Ambu A/S

Hello, everyone, and welcome to this conference call presenting our Q4 and full year results from 2024, '25 for Ambu. My name is Britt Meelby Jensen.

I'm the CEO of Ambu. And with me today, I have Henrik Skak Bender, our Chief Financial Officer.

So let's get going. So we'll start with the highlights from the year that we just exited.

And overall, we delivered a very strong organic revenue growth of 13.1% and if we look at our endoscopy business, that grew for the year, 15.4%. This underscores the continued momentum and potential of moving patients from using reusable endoscopes to single-use endoscopes.

If we look at our margins, we delivered a margin of 13.0% for the year, and this is impacted positively by our operational leverage where we continue to drive scale and be more efficient. And then on the other side, we also -- given we are a growth company as the most important, we are, as we have previously communicated, continuing to invest in commercial resources and scale in order to continue to deliver that growth.

At the same time, we had 2 external factors, and Henrik will come back to that in terms of FX and tariffs that had a negative impact on the results. What we also launched in this quarter was October 1, where we held our Capital Markets Day.

We launched our next-era strategy, a strong testament to the progress we have made over the last couple of years, and I'll come back to talk a bit about that as well. In connection with this, we both extended, and we increased our long-term guidance towards '29, '30 and what we are delivering also that Henrik will present for our short-term guidance is in line with these ambitions.

So if we dive into the specific results for the year, starting with the overview here, the 13.1% organic revenue growth for the quarter Q4, we delivered 10% and if we take a step back, this is well in line with what we said a year ago when we were up here that we were expecting to have higher growth in the first half of the year than the second half of the year, which is also what we have delivered. If we look at the split, and I'm going to comment on this shortly, we had almost 10% growth in anesthesia and patient monitoring 9.9% and then the 15.4% in our endoscopy solution business.

Both of these being lower in Q4 compared to the full year, again, as expected. Then our EBIT margin before special items landed at 13.0%, and we ended up with a cash flow of DKK 407 million positive for the year.

Let's look at the endoscopy solutions revenue, starting with the respiratory organic revenue growth where we saw, as we have also communicated throughout the quarter, a solid double-digit growth in this segment of 11.4% and then slightly lower 8.8% for Q4. Again, this is as expected, and it's related to the timing of order in particular, in the rest of world, and nothing that we expect is going to continue where if we look ahead for this segment, we believe that the coming years will be continuing to be solid double-digit growth in this segment, very much driven by the breadth that we have in our endoscopy solutions.

And what has been driving the growth this year has very much been our bronchoscopy solutions, and that is continuing to drive our revenue growth in the coming period together with also starting to see increasing revenue from our newly launched video laryngoscope solution SureSight. If we then look at the rest of our portfolio, and this is the segments that we refer to as urology, ENT and GI.

Here we also had a higher organic revenue for the year of almost 20%, 19.6%. And then in the quarter, slightly softer.

And although we normally do not comment on these different areas, and this is very different therapy areas that we are covering in this group. I think it's fair to also explain a little bit this quarter to say that in Q4, in particular, we saw a significantly lower growth in ENT than we saw in urology and GI.

Let me come back to that because this is well in line with our strategy of key focus on urology and respiratory as our 2 key segments. If we look at urology specific, we have now not only our aScope 4 Cysto, but we also have our aScope 5 Cysto.

We have our aScope Uretero, which -- the 2 latter are contributing still with a fairly limited part of the overall urology revenue, but that is something that when we look ahead, we expect to continue to see good momentum on our aScope 4 Cysto but where we also would gradually see these solutions driving an increasing share of growth. And I think it's important here to pause and take a step back and say, if we look at the overall momentum that we see when we launch new solutions in the market and when we take a couple of years back, looking at our aScope 5 Broncho.

It's very clear that it takes some quarters at the launch curve, and we have talked about this a number of times, is not steep as you will see in other areas, but it's relatively more flat, but then it will also continue to grow quarter-over-quarter for many years. As we have shown that we see still the primarily primary driver of the overall revenue in endoscopy is coming from solutions that have been on the market for quite some years.

So this also makes us comfortable when we look at this segment that there's good momentum as we move into this year and the coming years in terms of generating growth in this specific business area. If we then look at anesthesia and patient monitoring, 9.9% for the full year.

There's no doubt that this has been an extraordinary year. The revenue growth has been driven by price increases, which was also, as we had communicated, leading to a couple of quarters of very high growth.

And then the growth in our last quarter of 6.4% reflects the good balance of where we actually see a lot of growth coming from volume growth and also some growth still coming from price increases. This is purely driven by the fact that we have growth in the market and that we are able to deliver on the demand from our customers.

We have not launched any new solutions in this area. We have not added commercial resources.

So it's basically our existing people driving the growth and also fueled by very strong customer loyalty and the acceptance and appreciation of our solutions. If we then take a look at our -- if we then take a look at our strategy and what we launched because a month ago, we launched a very strong ambition when we look ahead to achieve global endoscopy leadership.

So this is basically on the back of a couple of very successful years with our ZOOM IN strategy where we were successful at a fairly high pace of doing the turnaround of Ambu and then looking ahead as a strong growth company based on the solutions, the market potential, we feel very comfortable of having an ambition of global endoscopy leadership, building on the momentum that we see in the market and acceptance of single-use endoscopy solutions. So our strategy includes some strategic choices that we have made and also a couple of strategic things.

And then -- and let me briefly do a recap of those starting with the strategic choices. What we communicated in relation to our strategy is that there are 2 key areas that are our primary focus areas as we look ahead.

And this is our respiratory business formerly known as pulmonology, but now also expanded as we also had strong airways management solutions, and then we have urology. Then when we look at our ENT, we still see some strong potential to continue to grow in ENT, although our portfolio is slimmer in this area, we are investing in new innovation to also meet a growing need for single-use endoscopy in this area.

Then when we look at GI, we have a long-term ambition of unlocking gastroenterology, which is a very realistic ambition as we see it because there are some of the same dynamics and the same needs in this segment as we see in other segments, but we also acknowledge that this is something that will take time. And we are investing more limited right now, in particular, when it comes to the commercial side.

But we do believe that we are the ones that will eventually lead the transition to single use in this segment. All of this is then combined in our EndoIntelligence, where we are continuing to advance the software, the AI solutions that supports our endoscopes and where we have the benefit of having 1 software platform for all our endoscopes combined as the only player in the field.

Last but not least, we are also confirming that anesthesia and patient monitoring remains meaningful for our company. And we continue also in this area to grow.

But here, we are more focused on the profitable growth, meaning that we are investing less, and we are expecting more scale, as you have seen in the recent results from the past year. If we then look at the strategic focus themes, let me recap this.

We have 4 specific areas where we believe that we can continue to make a difference. The first one is very important around customer centricity making sure that we continue to focus on our clinicians but also expand that focus to the health systems where our broad endoscopy portfolio can play a role.

And then we see opportunities here to accelerate our adoption of single-use as well also as creating more evidence both on the clinical solutions, health economic and not least sustainability which is also playing an increasing role for our customers. Innovation remains at the heart of what we do at Ambu.

And we also believe that we can deploy new technology either in-house or through an increased focus on partnerships to simply be able to be on the forefront of delivering new endoscopy solutions that plays a real role and makes a real improvement for our customers. Then to succeed with both our growth, but also with our margin improvement, it's super high on our radar to continue to build a scalable, profitable platform.

We continue to see a number of efficiencies that we can leverage over the coming years, which is part of the plan that we are fully executing and that we have slightly extended. And then last but not least, the most important in Ambu to deliver on our strategy to deliver on our plan is our people and the culture that we have built and that we really cater for in Ambu and this is where we see great opportunities to continue to fuel this culture of growth and of empowerment because we have a lot of highly motivated and highly capable colleagues all around the world.

So this is, in a nutshell, our strategy. And let me talk a bit about the growth because -- and where we see our growth coming from.

And instead of looking at the market size, which is huge, let's look at the growth in the single-use market because this is actually what matters. And there are a couple of important points here when we look at the market.

Overall, if we start on the right side here, we expect that the single-use endoscopy market is continuing to grow with over 20% CAGR, at least in the period until 2029 to '30. If we look at where this comes from, there's the underlying endoscopy procedure growth, which is roughly around 5% which is very much driven by both the aging population, increasing chronic diseases and also an increasing trend towards minimal invasive procedures.

But then there is the big transition from being -- from using reusable endoscopes to single-use endoscopes, where we see that growing at least around 15% on an annual basis. And this growth we see coming from both solutions that are already on the market, most of these solutions from Ambu and then also new solutions that are in development right now.

But we do see a continued conversion where customers have agreed in many of the subsegments that we are in -- that single-use endoscopy is the solution to a lot of the challenges that they have in the hospitals. And this is something that they also see as a standard of care as we move ahead.

We did a survey among customers earlier this year and among potential customers as well, where they said that in respiratory, urology and ENT, where we did the survey. The clinicians said that roughly 70% of their procedures can be done with a single-use endoscope.

And we are far from that today. So that also explains the great potential.

And let's look a little bit at what is driving this conversion to single use. And there are 4 main things that are the drivers.

One is the higher efficiency that we see in the hospitals. So there's more and more evidence out there that customers can actually treat, or hospitals and clinics can treat many more patients when they use a single use endoscope.

Because they don't have to wait for a scope being available or the reprocessing that needs to be done. And this one is super meaningful in the hospitals today where resources is a constraint.

Then there are better economics. If you do the full budget model -- budget impact model from the hospitals, it's very clear that it comes out more economic viable to use single-use in most cases.

We have the strong clinical performance where the quality of the single-use scopes have reached, in many segments, at a level where it is very strong and comparable to single-use and on some aspects, even better. And then we have sustainability, which, in particular, in Europe, and we are seeing also the trend in pockets of the U.S.

where sustainability really plays a role in the choices of the hospitals. So if we have to take a step back and say what is really the potential of Ambu and how do we see it, it's basically a very attractive market that we are playing in.

And we are, as market leaders, leading the structural shift to single-use solutions. We have the broadest single-use endoscopy and also a very strong proprietary platform to deliver this growth and the largest commercial footprint in single-use.

Our solutions and our innovation is very focused on meeting and solving the problems that we see with the customers so they can treat more patients with better outcomes. We have a setup which is already very competitive and scalable when it comes to cost, and this is something that we are continuing to fuel by ongoing initiatives that we have -- and this is basically what brings us to a very clear path of solid double-digit organic revenue growth longer term and also a margin expansion towards 2030 that Henrik will come back to.

So before I hand over to Henrik, let me just briefly talk about the EndoIntelligence where we have received a couple of questions. And basically, we are not sharing all the full programs that we have in development.

But what I can say is that EndoIntelligence is building on the hardware platform that we have, where we are also working on a next-generation supported by the software that we are really continuing to improve across all endoscopy solution areas and then AI-enabled applications. So we are basically able to support the doctors, both in being more efficient before they do the procedures with the patients, during the procedures, enabling much better diagnostic support than they have been able to so far and then also after the procedure where there typically is an increasing level of documentation being done where we can support.

So this basically also means that with us being present in respiratory, urology, ENT and GI with a strong offering when it comes to our endoscopes here exemplified by our respiratory solution, adding on then additional solutions that also plays a role in helping our customers such as the video laryngoscope that we launched. We have our VivaSight One Lung Ventilation as well as our Broncho Sampler Set, we are basically becoming a company that can help the full procedure that they do with the patients in terms of endoscopy, and this is the way that we are moving forward.

And then we have the benefit of the portfolio when we are engaging with the health systems where it's very meaningful that they can go into a room and actually plug any endoscope in and then do a procedure, so they can also leverage the full hardware platform and the software that we have with our solutions. So with that, I'm -- I will pause, and I will hand over to Henrik and come back in the Q&A.

But just by saying that we feel super confident around our new ZOOM AHEAD strategy, we are very excited about the potential that we have, and we feel we are very well positioned to also strongly differentiate ourselves in solving our customer needs better than anyone else. And this is also where with a high market growth in single use, transitioning from reusable, we are strongly positioned for high growth as we look ahead into the future.

So with that, Henrik, over to you.

Thank you, Britt. And like Britt ended, I also wanted to start before I get into financials by saying we stand here today on the back of what we feel are really solid results for '24, '25 with a lot of progress on our strategic initiatives.

And we also stand here today super confident, as Britt just said, and with a high level of excitement with what we have ahead, with what we launched at the Capital Markets Day guided by now our ZOOM AHEAD strategy. And I'll also come back to that and talk a little bit about our long-term targets in connection with that.

But starts with, of course, with viewing first our '24, '25 financial results. Starting with growth, we had an overall growth for the year, organic growth of 13.1%, impacted by FX, both for the full year, but in particular, for the last 2 quarters.

So the full year reported growth landed at 12%. For quarter 4, specifically, we had an organic growth of 10%, as Britt also presented before.

Adjusted for the FX impact that in reported currency landed at 5.7% and just illustrates how impactful the depreciation of the U.S. dollar DKK currently have been on our numbers in quarter 4.

In terms of business, we had a strong growth still endoscopy, though lower than the previous quarters at 12.4% and still a solid growth also in our anesthesia and patient monitoring business with 6.4% growth, bringing the total growth across the year to 15.4% for endoscopy and 9.9% for anesthesia and patient monitoring. Very satisfactory results and in alignment with our long-term guidance and also with the ambition we set out exactly a year ago when we set the guidance.

In terms of the geographical split, we continue to see very solid growth in North America and Europe, less growth in Q4 for rest of world, mainly due to timing of orders, but consistently across all of the areas, strong growth. And of course, our North American growth was in reported currency, particularly impacted by the U.S.

dollar DKK depreciation. So overall, a good growth momentum and a growth momentum we also see continuing in now to '25, '26.

Something that I'll come back to when I talk about the guidance for '25, '26. Then turning to margin.

We also landed the year on a very solid foot, we feel, in terms of our Q4 but also in terms of the full year. For the full year, '24, '25, we landed at a EBIT margin of 13.0% for quarter 4 alone at 10%.

Importantly to note, for quarter 4, as also communicated in our Q4 statement, we were impacted negatively by FX and also by tariff costs. And adjusting for that, we actually landed our Q4 and have corresponded to 13.4%, fully in line with our EBITDA margin expansion plan.

As also communicated on our Q3 statement, the FX impacts are temporary. We are initially impacted by the U.S.

dollar depreciation, but they will, over time, be compensated then by also lower costs. But it takes quarters to really see that offsetting effect and with a continuation of the U.S.

dollar DKK depreciation, it did net-net impact us negatively for quarter 4. For tariffs, I will also come back to it later.

We have seen an increased tariff regime globally but specifically for our manufacturing coming from outside of North America that has impacted us in quarter 4 and will also impact us in '25, '26, but we remain very confident that with the plans we have in place already, we can mitigate a lot of this impact. It takes time to implement, like we've said from the start, depending on the initiatives, 6, 9, 12 months.

So there will be a gradual phasing. And therefore, right now here in Q4, we did see a negative impact, which in part will continue into Q1 and Q2 and Q3, particularly for '25, '26.

Then looking more in detail on the margin and breaking up to gross margin first, and then secondary our OpEx costs. Gross margin continued a strong development, which we've been on now for 16 consecutive quarters almost with an increase versus last year of almost a full percentage point, landing the full year gross margin at 60.2%.

This, despite the negative impact from FX, is something we are very satisfied with, substantiates our ability to grow the higher gross margin business in endoscopy solutions and also drive price increases particularly in anesthesia and patient monitoring. In addition to this, it's also illustrating how we've continuously managed to drive efficiencies in our manufacturing footprint with better utilization of our factories, but also better throughput.

So a really good result and a good continuation also towards our long-term ambition. In terms of OpEx, there was an increase in OpEx in quarter 4, one, because we continued with the investments and Britt -- as Britt also said in her opening, investing in commercial resources.

But two, in particular, also because we did see effects from tariffs, which are reported under sales and distribution costs, which made the OpEx costs go up in absolute terms. That being said, we continue to see further potential for operating leverage and continue to be committed and confident on the long-term margin expansion journey where OpEx will be the main driver of our further leverage.

If we then turn to cash flow, we landed the cash flow within expectations of the updated guidance for full year cash flow of around DKK 400 million with for quarter 4 specifically DKK 130 million, landing the full year at DKK 407 million. This is a continuation of the efforts of driving strong cash conversion.

And despite the negative impact from FX on EBITDA, in particular, a continued positive momentum on also how we manage our net working capital while still making sure that we have enough safety in our supply chain and also in our inventories locally to manage customer demands where needed. So overall, a really good result.

If we then break down into some of the components of cash flow, as said, EBITDA had a drop in quarter 4, mainly driven by FX. Secondary on our CapEx, we did see a slight increase, mainly due to certain timing of investments in R&D.

And last but not least, we did continue to see a slight decline in our net working capital as also guided in the last quarter, particularly managing our inventory, but also our accounts receivable in a slightly more tight manner, while still making sure that we have enough buffer in our inventory and supply chain to manage customer demands. In addition to that, we are, as part of our annual report, also proposing a further cash distribution, a process we started more explicitly last year with an updated dividend policy and one that we are now extending and expanding.

This concretely will consist of: one, a dividend of proposed DKK 110 million, which will be finally decided at our AGM in December and secondary, a share buyback program of a total value of DKK 150 million. We intend to start the share buyback program after the AGM and executed in full before the end of the financial year with an expectation of canceling the shares when timely needed.

We do this, one, because we believe that this is the right thing to do under our dividend policy and with a continued strong balance sheet. And now because we have a negative net interest-bearing debt, we also feel it's timely to increase the cash distribution.

That said, it still leaves plenty of room for us to still have high ambitions on our M&A agenda, something that we certainly still do despite a slightly higher cash distribution than previous years. With that, let me look more specifically now at the '25, '26 outlook.

We are guiding for '25, '26, a growth of 10% to 13% organic growth for the year in alignment with our ZOOM AHEAD strategy. More specifically, we are guiding for endoscopy solutions, a growth of more than 15% in part with accelerated growth in respiratory and secondary by continued growth momentum in urology and GI and we have come off to a good start on both dimensions.

For anesthesia and patient monitoring, we're expecting mid-single-digit growth which is in the higher end of our long-term guidance and again, an illustration, as Britt described earlier, of the continued solid momentum both on volume and on price increases within anesthesia and patient monitoring. With the growth composition of our '24, '25 financial year, we are expecting that the total growth will be more back-end loaded, and we are expecting with very high comparables for quarter 1 that we will have a lower growth in quarter 1, perhaps even just below double digit.

But it doesn't change that our full year guidance for the year is 10% to 13%, and we feel very confident with the start we already see right now. Turning to EBIT margin.

We are, for the full year, guiding 12% to 14%, including an impact -- expected impact from tariffs, negative impact of 2 percentage points which means that adjusted for this, we would have been guiding 14% to 16%, exactly on the path of our EBIT margin expansion. Why do we see this impact from tariffs?

Well, we do because despite our ability to mitigate tariffs, there is a timing of implementation of between 6, 9 or 12 months, depending on the initiative. And that does mean that in particular, in the early part of '25, '26 financial year, we will see higher tariff costs that will gradually decline across the year.

And we're expecting tariffs to have much lower impact when we turn forward towards '26, '27 and further on, something that I'll also come back to later. That also means that with slightly lower growth -- organic growth momentum for the start of the year and a higher tariff impact that our EBIT margin will also be back-end loaded for the financial year '25, '26.

Last but not least, we are also in continuation with our ambitions from the ZOOM AHEAD strategy, guiding a cash conversion of around 40%, a continuation of our ability to drive efficient growth, make sure that we still invest in the business, while we manage our net working capital in an appropriate way. And with that, let me look a little bit further ahead and come back to some of the direction setting we also gave at our Capital Markets Day as part of ZOOM AHEAD on EBIT margin more explicitly.

We are, as you see on the left side on the slide, in a good position to manage the tariff situation as we've increased our manufacturing footprint in North America with our manufacturing site in Noblesville in U.S. and Juarez in Mexico substantially during the past years, with particular expanding our production in Mexico.

This leaves us good flexibility to manage that, more and more of our products sold in U.S. will be produced at these 2 sites, which are completely tariff exempted.

Mexico included under the USMCA tariff agreement or trade agreement. That means that with further transfers towards our Mexico factory, which we are ramping up further, we do, as I explained just before, see negative impact from tariffs of around 2 percentage points for the financial year '25, '26.

But we see this gradually decline and be very, very minimal when we get beyond '26, '27, which also means that despite a lower guidance for the next year at 12% to 14%, we are very confident still on our ability to deliver around 20% EBIT margin by '27, '28 as we continue the operational leverage on OpEx in particular, and we implement the mitigation actions on tariffs. And that brings me to my closure reminding us of the targets we communicated as part of ZOOM AHEAD.

We feel super confident, very excited, as Britt said, on the journey ahead, confident on the potential for the high-growth in endoscopy solutions, particularly within respiratory and urology, but also in ENT and GI with a much more clear path for how to deliver on this and a very strong market demand for more and more single-use solutions. We see an increased potential also in anesthesia and patient monitoring with a strong customer loyalty, strong product portfolio and a continued solid volume development at a 3% to 5% growth, meaning that our full combined organic growth ambition CAGR for the period is 11% to 13%.

In addition to the target on delivering approximately 20% EBIT margin by '27, '28, as also communicated at the ZOOM AHEAD, we also lifted the EBIT margin guidance to plus 20% by '29, '30 and across the period, an average of more than 40% cash conversion. We feel these extended and increased targets is an important part of our ZOOM AHEAD strategy and really underlines the great confidence and high excitement we feel about the future for Ambu and for single-use in particular.

With that, I thank you for your attention, and I hand it to the operator for questions.

I have 3 questions. First, on respiratory, you see a sequential decline in growth despite the easy comparables you have from last year.

Could you maybe just elaborate what makes you confident that you can see growth accelerate in the coming financial year? And then on the other endoscopy business, it sounds like it's -- the lower growth we saw here in Q4, is that related to urology and the competitive situation we've previously discussed at Q2?

So I just wondered if you could elaborate a bit what caused the growth to drop to as low as 16% and essentially what needs to happen to get back on track to the 20% growth you previously talked about for that specific segment and whether that's still the ambition. And then lastly, I think you indicated that in terms of the top line growth, that would obviously be sort of like slightly below the double-digit growth in Q1 due to tough comparables and because you have a back-end loaded year.

So I just wondered if you could also provide a bit more information on sort of like how to expect or think about the EBIT margin in Q1 as well, whether that could go below the 10% EBIT margin here in Q4, especially considering that the tariffs are probably going to weigh a bit more.

Thank you, Jesper, for good questions. Let me comment on the first 2 on growth, and then I'll hand over to Henrik to also comment on the Q1 and your EBIT question.

So first, on respiratory, I think if we take a step back, we have had discussions and questions over the last 1 to 2 years, whether this was a segment where we would see double-digit growth. And I think this is what we feel very confident around.

And also, as Henrik also commented on, when we look ahead, we actually think that we are quite solid in the double-digit range. Having said that, we do see fluctuations and now we are landing on 11.6% for the year, but we do also -- we do have quarter-over-quarter some specific orders that are timed and that where we are not able to fully control or we deliver, said in other words, we deliver when the customers have the demand.

So this is why we went slightly below on the 8.8%. So we -- when we look into the pipeline that we have of orders and into the year, we feel quite confident around the solid -- the strong momentum and the solid double-digit growth that, that will continue.

We are entering now not only the flu season, but I think with the portfolio that we have of continued strong aScope 5 Broncho sales combined with the aScope 4 and then with our SureSight solution, having received a very strong feedback and initial positive -- being positive received by the customers, we actually do look at a segment where we see continued very solid growth for the coming -- for this year and the years after. So this is how we look at this segment.

Then the other segment, which is, of course, a little more difficult to look at the number because it is, I mean, GI, which is growing nicely, but from a low base. And then we have urology being the biggest part of that segment and then ENT.

I think when we look at urology, we -- I mean, we still -- with the new solutions that we have delivered where our ureteroscope, as an example, is off to a good start. But given the nature of these procedures, this is something that is -- that has slightly longer sales cycles, as I mentioned, which we often see.

But overall, when we look at this segment, I mean, we do feel quite comfortable around the -- being around the 20% range, which we have also seen in the previous quarter, which is why I commented on ENT specific because that's a segment where we have basically our rhinolaryngoscope, which has been on the market for 7 years now that is continuing to drive the growth in this segment. And while we expect that growth to continue, we see a slowing down of that growth, which basically, in particular, in Q4 impacted the total growth in this area quite a lot.

So this is also why we wanted to single that out to be transparent and also to make sure that we aligned around the prospect for urology and the current performance. So overall, we do think that this is a segment where we continue to see good growth.

And the 2 segments combined, we feel quite comfortable that we should deliver above 15% total endoscopy growth in the year that we have just started. And as Henrik said, we are off to a good start with October.

So we don't have concerns that this will not be the case.

Exactly. And building on that on growth -- on your question on growth for Q1 and my indication on where we expect to land and related to that EBIT margin.

On growth, I just want to particularly underline that if you look at the quarter 1 for last year, we had a solid high endoscopy growth, but an exceptionally high A&PM growth. So in terms of the composition by the businesses, it's particularly in A&PM, where you will likely see very low growth because obviously, there, you're up against exceptionally high comparables.

If you then translate that into EBIT margin, as I also said on my guidance, therefore, we will see lower growth. We will likely also see higher tariffs with what we are observing right now with the current tariff regimes.

And therefore, those 2 combined means that we will also see a lower EBIT margin. I'm not going to guide exactly on what number that is, but it's mainly to say, if you look at our guidance and if you look at how the EBIT margin will look quarter 1 across quarter 2, 3 and 4, then quarter 1 will likely be the lowest quarter of the 4.

I've got 3, if I could, please. So the first is, I'm just wondering what is driving that delta to the lower end on that 10% to 13% revenue guide versus that midterm guide of 11% to 13% that you provided at the CMD last month?

It would be really useful if you could speak to the moving parts that result in the lower end here. Really, I'm just wondering if there's anything new or different that we missed since we last heard from you.

And then second question is just thinking about the run rate into Q1. You gave some soft guidance, but are you expecting any margin improvement in Q1 from the 10% in Q4 that you gave this quarter?

And then lastly, obviously, you're a growth story, but I'll round up with margins. Could you just confirm that the 12% to 14% on the adjusted EBIT margin includes all possible mitigating actions that you can take?

So aside from shifting production to Mexico, what other actions are being taken? And you gave us a good chart in that -- in the presentation.

Could you just confirm that the impact of tariffs pretty much goes to 0 over the course of 3 years and that you still feel good about that kind of 20% margin by '28?

Thank you for good questions. Let me take the first one, and then I'll let you, Henrik, comment on the second and third.

So basically, as you rightly say, we guided on our long-term guidance of 11% to 13% when we look at -- as a CAGR for the coming 5 years. And we feel quite comfortable that we can deliver on that.

Then you can say has not -- why are we then guiding 10% to 13%? I think I want to reemphasize and make it very clear.

There's nothing new that makes us see the market, the world, the potential anyway different than we saw around 1 month ago. But again, this is a 5-year guidance, and we believe our guidance of 10% to 13% is a prudent guidance and that is a guidance that is even should we land on the lower end of this, which is not any speculation that I have right now, but then we should still be very well aligned to deliver on our long-term guidance.

So we do feel still quite optimistic and quite confident around the potential that we see and also that our guidance is well aligned with our plans for 11% to 13% growth -- CAGR long term.

And with that, to your margin questions, Thyra, also thank you for those. If we start with the run rate EBIT margin from now Q4 going into Q1 '25, '26, I think the clear answer is, yes, we see actually continued strong margin expansion excluding FX and tariff effects.

And I think that is the big caveat we have to give today. I think learning from now Q3 and Q4, actually, the biggest negative impact on EBIT margin has been FX.

And therefore, exactly where that Q1 will land depends on exactly those 2 dimensions, tariff and FX. With what we see right now, we feel very confident that taking those aside, we are on a continued margin expansion plan, both on gross margin and on OpEx ratio.

If you then look at a 3-year period and you asked, will the tariff go pretty much to 0 by '24 -- '27, '28? I think what I want to remind us all that I think the days where tariffs disappear completely are likely not just around the corner.

So we will have a smaller margin -- marginal impact from tariffs, but it will be very, very small. And that is really why I would say not that tariffs will disappear, but that we will manage them and stay within the long-term guidance we gave already back in ZOOM IN and the one we reiterated now with ZOOM AHEAD being by '27, '28, our EBIT margin target remains around 20%, subject to certain changes if there are opportunities along the way.

That still stands, and we don't see the current tariff regime in the world impacting that because we can mitigate that between now and '27, '28.

Okay. Very clear.

And if I could -- you just missed that, aside from shifting the production to Mexico, are there any other mitigating factors that are being taken at the moment?

So happy to cover that also. Thank you.

I think besides moving production, which is the bigger impact, of course, we're looking at pricing mechanisms for certain products. We are looking at what are other mitigating actions we can take.

The reason why we point out the production transfer is because that is by far the single biggest initiative that will impact and mitigate the tariff cost.

Yes. And I think we cannot be fully transparent on all the different things that we are looking at.

But we have -- we are well in progress in implementing a number of things that should also put us in a good position in relation to tariffs.

I have a couple of questions, if I may. Just so you just concluded a solid CMD here a month ago, but it will come in a little bit softer here in Q4 and also with the EBIT margin at the low end of the guidance here coming in at least 13%.

This can suggest you kind of have limited visibility here in the short term also with these more lumpy sales and with FX and tariff headwind higher also than what we had expected. Why should we trust you when you come out with this reiterated midterm guidance, but also your longer-term guidance on the margins?

That would be my first question. And then just looking at tariffs and FX, it seems like the market is at least like not that good at calculating this.

How should we model this over the next coming quarters? I hear you saying that the highest impact here in H1, but how do you see it also because you have like DKK 50 million here in Q4, 30 million FX, DKK 20 million from tariffs, but also like DKK 30 million in Q3, that's only FX, right?

So if you can put some more clarity on that, that could help the modeling, would be great. And also, if you could provide more details on the time line and measures you're taking to mitigate some of these tariff costs, especially with the ramp of the Mexico's plant.

And if you have baked in any like one-off like cost items related to this in the guidance for next year. I know you're not guiding any special items, but any color could be great.

And then just on the ENT side, another follow-up. The slower growth, is this related to higher competition?

I know you mentioned [indiscernible], that the product is now 7 years old, and I know you have a HD version in your pipeline. Is the HD launch what is needed to drive this up to prior growth rates?

Yes. Thank you, Tobias.

And I'll comment on your last question and let Henrik handle 1 and 2. But maybe also just a small comment.

So I mean, clearly, as you say, we -- I mean, we were very confident in our future growth and in our strategy when we were at the Capital Markets Day. And I have to say we -- I mean, at that time, we obviously also knew and the Q4 results coming in around that time.

And we were also actually very confident that these were in line with our own expectations for the year. And in terms of also some of the choices that we had made when it came to continuing to invest in growth as well.

So overall, we -- I mean, we are equally confident when we look ahead at the great potential and our ability to also deliver solid growth. So I just want to make that super clear.

Then in terms of ENT, I think you should look at this as -- I mean, as an area where there's actually still limited competition. And even we have a solution that is 7 years old.

So it's not built on the latest technology that we use in some of the other solutions that will come with our next-generation rhinolaryngoscope. But our effort in terms of having, in many countries, some of the same commercial resources focusing on urology and ENT basically means that there's -- and in line with our strategy that we have launched with a stronger focus on urology, I think it's fair to assume that it's probably more driven and again, not to read too much into a softer quarter because we do see the fluctuations.

But it's more to do with our internal commercial focus than competition because we do see still very limited competition in the ENT space. And we're also still quite confident around the growth that we see in this segment.

But we are looking also at how is it we balance our resources in -- across the different segments. And we also do, again, see some structural or temporary fluctuations that drive this, such as timing of orders we talk about, which also is why we look more at the underlying trend and the details below that in terms of new customers and the existing customers buying more.

So I think we remain confident about this segment. But again, that's where we are.

Exactly. And then going back to your questions on CMD linked to now our quarter 4 and FX and tariff models.

I think I will start out by saying, Tobias, 2 things. So why trust us?

Well, we would say what we communicated at the CMD is in line with what we're also communicating today. And then you can argue, is it softer or as expected, as Britt also said, for Q4?

I think we've been quite clear on both how FX impacted us. We spent quite a bit of time on that in Q3 and also that tariffs will have a negative impact, though temporary and then go away.

And this is exactly what we are reiterating today. So I think that is my main argument that the story has not changed at all.

And actually, if you look at the graph we also illustrated, it's exactly the same pathway. Obviously, at the CMD, we did not discuss guidance for '25, '26 because we had not closed Q4, and it was not the time to do that.

I think secondly, of course, we always take feedback for how we can be more explicit. And one of the feedbacks we have taken from the community on the call here now, for example, is to be more explicit on FX and tariffs.

And therefore, you will see across the quarters of the past financial year, which is a practice we will continue. We've been much more explicit about quantifying the FX impact and the tariff impact now also here with quarter 4 in a DKK million amount because that enables us to have this discussion on where are we actually with and without FX and tariffs.

The last thing I will say on that is that -- that I think on tariff is obviously something that moves by the day but now is starting to fall into a slightly more stable regime, even though I think the past now 8, 9 months have shown stability is not exactly how to describe the situation. I think on FX, I would just call out again that, that is the biggest single impact across the last 2 quarters.

And I think you all on the call know how much the U.S. dollar DKK has fluctuated.

And remind you, if you go back a year ago versus today, it is a quite significant depreciation that very few, including all of the banks on the call, were not forecasting. So I think there, we are at the mercy of the FX market like you.

And we follow the market. We have a natural hedge.

But as part of -- as we communicated in Q4, there is a time lag in between, it impacts our top line and our gross margin and therefore, EBIT margin and when you actually see the counter offsetting effect coming, particularly through COGS with our international manufacturing footprint. Specifically, therefore, how should you model?

And are there any specific one-offs you should think about for '25, '26? On FX, I'll put that aside.

I mean, that follows the answer I just gave. On tariffs, we are not expecting any specific one-offs related to this.

I think as a practice, we operate and manage the mitigation actions within the running business, partly because we were already on the journey of ramping up in Mexico and partly because we think that is the right thing to do. So unlike other companies, we will not start reporting bigger one-offs because we don't think that is relevant given it is a temporary situation.

I think secondly, in terms of how you then model, I think my best input would be to now with the added specificity that we are giving in the quarterly updates with a more explicit FX, DKK million and tariff amount. That with that, hopefully, we can better adapt that also into your models in the right way because clearly, there was a difference here on Q4 with what was in consensus and where we landed, particularly on these external factors.

Highly appreciate also that you are giving this detailed view, and you doubled down on your CMD strategy, much appreciated. I guess where the share price is today is reflecting maybe that we've seen management being bullish and confident on Ambu before and have also seen the analysis of how big the market is.

And if you just take some of that market and penetrate that, then everything is going to be good. So maybe I think to provide a bit of confidence to the outsiders here, how do you foresee Ambu accelerate back if you look at it from a more bottom-up perspective?

So you say ENT will remain a drag most likely. It will not be something that will reaccelerate.

So can you maybe be a bit more clear on which drivers you see for the growth from a bottom-up perspective? And I'll let you decide how to do that.

That will be the first question from my side.

Yes. Thank you, Martin, and actually a very good and relevant question.

Let me answer that, and then, Henrik, you can supplement. So if we take -- I mean, you're right that if we look at the market, I mean, it's huge, and we can say that out of the total market, it's only 3% to 4% penetrated.

When we also look at -- I mean, the last many years, we were the first to enter this market with a single-use endoscope. And we have basically, I mean, as market leaders built this market.

And then we have seen some competition come in, in the last couple of years. But what I will say is I think there's a couple of things that makes me very -- I mean, very confident.

I mean one thing is that it does take time to build a market. It does take time to change habits in -- among physicians, in particular, in some areas more than others.

And I do think if we look at it and maybe start with -- or if we look at it overall, you could say, I feel much more confident and I actually do feel that we are much more derisked right now compared to when I stood here 2, 3 years ago. Because back then and for many years, it was pulmonology, as we call it at the time, that was basically driving the growth where right now, we stand on, you could say, essentially 4 solid legs where we have actually proven that we have solutions that meet the customer needs, not only in respiratory, where we have expanded the portfolio, but also in urology, ENT and GI, where we are today very niche focused mainly with our gastroscope.

So that actually makes me confident. And in particular, then looking at the potential and if we start with respiratory, we basically went in and delivered on the need of very simple procedures.

And then we gradually expanded and with our aScope 5 Broncho also we were able to meet the needs of the very advanced procedures. And some of this has to do with the customers getting used to our solutions, but a lot of it also has to do with our ability to innovate and drive superior solutions also at an affordable price.

And that is where our innovation effort continues and our scale continues to play a key role, not least also because technology is playing with us in making higher quality image cameras, sensors, as an example, available at much lower cost. So that basically means that we are also able to meet the needs at the customers at prices that are attractive to them.

So that's where when we look at the momentum that we see in respiratory with our bronchoscope that -- I mean -- and the continued expansion into more and more complex procedures, continuing the trajectory that we see now in the markets where we are established, mainly in U.S. and Europe, that I'm confident that we are actually on to this momentum that is continuing.

And the fact that customers even themselves says that we can use it for 70% of the procedures makes me actually quite confident because normally, customers will say a lower number than they actually end up using. Then if we talk about urology, I mean, we have been able to -- in cystoscopy, which is very much around bladder cancer screenings, we have been able to build a solid presence with our cystoscopes that basically with our first generation works for what they need.

And this is then where we have also leveraged technology to bring a high-definition scope out expanding with the PCNL indication. So that can also be used in the field of kidney stone management.

And then we have entered the whole kidney stone management space with our ureteroscope, which is a market where, as you know well, it's the first time, we are not the first to enter that market because there is actually a demand for single-use scopes coming from a slightly different angle in terms of the reusable breaking a lot, and they spend a lot of cost on repairing. And here, we have a solid scope that can then fit into our portfolio and some of the development that we make in innovation on the platform, on the software with -- latest EndoIntelligence actually helps us there.

So we do also in urology, with our expanded portfolio, see a good momentum. And this is also why with our strategy, those 2 areas are the key ones.

And we are also looking at how is it then we can consolidate even further and potentially add more solutions that helps address some of the needs that we are solving, which will come on top. And then ENT, it's a little more slim.

It's still an area that -- and that's in line with our strategy where we see that we can continue to grow and meet more needs, and that's what we will do there. And then combined, you can say as more of the treatment is moving outside hospitals, that's also where -- I mean, the need for solutions like ours is just increasing.

So that's really why we are quite confident that we have gotten to a meaningful penetration where there is acceptance that this is, I mean, a solid standard of care. So that's really why we are looking at the potential with great confidence.

And then on the side, and I will not spend too much time on this, but just to say if we then take GI, it's very clear, and I've been out with a lot of GI physicians that a lot of procedures are done outside the GI suite. There's a lot of the similar needs that we are actually solving in the other segments.

We don't have right now the solutions at an affordable price to be able to go large scale into this segment, but the technology is there to my earlier point. So this is also an area where we should, of course, be the ones entering this.

And that's something that comes on top of some of what we talk about here at a completely different magnitude that we are not getting carried away here, but we are solid making progress and making sure that we also don't risk the company or don't risk too much, but still also deliver on our potential in a step-by-step approach.

So if I can round off, and I know we already gave a lot of details, Martin. I would say, ironically, on your question, we stand here more confident than ever based on 2 main things: the feedback from customers and the fact that what is needed to deliver, on what Britt took us through now, is fully within, to a very, very large extent, our own control.

So I think our advice back would probably be to say Q4 might have been a slightly different composition than you expected. If you look at the guidance for the year to come, it's fully in line with what we communicated at Capital Markets Day and the potential we see in all of the areas for all of the products with the feedback from the customers is exactly the same.

This sounds really good. I have 2 quick follow-up.

One is I love good feedback. I also appreciate it myself.

But unfortunately, you cannot put it on the P&L. So wondering when we should start to see that the good feedback starts to translate into sales.

What's -- and you don't have to say what you expect for this for your products in terms of SureSight and Uretero, but maybe in terms of what the historical run rate has been for previous launches. And then just finally on margin, it's going to be a bit back -- or back-end loaded year on the margin side as well.

For the past 7 years, the margin has been the softest actually in Q4. So just wondering what gives you confidence in Q4, the latter part of the year being the strongest margin all of a sudden.

That would also be nice.

And I'll briefly -- and I'll make it brief on the revenue. I think we have talked -- and I think, again, we appreciate feedback to Henrik's point, but we have tried to also explain our -- the whole selling process and the sales cycles.

And when we bring new solutions out, how we also -- how we do the evaluations before the sale. But maybe I'll just jump to the conclusion and say, as we have seen with previous product launches where we have put an effort behind like the aScope 5 Broncho, I mean, this has come gradually.

And it's -- I mean, when you build the momentum and get the solutions in, we will see a steady strong growth. And then that growth is building up and coming for many years ahead.

So we are, of course, continuing this year on our new solutions, being SureSight, being our ureteroscope, a continued good momentum. And yes, and I think that's as specific as I can be.

But I think it is promising for the coming years that we'll see that gradual improvement.

And on margin, Martin, I think 2 things. One, you're right on the historical pattern, particularly, I would say, for the last 3, 4 years.

The main answer is the -- are the external factors, particularly tariffs, which will gradually decline across the quarters with our implementation of the mitigation actions. So that is by far the biggest driver of why we feel confident that the EBIT margin will increase across the year.

The second thing is more timing of our internal investments where we've had now for the couple of -- past couple of years, a certain timing where a lot of -- majority of those investments often end up at the end of the financial year. The composition will be a little bit different this year.

So it's really things that are right now relatively clear line of sight to how we think it will impact our P&L.

I have 3, please. Just again, touching on the phasing for next year.

You have pointed to back-end loaded here, and we've kind of discussed that. But just trying to understand, is it all down to comps at the top line?

Is that the key driver of the back-end loaded year? And on margins, you've touched -- similarly, you touched on FX, tariffs and some investments being more front-end loaded.

Are these key elements that we need to be aware of in terms of phasing? And then the second one -- and apologies to fish a bit more on the long-term targets.

On the margin guide of 22% by 2028, which you have reiterated this morning, how should we think of that bridge from 12% to 14%, let's assume 14% that from this year to 20% in the next 2 years? And what will actually be the drivers and that's despite the tariffs and FX headwinds, which we expect to continue?

And then the last one is on FX. Are you able to quantify the FX impact assumption we should assume for the top line and margins for this year if current rates continue?

Maybe putting it another way, from our math, we get around a low single-digit headwind to sales and margins. Is that fair?

I couldn't exactly hear what you said, the last part of the question, but I think I got the gist of it, Anchal. So let me try to go through it from your second question first and then phasing and then FX.

So I think I just want to reiterate on long term, as I heard your question on the impact of tariffs and the, you can say, journey towards the particular around 20% by '27, '28. I think in all honesty, back to the point that tariff costs are temporary with the mitigation plans that we're implementing.

The more relevant number to look at in terms of the EBIT margin expansion for the year we're now entering '25, '26 is actually 14% to 16% because that is excluding the bigger impact from tariffs. And if you use that number, we will be exactly on the line also of consensus with what the EBIT margin expansion plan would have been without the current tariff situation.

And with us being able to mitigate them, as I answered earlier in my presentation, we really see that the underlying operational initiatives we are taking, they are bearing fruit, and we're exactly on that journey still that we communicated at the CMD and a year ago in a similar meeting like this. So that is why we feel confident that is really because if you take the tariffs aside, we are really exactly on that journey.

And that is also why we've been so explicit in our communication around it. If you then look at the phasing for the financial year that we're now in, revenue, it is mainly/purely comparables that drives this back-end loaded factor.

As I said before, we see a solid start of the year and on endoscopy, the growing factors, as Britt said earlier, there are still effects from new products. Obviously, they are also building across the year, which means that we will see an uptick across the year, we expect at least from the impact from these new products, even though still smaller, it is growing.

The second thing is really on A&PM. If you look at how A&PM grew quarter-by-quarter in '24, '25 and you look particularly how much A&PM grew in quarter 1 on '24, '25, this is where you see particularly high comp challenge that we're up against now with our quarter 1 sales here for '25, '26.

And that brings me lastly to FX. I think now for the last 2 quarters, we've been more or less explicit on exactly the DKK million impact from FX.

Obviously, we are impacted by a mix of the U.S. dollar depreciation and then partly some of our currencies in which we produce and source, the Chinese renminbi, the ringgit in Malaysia and the Mexican pesos, how they correlate with the U.S.

dollar. As we described in the quarter 3, there is a time lag effect whereby when we are impacted by top line immediately and when we then see the cost of the production then going down typically of up to 3 months.

And that's really also what we're seeing. So to answer the question, I believe you asked then what have we assumed for '25, '26.

As you see in our outlook assumptions, you see there also what exactly are the FX assumptions we've made in terms of what will be the average FX rate across the financial year '25, '26. And these are what substantiate the guidance of the 12% to 14% EBIT margin.

That's very helpful. Could we perhaps -- just on the long-term targets, could there be a scenario where you could amend your long-term targets on more of an underlying basis?

I think that, yes, we'll get to the 20% margin by 2028, but this is on an underlying basis, excluding the effects of tariffs and FX. Could that be a potential scenario where we get to?

I don't see that. We guide EBIT margin, including FX.

And fundamentally, as I said before, even though tariff will not fully go to 0 back to one of the earlier questions, we believe that with the size of the company we are becoming, the impact that will still be left is something we can manage and still deliver on the target.

I have 2 left here. Firstly, a question on the growth for the other endoscopy solutions.

I mean the quarterly growth rates are getting more lumpy if you mean that the growth should accelerate, and you still expect to deliver the 20% -- around 20% growth. I was wondering in your guidance, was there any large order pipeline embedded here in your expectation?

Yes. So I think the quarter -- I mean, so what we guide on the quarter.

So the long-term guidance that we have is that we expect our endoscopy solutions to grow between 15% and 20%. And what we are saying specifically for this year is over 15%.

So that's -- I mean, that's the range that we see. So just to specify -- you talked specifically the 20% for the other segment.

Sorry. Sorry, Yiwei.

Yes. So I think we -- I mean, we overall, again, believe that we have continued solid momentum.

We don't guide specifically on this segment. I should just say we guide on the overall.

But I think -- I mean -- and when we guide on the overall, we feel quite comfortable around the 15-plus percent. And then I also do believe, and that's also why we wanted to single this out.

I mean, urology being the big -- I mean, we see very solid continuing growth. It's the biggest part of this segment, and it's also growing at a good pace.

So overall, we feel quite confident. I will not comment again on the specific 20%, but we do feel confident that we should continue to see solid growth in the -- in this everything but respiratory.

And then when we combine both of them that, that should still leave us with solid endoscopy growth as we look ahead.

Yes. But my question was what is your visibility here for '25, '26?

I was wondering if you have any large order pipeline embedded in your expectation.

No. I think in this segment, I mean, we have a lot of customers.

And then again, we do have large customers, NHS being one where we don't see these big large orders coming in. That is more spread out, of course, still big customers having bigger orders, but we don't see any specific big order coming in.

This is basically driven by solid underlying growth in terms of customers transitioning from reusable to single-use and being at very different adoption levels, some at 100% specifically on the cystoscope and others at lower levels that are then gradually increasing. So the potential we have is coming from continuing, obviously, bringing new customers on board, but also continuing to increase the penetration of single-use of our scopes with existing customers.

And to build on that, the confidence you said here is based on when we look at the pattern of new customers converted just in the last few quarters and the expectations of what the running volume should be on those, we feel very confident. And that's also what we see now in the early start of this financial year that, that continued conversion, that Britt is talking about, will drive us towards the growth levels that we are indicating.

So we are not dependent on any major single bulky orders to deliver on this guidance.

Okay. That was clear.

And my second question, it has actually been asked but I want to try it again. I'm still a bit surprised that you see 1% downside to your long-term growth target this year.

I mean it was only 1 month ago, you said 11% to 13%. Now it's 10% to 13% for this year.

I mean if I understand correctly, this will be the year where you see a full year sales contribution from the new products like ureteroscope or video laryngoscope, where the growth acceleration should be higher in the beginning. But now you are talking about 1% downside.

Could you elaborate here what is the risk you're seeing for this year?

Yes. So I mean, I think -- and thank you also for -- I mean, for how you put it because I think the way we looked at this was, I mean, that, again, we are fully behind.

And when we set the long-term target of 11% to 13% CAGR over 5 years, we actually do feel, I mean, very comfortable around that. And then when we are to look at this year and what we have in the pipeline, we are also actually quite confident around the year that we have and what we are able to deliver.

But we do see a 3 percentage point margin in the world that we live in where there's a lot of things happening. So that's basically what is driving us towards what we believe is the right guidance for this year, which is 10% to 13% on an overall level.

But it doesn't -- it's not -- as I said before, it's not that we are more cautious than we were a month ago and that we -- or that we see anything that has changed. And I -- so this is, I mean, in full honesty and transparency how we have thought about it as we laid out our guidance for next year of 10% to 13%.

Thank you very much, and thanks to everyone for good questions on this call today. We look forward to our continued interactions, and I wish everyone a great day.

Thank you.