Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Order entry improved sequentially in the second quarter of 2024, with a book-to-bill ratio returning to above 1.
- Newly launched products have garnered significant interest, contributing positively to the order book.
- The service business remained robust and stable, supported by a high level of installed instruments.
- Sales of the Paramit product line remained at high levels, indicating strong performance in the partnering business.
- Successful commercialization of new products in genomics and proteomics, such as the phase separator and Resolvex i300, showing strong market traction.
Negative Points
- Sales decreased by 11.6% in local currencies compared to the same period last year, primarily due to reduced spending in the biopharma sector and market weakness in China.
- Adjusted net profit for the first half of 2024 fell to CHF36.5 million, reflecting the challenging market environment.
- Gross profit declined by CHF43.8 million compared to the prior year, mainly due to lower sales volume.
- Operating expenses, although controlled, still amounted to CHF137.8 million, impacting overall profitability.
- The tax rate increased to 20.5%, influenced by the Swiss tax reform and OECD Pillar Two minimum taxation, affecting net profit.
Q & A Highlights
Q: If sales decline for the full year, would that trigger more drastic cost-saving measures? How does this shape your thinking around the structural margin of the business going into 2025?
A: We have already implemented several cost-saving measures, including reducing discretionary spending and headcount. We do not plan for additional measures in the second half of the year, but we remain flexible. Regarding structural margins, we expect a total of around CHF15 million in savings for 2024 and around CHF10 million annually going forward. (Tania Micki, CFO)
Q: What has changed in the environment versus your guidance setting in March that led to softer H1 results?
A: The recovery in the biopharma segment has been slower than anticipated, and market weakness in China has been more pronounced. Additionally, Cavro OEM components saw a more substantial decline due to slower inventory reduction by customers. (Achim Von Leoprechting, CEO)
Q: Could you provide more insight into how July and August have shaped up? Are you seeing the recovery needed to achieve flat sales?
A: The July and early August performance was included in our revised guidance. We have seen some positive momentum, particularly in diagnostics and medical segments, but the overall recovery is slower than expected. (Achim Von Leoprechting, CEO)
Q: What gives you confidence that H2 will be better, and does your new guidance require a budget flush in Q4?
A: We are seeing initial signs of easing in the biopharma segment and good traction from new products and partnerships. We do not count on a significant Q4 budget flush, but we are cautiously optimistic about the second half. (Achim Von Leoprechting, CEO)
Q: Could you help us with a revenue number for your largest customer?
A: The revenue from our largest customer remains around 20% of our total sales. (Achim Von Leoprechting, CEO)
Q: How do you see the impact of the workforce adjustments on your operations in the US and Europe?
A: We reduced our workforce by over 100 FTEs, primarily in the US but also in Europe. The adjustments were strategically implemented to align with market developments and focus on higher volume products and key accounts. (Tania Micki, CFO)
Q: Does the streamlining in the genomics portfolio change the strategic outlook for this segment?
A: No, genomics remains a key growth area. We are focusing on strategic key accounts and the MagicPrep product, which have shown strong traction. The streamlining allows us to concentrate on these high-potential areas. (Achim Von Leoprechting, CEO)
Q: When will the new product launches impact the market? Will they affect 2024 or 2025 numbers?
A: Major new product launches will be discussed at the Capital Markets Day in October and are expected to contribute to 2025 revenues. Some partnering launches will impact the second half of 2024. (Achim Von Leoprechting, CEO)
Q: How do you view the potential recovery in 2025?
A: We expect a recovery in the biopharma market and continued traction from new products and partnerships. We are cautiously optimistic about returning to our targeted midterm organic growth rates in 2025. (Achim Von Leoprechting, CEO)
Q: What is the outlook for China sales in the second half of the year?
A: We do not expect a significant change in China sales in the second half. The stimulus packages are anticipated to impact more in 2025. (Achim Von Leoprechting, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
