Full Year 2024 Fresenius SE & Co KGaA Earnings Call
Good afternoon, and welcome to the conference call of Fresenius, Investor relation, which is now starting.
Thank you operator next film.
That's the relationship.
Speaker Change: Thank you operator, Hello, everyone welcome to our full year, and Q4 2024 earnings call and web.
The presentation was email to our distribution list earlier today and is available on presenting a stock comp on slide two of the presentation. You will find the usual safe Harbor statements unless stated otherwise we will comment on our performance using constant exchange rates, we will sell.
Speaker Change: Today, I'm joined by Michael and Sarah who will take you through the details of another strong performance. The call will last approximately one hour with the presentation, taking around 35 minutes in the remaining time for your questions to give everyone. The chance to participate please limit your questions to one to two in the first instance, we can always come back for a second round if needed.
Michael: I will now hand, the call over to Michael.
Michael: Thank you Nick warm welcome everyone Hello from my side, Sarah and I will review, our 2020 for operational and financial highlights. We will also go into more detail on our individual businesses within coffee and tea.
The company is at an exciting juncture as we focus now on the next chapter of future for that is what we call rejuvenate showing how we will move to the next level of financial and operational performance geared by an innovation mindset of course, we have.
Set aside plenty of time for your questions. So why don't we just get started.
Firstly, I just had a great fourth quarter and full year 2024.
This performance comes from all the hard work, we have done to ensure present, you're still remains a leader in global patient care.
Last two years were all about simplification structurally and financial progression, we sharpened our focus and accelerated performance. We successfully concluded several important strategic portfolio measures, including divesting non core assets, we completed the deconsolidation of <unk>.
Medical care and.
And we exited vomit.
This decisive steps were stringently executed and demonstrate our commitment to deliver value.
We made the organization better increased transparency de layered management levels and set rigorous ambitions, we increased both transparency and accountability, creating a performance culture.
Shipping more than $470 million of structural improvement in our cost base with consistently over delivered.
<unk> is now a simpler more focused and stronger company.
Michael: Our 2024 results show consistent progress quarter on quarter year on year, our momentum continues with a strong finish to the year.
We achieved our twice upgraded 2024 guidance delivering high single digit organic revenue growth with EBIT growing even faster in double digits.
Michael: Our growth vectors Med Tech nutrition, and Biopharma were the main drivers with 16% year over year revenue growth with the latter in particular with 76% year over year growth increasing its contribution.
Michael: And this pattern will accelerate as we move into rejuvenate Healy.
Helios delivered consistent revenue performance.
I think the progress we've made is meaningful in our business businesses continued to deliver strong organic growth and better margin expansion.
Michael: Our commitment and focus on better returns are paying off with the improvement in EPS, especially remarkable from a 13% decline in 2022% to 14% EPS growth in 2000 and for.
It is a similar story on cash and deleveraging. We finished 2024 at the lower end of our leverage corridor something the company did not managed for seven years.
Michael: And now we are increasing our ambition was a new leverage target.
Michael: This new range reflects us being a stronger company and our financial stability with strategic flexibility.
Michael: Our future is any transformation has created significant value I E shareholder return.
The structural changes with implemented have made us faster adaptive and more robust.
Michael: Higher margins more cash lower depth. These all have created value.
Michael: And we are happy to see that the market is recognizing our progress. This is also important and critical development for the increased company morale as our team now sees the outcome and benefit from their hard work.
Michael: Looking ahead, we see even more upside we have a great company positioned in attractive markets with strong secular growth trends and we will keep this momentum going.
Michael: Historically presented has delivered consistent dividend growth, which was kind of interrupted last year by legal restrictions due to the receipt of the energy relief payments. However, this year I am pleased to announce that we will resume our dividend.
Michael: We are proposing one euro per share for 2024. This is a strong increase over the dividend, where we left off and demonstrates our improving financial strength and our commitment to delivering shareholder value.
Michael: Moving forward, we'll adjust our dividend policy in line with our capital allocation priorities, Sarah will go into more detail a little later.
Michael: Now, let's take a look at present is this core assets our health care assets are strong and address a wide spectrum of current and emerging healthcare needs. The impact of our growth vectors continues to gain relative weight in our activities. This has exactly been the plan.
Michael: And when vision 2026 was introduced in 2021 this expands both our topline and margins over the past two years, our group EBIT margins have improved by 180 basis points, a clear Testament to our strategy.
Michael: This trend will continue fueled by the increasing contribution from Biopharma, the improving med tech margin and newly launched nutrition products are strong care delivery platforms provide predictable stable and reliable cash flows strengthening our balance.
Michael: Its sheet. These developments are in line with what we had in mind when we initiated future for <unk>. Our strategy is unfolding as planned underpinned by a strong high single digit compound EBIT growth rate of 8% and even better a double digit growth for the <unk>.
Michael: Full fiscal.
Michael: It's not a secret that the worldwide macroeconomic environment is changing rapidly global markets have become more volatile and trade dynamics are shifting.
Michael: However, we are well positioned to navigate and potentially benefit from these challenges with a broad and balanced business and regional footprint.
Michael: While we serve all markets, we have regional and local strength in the US For example, shortages are known to be an issue and 70% of IV drug units shipped by carbon in the U S are listed on Fda's essential medicines list. This is a system.
Michael: Critical role so we do play a major part in ensuring health care security in the country delivering significant value and ultimately benefit for patients.
Michael: We consider ourselves a local player in the U S with a team of more than 4000 employees across nine sites. We have invested nearly 1 billion over the past 10 years to further expand our local manufacturing and supply footprint and capabilities more than 70% of our own.
Michael: Pharmaceuticals for the U S are produced in the U S. But it's not just about manufacturing it's much more we manage the entire supply chain from logistics to warehousing. We have also invested in our distribution network, making us a reliable player in the system.
Michael: Affordability is key, especially when it comes to IV generics in Biopharmaceuticals.
Michael: Biosimilars, which come at a significantly lower priced in biologics.
Michael: <unk> important in improving access to cutting edge treatments for acute and chronic diseases.
Michael: We see ourselves as the solution to rising healthcare costs.
Michael: A few words on China, the APAC region remains a strategically important market for presenting is our short term view on China remains unchanged.
Michael: There are still challenges, mainly due to a slower economic situation the impact from the national volume based procurement, particularly relevant for caito, which I will discuss in a moment and the hospital budget control. However, we are seeing signals in the environment with the recent new suggesting that.
Michael: Healthcare practitioners physicians and doctors are becoming increasingly concerned about the impact of MVP and other policies on direct patient care naturally we are closely monitoring development, but still do not anticipate a substantive change to the operating environment.
Michael: In the short term.
Michael: With our global health care assets, we have great confidence that our sales and margin momentum we'll continue.
Michael: Our next strategy phase, we duveneck will lead us another step upwards in performance at copy there are many exciting growth areas in 2025 pharma, a highly resilient and cash generative business has a steady launch agenda. This year our U S site ramp up continues to further increase.
Michael: Our impact on fluids supply with nutrition, we continue to leverage our strong market positions the business delivers accretive margins and we are driving growth with further innovations and product rollouts, which equally means additional investments.
Michael: On China in Quito, which is an important product in this market. This is expected to be included in this year's its the 10th National volume based procurement process, creating volatility to the downside on outperformance in Q2.
Michael: But this impact is reflected in our outlook assumptions and we are already preparing already preparing for this normal by optimizing our selling model. In addition, we are also launching new products tapping into emerging and attractive growth opportunities outside the Pvp system.
Michael: In Med Tech, we continue to drive performance.
Michael: The avonex pump rollout in the U S is progressing as planned excellent customer feedback so far and we are pushing product innovations also in our transfusion and cell therapy business.
Michael: Standout the adaptive nomogram enabled us on average to increase the plasma yield by 11%.
Michael: 11% per donation collecting more per donation, while maintaining safe and effective operations.
Michael: This innovation enables plasma centers to improve collection efficiencies gray.
Speaker Change: Great job here by the team in introducing this new software overall, we expect steady margin improvement for med Tech and see significant potential for further margin expansion on Biopharma, we are beginning to see how powerful it can become.
Speaker Change: Pack growth every quarter, we have a growing portfolio of molecules launched in different countries. We continue to work on further improving our operations by scaling and driving vertical integration with map science.
Speaker Change: We expect our biopharma business to reach more than 1 billion in revenues in the coming years being accretive to our improved structural margin band of now 16% to 18% for this current fiscal <unk> expect a meaningful leap forward almost kind of at the mall.
Michael: <unk> range, clearly biopharma is making a significant contribution to the structural margin improvement at coffee.
Michael: Turning now to Helios, where outperformance program for Germany is picking up steam like our efforts at Kabi. These efficiencies are not onetime efforts. They are designed to permanently improve the structural and operational performance of Helios, Germany, Kieran salute is our digital front runner and they will come.
Michael: <unk> to lead in this space with further digital rollout.
Michael: I mentioned, our growing biosimilars portfolio and I want to give you more color on this one.
Michael: The Biosimilar market is expected to grow on average by 20% in the next five years, and we are well positioned with our portfolio to capitalize on this very market.
Michael: In terms of products already in the market, we have a broad and attractive pipeline with several new upcoming launches Diane is picking up month by month, and we expect an increasing contribution from the U S. This year I will share more details on the performance in a minute with <unk> with our <unk>.
Michael: <unk> is expected to be launched shortly we are progressing with several pbms and health plans for placing a toll feet on the formulary and the newsroom up is also expected to be launched later this year. So when you look at the market size that means global peak of the original.
Michael: At a product these are very attractive molecules.
Michael: <unk> science, we have acquired a leading biopharmaceutical company that develops and manufactures biosimilars and biologics with end to end capabilities in state of the art facilities in Spain, and Argentina map science is not only increasing our pipeline of molecules, but it.
Michael: It also complements our service offerings with a highly attractive CMO business. All of this is also contributing in 2024 and beyond.
Michael: Let's go to tie in Pi and continues with great momentum, we see improvement each month in Europe. The uptake continues to be dynamic since last quarter. The market share has continued to improve now with 22% in EU five in all countries delivered market share gains in the U S. We are progressing well with the <unk> launch we are in.
Michael: Now shipping tie into more than 100 payer client agreements very very encouraging in addition, more than 90% of both pharmacy and medical benefits volume is awarded under exclusivity overall, a great step forward into making healthcare more affordable in the U S. Our tech trends.
Michael: For in our manufacturing facilities that map science in Leon, Spain, as well as set kabi in Graz, Austria is progressing as planned leading to a stronger more competitive cost position and enhance supply reliability as we move forward.
Michael: Bringing all this together Fresenius has changed for the better I would say delivering consistent and sustained improvement in revenue margins and cash as we enter 2025, we are moving into the next phase of our future presenting his journey rejuvenate.
Michael: Not going to stop no moving to the next level is our goal setting higher ambitions, while its driving down depth. Further we will see continued product launches and upgrades in patient care, along our dedicated platforms.
Michael: Copy, we've raised our margin ambitions paced by performance improvements and the growth contributions from our Biopharma business at Helios, a dedicated performance program will generate productivity improvements and create a stronger business setup, while reinforcing our commitment to <unk>.
Michael: Highest quality care, having finished 2024 strongly we enter 2025 with confidence and expect 4% to 6% revenue growth and 3% to 7% EBIT growth. Consequently, EPS will grow accordingly.
Michael: Over the past two years, we have created a simpler more focused company delivering shareholder value and in 2025, we will sharpen this focus even further continuing our strategic momentum and revenue and earnings growth now, let me hand, it over to Sarah.
Sarah: Thank you Micah warm welcome also from my side.
Sarah: We concluded a successful year with another quarter of strong execution and delivery on all relevant kpis.
Sarah: Revenue growth was driven by both operating segments with cabot's growth vectors showing excellent performance.
Michael: EBIT growth was mainly fueled by kabi.
Michael: <unk> set the first quarter in 2024 without the benefit of any relief payments as anticipated as a reminder, we had significant support from energy relief in the fourth quarter of last year, sorry of 23 actually.
Michael: Our strong financial progression is also reflected in net income. This however must also be viewed in the context of the soft prior year base.
Michael: Both tax rate and interest expenses were in line with expectations for the full year.
Michael: We maintained our strong cash generation with operating cash flow nearing 1 billion euros in the fourth quarter.
Michael: Our rigorous cash focus helped us reach the low end of our self imposed leverage target corridor that is an impressive reduction of more than 70 basis points since the beginning of the year.
Michael: Yes.
Michael: We are particularly pleased with the excellent EPS momentum delivered in 2024.
Michael: The stringent execution of our strategy translates into significant financial progression.
Michael: It becomes even more evident when looking at a multiyear comparison.
Michael: Our strong bottom line performance was also driven by the great progress made with our cost and efficiency program in 2020 full we realized a strong 201 million euro and incremental savings at EBIT level.
Michael: This brings our total structural cost savings to 474 million euros.
Michael: Productivity measures will continue to strongly contribute in 2025 and beyond.
Michael: One off costs required to realize these are treated as special items as usual.
Michael: Two years ago, we told you that 15 years from now on it will be geared towards returns.
Michael: At the end of 2024, our return on invested capital is back in the self imposed target range.
Michael: However, at six 2% were still not where we want to be and where our ambitions are.
Michael: There is more work to do.
Michael: As we have always said there are no shortcuts to this one.
Michael: When we look at ROIC. We include goodwill as it represents part of our legacy challenges.
Michael: However to give a clearer picture of our underlying performance improvement. We are also giving your ROIC excluding goodwill as an addition of Kpis. This is something many investors have been asking for.
Speaker Change: As explained by Micah, we're now entering the rejuvenate face to bring our performance to the next level. This means our financial agenda, we'll shift gears as well.
Michael: In my presentation I will show this agenda, along three key parameters.
Michael: First higher ambitions we.
Michael: We will push ourselves further set clear ambitions in line with our long term strategic vision and pursue them with rigor.
Michael: Second increased productivity.
Michael: We will continue to drive productivity across the board.
Michael: This includes optimizing processes enhancing efficiency and fostering a culture of continuous improvement.
Michael: And third focused capital allocation disciplined approach to capital allocation will continue to be key to ensure we make the best use of our resources investments have to be aligned with our strategic agenda and to meet our strict criteria in terms of returns.
Michael: And we remain committed to strengthening our balance sheet.
Michael: <unk> financial framework as a living frameworks it evolves over time as we achieve new levels of performance and maturity.
Michael: As we enter 2025 and based on the significant progress made in 2004, we are upgrading our financial framework again.
Michael: First we are raising cabbies structure margin band to 16% to 18%.
Michael: This is a clear reflection of the strength over the past quarters and the margin potential we see.
Michael: Second we're setting ourselves more ambitious target corridor for leverage now at two and a half to three times net debt to EBITDA.
Michael: I will cover both topics in detail in the course of my presentation.
Michael: Lastly, after the legally required suspension of dividend payments last year. We are pleased to propose a dividend of one euro per share.
Michael: This is a strong signal of our financial strength and commitment to attractive shareholder returns.
Michael: At the same time, we are introducing a new dividend policy, which aligns with our capital allocation priorities more on that in the capital allocation section.
Michael: Not only have the growth vectors made an increasing contribution to <unk> top line growth in 2024. They also drove margin expansion, providing the foundation for us to raise the structure margin band.
Michael: This actually is the three plus one strategy coming to life.
Michael: I want to make it very clear at this point this is about unlocking incremental growth and value.
Michael: While the growth vectors are gaining momentum we continue to further strengthen resilience and our highly attractive and cash generated IV generics business.
Michael: The balance between new growth opportunities and business stability is key to our success.
Michael: Within the growth vectors Biopharma stood out in 2020 full with high double digit top line growth.
Michael: EBIT positive ahead of our original plan.
Michael: Milestone payments are recurring and provides a stable floor dynamic biopharma growth in.
Michael: In 2024, they made a mid to high double digit EBIT contribution.
Michael: For your awareness those milestone payments are predominantly associated with R&D spend.
Michael: Going into 2025, we expect milestone payments to remain broadly stable on a yearly basis.
Michael: There may be some differences in terms of quantum quarter over quarter.
Michael: Looking ahead to 2025, we expect the strong momentum in Biopharma to continue the business contribute even more significantly now also in terms of profitability.
Michael: With our pipeline and upcoming product launches unfolding as planned we remain confident in achieving our ambitions just outlined by Mike.
Michael: On attrition, we always said that nutrition is accretive to the structure margin of copy and that has not changed.
Michael: Let's turn to Helios.
Michael: As you know we received energy really funding in Germany of roughly $140 million in 2024, resulting in a tough year on year comparison.
Michael: However, despite this headwind we still expect EBIT to grow this year, but the margin will remain broadly stable.
Michael: To achieve that we have moved fast with a dedicated performance program for the German hospital operations.
Michael: Focusing on clinical process optimization, improving non patient facing areas for increased efficiency as well as synergies in procurement.
Michael: In total this program is anticipated to deliver an incremental EBIT contribution of around 100 million this year.
Michael: This will add to the top line and EBIT growth, we expect for both he is.
Michael: Germany, and kill and sell out.
Michael: Sure.
Michael: In 2025 contributions from the performance program will be weighted to the second half and particularly some of the levers are process related and will take time to deliver and realized benefits.
Michael: And the program will of course continue and provide further upside in 2026 and beyond it will establish a strong base for continued margin improvement within that 10% to 12% structural margin band for Helios.
Michael: And also very importantly, it will further enhance medical outcomes and our quality of care.
Michael: Let's talk capital allocation, we will ensure that we continue to deploy capital and our focus and value accretive way.
Michael: Our approach will be based on the following key pillar.
Michael: Investing in the business to drive sustainable long term growth, we see attractive opportunities to invest in ourself and bolster growth.
Michael: R&D and more broadly spend to foster innovation and further expand our pipeline as part of this.
Michael: We're committed to a disciplined capex spending.
Michael: And it's strengthening of our business units through business development will be assessed carefully within our strict cartwright for return and payback and of course will be aligned with our strategy and focus areas.
Michael: Okay.
Michael: Delivering attractive shareholder returns remains a priority we are firmly committed to rewarding our shareholders and of course resume dividend payments from this year.
Michael: Our new dividend policy is designed to ensure attractive shareholder returns, while providing strategic flexibility.
Michael: Going forward, we will pay out 30% to 40% of core net income that is net income before special items and excluding Slovenia medical care.
Michael: It aligns with our capital allocation priorities and market standards.
Michael: We will also continue to further strengthen our balance sheet, our financial discipline remains a priority and deleveraging will continue with an even more ambitious target corridor.
Michael: I will come to this in more detail now.
Michael: In 2024, we achieved strong fleet free cash flow generation with a year over year increase of more than one 5 billion euros.
Michael: Impressive even when adjusting for the foregone dividend in 2024.
Michael: Key drivers of this performance.
Michael: Continued efforts to improve working capital as well as successful Capex management with four 3% well below the 5% of revenue.
Michael: Our strong cash flow generation has allowed us to work on both sides of the equation when it comes to deleveraging not.
Michael: Not only did we increase EBITA, we were also able to reduce net debt by approximately 2 billion euros.
Michael: As a result, we reached the low end of our original leverage target range of 3% to three five times net debt to EBITDA by the end of 2024. However.
Michael: However, we're not stopping here.
Michael: Also in light of the more volatile interest rate environment. We are now setting an even more ambitious target range of two five to three times.
Michael: We have made strong progress over the past quarters and will continue to operate within the <unk> of our disciplined capital allocation strategy.
Michael: That said, while we will make further progress. It is important to note that deleveraging is not expected to continue at the same pace we saw in 2024.
Michael: We expect our performance momentum to continue into 2025.
Michael: Starting with copy.
Michael: We expect mid to high single digit organic revenue growth.
Michael: This will mainly be driven by broad progress across the growth vectors.
Michael: At the margin level. It is about further margin expansion through even better operating performance and our growth vectors with an increasing contribution by Biopharma in particular.
Michael: We expect <unk> to deliver an EBIT margin of between 16% to $16, 5% within the new structure margin band.
Michael: At <unk>, we expect solid volume development in Spain in Germany that will enable the mid single digit organic revenue growth.
Michael: The EBIT margin is expected to be around 10% within the structure margin band.
Michael: And that despite the ending of the energy relief payment in 2024.
Michael: Moving to Fresenius group for the group, we expect 4% to 6% organic revenue growth in 2025.
Michael: On the EBIT level, we expect growth at constant currency to be in the range of three 7%.
Michael: In terms of phasing, we see our strong momentum continuing into the first quarter of 'twenty five.
Michael: However, the overall performance for the full year will be second half weighted.
Michael: This reflects the impact of Chinese volume based procurement on Q2 and Q2.
Michael: The Easter phasing effect and the year on year comparisons for Germany with the benefit from energy relief payments in 2024.
Michael: I would also like to mention our assumptions for other relevant kpis to help with modeling.
Michael: For 2025, we expect interest expenses in the range of 400 $420 million.
Michael: Tax rate between 25, and 26% and capex up around 5% of revenue.
Michael: As we enter 2025, we must we must remember that we are all navigating a fast moving geopolitical environment, which is introducing a heightened level of operational uncertainty.
Michael: Obviously, our guidance assumes current sectors and known uncertainties, but it does not reflect potential extreme scenarios.
Michael: Overall <unk> is in a much stronger position today, we're more focused more resilient and our strategic plan is unfolding successfully.
Michael: This will provide an excellent foundation for long term growth and for bringing outperformance to the next level.
Mike: With that I'll hand back to Mike.
Mike: Thank you Sarah So 2024 is another exciting year for <unk>.
Michael: We are elevating to the next level of maturity with capital allocation continuing to emphasize organic growth at the same time, we remain committed to structural productivity improvements Kaabi has set the benchmark for achieving sustainable saving it now.
Speaker Change: Is helios, a stern with their dedicated performance program.
Michael: As a global healthcare leader, we will continue to innovate driving new ideas and technologies fostering partnerships within the ecosystems through our healthcare platforms and continuously enhancing healthcare delivery to create long term value for our patients.
Michael: We are committed to life 2025, we'll extend that commitment now it's time to take your questions. Thank you very much.
Michael: We are now starting the question and answer session.
Michael: Thank you Mike if you would like to ask a question. Please press star followed by one on your Touchtone telephone.
Speaker Change: The operator will announce your name when it's your turn to ask a question.
Michael: In case, you wish to cancel your question.
Michael: Please press star followed by <unk>.
Graham: The first question today comes from Graham with UBS.
Michael: Please go ahead.
Michael: Okay.
Michael: Afternoon, guys. Thanks for taking my questions.
Michael: Just two for me please.
Michael: Firstly on tie in.
Michael: Would you please give us a little bit of color as to the visibility you have on volumes as we go through this year. So.
Michael: Typically with some of the drugs that have been.
Michael: We've seen biosimilars enter the market they have been acute rather than chronic this is slightly different so be interested to get a sense to how much visibility you have on patient switching.
Michael: Based on some of these contracts you've won.
Michael: Second point, then is around capital allocation, so obviously, you're deleveraging and you've given us a good clue as to what your plan is going forward in terms of dividend.
Michael: But maybe just a.
Michael: I look at sort of M&A, so when could acquisitions be back on the agenda and also with regards to your large stake in Fresenius medical care. How are you thinking about that in terms of share prices have been doing quite well.
Michael: Again, using that as a potential source of liquidity for subtract acquisitions. Thank you very much.
Graham: Thank you Graham.
Speaker Change: I think this is a great start and we can keep it Chris look on tie and we have very good visibility.
Speaker Change: Actually what we have baked into our plans.
Graham: I would say north of 90%.
Michael: Is contracted.
Michael: I mentioned that we have several contracts in different channels with private plants and we see both we see.
Michael: Part D and part D or pharmacy benefit and medical benefit.
Michael: And <unk>.
Michael: Customers are switching as we talk now.
Michael: I may already insert one sentence on our outlook now we have great visibility on the contracts actually what we plan is covered now we need to execute that one we need to.
Michael: Produce ship and all of these kind of stuff and this will obviously ramp up.
Michael: During the course of the year in the later part as Sarah said and that's why it will also be New York to the second half of the.
Michael: Of the year now I mentioned on capital allocation overall on strategy, we do emphasize going forward organic growth.
Michael: This whole capital.
Michael: Financial framework actually is a very consistent framework. If you. So wish we on the one hand want to improve on operating earnings. That's why we increased the coffee margin band.
Michael: And concurrently we said we're going to go to a new leverage range. So this in essence shows you that the emphasis or the priority is on organic growth I said that at some point in time, if and when the company is ready and maturity as we go into the new rejuvenate face.
Michael: We will work around our platform. So we will invest currently the priorities investing into organic topics, whether it's some in licensing whether its on capex, whether it may be a greenfield on the hospital side and yes Youre right.
Michael: The monetary item is there and we love what we've been seeing on the value creation of Fresenius medical care and <unk>.
Michael: Two quarters ago, Sarah and I were sitting here and saying.
Michael: This may be a gap to davita.
Michael: Last two quarters.
Michael: As investors were happy that FMC did good.
Michael: And we are ahead of us.
Michael: The Pir we saw see this asset quickly deleveraging so theres a lot in play they can still create value and that's why we love the investment.
Michael: Thank you that's really impressed with clarity thanks a lot.
Marion Ball: The next question comes from Marion Ball with Bank of America. Please go ahead.
Marion Ball: Thank you very much for taking my question I have two as well.
Marion Ball: The first one is on the on the group guidance you have put out for 2025.
Michael: If we look at the range is relatively wide, especially on the EBIT side. So I was wondering if you could talk a little bit about the headwinds that you would have assumed that could lead to the low end of the guidance.
Michael: And the second question is on <unk> could you remind us a little bit how the partnership with Farmington works and just wondering if you could comment a little bit on.
Michael: The announcement from form again that there was a higher than expected price discount for biosimilars in the U S. Thank you.
Michael: Yes, Tim I ran a very good question and I think this outlook question is important we will probably come back to that one a couple of times and also in the next couple of days look overall the pattern, we want to pursue for the full year is a little bit what we had in the last two years, what I mean with that is.
Michael: We at the beginning of the year. If you are at the beginning of the year and if.
Michael: We read the newspaper Theres a lot of volatility on many many topics, which are out of our hands. Sarah had the disclaimer that if there is a mega topic that is obviously not included on geopolitics and Geo strategy, but we have a volatile.
Michael: Overall environment, not operating environment, but overall environment. The second thing is that we clearly want to share with you our assumptions.
Michael: We have at the beginning of the year the assumptions need to work, we need to work against them and if they work. We all will have the benefit and if they don't work you know what we have been thinking about specific topics at the beginning of the year now let me give you a few topics.
Michael: As a startup.
Speaker Change: Sarah and myself you mentioned the MVP in Quito Caito is a product, which is a very profitable product marketing and selling in China and it is part of the 10th MVP program and we know that for sure not only did we received the paperwork the tender.
Michael: He has done.
Speaker Change: Not part of that tender, so we're losing that volume.
Speaker Change: And that will happen in Q2, that's why Sarah mentioned the phasing. So we will lose the contribution of capital. The second thing is there were some VIP products on the pharma side in last for school, where you see the spillover in an annualized fashion. If you so wish into this year.
Speaker Change: These are two headwinds if you would take them in isolation only in isolation and we don't work against them then.
Speaker Change: It would actually decrease the coffee margin.
Speaker Change: But as they are growing and have a nice structural improved cost base kabi wants to improve the margin given where they left it in 2024th so we guided to 16% to 16, 5%, but in order for that to happen new products need to know.
Speaker Change: It only hit the market need to ship then we post revenue and then we get the contribution margin I gave you a little bit of a flavor on <unk>. So this is one thing the other thing is that.
Speaker Change: If I take the China effect in isolation it all in isolation as a gross topic it would cut more than 100 basis points of the coffee margin.
Speaker Change: But as you see kabi is going to improve so they must be doing something right, but they need to work against that Helios. It has Sarah mentioned 140 energy relief payment year over year, which is also a pressure yet we say the margin is scratching the 10% in essence, we even one.
Speaker Change: <unk> them. If you don't think about margin, but if you think about absolute EBIT. If we even wanted to grow. So these things need to happen because against those growth effects people have to work against and we will know during the course of the year. How this whole thing is unfolding in Helios on the.
Speaker Change: Performance improvement and on Kabi as to how the commercial.
Speaker Change: Biopharma publics, but also other topics, we are launching more molecules than last year and IV generics in the U S, but that all needs to happen. If all of them happen. Then it's great. We will also be in the margin range, but if some of them are not happening or our.
Speaker Change: Prolonged or there's an obstacle than.
Speaker Change: A little bit of a flavor now on <unk>, which is ours, we can't comment on other company.
Speaker Change: Company's books and records.
Speaker Change: We also saw the news that there was some write off and then I guess the write off is clearly attributable to if the value is not being held in the balance sheet anymore that.
Speaker Change: The prices they assumed on making with this molecule.
Speaker Change: We're maybe now in reality lower than initially planned.
Speaker Change: In our case, we are not having a write off so let's say that means that our assumptions are.
Speaker Change: Also on pricing, we have on auto fee.
Speaker Change: <unk> be something what we are also expected to see while we launch it remember when or toll fee. When we talked last time, we said that it will also be a competitive market actually a highly competitive market there are differences to industrial.
Speaker Change: But this is a competitive market with several players are entering the market and are entering the market in bracket as we speak that's the first thing the second thing what you see is first of all don't rely on one molecule only.
Speaker Change: That's why we have a pipeline of molecules a breath of molecule and we keep adding molecules because if you're dependent on one and that is your cash generating unit that may happen what happened there.
Speaker Change: Second thing is vertical integration, that's why map science is so important because it's competitive at the front end you better have your cost per molecule under control and Thats why vertical integration.
Speaker Change: Thanks.
Speaker Change: Thank you very much.
Falko Friedrichs: The next question comes from Falko Friedrichs with Deutsche Bank. Please go ahead.
Speaker Change: Thank you very much for taking my questions. Two please firstly could you add a little bit more color on this 100 million cost savings in Helios and <unk>.
Speaker Change: Specifically that that entails and how sustainable do so and then secondly.
Speaker Change: Going back to us to keep them up into newsroom up could you be a little more specific in terms of the launch timing this year, whether thats more in the first or the second half.
Speaker Change: That would be helpful. Thank you.
Speaker Change: Yes, happy happy to take the 100 around 100 million.
Speaker Change: They fall under three buckets clinical process optimization non patient facing areas and then.
Speaker Change: Procurement and if you think about them.
Speaker Change: Probably what you will see in 2025 is a good chunk of the procurement because they are relatively quicker actually to materialize.
Speaker Change: It's generating synergies across the Helios platform in particular in Germany.
Speaker Change: To safeguard those.
Speaker Change: Savings, which we expect on the procurement side, then if you're looking at a non patient facing areas is how do we.
Speaker Change: Yes.
Speaker Change: Just our infrastructure setting on the non patient facing to best serve our patients and actually to optimize these processes and there you can think of.
Speaker Change: Harmonizing, our it infrastructure centralizing and also pursuing more rigorous digitization strategy.
Speaker Change: Some of those benefits we were clearly already seen in 2025, some more back end loaded and some are also more into 2026 and for what when you then look on the clinical process optimization. This is probably the lag which is one which will bring us most forward in terms of.
Speaker Change: Enhancing quality to serving patients, which is however, also most structural and fundamental so we'll take a moment longer until we see the full benefit of it and it's actually for me. It's two sided it will enhance patient satisfaction, it will enhance quality and it will bring us productivity and.
Speaker Change: Efficiency and if you think about it it's the cluster strategy, we have talked about it's about the patient flow through the hospital starting all the way by emergency room at mission, how do we reduce waiting times, how do we best leverage the infrastructure, we have to increase the patient.
Speaker Change: Throughput if you so wish so that's basically how you how I would phrase the three categories.
Speaker Change: And the 100 million is what we see for 2025 as I said biggest.
Speaker Change: Chunk from procurement quickie quick quicker and then the <unk>.
Speaker Change: Asset optimization, a little further out but overall it's more.
Speaker Change: Kind of geared towards the second half of the year.
Speaker Change: And what we said all the way along they will need to have to hold the ground.
Speaker Change: So this.
Speaker Change: This will be work, but I think we've also seen from the time you said, we can do it and we are very much convinced we will get it done.
Speaker Change: Yes.
Speaker Change: Farquhar.
Speaker Change: Deno.
Speaker Change: Let's start with Dino.
Speaker Change: The launch and this is another item when I qualified the outlook will come in the later part of the here more Q3 Q4.
Speaker Change: <unk> when we get the full approval what we have on the newsroom up is the BLA.
Speaker Change: So not the full regulatory approval now is there anything which keeps us or where we think we should not get approval no. There is kind of like a clock, which.
Speaker Change: Goes backwards.
Speaker Change: As to when to expect the pool.
Speaker Change: And we are waiting from the regulatory bodies, but sometimes you have heard now theres a lot of noise and workforce reduction at the FDA.
Speaker Change: There is no reason for us to believe that this is impeding this one.
Speaker Change: But you don't know whats going to happen. So we have just two for full clarity we have a BLA status and we are waiting for the full approval on the toll fee.
Speaker Change: I will only go thus far.
Speaker Change: As I said it is a competitive molecule.
Speaker Change: Folks are already peers already in the market and active.
Speaker Change: Are we active yes, we are but let me.
Speaker Change: Don't want to spill out our whole launch strategy here.
Speaker Change: Publicly so what I will say it is expect to it to be launched soon.
Speaker Change: Because.
Speaker Change: We are waiting for a few data points as to how the market is.
Speaker Change: Shaping up in the very very very very early stages.
Speaker Change: We are in touch I can tell you is a positive indication with several pbms and health plans and obviously hope to get the contracts behind that one but this is only so much I can tell you at this very moment, but at the back of your head.
Speaker Change: It should come soon.
Speaker Change: Great. Thank you.
Speaker Change: The next question comes from Hugo Fallback with BNP Exane. Please go ahead.
Hugo Fallback: Hi, Hello, Thanks for taking my questions and congratulation on the results.
Hugo Fallback: Questions on <unk>.
Michael: Michael following up on the.
Speaker Change: Youll preview center all critical Pbms yields are two construction you think in the U S market overall.
Speaker Change: Maybe you can elaborate what youre going discussion are you seeking exclusive deals with tdm or.
Speaker Change: And on Biopharma, if I remember when you commented on getting close of $1 billion in sales.
Speaker Change: 2025 already can you help us reconcile this.
Speaker Change: Guys for both 1 billion, what's the timeline I'm nine year.
Speaker Change: How should we think about.
Speaker Change: The sales ramp up beyond 2025, just say conservatism from your end. Thank you.
Hugo Fallback: Yes Hugo.
Speaker Change: Look.
Speaker Change: The market in the U S is information as we speak that is what I meant when I almost wanted to have years ago said, we will learn a lot from the whole industrial or utterly move up.
Speaker Change: <unk> case, what we see obviously is pbms are playing a role.
Speaker Change: But there is what we are also seeing there is much more than the national formularies.
Speaker Change: We're also other formulas, which we also see is that there are private health plans. So.
Speaker Change: You can also contract with private health plans. What we also see is that if and when you contract and this is and will be the case for example on potency that you can get exclusivity. So all of these things are in flux, but what I'm trying to say is it is.
Speaker Change: Does not.
Speaker Change: Rigid or carved in stone like maybe folks that wanted to have years ago that you only have to go through Pbms, who can go through different routes and the market is evolving and we even think that.
Speaker Change: We'll evolve even more that people will get to use the class uptake is there the more molecules are out there the more people will know what it is so we are also placing our bets on many channels. So pbms are customers of ours.
Speaker Change: But as our private health plans so on the.
Speaker Change: On the outlook not outlook.
Speaker Change: Outlook.
Speaker Change: What we said midterm kind of thing on the Biopharma, where we thought he is give you a little bit of an update vis vis where we left it at the capital market now they are roughly a $600 million business last year. They grew by 75%. We said they are going to be materially growing this year. It will not be 75% we set the mall.
Speaker Change: On average is growing by 20%. It would also not be 20%. So it's something between the 20 and the 75%.
Speaker Change: A number and probably.
Speaker Change: It will not reach the $1 billion. This year other than that we would have told you. They are going to reach 1 billion. This year, but probably pretty close if things work out we say in the next two to three years and you pick where you want to place.
Speaker Change: <unk> on the two to three years. So this is how we go about the $1 billion.
Speaker Change: Alright, Thank you very much.
Hassan Al: The next question comes from Hassan Al <unk> with Barclays. Please go ahead.
Hassan Al: Good afternoon, and thank you for taking my questions. A couple on copy. Please firstly another strong performance in clinical nutrition can you quantify the Argentina growth tailwind here and detail the drivers of what would have still been a strong print. Excluding this how you think.
Speaker Change: <unk> about growth from nutrition as you lap tough comp of 13% in 2004.
Speaker Change: And how is China progressing nutrition in FMT.
Speaker Change: As well as any views that you have an incremental GBP over the medium term.
Speaker Change: And then secondly can you talk about the significant margin expansion at the growth vectors in copy and any color on the individual segments that you can provide and whether nutrition supported this given the stronger top line growth and how are you thinking about this mix evolving in 2025.
Speaker Change: Thank you.
Speaker Change: Good morning.
Speaker Change: Yes happy to do so so in general it's fair to say Argentina provided.
Speaker Change: Tailwind to the overall growth in the Combi.
Speaker Change: For the full year of 2024, and yes also in the nutrition area. However, if you look in and overall just to give you a number for the full year.
Speaker Change: Probably mid single digit what we're talking about in terms of in terms of tailwind if.
Speaker Change: If you look at clinical nutrition for Q4, I think there are a couple of things to see first.
Speaker Change: We saw a strong growth again also on the on the U S site that we benefited from some change in order behavior as a temporary effect post the Baxter topic I think second you need to be reminded that China was a pretty soft comp in kind of Q4 of 'twenty three.
Speaker Change: And then if you kind of come to your next question in terms of profitability.
Speaker Change: Yes that.
Speaker Change: That resulted nicely in an uptick.
Speaker Change: Sure.
Speaker Change: Hassan.
Speaker Change: A question on nutrition in my speech I said.
Speaker Change: And the attrition is highly accretive, but we will also invest into nutrition.
Speaker Change: Exactly where we need to beef up both the pipeline we have some phenomenal ideas there they need to be worked on.
Speaker Change: I won't say, whether an apparent.
Speaker Change: Parenteral, but phenomenon of ideas where.
Speaker Change: 425 nutrition will be great business don't get me wrong, but.
When I think about incremental improvement I would say in the capital market day, They said I think 4% to 6% growth.
Speaker Change: I see them more probably on the lower end of that one and.
Speaker Change: And I would not bet too much on margin expansion on that one because as I said they need to invest actually the invest is very tangible it is on clinical data in order to then have the approval so that in 'twenty six 'twenty seven.
Speaker Change: We will have the more regular pattern.
Speaker Change: I E probably beyond the four and hopefully then again seeing margin expansion when it comes to China, we elaborate on China, and the loss of keto and so on and so forth. We do expect more volume based tender.
Speaker Change: Tendering coming there the food for special medical purposes is an attractive segment, we did place orders there, but that's why for China and 25, we are how should I say it still.
Speaker Change: Thinking about the softness in China. This is great stuff. This is for us have been powder and so on and so forth. But this is out of pocket expenses. So if there is general economic weakness the out of pocket expenses is also held back.
Speaker Change: And when you think about the 2025% growth vectors. So.
Speaker Change: Qualified a little bit the nutrition IFF.
Speaker Change: I think you can do things for your model from what I've said then mystic.
Speaker Change: We'll should pass to <unk>.
Improve.
In topline growth and then in margin expansion.
Speaker Change: Yet they also need to work again, another one where they need to work with.
Speaker Change: More IV next machines.
Speaker Change: Not only plays but post revenue.
Speaker Change: It will.
Speaker Change: In the beginning not be margin accretive. So this is a balanced but they've got other stuff the normal Graham the software product I told you if and when you replace this one there will be a nice margin behind that so metric needs and we will have to improve year over year and then the biggest contributor will be.
Speaker Change: Biopharma, which when we say last year it was kind of EBIT positive.
Speaker Change: It was a small number and as in terms of margin and I said during the course of my speech that they will make a huge leap forward. So a huge margin expansion and they probably can see the new margin range.
Speaker Change: Yes.
Speaker Change: When I said, they see the bottom line not the top end the top end will they see for the next coming years.
Speaker Change: Really helpful. Thank you.
Oliver Metzger: The next question comes from Oliver Metzger with auto in Asia. Please.
Speaker Change: Please go ahead.
Speaker Change: Oliver Your line is open and you May now ask your question Hi.
Speaker Change: Hi, do you hear me now.
Yes.
Speaker Change: I apologize.
Speaker Change: Headset. So good afternoon. Thanks for taking my questions. The first one is on the <unk>, Germany for 6% organic growth is still a very good level I remember last quarter, you had some one off items, which you booked.
Speaker Change: Top line, which boost organic growth does the 6%.
Speaker Change: The quarter also contains some of these elements.
Speaker Change: Freshness on the Biopharma vertical integration great to see that you have started to.
Speaker Change: Produced by yourself.
Speaker Change: Should we think about the progress of in sourcing the remaining coffee pipeline of Biopharma. Thank you.
Speaker Change: Maybe.
Speaker Change: Maybe to start so in Q3, where they kind of technical adjustment on the top line.
Speaker Change: And we have no such extraordinary elements in the Q4 when it comes to heal.
Speaker Change: Yes on vertical.
Speaker Change: Integration, let me specify I did not say tie in is on <unk> as I said in general vertical integration is a competitive advantage, but your question is.
Speaker Change: Still correct, because we are planning.
Speaker Change: Moving to <unk> on.
Speaker Change: On the map science capacities, which.
Speaker Change: Initially in the original plan when we acquired <unk>. This was not in the cards, because we had the five molecules, which we acquired at that time and they have five contract manufacturers.
Speaker Change: Shifting something through to a different manufacturing platform is a so called tech transfer and this.
Speaker Change: Hi, Lee resource intense and needs new regulatory approval now.
Speaker Change: Now as Tang Yan will be in demand and we want to be in control of not only the cost per molecule, but also in serving the customers I said that Q3 Q4, we expect a bigger ramp up of really delivering the product not the contracting which we have great vis.
Speaker Change: Ability, but we need to ship the product. So we are currently working day and night to get it also parts of it.
Speaker Change: To map science into routes by the way also on the.
Speaker Change: Fill and finish.
Speaker Change: In Australia, which is a coffee side and then hopefully from then onwards.
Speaker Change: <unk> science and future molecules, we will always if we don't in license them.
Speaker Change: We'll see that will.
Speaker Change: We will use the capacities of map science.
Speaker Change: Okay. Thank you just a clarification.
Speaker Change: Clarification, so it's more 26 onwards topic.
Speaker Change: <unk>, yes.
Speaker Change: Not yet.
Speaker Change: For the other molecules.
<unk> progresses.
Speaker Change: Do we have to go molecule by molecule.
Speaker Change: It's useless, because it's done by forming console, we cannot tech transfer anything.
Speaker Change: At aluminum up is already running and impressed by the way, it's Philip finishes in Grad. So.
Speaker Change: For future molecules.
Speaker Change: So have capacity limitation.
Speaker Change: In fact, we will part of the investments in fact, we will we will discuss capacity expansion at <unk> science in order to serve what we have in the pipeline.
Speaker Change: Okay great.
Speaker Change: Very helpful. Thank you.
Speaker Change: The next question comes from James Kisner with Jefferies.
Speaker Change: Please go ahead.
Speaker Change: Yeah, Hi, Thanks for taking my questions James <unk> of Jefferies.
Speaker Change: If I may please firstly, just thinking about Biopharma I mean at the capital markets Day, you came out with the structural 14% to 17% margins now obviously at 16 to 18 I think when you consider the mix and the products thinking ahead, what would need to happen within copy to structurally deliver 20% because I think when we look at the businesses that doesn't seem to be an obvious headwind wireless.
Speaker Change: Combi structurally achieved I mean, obviously kind of metrics, improving but I'm not expecting a new midterm guidance I think just conceptually be really helpful. Just to understand what would need to happen to deliver that level of profitability.
Speaker Change: The second question is just because you called it out in your prepared remarks on the <unk> pump rollout.
Speaker Change: The FDA in December sheet, and earlier last I think you have to class one recall, so I'm just wondering with the background to that wall somewhat challenges you faced in rolling out some new pump. Thank you.
Speaker Change: Let's start with.
Speaker Change: It was the first one James we love to invite you to our next.
Speaker Change: Management meeting with <unk>, and then you tell them. So what is preventing you from delivering a 20% margin.
Speaker Change: And then if we could get a lot of reasons because.
Speaker Change: Look at where they left it last year was a great achievement and look there is a gradual incremental improvement going into this year and by us saying that the.
Speaker Change: The combined profit pool of the businesses, we believe can be 60% to 8%. We already gave you the confidence as to where it should be let's say mid term.
And then we don't have a crystal ball, but if everything works right.
Speaker Change: Nutrition is a great business with I always say, it's highly highly accretive people know what I mean.
Speaker Change: The generics business you know, it's stable, but it's growing and then.
Speaker Change: We said midterm the biopharma business will be.
Speaker Change: Accretive. So this is the movement, we have and obviously improvement in med Tech and.
Speaker Change: And then we got to see how the whole biosimilar market evolves also especially in the U S. Whether it's the class uptake what is the role of Pbms. What is the price competition, who will leave the arena of competition because they don't have the right business models and then.
Speaker Change: Conceptually youre, obviously right, but the numbers we have out there so we.
Speaker Change: We had all corrective actions committed to the ft FDA in the.
Speaker Change: And the response, we have been seeing from the very outset. If you have a new think completely new pump, which was obviously cleared and everything but to roll it out in large quantities.
Speaker Change: We have we.
Speaker Change: We have 5000 pumps in front of us to be installed and we're going to want to go up over the course of 'twenty five and beyond to 25000 pumps things.
Speaker Change: It's natural I think if you compare to the industry, but nothing to worry about.
Speaker Change: Thank you.
Victoria Lambert: The next question comes from Victoria Lambert.
Speaker Change: Please go ahead.
Victoria Lambert: Thanks for taking my question.
Speaker Change: The first one is just on the generic pharma business. So it looks like you have 10 launches planned for 2025.
Victoria Lambert: This seems like it's a bit higher than normal.
Speaker Change: How should we think about.
Speaker Change: Got it great throughout the year and could margins look more like Q4 margins are like about 20% with these launches because usually you get some good pricing.
Speaker Change: With new launches.
Speaker Change: And then just on the <unk> business.
Speaker Change: When can we expect.
Speaker Change: Okay.
Speaker Change: Ethan.
Speaker Change: Thank you.
Speaker Change: Yes.
Speaker Change: Look we.
Speaker Change: On the pharma business also in the capital market day, we said growth will be roughly between two and 4%. So usually if people don't know anything more they take the midpoint. If you would do that I think we would feel.
Speaker Change: We would feel comfortable.
Speaker Change: Overall, we have to look at the entire range of portfolios. Obviously, we have molecules in the business, which are decreasing in price as we speak. This is the whole game plan.
Speaker Change: That <unk> been launch again to keep up.
Speaker Change: The level of if I look at the overall market.
Speaker Change: Not as the overall market.
Speaker Change: In 2004 to 'twenty three if I look at the <unk> data the market.
Speaker Change: Volume grew in value it even truck.
Speaker Change: Which tells you a little bit with price competition is doing there.
Speaker Change: But thats why we are launching these things and this.
Launches.
Speaker Change: Roughly 10 in the U S, which you say will have a better price point, so I would say if.
Speaker Change: If youre roughly.
Speaker Change: Assuming something flattish year over year on the pharma side.
Speaker Change: Depending on when and how we can launch this is a little bit what we said if.
Speaker Change: If everything works then.
Speaker Change: The flattish kind of thing if the launch is.
Speaker Change: Delayed out of whatever reason, then we will have more pressure.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: So I would ask breakeven did we did you ever disclose is I think we can disclose.
Speaker Change: I mean, maybe just to kind of put it a little bit into perspective.
Speaker Change: <unk> thousand 25, our year, where we are rolling out.
Speaker Change: And if we increase.
Speaker Change: Substantially our installed base. So this is what will happen at the same time, we work on competitive.
Unit price and so on so I think for US 25 will be a focus point to getting the installed base up and running.
Speaker Change: And then breakeven.
Speaker Change: More in the kind of thing that after in the outer years more in the midterm and in general there will be maybe my <unk>.
Speaker Change: CFO Humbleness also on guidance and on what we discussed.
Speaker Change: There is a lot of roll out and launches in the coffee area in 2025, as Michael alluded to and there are certain things, which are in our control, which we are fully focused on.
Speaker Change: Certain things like FDA approvals.
Speaker Change: Pro question on China volume based procurement and the roll out of these and so on which are a little bit outside of our control. So if I look at it and if I look at the year to come there is a lot of really good momentum starting from Q4, there is a lot of very positive energy.
Speaker Change: As we look into those rollouts and launches across and Thats biopharma, but that's also generics and Thats also nutrition.
Speaker Change: But it needs to happen.
Speaker Change: And we will control what we can control.
Speaker Change: Certain things.
Speaker Change: We will work on hard to make sure they will fall.
Speaker Change: On the right side, and then with Helios, Germany. This is obviously also the $100 million what we will work on at the same time as Michael alluded to that the known headwinds of $140 million and they'll also known headwinds.
Speaker Change: And so I think if you take all of that together.
Speaker Change: I see it very confident on what we what we put out here for you today.
Speaker Change: Great. Thank you.
Speaker Change: Okay.
Speaker Change: The next question comes from Robert Davies with Morgan Stanley. Please go ahead.
Robert Davies: Thank you for taking my questions.
Speaker Change: Peter.
Speaker Change: First one was just around.
Speaker Change: Your targets for improving return on capital in Florida, just wondered if there was anything else within the portfolio. Just in terms of further asset disposals that we should be thinking about heading through 'twenty five or is it mainly.
Speaker Change: Margin profitability that Youre looking to drive improved returns the second one was just on.
Speaker Change: The higher central cost in terms of run rate had a few questions from people asking about potential reallocation from the divisions to the group level and can you just provide a little bit.
Speaker Change: Additional color, where there was extra cost at group level or come from in <unk>.
Speaker Change: That will be helpful.
Speaker Change: And the final one was just around the.
Speaker Change: The Helios margins over the medium term in the sort of framework targets.
Speaker Change: 5% given the challenges obviously.
Speaker Change: 25, and your additional savings is that more kind of tread water just kind of walk us through the bridge of how you get to the upper end of that 10% to 12% range. Thank you.
Speaker Change: I'll start with the first question, because thats, a faster and easier.
Speaker Change: Maybe I would answer with yes. So yes, the improvement is going to come out by the operational business as I said emphasis on organic growth margin improvement.
Speaker Change: We'll be deployed but more in terms of capex or if there is some in process. R&D then it will be may be capitalized, but there is that we actually last year already concluded the tool huge portfolio shuffle.
Speaker Change: Yes.
Speaker Change: Happy to comment on the higher corporate cost.
Speaker Change: I mean, if you look at it for 2025.
Well, maybe not that off from a content perspective in terms of numbers. If you look at it more from a conceptual perspective, obviously, yes, we have a new operating model, yes, we skewed more centrally and yes, we allocate more resources to corporate because we believe that overall with now Helios and.
Speaker Change: We sold two operating businesses.
Speaker Change: Within <unk>, we benefit from a more direct steering and Thats <unk> tool.
Speaker Change: Higher corporate costs being generated also going forward, if you're still compare to where other corporates are sitting kind of the 1% to 2%.
Speaker Change: Corporate cost in terms of revenue I think we are still very far apart from that kind of benchmark. If you so wish.
Speaker Change: We have the absolute desire to stay efficient and lean at the same time, it's very clear we changed our operating model to the better and that will mean incurred cost and rising cost base.
Speaker Change: And then to Helios margin.
Speaker Change: And happy to take that one so I think.
Speaker Change: How should you think about that one I think the first thing.
Speaker Change: <unk> is.
Speaker Change: We start.
Speaker Change: We and 20.
Let me go one even one step further back and not and with 2024, but start with the capital markets day, where actually we raised our margin band and we raised it knowing that the energy relief would fall away for us that merchant bank.
Speaker Change: Structural and merchant sandwiches, our ambition, which is not necessarily what we need to fusin year over year also on the capital market day. We told you that it will not be a linear way towards that margin band and also not linear way within that margin band, but we always knew that there is.
Speaker Change: <unk> had.
Speaker Change: Headwind blowing into our pace in 2025, there is that $140 million, which we will need to overcome I outlined to you. The Helios program of roughly $100 million. However, if you then think of end of 'twenty five and now look forward with me obviously, the Helios program.
Speaker Change: <unk> will have an annualized effect going into 2026, given asset it's mostly back end loaded for 25, but there are also more leave us which will only start to really materialize and particularly on the structure side on the clinical process side in 2026 and beyond and maybe a comment there.
Speaker Change: <unk> as well.
Speaker Change: In particular that kind of leg of clinical process optimization is not a pure EBIT leg. So to say it is at top line and EBIT lack which will serve for higher revenue, but also more EBITDA on absolute and more margin.
Speaker Change: So for US 2025 actually is a good jump off point to see a margin.
Speaker Change: Increase in 2006 and thereafter.
Speaker Change: In a way we need to get 2025 right to lay the foundation if you selfish.
Speaker Change: Okay. That's great appreciate it thank you.
Speaker Change: No further questions at this time.
Speaker Change: So that concludes the Michael why don't you close out today's call force well. Thank you very much for listening in the intense questions I think that was very helpful.
Speaker Change: Especially gave us the opportunity to provide more color also on the outlook I think you could see that we are going into 25 with confidence based on what we have been achieving so far in the first two years.
Speaker Change: But the nature of the structure of.
Speaker Change: The rejuvenate will change as a new.
Speaker Change: A whole array of new innovations and launches and the like will have to hit the market. We are pretty confident that they will hit the market. We have great customer feedback and all the preparations are working but we need to work on that one to make it happen and to the extent these things work out.
Speaker Change: Also on the cost side on Helios.
Speaker Change: It will then determine where we will be in the margin, but we at the beginning of the year. That's why you have that range, which you have obviously, we added the disclaimer on the very high Geo political Geo strategic Mega topics, we know that the.
Speaker Change: U S with a lot of.
Speaker Change: Our rigor in transaction mode going through the world, but all in all we are very confident.
Speaker Change: Looking forward to delivering also and the rejuvenate phase thanks a lot.
Speaker Change: That concludes today's call.
Speaker Change: We want to thank you for sending us and all the participants for taking part in this conference call.
Speaker Change: Goodbye.
Speaker Change: Okay.
Speaker Change: [music].