Getinge AB (publ)

Welcome to the Yeartinger 2023 Q1 report with CEO Matthias Perios and CFO Lars Sandström. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing star 5 on their telephone keypad. Now I will hand the conference over to the speakers. Please go ahead. This call is being recorded. Your line is muted.

Thank you very much. Thanks for joining everybody. Sorry for the delay. There was a technical glitch apparently in the beginning here, but I think we're good to go now. With me today, I have our CFO, Lars Sandström, who will go through the financials a little bit later, but we can start with moving over to page number two and talk about the key takeaways for the first quarter of 2023. We had net sales and order intake increasing organically by 7.5% and 2.9% respectively in the quarter. This is a consequence of high demand for ventilators in the expansion of China. We also saw a recovery in cardiovascular procedures and large deliveries in surgical workflows in order to meet the need for productivity enhancing infrastructure in healthcare around the world. Surgical workflows specifically increased in sales by almost 20% organically, and this is thanks to better availability of components that enable the prompt loading of deliveries, but also a good underlying demand situation. The supply chain challenges that we still have with us are now mainly concentrated to intraortic balloon pumps and products for ECMO therapy within acute care therapies. where we still have orders worth over 400 million sec awaiting delivery. The higher sales volume, the price increases that's been implemented, and the positive currency effects contributed to a stronger adjusted cost of profit and EBITDA, despite the higher cost inflation in goods and services, as well as personnel-related higher costs. We're actively continuing to work to raise prices and reduce our costs, which is having an effect. It's a very measurable effect, albeit with some time lag. Pre-cash flow was better than in the same period last year, adjusted for large payment related to the final settlement with regards to surgical mesh. So getting a financial position remains very solid with a low level of net debt. We can then move over to page three, please. So let's focus on some other key events during the quarter. When it comes to our offering and our customers, I'm really pleased that the Getting Us Covered Stent System, ICAST, received pre-market approval, the PMA, from the U.S. Food and Drug Administration for the treatments of patients with iliac artery occlusive disease. We expect this to have a positive impact on sales and margins for acute care therapists from the fourth quarter. manufacturer of ultrasonic cleaning technologies, which is used in hospitals and surgery centers to decontaminate surgical instruments. This is part of our strategic journey of securing an even more attractive product offering a better portfolio in the important U.S. market. Getting also launched a new Cervo-C ventilator that offers lung protective treatment functions for both pediatric and adult patients. And Cervo-C is a very cost-effective offering with the aim to make high-quality healthcare available to more hospitals and patients globally. And finally, on the offering front, as a consequence of growing demand for our DPT alpha port in recent quarters, we have initiated a project to increase production capacity by 50% at the production unit in in France. This is of strategic importance for us as a larger installed base of alpha ports contributes to increased need for DPT beta bags where we have a leading position globally. When it comes to sustainability and quality, we can see that carbon dioxide emissions, energy consumption, and the share of renewable energy continue to develop in a positive direction thanks to the ongoing improvements that we have in our business. We can also see that customers are placing an increasingly higher value on sustainability when it comes to tender processes, for example. So we're ready and in a good position, competitively speaking, for this. During the quarter, we also reported on a suspension of the C-mark and quality-related field measures regarding our intra-aerobic balloon pump. The C mark has also been temporarily suspended for consumers used in ECMO therapy due to shortages in the design of the packaging. However, deliveries to existing customers have been approved, citing the clinical benefits of this therapy in accordance with the EU regulation. So, we are producing and delivering as we speak despite the suspension of the CMARC. And we just want to underline that we take these issues very seriously and react accordingly, which may lead to some delivery disruptions during the second quarter of this year. We're going to move over to page number four, please. So as I mentioned at the beginning, we have order intake increasing by 2.9% in the quarter and net sales by 7.5% organically. Order intake was significantly positive in EMEA due to especially strong performance in surgical workflows. Both acute care therapies and surgical workflows grew orders in Asia Pacific in the quarter, but due to a drop in life science capital goods, the overall order intake was down in the quarter in Asia Pacific. Americas was flat on orders in the quarter with a mixed picture in the business areas where life science reported decline due to significantly reduced demand for products related to COVID-19 vaccines. At the same time, acute care therapies stands out in a positive way, mainly due to a recovery in cardiovascular procedures. On net sales, we had a positive development across the board with EMEA in the lead. This is to a large extent leading to large volumes being delivered in surgical workloads. This has been supported by a healthier situation in the supply chain, enabling earlier deliveries than we had previously planned. The growth in Asia Pacific is due to healthy growth in surgical workflows and large volumes of ventilators being delivered to China in the quarter. Our estimate is that we have been delivering ventilators of an additional value of some 150 to 200 million sets versus what would have been normal in the first quarter. Our belief is that the demand from China will be muted for the rest of the year when it comes to ventilators. The outlook otherwise in China we remain positive about. America has grown nicely thanks to elective procedures picking up in acute care therapies and certain workflows delivering on the much larger order book that we have for North America versus last year. Also here we see some support from supply, which has helped us deliver a bit earlier than planned in that week. We can then move over to page number five, please. So when it comes to guidance, we reiterate the net sales output for the full year 2023, despite the positives in the first quarter. The reason is that we expect the second quarter to be slightly weaker compared to last year, and that we grow slightly year on year in the second half of 2023, which should then take us to organic growth in net sales of two to 5% for the full year. The main uncertainty is regarding supply chain and quality challenges in cardiac assist and cardiopulmonary. And again, we take this challenge extremely seriously. We are working hard as we speak to resolve all the issues related to this so we can continue to deliver high quality and safe products to our customers and patients. We can then move to page number six, please, and dissect the order growth a bit more. When it comes to acute care therapies, we had 5.1% organic care growth. The increased order intake in acute care therapies is mainly attributable to ventilators for the Chinese market and products for cardiac surgery in North America. Organic order intake for products for ECMO therapy increased marginally compared to the previous year. In life science, we had a 12.7% organic drop, and the decline in water intake in life science is mainly due to lower demand for products related to COVID-19 in Americas and in Asia Pacific. The water increase in EMEA for life science is mainly a result of increased customer activity in North Europe. Surgical workflows, here we had 6.6% organic growth in orders, and the increased surgical workflows order intake increased organically in all product categories in the quarter. Asia Pacific and EMEA accounted for significant growth, while Americas ended up slightly below last year's strong order intake. We're going to move to page number seven, please, and do the same exercise on sales. Here we had acute care therapists growing 6.5% organically. The ACP organic net sales increased significantly in Asia Pacific as a result of large deliveries of ventilators to the Chinese market. Net sales also increased in cardiovascular products. This would negatively impact the in the QCAP purpose by continued component shortages, primarily in intralogic balloon pumps and in ECMO therapy. This backlog is estimated to be at least 400 million sec in net sales, and this is something that we hope to be able to deliver in the second half of this year. Life science, here we had a 10.3% organic drop in sales, and the life science net sales became mainly as a result of significantly reduced demand for products related to vaccines against COVID-19, mainly in consumer goods. The positive trend in the service business over life science continues, which we're very happy about. Certified workflows, here we had the biggest increase, 19.6% organically, and certified workflows grew its sales organically because all product categories had a strong quarter in both Americas and in EMEA. An improved supply chain situation contributed positively to capital goods in the quarter. Recurring revenue also increased organically, thanks to positive development in all the sub-parts, which is consumables, service, and spare parts. In the quarter, currency had a 481 million sec, or a 7.8% positive impact on net sales for . Capital goods organic growth was 9.4% in the quarter, positively impacted by an additional sales of the ventilators to China and also a more positive situation in the supply chain for surgical workflows. Recurring revenue grew 6.5% organically and this is thanks to continued good job in our service organization overall. It's also thanks to strong deliveries of cardiovascular consumables and a continued positive trend in surgical workloads. We can then move over to page number eight, please. Adjusted gross profit increased by 473 million SEC to 3,734,000,000 SEC in the quarter, where a positive currency effect accounted for 287 million SEC. For the group as a whole, the adjusted gross margin declined by 0.4 percentage points, and this is an effect of unfavorable mix, some supply chain disturbances, and also cost inflation. The effects were partly offset by price increases, productivity improvements, and some support from currency as well. For acute care therapists, the adjusted gross margin declined by 0.6 percentage points, and this is due to unfavorable mix, some shortage of components, and also due to cost inflation. Here it was also offset to some extent by positive currency effect and successful pricing. For life science, the adjusted gross margin declined by 0.6 percentage points, mainly as a result of lower volumes, cost inflation, and also some under absorption. Favorable currency effect and the cost reductions contributed positively to the gross margin in life science. Circular workflows suggest the gross margin increased by 0.4 percentage points, primarily as a result of higher volume, currency effect, price increases, and a better level when it comes to absorption as well. These positives were partly offset by cost implications. With that, we can move over to page number 10, and I leave over to you, Lars. All right. Thank you, Mathias. Adjusted EBITDA increased 133 million compared to the same period last year while the margin was flat despite negative effects from those profits and OPEX. So adjusted for currency, GDP had a minus one percentage point impact on the beta margin due to the reasons just mentioned by Mattias. Organically, S&A increased by some 7.1% versus previous year due to higher activity level, cost inflation in purchase services, and personal related expenses. This was slightly beneath the organic growth for the quarter, but when adjusting for FX and other OPEX, And somewhat higher R&D, and putting it together, this takes us to reduce operating leverage on OPEX over minus 0.8 percentage points versus last year. R&D activities increased in the quarter, mainly in acute care therapies. And adjusted for currency, DNA had a positive effect of plus 0.6 percentage points on the margin in the quarter. So all in all, this resulted in an adjusted EBIT of 972 million and the margin of 13.6%. Let's go to page 11, please. Free cash flow in the quarter amounted to minus 700 million due to a substantial payout related to the mesh settlement that we have previously announced. We do not share the exact amount, but just for this payment or this payout, the underlying free cash flow is better than last year's plus 400 million with a healthy margin. Looking closer at working capital, it develops according to the seasonality with some buildup on inventories here in the first quarter, which is also negatively impacted by cost inflation on input materials. Working capital days continue to be well below 100, and we are now at some 95 days. Down 34 days from the peak in Q2 2018. Going forward, we expect working capital days to increase somewhat, mainly related to the inventories where higher material costs are impacting and also the supply chain disturbance. We are back on trend on operating return on invested capital with 14.4% on a rolling 12-month basis, well above the cost of capital. Let's go down to page 12. The change in net debt on year-on-year was negatively impacted by the mesh payout, taking us to 3.7 billion. If we adjust for pension liabilities, we are at 1.2 billion. This brings us to leverage of 0.6 times EBITDA. And if we just attention, I build this leverage is still low and at 0.2% times EBITDA. And cash amounted to approximately 4.6 billion at the end of the quarter. By that, let's move to page 14 and back to Mattias. Yeah, thank you. So we jumped right into the key takeaways of the summary for the first quarter of 2023. So we've seen healthy growth in the quarter in net sales, and we continue to have a strong order book as well. We reiterate the outlook for full year 2023 with the 2 to 5% organic net sales growth. We can see improvement when it comes to gross profit and adjusted EBITDA thanks to volume, to price increase, and positive currency effect. We have a strong underlying cash flow from our operations, and our financial position remains very solid. And last but not least, it's very nice to finally see the PMA for our high-cost cover spending system. So finally, I will also take this opportunity to thank our customers and our employees who are still working in somewhat challenging conditions and look forward to seeing gradual improvements during 2023. So with that, I open up for questions.

If you wish to ask a question, please dial star 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star 5 again on your telephone keypad.

The next question comes from Eric Castle from ABG.

Please go ahead.

Good morning, Matthias Melsch. So first off, on the guidance, supply chain seems to have improved quite a lot since you set the 2% to 5% guidance. And then you also, as you mentioned, had the approval of ICAST. And it seems to me at least that the general hospital macro environment is also a lot better. So, yeah, the guidance seems to be quite cautious and also allow for a lot of headwinds within supply chain still. But let's just say that supply chains continue to improve. Where are you in that range in that case? Is there perhaps an upside to it? We've given a range in guidance because of the uncertainty. I don't disagree with any of the statements that you made. We do see gradual improvements on most fronts, but it is challenging when it comes to cardiac assist and to cardiac pulmonary, and I think the span of potential outcomes there is wide and therefore we maintain a wide guidance span as well. So I can't give you any more granular view on this here. I think the whole span is still realistic, depending on the different potential outcomes in those two product categories, I would say. The rest of the business, though, I agree with you that we're quite confident that we've seen the worst when it comes to supply chain hiccups. I also agree that the underlying demand is in line with what we expected and continuing to develop in a positive direction. And on the life science front, maybe as well, just to cover that in the guidance bit as well, there's still some uncertainty when it comes to the stocking situation. We are seeing delays when it comes to order placements, and we don't expect this to pick until the second half of the year, and until we kind of, we have a better feel for how that's developing, I think we will remain with this guidance band. Okay, thank you. I understand. And then the earlier deliveries, as you called it, for circular workflows, does that imply some sort of pull forward effect from Q2, or do you still have enough deliveries done for Q2 to post some sort of organic growth there as well? I think it's yes on both questions. So there is a pull-forward effect from the second quarter. Having said that, though, we had good order intake in the first quarter as well, and the order book is higher when we leave the first quarter this year compared to a year ago. So I think we're still in good shape in cervical workflows. Perfect. Thank you. And the last question, the catch-up effect in the interaortic balloon pumps during H2, as you guide for, Is there a potential that you see component access allowing for some increased deliveries already in Q2, or should we still wait for HD with that? Yeah, I think the probability is very low for any bright development in the second quarter. I think it will remain challenging, I think. Okay, thank you.

I'll jump back in the queue. Thank you.

The next question comes from Matthias Vadsen from SEB. Please go ahead.

Hello there. I'll talk with three questions. First one, I see a comment in the CEO letter regarding incidences related to IABT and ECMO, and that this could cause delivery disruptions for Q2. So, just really, is there anything new to your knowledge versus what you had when you sent out the press releases, something that you've seen now? And then maybe on Q2, if you could remind us what disturbs the comparison versus last year in terms of sort of COVID boost, let's say in terms of volumes. And then just if I understand you correctly, it will be tough to match last year's sales organically with Q2. That's the first part. When it comes to the delivery disruptions, I wouldn't say that there's anything new. We've been aware that it's going to be a challenging situation for a while. So I think that we had hoped that we communicated properly already after the fourth quarter last year. So there's nothing really new. It's just that a projected difficult situation will materialize in Q2. The other part of the question, I actually didn't hear. Maybe Lars can fill in. On the comparison with Q2 last year, we had a good quarter on cardiopulmonary and the beta banks last year. So that will also impact, so to say, year-on-year comparison. Okay, good. Then the next one is on the stem system ICOS. here in the end of March, if I remember correctly. So if you could shed some light on, you know, what the product means today and what you expect going forward and what you include in your guidance regarding this product category. Yeah, we're starting now to ramp up and plan for a proper relaunch of this and much more active sales and marketing. We don't think it's possible to have any real material impact until the fourth quarter of this year. We've included some improvement in our guidance, but it's, Also one of the areas where I think there is a big span of potential outcomes depending on how quickly we can ramp this up and how the demand develops. I think in terms of coloring this, I think a good rule of thumb is that it has more than halved in size, this business, since we started to see the decline in 2017. So we're hoping to, and at that point in time, it was around a billion sec in volumes with attractive gross margins. But I can't break down the development for you in quarters or years here. But it's definitely positive news for us towards the end of the year. I think that's good. And the last one, you see this increased demand for Alphaport recent quarter. You will increase production, as you stated in the report. Could you just give us, you know, some more flavor on the development here and, you know, when it can bear fruit for, I guess, data back sales and, yeah, if it's exceeding the expectations you had maybe a year ago on alpha port? Yeah, I think the last part of the question is easiest to answer. Yes, it's exceeding our expectations a bit compared to a year ago, so it is positive to see this development when it comes to . What's more difficult is to predict the impact of the consumption of beta bags both in terms of timing and in magnitude. You need to be aware that these ports go into equipment that needs to often be integrated with other equipment that customers cite. It needs to be validated. So it can be anything from six months to two, three years.

Thank you very much for that. Thank you.

The next question comes from Victor Forssell from Nordea.

Please go ahead.

Thank you very much for taking the questions. I'll start. I pick up on a few of the earlier ones. Lars, if I heard you correctly, you said that both cardiopulmonary and beta vax had a decent Q2 last year. But if I recall it correctly, that was actually one of the reasons that you warned last year. Did I just misinterpret your answer, or is it anything more true? That is correct. And the reason why that we saw the slowdown coming then last year, but it was not so visible already in Q2 in sales. Order pattern, though, and the forecast from customers changed significantly in Q2 last year. Okay. And secondly, also following up on the Q2 questions, if we take the, I mean, what would you say is the largest reason for why you think the Q2 performance, particularly for ACT, might be a little bit weaker? Is it due to supply or is it that, you know, there's still uncertainty regarding how much of ECMO consumables you will deliver in Europe and also, you know, the final outcome in the three months that you have for the data scope sales or the balloon pump sales here in Europe. Yeah, sure. The vast majority of the weakness is because of supply, not because of lack of demand. Okay, perfect. And just curious a little bit of the gross margin dynamics. You talked a lot about price coming through in the P&L this quarter. You've had volume support, obviously, in Q1, but also tailwinds from mix in the latter part of this year is at least what I think you've stated before. So anyway, you could elaborate a bit more about the dynamics for the rest of this year. And also, can we see Q1 margins as closer to the trough or? or what should we expect going forward in terms of gross margins, please? I think it is the continuous positive impact on pricing that we see coming through. But we also see that we have the inflation part that is hurting us on the GDP margin here in Q1. We see that it will continue, but it will gradually calm down a little bit. So a little bit better on the price, a little bit calmer on the, we will have negative impacts on material costs, but it will be a little bit less, I believe, going forward here in the second half of the year. Then you have the mix, of course, and the supply chain disturbances we have. These are important categories with good margins so that it will have a big impact on that as well. And then, of course, you have the mix of the where SW is going nicely, which is good. We like that. But, of course, as a mix impact is somewhat negative. But those are sort of the main components I think you can take with you. So you anticipate a quite strong growth from workflows in the rest of the year relative to your other BAs, and thus perhaps you're slightly more negative on mix for the full year. Is that a fair way to interpret it? Yes, and I think coming back to one of the first questions there on our guidance there from 2 to 5 percent, so depending on how well we are performing losing enough and handling the disturbances, of course, that will help both in the product mix and the net sales mix, and then we get the leverage out of that. And if we are having in the lower range, of course, we have the opposite.

Thank you very much. Thank you.

The next question comes from Ricard Anderkrans from Handelsbanken. Please go ahead.

Thank you for taking my question. So two from me, please. First, if you could talk a little bit about the trends in elective procedure volumes in the quarter and sort of trends in the Q2 and for the rest of the year, perhaps both in a sort of pre-pandemic level, but also, you know, sequentially. And yeah, it would be very helpful. Thank you. Yeah, so you broke up a bit towards the end, but I think I got the question. When it comes to electric service, it is one of the positive factors right now. It's one of the parts where we see good momentum, and we do expect this now to be more of a sustainable development, and hopefully we'll continue to see that during the rest of the year. Would you say that it's above the pre-pandemic levels on your major markets? Yeah, it has at least caught up, I think, with pre-pandemic levels now, and we expected to stay above it. Now, it was a bit more lumpy, as you may remember, last year, but it feels more solid now, more robust. I think there's still personnel shortages in hospitals and a little bit of operational challenges, but it's on a better level overall than it was last year. Right, thank you. And can you quantify the anticipated delivery disruptions for Q2 here in light of the suspended CMRs? And can you comment on your conviction that these disruptions won't impact Q3, Q4 as well? Thank you. I think the short answer is on the first half of the question is no. We can't give you any more granular information about that. When it comes to the impact in the second half of the year, I think we have reasonably good visibility for the actions that need to be implemented. I think the uncertainty here is more related to the approval process and the actual lifting of suspension, which is a little bit less difficult to or less easy to predict. But we're hopeful and factored into our guidance is that it will be lifted in Q3.

Thank you very much.

The next question comes from Oliver Rainberg from Kepler Chewbacca. Please go ahead.

Thanks so much for taking my question. The first one would actually be just in terms of the general order dynamic. I mean, I appreciate There's obviously a different moving part, but if I look at the order growth versus the 2019 street pandemic baseline, the average growth was 2% only, similar in Q1 in terms of comms. So when I look at the kind of 3% order growth, it still looks a bit soft compared to your general growth aspiration. So can you share any thoughts on this, please? I think our order intake, you should keep in mind, it's also hampered by some of the supply chain challenges that we have. So, I think it's not an appropriate reflection of the market or end market demand in this case. We can clearly see that the customers who have already placed an order and are waiting for that to be delivered, they don't place a new one until the first one is delivered. So, I think that's one of the explain factors. So, it's the assumption that order growth should actually pick up from here? It's definitely our hope, and I think there is market support for this, if we can then resolve the supply chain challenges. I mean, that headwind on orders will remain until we've been able to resolve the obstacles in cardiac pulmonary and cardiac ascension. Super. Okay, thanks so much. Second question, can you just provide a bit more color on the phasing of pricing action and also personal cost inflation? I think a reasonable assumption for pricing is probably 2% to 3% for the full year on average in terms of realized pricing. Can you just give any kind of color? Have we been at that level or before? So how much more is there to go for? And also in personal cost inflation, have we seen the full impact or is the impact ramping up over the course of the year? On pricing, I think we've had a good start. Our mission is to hit 3% this year, and I think we made very good progress on that in the first quarter, a little bit ahead of that plan. So that's one thing that is working well. Cost inflation, we will still have some additional headwind from going forward. We haven't seen the end of this. It's one of the things that we were hoping maybe would happen. We'll stop at this point, but we don't see that yet, so it will have some impact in Q2 and onwards from that as well. Okay, perfect. And the third question, there has obviously been a large discussion around the sleep and respiratory care issue at Philips, and one of your competitors talked about that the regulator, particularly in the US, is also more cautious in terms of the data on biocompatibility here. I mean, is that anything that you see impacting your pipeline activities and ventilators and anesthesia, or whether this could imply any kind of higher cost for doing this kind of data analysis? We're well aware of the development ongoing, but I can't comment on the impact on our business here from what's happening with competitors, unfortunately. I was just wondering if you see any kind of potential delay in the pipeline activities or higher cost for any kind of data that you have to produce? Not to my knowledge, no. Okay. And the last quick question is from A3ZM. I mean, surgical workflows was quite impressive with this kind of 20% sales growth and also implemented quite some kind of efficiencies. I was a bit surprised actually that the margin in terms of gross margin was only improving 40 basis points here. I would have thought that the kind of leverage effect is much stronger. Any kind of color here? We have a cost inflation impact. I think it's one key headwind for them. That's one of the things that we were hoping to be alleviated a bit, but it hasn't really in the first quarter, so that's probably the main factor. That's true. It's tougher with the pricing, and it's tougher on the material costs, so that is squeezing the markets a bit on that. Okay, the cost process more pronounced in this position apparently. Yeah, it's a little bit more that compared to if you look at our ACT product portfolio.

Okay, thanks so much indeed. Thank you.

The next question comes from Christopher Liljeberg from Carnegie Investment Bank. Please go ahead.

Hi, good morning. Coming back to this comment about ECMO deliveries in the second quarter. So could you explain why there will be more disruptions in the second quarter versus first quarter as you at the same time say that you could ship the product? Is this something you have to do with packaging, something you have to change in the manufacturing process, et cetera? Yeah, it is changes in manufacturing processes that take some efficiency out of that. And also, despite the fact that we actually have approval to deliver, it doesn't mean that you have the same kind of demand situation. We do expect our customers to be more cautious in use of the product as well. So there is that effect as well. So those two things are combined what made us make us a bit more pessimistic about the second quarter. The other thing is that we also, we have some hardware supply issues as well in that category, which also hampers demand a bit. But that's also something that we hope to get fixed by, well, into the second half of the year. Okay. But do you think there have been any effect of customers stocking here ahead of the CE registration was halted? No, I don't think so. It would be very marginal in that case. I don't have any evidence of that at this. Okay. And then a question on modding. After the fourth quarter, although you don't have any official modding guidance, you talked about modding being flat to maybe slightly up, it sounded. Anything that has changed since that that would change this type of outlook? No, not really. I think the only thing that has changed since the guidance was created is that we had some earlier deliveries mainly related to surgical workflows. I think that's the main change in dynamics. Otherwise, we're confident with the guidance that we issued a quarter ago.

Okay. Thank you. Thank you.

The next question comes from Peter Ossling from Pareto Securities. Please go ahead.

Thank you for taking my questions. Most of them have already been answered. I just wanted to dwell a little bit more into the fact that you are highlighting that Q2 will be weaker than Q2 last year, despite Q2 last year being the weakest quarter when it comes to organic growth. Is it only these disruptions within the Arctic balloon pumps and ECMO that is the key part why you think that Q3 this year will be lower than last year, which was the weakest quarter last year? It's also related to beta bags, which is also where we don't expect any come back with beta bags until the second half of the year, and the second quarter was stronger than what we expect this year. Okay, but life science is only 10% of your turnover, so do you think that this change in beta bag demand is still having that quite significant effect on the total group? Yeah, life science is actually more than 10% of our turnover, and it does have effect, absolutely.

Okay, great.

And then, can you say anything about your organic sales growth of 7.5% in this quarter? If you exclude the higher than normal demand from China, what would have What would it have been then? You can take 150 to 200 million SEC off the growth, and that will give you the number without the boost in China. Okay. Okay. Fair enough.

And then I just wanted to double check if you, what you said about the margin development since margins in Q1 was,

significantly above the market expectations, is there anything that you think will, with the rest of the year, be that weaker that you still expect to come out margin-wise compared to the guidance that you gave during Q4? So even if H2 will be better than H1. I think we haven't changed our view in terms of EBITDA development. We still expect to be able to improve with a few bits. That's no change to that. It may be one thing that you need to be aware of is that we will have some benefit from currency in the second quarter, but it will be diminishing over the year and probably be nothing towards the end of the year. Yes. And then just two quick ones. Did you say that the strong demand or the strong sales growth that you saw in surgical workflow, there's no, this will, you expect this will to continue and there will not be a negative effect in Q2 and Q3? because you pushed forward some orders in Q1? I think we don't guide by quarter by BA, as you know, but the development in surgical workflows, I think, is still strong from an underlying perspective. So we had some earlier than expected deliveries, but we also had, as I said, mid-single growth in order intake in the quarter, and We have an order book that is higher at the end of Q1-23 than Q1-22. So I think we are in, we haven't emptied everything in surgical workers. It's an important thing to be aware of. Okay. And finally, can you say the OPEX level that you delivered here in Q1, is that the level that we should expect for the rest of the year? We also don't guide on individual lines in the P&L, as you know, Peter, but we've had some inflationary impact now, and it's more full inflation from salaries coming as well. So that's still there. The other thing to be aware of is that variable pay, we would have a tougher comp, so to speak, in the second half of the year. And at the same time, we are trying to mitigate this effect by some of the improvement programs that we've started to put into place. And you could see some of the restructuring costs already last quarter related to this. And we have some additional initiatives that are under implementation here. So those are the main swing factors here without giving you a number by quarter. Okay. Okay. Thank you. I go back into the queue. Thank you.

As a reminder, if you wish to ask a question, please dial star 5 on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

All right. Thank you very much. Thanks, everyone, for joining. So I'll just reiterate that we've had a good start to 2023, strong sales growth and healthy order book, but the outlook for 2023 remains unchanged, so we're still expecting 2% to 5% organic growth. Continue to have good underlying cash flow from operations as well, so we remain in a solid financial position. We have, from a broad-based perspective, a vector supply chain situation, but still very challenging in two of our key product categories, so that would be some headwinds for the second quarter. So all this combined, based on that, we reiterate the outlook of 2 to 5% organic growth for 2023. So again, thanks very much for joining.