues. We do not expect any further restructuring cost in the upcoming quarters. We are successfully executing our operational improvement plan. As we speak, more than 80% of the initial 400 million cash cost savings have been already deployed. Furthermore, we have increased this target to more than 450 million on the back of further improvements, especially in the plasma operations. All in all, analyzed total plasma-related savings now are more than €340 million from the initial expected €300 million. On the left-hand side of this slide, we can see the previously announced plan and on the right-hand side, the updated plan. In 2023, cash savings will now amount to €275 million and cost savings flowing through the P&L will be 130 million. In 2024, we are now expecting additional 175 million euros cash savings and 320 million cost savings that will be recognized in the P&L. As a reminder, the plasma cost accounting rule of this industry, which implies a nine-month inventory lag. OUR POSITION IN THE LEVERAGING AND ACHIEVING THE FOUR LEVERAGE RATIO TARGET BY END OF 2024 HAS NOT CHANGED. AS WE CAN SEE IN THIS BRIDGE, CONSIDERING THAT 50% OF THE 1.8 TIMES REDUCTION RELATES TO ABD IMPROVEMENT, OVERALL, The leverage ratio declining from seven times to four times is coming from 70% of ABD improvement and 30% from the leverage transaction. A significant piece of this ABD improvement is driven by the 450 million euro operational improvement plan. We are making a good progress on the several work streams of the nearest transactions and we plan, as already mentioned, to complete one transaction during this year. The cash proceeds will be prioritized for debt reduction. We currently have a total liquidity of 1.3 billion euros and cash on hand amounting to 400 million euros. Based on our solid performance in Q1, We reiterate our full-year guidance for top-line, and we upgrade our adjustment ABDA margin guidance for the first half to more than 21% margin, and for the full year, it will be the new margin range between 22% and 24% excluding biotest. As a result of this, we are very confident that we can beat the full-year ABDA guidelines euro 1.4 billion, as well as the 1.7 billion euro considering the annualized cost savings. These numbers confirm that our strong recovery path is ongoing. And with that, I hand over to Thomas.

Thank you, Alfredo. I would like to conclude by reiterating a few points we've already made, but that are worth repeating. My management style is to keep returning to the most critical priorities, those that make us strong and those that need changing, to ensure that these are absolutely clear and that we continue to effectively execute against them. The company has clarified its governance and leadership structure and made significant progress in defining the responsibilities of the senior leadership team, ensuring focus and accountability. The company has introduced a new operating organizational model, which has resulted in a stronger and more efficient structure. This is supported by strong focus on a performance-driven culture, which will continue to make the company more efficient, effective, agile, decisive, and accountable. The new short- and long-term incentive plans will play a key role here. The strengthened and new leadership will be instrumental in driving change and ensuring that the organization is more responsive to the changing market dynamics. Griffles delivered a solid financial start to the year, and we are on track to meet and improve guidance. The company has successfully deployed, as Alfredo mentioned, more than 80% of the initial Euro 400 million cash cost saving of its operational improvement plan and updated its target to more than 450 million, mainly driven by plasma initiatives. Testament of the execution of the plan is the cost per liter reduction of more than 15%. As also been mentioned multiple times, deleveraging remains our top priority, and our commitment to reduce leverage ratio to 4 by 2024 remains unchanged. We are advancing on several work streams to execute deleveraging transactions. Adjusted EBITDA margin for the full year, excluding biotest, is again, as Alfredo mentioned, expected to reach the 22 to 24 range. And we are confident on exceeding 1.4 billion euro. Performing the additional €320 million, the adjusted EBTA margin would stand at over €1.7 billion, setting the base for a further expansion of EBTA in 2024. As promised, we are delivering a step change in performance as we advance in 2023. We are increasingly better positioned and confident that we will keep building on this positive momentum. As mentioned, And I'll repeat, Griffles is on the rebound. Finally, I want to thank our entire Griffles team for making it all happen. Without everyone's effort, focus, and dedication, the progress made in the first quarter of 23 would not have been possible. I appreciate your attention, and I now turn it back to Nuria, who will open it up for your questions. Thank you very much.

Thank you, Thomas, and thank you all. Let's start the Q&A session. Remember, you need to press the star five to ask a question, and we need to limit to two per person. If you have additional questions or follow-ups, then you press the star five again, and then you can go back to the list. So let's start with Joe Walton from Credit Suisse. Joe, thank you. Joe, are you there?

Sorry, yes.

Can you hear me? Oh, yes.

Now, yes. Thank you. Perfect. I wonder, in order to put some context on it, whether you can tell us what the cost per litre is now, not in relation to July 22, but a pre-COVID world. And a couple of clarifications, please. In terms of your sales growth for this year, the 8% to 10%, is that including the 2.5% or so benefit that we get from the first-time consolidation of biotest or on a clean underlying basis? Thank you.

Hello. Joe, I take the question on the cost per liter. We are comparing to this kind of benchmark, if this is the word, from the peak that we had. If we compare this to 2019, it's still above that level. mainly because of two factors. The one is, well, it's kind of inflation related, both of them. One is the donor commitment compensation or donor fee. It has increased, as we all know. And the same for the labor costs associated in our plasma structure. Excluding those two kind of items, we are still higher than the 19, but now we're narrowing the gap every month that we progress.

Sales? Sales growth 8 to 10. Alfredo?

To your question regarding the 8 to 10 revenue growth, as you know, as disclosed in the slide, this is including biotest. Same relates to biopharma, that 10 to 12 include biotest. So that means that the revenue all in is is basically including biotests. Life for Life and Biopharma were a high single digit, so that's our best estimate for the year end.

My second question, if I could, is a bit more of a perspective on your relationship with Shanghai RAS. You've talked about China a couple of times as being important, but I think it would be interesting to see how that relationship is going. Many thanks.

First of all, just to remind everybody that the plasma business in China is booming and some high results that are publicly available since there's a listed company. I mean, they're very impressive, point number one. Point number two, we have, you know, a great and amazing relationship with Shanghai Rush with full collaboration in all areas. And also to remind everybody that they are our distributors for albumin and in biopharma as well as NAT in diagnostic. And, you know, both business lines in China are booming also.

Thank you, Alfredo. Now we have a question from James Gordon from JP Morgan. Hi, James.

Hello, I hope you can hear me. James Gordon from JP Morgan. Thanks for taking the two questions. The first question was about EBITDA margins. So you took up the H1 margin from 19% to 20% to 21% plus, but I don't think you took up the H2 margin. So is that because this was more about cost savings being pulled forward, or have things actually got a bit better on an underlying basis, and could that be a bit conservative for H2? And what world has got better? Is it something else has got better, or is it just phasing? So that's the first question, please. And the second question, also related to cost savings, so I think you're saving more on plasma operations. I read, though, that there may be smaller cuts in Spain than originally planned. So is that going to be offset or more than offset by bigger cuts in the U.S.? And are we going to see further U.S. plasma centers being shut, or are you done on the closures there? Where are the further savings coming from, please?

Okay. So to the first question on the DVD margin, you know, the improvement, you know, is based on basically the underlying business is better than expected. You know, I already mentioned about, you know, pricing, country mix, product mix, you know, as well as we see, you know, better operation performance on the also on the plasma cost, manufacturing cost. And then, you know, it's true that in the case of OPEX, we're ahead of the budget. It's not because of the phasing. It's because we are, you know, upgrading our target. So that's why I said that this ABDA sequential improvement that we've seen in Q1 versus Q4 last year is going to continue in the upcoming quarters. To the cost savings that you mentioned, well, as I said, there are, you know, 80 percent already, you know, fully deployed. And we have upgraded, you know, the target on that, you know, on that sense. And so that's why we are very confident that we can beat the 1.4 billion by the end of the year. Okay.

And I think was kind of a comment regarding plasma, plasma centers and further cost savings or further, sorry, centers closing. No, this is not the case. We think we have done already all the efforts in the front of closing or consolidating plasma centers. The improvements that we are pursuing in the plasma network, it's, let's say, at center level, because, again, overhead staff above center level, the restructuring has already taken place as well. And now we are focusing on improving efficiencies at center level, aligning opening hours with donors flowing in, improving the donor flow time at the center level, and this type of activities.

Thank you. I don't know if you can still hear me, but just as a follow-up, which would be, I think Alfredo was saying that things were actually better on an underlying basis in the first half, so things were going better than you originally planned in the first half, or you expect them to. But so why would that not also mean profitability is better than you originally thought in the second half?

Well, you know, we are – as a matter of fact, if we look at the slide, we are also upgrading the – we think that the second half is going to be within that range, 23, 25 percent. And on the – once we close the second quarter, will be in a position to provide you with, you know, additional color about the second half. But clearly, we are very confident, as I said, that the 1.4 billion by the end of the year, you know, will be, I would say, will be better.

Okay. Thank you. Thank you. Thank you, Alfredo. And we have Guillermo Sampaio from CaixaBank BPI. Guillermo?

Yes. Good morning. Thank you for taking my question. So the first one on donor fees, if you could provide some color on your expectations for additional reduction in donor fees. And secondly, if you could go through the dynamics of album in markets in China and the U.S. right now. Thanks.

The donor fees, as you have seen, there is a kind of progressive trend of lowering those donor fees versus the peak in July. We are expecting this to continue in a way throughout the year and to reach a lower level than today's level, let's say by December 2023. And in the environment in the market regarding donor fees, we are seeing In certain specific types of donor fees, we're seeing kind of a positive trend in the sense of lowering the donor fee. For the second question regarding albumin, as Alfredo in a way tried to instill in his comments, previous comments on China, the market is kind of booming for albumin. There is plenty of... of need and demand from the market and from Sanger Bars, which is our distributor. So it's overall very positive there. And in the US, we are seeing more, not challenging, but there is more product in the market and we are all now repositioning ourselves in the US in a way.

Thank you. Thank you, Victor. And thank you, Guillermo. Thank you. Now it's the turn for Berenbert, Tom Jones. Hi, Tom. Hello, Tom. We have lost Tom.

Oh, hello.

Sorry, I am here.

Sorry, you cut off just after you said the next caller comes from, and then it stopped, so I couldn't hear. Sorry, I do have two questions. The first is just on the balance of revenue growth between the three key proteins or three key franchise areas in Q1. IG was trending well ahead of the other two. Is that a dynamic you expect to continue broadly for the rest of the year? And what's driving the sort of excessive growth in IG? Is it kind of just price and mix or is there a volume component to it too? Because I guess it pertains to to kind of revenue per litre. And then my follow-up question was more of a longer-term one on margins. I think we're all well aware of the margin uplift potential from Trimodulin and the fibrinogen products. But the one that doesn't get a lot of discussion is Biotest's IVIG product, Imungo. Given it's a relatively new product, one would assume that it's probably got a higher manufacturing yield than the incumbent products out there. So I just wondered, given how significant even a tiny improvement in yield can be on IVIG manufacturing, whether there's any longer-term margin upside potential, I guess, coming from the Yumungo technology. I know you're going to distribute it for them in the U.S., but I just wondered if there's any kind of technology transfers you might be considering into your Grifols IVIG franchise where you could potentially push the yield on your IVIG manufacturer up a bit.

Okay. Hello, Tom. On the first question about the balance growth among our proteins, clearly IG is driving the race here for us. This trend will continue throughout the year, we expect. But the goal of the company, after all the turmoil of the plasma availability and so on, is to kind of converge the growth, the pace of growth of the three main proteins for us, Ig, albumin, and alpha-1. The idea is that to go and rebalance our growth for those three proteins in the coming months and during 24 as well. And the second question about Jim Mugo and the yields, yes, we have launched the product in Europe. It's very well accepted in the markets that they are starting. Manufacturing-wise, they are ramping up. But on the yield side, yes, we are seeing and learning from them about their yield and the performance they have and trying to get all that knowledge and possibly incorporating into some other projects. product lines uh but all in all it's it's a great product and it's uh gives us a lot of flexibility now with gamma next flebo gamma and the yamuga product to let's say play with all those brands and use them as needed in a wise manner let's say from the geographical standpoint perfect and then that's very helpful and then one follow-up question on margins for alfredo um it just helped me understand the dynamics of this when you gave the guidance for

€1.4 billion, that was back in February. Since then, the dollar has weakened somewhat against the euro, which is normally bad for your reported EBITDA and even worse for margins. So, A, have I got that correct? B, does that not imply that the underlying increase in guidance is probably slightly higher than that revealed by the figures you've given this morning? And then C, might that also partially explain your caution regarding margins in the second half of the year? Because obviously the dollar impact will be more significant in H2 than it will be in H1 at current rates.

Currently, in the first quarter, the effect impact of ABDA is slightly positive. And if we somehow project the 110 for the rest of the year, the impact versus the current trend of ABDA will not be material. So the fact that we want to be prudent is – doesn't have anything to do with ethics. But, you know, on the contrary, as I said, you know, we expect that the – we expect that the ABDA margin will continue to increase and expand every other quarter, okay? And as I said, you know, once we close the Q2, we'll have more visibility and we'll provide you with an update guidance.

Perfect. That's very clear, Rafael. Thank you very much.

Thank you. And our next call is coming from Jaime Escribano at Banco Santander. Hello, Jaime.

Hi. Good afternoon. So a couple of questions from my side. One regarding immunoglobulin volumes. The question would be if you are selling higher volumes already than 2019 or there is still room to catch up, for example, in Europe or the rest of the world or some countries that were left unattended or you are already selling pre-COVID volume levels. And the second question would be regarding free cash flow, which obviously has been negative this Q1 because of all the cost-saving plan. But my question would be if you can give us some visibility on how should we think about Q2. So probably positive operating free cash flow. And the question is also positive free cash flow after CapEx or this will come later on in the year. Thank you very much.

Hello, Jaime. I take the first one. We are, let's say, grams wise being sold for us compared to 2019. We are not yet there, but we are very close after our plasma recovery.

So regarding the operating cash flow, you know, in the Q1, as I said, we ended up with a positive operating cash flow, excluding the one of restructuring charge. So that gave us, you know, I would say a positive sentiment that in the Q2 and upcoming quarters to show a positive operating cash flow, that means including working capital and CAPEX.

Okay. Thank you very much. And just a final question, if I may. Regarding the donor fee, it relates a little bit with some of the questions that were raised around the guidance for the second half of the year. If the donor fee has declined by minus 25% from peak, so probably you said it was minus 20%, this means that the donor fee has kept going down in Q1. What I think I wonder, and the rest of analysis, because of this, in the second half of the year, or at least in Q4, should we not see a positive impact of this further decline in the donor fee?

Thank you. You know, first of all, from the, you know, cash savings perspective, you know, what we expected and we see, you know, those days is after, you know, a significant decline of the donor fee. Now, you know, we are focusing on the rest of the cost. I mean, labor cost and other fixed cost. And so that's point number one. We, you know, the good thing is that... The market now is somehow wintailing our donor fee because we see that there is a collective decrease across the markets in donor compensation. But also, you know, to your point of, you know, when this is going to go through the P&L, you need to wait until, you know, early Q1 of 2024. However, as you know, all the savings that we have already in the back from the end of 2022 and Q1 2023, those will flow through the P&L this year. So that's why in the second half of the year, we expected, you know, higher margin than the first half of the year.

Okay, thank you. We have from Barclays now, Charles Pittman. Hello, Charles.

Hi, thank you very much for taking my questions. I've got two, please. Maybe just on the deleveraging, I understand you can't give us any specifics, but I was wondering if you'd give us any kind of direction or expected target internally for what level of funds you expect to raise. I know you said 30% of the target was going to be achieved through deleveraging. I mean, what portion of that is going to be organic free cash flow versus what you intend to raise from some form of transaction? And maybe just a second one on the refinancing. So in 2025, you're going to have to obviously pay down your debt. I understand you're going to use your deleveraging transaction to help pay that down. But just thinking in terms of what some of the questions we're beginning from credit investors is how ratings agencies are viewing ongoing performance. And I was just wondering if you could update us on your conversations with them and what you think you need to show this year as we see margins improve further. and the more fundamental improvement story continue just to allay their concerns. As I know, for example, Moody's has a negative outlook right now. Thank you.

Your first question on the leverage, as I said, when we compare the current seven times versus the four times, there is 1.8 times that appears in the bridge, which is a combination of organic and non-organic. So 50% of this, which is 0.9 times, relates to everyday improvement. AND THE REST IS COMING FROM DELIVERY TRANSACTIONS. SO ALL IN ALL, THIS REPRESENTS THAT 70% OF THE TOTAL DELIVERAGE IS COMING FROM ABDA IMPROVEMENT THAT INCLUDES BOTH ORGANIC ABDA IMPROVEMENT PLUS THE OPERATIONAL PLAN. AND 30% OF THIS DELIVERAGE IS COMING FROM SALE OF ASSETS. To the question of the refinancing of 2025, yes, we hold on quarterly basis or yearly basis conversation with the rating agencies. And there, you know, we update, you know, those agencies with the current development. And clearly, you know, The reason why we want to be four times by the end of 2024 is precisely to get, you know, an upgrade in our rating and then ahead of a potential refinancing. But, you know, there might be, you know, other options like, you know, like paying off the debt, you know, ahead of the due date with the cash proceeds from the transaction which is, you know, will be our top priority.

Thank you very much.

And now we have a final question from Vinit Agrawal from Citi. Hello.

Yeah. Hi. You can hear me. Good afternoon. This is Vinit Agrawal on behalf of Peter Weddell. Just have two questions. So the first one is we have two important Phase III readouts coming over the summer, the first biotest fibrinogen data and the FCRN data from Arginix and CIDP. Maybe can you remind us how you're thinking about the commercial potential of fibrinogen, the revenue exposure in CIDP, and why do you think your IG business in CIDP will not be impacted by FCRN?

Okay. Sorry, sorry.

Go ahead. Sorry. And then just wanted to better understand how much of a gross margin driver Zambify can be and wondering if you could remind us what percentage of your IG franchise revenues come from SubQ and where would you like this to go over time? Thank you.

Regarding fibrinogen, yes, the project is on track, and we expect to finalize the trial by the end of 2023, get the readout, clinical study report, and ready to launch for next year, 2024, in Europe. This is on track, and we expect this to be a great success for us. Regarding CIDP and one company delaying the results until July, it's kind of wait and see what they bring as news to the market. But taking this not into account or putting this aside, as we have said in one of our slides for today, it's a huge market, the IG market. Currently, it's this level of 14 billion euros, fast-growing historically, and the prospects signaling this kind of growth. 8%, 9% ranges of growth for the market. So we think even any competitor being successful, there is plenty of room for all of us to capture value from this market. So we are very confident that with the lifecycle management that we have in place that will come in the short and mid-term, we'll be able to capture significant value of this market growth. And I think, what's that? Today, Shambi 5 in our current IG portfolio accounts for around 5%.

Okay, thank you. Thank you, everybody. And with that, we are coming to our hour, two minutes above it, so quite on time. Thank you, everybody, for taking part. And let's continue talking. Any questions? You have the full IA team to your disposal. And let's speak very soon. Thank you and bye. Thank you very much. Thank you.