Release Date: July 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net sales increased by 15.7% in the second quarter, with 8.9% organic growth.
- Order intake grew by 14.4%, with 7.8% organic growth.
- Adjusted EBITDA margin improved by 4.9 percentage points year-on-year.
- Launch of new products like the Poladus 150 sterilizer and GEW888 neo washer, contributing to future growth.
- Strong performance in Acute Care Therapies, with 8% organic growth driven by Critical Care, cardiopulmonary, and cardiac surgery.
Negative Points
- Life Science organic net sales decreased by 13.1% in the quarter.
- Higher quality-related costs, with SEK200 million in Q2 compared to SEK100 million in Q1.
- Decline in organic order intake in the Americas due to a softer quarter for Life Science and Surgical Workflows.
- Currency impact resulted in a minus SEK5 million effect on net sales for the group.
- Uncertainty around the impact of the FDA letter on customer behavior and future sales.
Q & A Highlights
Q: What are the short-term trends you're seeing in customer loss with ECMO Balloon pumps?
A: It's difficult to predict. Some customers may take longer to evaluate whether they should change. We don't see any customer loss effects in either product category at the moment.
Q: How much of a stocking and pull-forward effect do you think there is in ECMO Balloon Pumps this quarter?
A: We can't really measure that, and we don't see why there should be a pull-forward or stocking effect at all.
Q: Are you seeing any trend shifts or market share gains in Critical Care post the Philips exit in the US?
A: It's too early to say. We think this will be favorable for us, but we need more data points before making any conclusions.
Q: At the Capital Markets update, you mentioned having cleared 90% of FDA's quality record backlog. Where are you now?
A: We've made continued progress and are now closer to around 95%. We are confident we will have worked through this before the end of the year.
Q: There seems to be a step-up in extraordinary quality costs in the quarter. How should we think about H2?
A: We expect costs to normalize in the second half of the year, going back to Q1 levels. For the full year, we expect these costs to be around SEK0.5 billion.
Q: Can you share more about the strong order growth in APAC, particularly in ECMO in China?
A: We've had good traction in Surgical Workflows on larger projects in Asia Pacific. Overall, we are positive about market opportunities in the region, including China.
Q: Can you comment on the margin profile for acquired companies this quarter?
A: Both Healthmark and High Purity New England have shown strong growth and are trading better than expected. Healthmark is more mature, while IPO in New England relies on fewer customers but is performing well.
Q: Do you expect to expand margins in the second half of the year?
A: We don't give guidance on the margin for the full year. We have activities to address the cost base and are exposed to product mix, which was highly positive in Q2.
Q: Can you explain the strong performance in Acute Care Therapies (ACT) this quarter?
A: The largest factor is the weak comp from Q2 last year. We've also improved supply in cardiopulmonary products, which has positively impacted performance.
Q: Why didn't you highlight Q2's strong performance during the Capital Markets event?
A: We don't discuss individual quarters during such events. Despite the relative strength, we don't see this as a particularly strong quarter and are not fully satisfied with the performance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
