Getinge AB (publ)

Welcome everyone to today's call. This is Patricius Pördös with me. I have our CFO, Agnetha Palmeer. In today's conference, we'll first look into our performance in the second quarter of 2025 and then also talk a bit about the current market situations and our expectations for 2025. So we can move directly over to page number two, please. I wanted to start with a quick repetition of our overall ambitions and how to get there. As you already know, our financial target for 2024 to 2028 is to have at least 12% adjusted EPS growth on average. We believe we have a strategy that is well crafted to get us to this goal. It's really based on our market positions in leading categories and the strength that we have in the different key geographies globally as well. And part of this is, of course, increasing the share of sales from recurring revenue. It's accelerating the share of sales from higher margin products like our Paragonics offering, our ECLS portfolio, the consumables in infection control and our beta bags in sterile transfer. And it's also a strategy that involves, of course, solid and effective quality processes going forward. These improvements should, of course, be achieved through responsible leverage as well and an attractive long term return on invested capital. We can clearly see that we are delivering according to the plan on these KPIs. We're trending in the right direction on all of them. Sales from recurring revenue is now at 65% and it was even higher now at the beginning of the first half of this year. But I would like to remind you that we are more weighted towards capital, especially in the fourth quarter of the year. High margin products make up about two thirds of sales. For quality, the number of field actions in relation to sales has decreased significantly. And we can see that this positive trend continues in the first half of this year as well. We can move to page number three, please. So if we zoom in on the second quarter of this and the key takeaways on performance for the quarter, we do look back at a solid quarter when it comes to a top line. Net sales grew by .1% organically with positive development in all business areas and regions. Order intake increased by .4% organically with growth in all regions and also in acute care therapies and surgical workflows. While we had a softer performance in life science, also based on high comps from the previous year. Adjusted gross and the beta margins improved mainly due to acquisitions, healthy price increases and positive mix. Tariffs and currency weighed heavily on the beta margin, signaling that the underlying development is very strong. Our financial position as well remains solid with financial leverage way below two and a half times EBTA, despite the increased net level after the acquisition of Paragonics. We can then move over to page number four. So I wanted to talk a bit about the key activities and events during the quarter as well, and let's start with the offering and customers. First, I would like to highlight that our VESAview Himapro 3 clinical cases were successfully conducted in the US and that we expect now to start deliveries in the US in larger scale during the third quarter and especially with the full force from September. We've also extended the functionality of the Servo-C ventilator with the neonatal option in targeted markets. And besides making a series of sales records for different product categories in the quarter, Paragonics celebrated its 100th kidney transplant case with the kidney vault that was approved in Q4 last year. In life science, we launched the heavy duty Altima 1600 washer and in surgical workflows, we have announced that we have entered into a partnership with Zimmer Biomet to support the fast growing orthopedic ambulatory surgery center segment in the USA. In surgical workflows, we've also introduced the Zen disinfection chemistry portfolio in the US, and this is leveraging the quarterly offering through Healthmark, which was one of our strategic intents with the acquisition of Healthmark. So it's really nice to see that this is going according to plan as well. When it comes to sustainability and quality, I just wanted to highlight that our complete Introtic Balloon catheter portfolio obtained EU MDR certificate in the quarter. And we have also submitted the documentation for reinstatement of the CE mark on our balloon pump and are now in a dialogue with our notified body about this. As you can see in the second quarter report, we have a positive trend also in regulatory compliance on findings per audit and the field corrections per million SEC of net sales compared to previous year. So really good job by the team on all fronts in this regard. The increase in online training of customers remains and CO2 emissions from operations also continue to deep. Let's move now to page number five and our top line performance please. Overall, we had a specifically strong top line performance in acute care therapies and in the Americas regions. I also want to highlight that we had really good traction when it comes to order intake overall in our three biggest markets, so US, China and Germany. When it comes to order intake, we had an average 4.4 organic increase across the company. So the organic or intake for acute care therapies increased mainly due to ventilators in critical care and ECLS consumables. The organic or intake for life science continue to report double digit growth instead of transfer. However, the otherwise challenging comparative figures meant that the order intake declined organically. The organic order intake for surgical workflows increased sharply due to healthy growth in all product categories and regions. So that's really nice to see. On the net sales front, we had .1% organic growth. And despite challenging comparative figures, acute care therapies increased its net sales organically mainly due to the strong performance in ventilators and also in cardiac surgery. Organic net sales for life science primarily increased as a result of the very high growth in sterile transfers and also sterilizers in the quarter. In surgical workflows, organic net sales increased due to high growth in infection control and also in our health solutions offering. Let's move to page number six then, and with that I hand over to you Agnes.

Thank you, Mattias. Firstly, I will say that even in the face of these headwinds in terms of tariffs and effects, we do continue to see improvements coming through leading to higher margins. Starting then with adjusted gross profit. For the group, adjusted gross profit increased to 4 billion 183 million SEC in the quarter, primarily on the back of volume acquisitions, continued traction in pricing and positive profit. The positive effect from adjusted gross profit on the EBITDA margin was .3% related to what I just mentioned. Adjusted for currency, OPEX had a slight negative impact on the margin in the quarter. FX impacted negatively by minus 0.9 percentage points in the quarter. All in all, this resulted in an adjusted EBITDA of 989 million SEC, improving our margin by about 0.2 percentage points year on year to 12%. So I really want to emphasize the underlying performance improvement. Tariffs and FX had a significant negative impact on adjusted EBITDA margin. If currencies had been the same level as last year, and if we add back the cost of tariffs, we would be above 14% on adjusted EBITDA margin. So the underlying improvement is strong. Let's then move to page seven and tariffs, please. So a few words on where we are on the tariffs. Let me first reiterate what we said in our previous earnings call that about 60% of our sales in the US is produced in the US. For EU and China respectively, about 10% is produced in the US, and about 1% of sales in EU and US is coming from China. Finally, as you can see, a significant proportion of our sales in China is still produced in the EU. And on that note, we will not comment on the latest news when it comes to tariffs and trade regulations between EU and China, as things are still moving. What we can talk about is the cost from tariffs that we have in the second quarter, which amounted to approximately minus 110 million SEK. And even though we continue to be successful with price adjustments, we have had to absorb most of this cost in the quarter. Let's move to page eight, please, and what we do to mitigate these effects. So here we aim to illustrate what we do to mitigate the impact on tariffs. As you can see, there are three main areas, pricing, cost reduction, and reviewing our structural setup for sourcing and production. The further to the right that we go on this slide, the larger the potential effect, but also the longer the time to impact. As we said before, we continue to be successful in adjusting prices, but nevertheless, we expect pricing to have the least impact out of these three, given our competitive landscape. The next one, productivity-driven cost reduction. That is, of course, nothing new, but we will scale up our ongoing initiatives globally and throughout our operations. And we do expect that to continue to counterbalance the impact from increased costs that we have seen in recent years from inflation and now also from tariffs. When it comes to the last one, reviewing our setup for sourcing and production, we are analyzing everything from local sourcing alternatives to regionalizing or even localizing other value-adding activities along our supply chain. Where this makes sense. At this stage, it's too early to put figures on this based on two facts. First, there are still a lot of moving parts. No one knows exactly what the final tariffs will look like, meaning that the tariff landscape can still change materially. Secondly, we still have important work ahead to assess and compare our strategic options and therefore we will not comment on this for now. Let's move to page nine, please. Free cash flow in the quarter amounted to half a billion SEK compared with last year. Free cash flow was positively impacted by changes in working capital and working capital days continue to develop well. On operating return on invested capital, we are at .1% on a rolling 12-month basis, which is well above the cost of capital. At the end of Q2 net debt amounted to 11.7 billion SEK. If we adjust the pension liabilities, we are at 9.2 billion SEK. This brings us to a leverage of 1.7 times adjusted EBITDA, which is well below the 2.5 that we have as an internal threshold. If we adjust the pension liabilities, leverage is at 1.4 times adjusted EBITDA. So this signals that we remain in a solid financial position and actually at the same leverage as last year, even with our recent strategic acquisitions. Cash amounted to approximately 1.9 billion SEK by the end of quarter. So all in all, we can conclude that the financial position continues to be strong. Let's move to page 10 and back to you, Mathias.

Okay, great. Thank you, Anita. So this takes us to the outlook for 2025, where we remain with our expectation for organic net sales growth to be in the range of 2 to 5% based on the 2024 net sales. With that, we can move directly to page number 12, please, to summarize a bit. So key takeaways after the second quarter of this year is that we've delivered organic growth with improved margins, despite significant headwind from tariffs and effects. Our financial position remains solid despite the acquisition of Paragonics, and we stick to our outlook for 2025, where we guide for organic net sales growth of 2 to 5%. So the priorities for 2025 haven't changed since last time. We are continuing to address the remaining challenges when it comes to quality and acute care therapies. We work actively with the sustainable productivity improvements and also cost consciousness when it comes to navigating the geopolitical uncertainty and addressing the impact from tariffs. And most importantly, we continue to invest in our business, develop new products and solutions to create added value for our customers. And make sure that we provide access to life-saving technology for more people globally. So with that said, I open up for questions. Thank you very much.