Eurofins Scientific SE

Thank you, Andrew, and hello, everybody, and thank you for joining our full year 2025 results call. I will keep -- we have a long slide show, but I will not go through every slide.

I have to give apologies for Laurent Lebras, our CFO, who is not well today. So I will not go in great detail through the financial slide and leave time for questions.

If I start on Page 5, or the Slide 2. I'm happy to report on a strong year 2025, where we achieved all our objectives or exceeded [Technical Difficulty] Eurofins, as you know, is every 5 years defining a plan for the next 5 years and sharing with investors what we are trying to do, what we will do in the next 5 years.

We just completed year 3 of that 5-year plan, where we are building a truly global network, fully digital network of laboratories organized in a hub-and-spoke structure. So we get the benefits of scale in our large hub laboratories.

And we have a network of local laboratories to collect samples close to our clients, serve our clients in their country, their language and yet be able in the large laboratories to implement automation, artificial intelligence and all the things that make our services much more unique and faster and more reliable than what others do and we do. So this is continuing to proceed at pace.

I'm happy to report that I can confirm we should be done by 2027. There's been massive investments.

And we start to see some of the benefits of that in our operating leverage, which has continued to improve every year. It improved well in 2025.

Overall, our margins -- reported margins and our adjusted margins continue to improve year-on-year. Our EPS has shown a remarkable growth, 24%.

And I think it's just the beginning because we still have heavy investment, heavy OpEx investment, especially in our deployment of digital solutions, development of digital solutions, which should give us significant [Technical Difficulty] and the cost of which will go down. We have generated before those investments to buy our sites because we prefer to own our sites.

This is linked to the long-term view that we have. We think over the long term, although they provide a lower immediate return on capital deployed over the long term, we're going to use them forever.

It's a great benefit to have them because we can expand on those sites. But before those investments, we have generated more than EUR 1 billion of free cash flow to the firm.

So our group is starting to generate serious cash and it's just the beginning of that. And if I move to Page 6, the nice thing is that is accelerating in the second half.

Organic growth is still not where it will be, we think, when -- and we'll talk about that later, but it's still accelerating quarter-on-quarter and half year-on-half year. Our EPS growth in the second half even reached 30%, which is quite remarkable.

And our free cash flow has grown also much faster in the second half than in the first half. On our investment program on Page 7, you see that we are starting to be done.

We still have massive IT investments that post 2027 should be less. And more importantly, we should get the benefit of that.

We're still adding some start-ups, but you see the investment has started. We've done the peak of it, so it's starting to be less.

So all of that is running according to plan. We still will add a few large and very efficient sites to our network over the next 2 years.

They are being constructed right now, and we think the delivery will take place over the next 24 months, more or less for in our current perimeter that should take what we need in our program. On Page 8, we provide a bridge on the evolution of margin.

And you can see we've had a nice underlying operating leverage. As we had flagged, we have some dilution from the acquisition for a very low amount as compared to the profits we think we can generate in 2 or 3 years of the network of clinical laboratories of Synlab in Spain.

We are merging it with our network, and we're taking a lot of cost out. We've had a lot of exceptional costs for that.

And that should -- the first phase should be completed by the middle of next year. We think we will create significant value from this combination.

But nonetheless, short term, it has been dilutive, especially in the second half. First half, we only had 3 months.

Second half, we had 6 months. We have a bit of an impact from the FX because we make more profits in North America, although we want to improve profits in Europe as we finalize this IT program and site consolidation.

So a good improvement of margin, good drop-through on Page 9. If you see the trend, well, the COVID peak is well behind us, but we are catching up.

Our revenues now are over the peak revenues from COVID. Our margin is catching up.

It's -- and I think we are very confident in exceeding 24% margin in EBITDA -- adjusted EBITDA in 2027. And considering the benefit of that beyond 2027, I think there is some room to, at some point, maybe achieve or get close to the margins we had during COVID.

So that's also encouraging. On the -- if you see -- if we look at the CAGR, we've had since 2019, 8% revenues CAGR, 35% CAGR of free cash flow to shareholders.

So -- and that's ultimately the most important thing, while we still carry huge amounts of investments. And I think those investments, once we have built our network of labs, we have them for the next 20 or 30 years.

So the growth of the EPS and the cash flow per share should be for quite some time over proportional to our total revenue growth. On the financial numbers on Page 11, you have a breakdown.

I think I will go back to that as part of the question and answers. Main point is our profits are going in the right direction, are growing, growing faster than revenues and the EPS is growing also faster than revenues.

We took the opportunities for us, the fact that our share price is massively undervalued is actually an opportunity, and we took advantage of that opportunity to acquire a lot of shares last year, which is even further boosting our EPS. And the impact of that, once we hit in 2027, our target -- margin targets and cash flow targets will be compounded.

On Page 12, you have a bridge of our revenue evolution. We generated EUR 250 million of organic growth.

Of course, it has been a bit diluted by the FX impact. And we have a sequential increase quarter-on-quarter of growth.

And I think that will continue because now the comps that were strong in some areas, I can talk about it a bit later, will not be there next year as we enter -- or this year as we start 2026. On the Page 13, we give a bit more breakdown by area.

I think all our areas are doing well. Life areas are doing well.

Food & Feed and Environment are growing both in Europe, North America and Asia. BioPharma, and I'll come to that on the next slide, is starting to recover.

It is still being soft, it is still being far from what we think we can achieve long term. Diagnostics could do a little bit better, but it's starting to show in many areas, some recovery.

Q4, of course, didn't get the negative base effect of tariff reductions in France. Consumer.

Consumer has been hit because consumer and technology includes some material science testing, microscopy, et cetera. This had a big boost in 2024 from the -- a lot of tools companies were looking at potential stricter export restrictions, both from Europe and North America to China.

And there was a lot of anticipated buying of tools from our clients in 2024 that gave us a bit of boost on that in 2024, which is not -- has not recurred in 2025, but now we think '25 has hit a plateau and we should grow from there. But that explains the only 2.3% growth in Consumer & Technology.

Consumer was better than that. On BioPharma.

And here, we have, I think, the last year was a mixed picture. The bulk of it is our BioPharma product testing, where Eurofins is a global leader, and that has continued to do well, mid-single digits.

We have done at times better, close to double digit or double digit on that. There is some potential upwards.

And we have a good outlook for next year. We are adding a lot of capacity where we will be adding -- expanding our big site in Lancaster, expanding our site in the Netherlands.

So we'll have more capacity coming online in the next couple of years. So there is some upside potential on BioPharma product testing, but the growth has stayed solid -- quite solid during the time where BioPharma is reevaluating its pipelines, hasn't been affected like Discovery.

In Discovery, this is, we think, plateauing now. It's still a little bit down in the second half of the year.

Genomics is still hurting from cuts in research fundings. But again, we think we're hitting now a plateau and we can grow from there.

Agroscience is part of the ancillary activities, and that is still down significantly. So we have made significant efforts to cut our footprint.

There has been massive restructuring for the size of that business, significant restructuring. That's also part of our SDI.

We've closed a number of field stations to basically fit our capacity to the demand. There could be at some point upside when the agrochemical companies, Agroscience companies and the seed company have more visibility on regulations to get their products approved, especially in Europe.

So we keep that activity where we are a global leader, but that has suffered. And between Genomics and Agroscience that explains a large part of the overall softness of BioPharma.

Otherwise, BioPharma will be at the same level of growth as our Life activity -- area of activity. So our CDMO did well in the first half of the year in the U.S.

because we -- or in Canada because we filled a tranche that got completed at the end of the year before. It's a bit less in the last quarter because now it's full, and we're going to have a next tranche coming up online in the next, I think, 24 months.

CDMO was a bit softer in Europe. It was a bit more on smaller biologics clients, but we think this will pick up in the next few quarters, too.

So that's for the ancillary activities for BioPharma. We have, of course, in BioPharma, some clinical works, large contracts and our clients are positive.

on the start of those programs. And of course, that would switch completely the growth of the ancillary activities.

If we look at the -- especially Central Laboratory, Bioanalysis, we do think that some point in '27, we will have -- we should have a significant boost from those activities. That's also hurting our profits because we keep capacity that is in excess of what we have as volume right now because studies should start relatively soon.

We have significant demand from clients. So we're optimistic on that.

And in any case, the -- we're now at a baseline where we don't think that would go down anymore and affect our BioPharma growth anymore in 2026. On Page 15, you've got a split of the margins.

So the margins are growing everywhere, especially in the rest of the world. The rest of the world is catching up with U.S.

margin. Europe has not been improving as much as we wanted.

We've had an impact, of course, in Europe of the reimbursement cuts in clinical diagnostic in France that occurred in 2024 that affected the comparable with 2025. We've got the dilution from Synlab.

We've got a number of other things. We think we have a big upside in Europe to increase the margins and make them move much closer to U.S.

margins, which will also reduce the FX impact on the translational results and margin. So we're optimistic over the next 2 years to significantly increase the margins in Europe.

Another thing that we do is described on Page 16. So we have labs that are well integrated, where we have deployed our IT solutions, where we -- that have been in the group for a long time.

And then we have a number of start-ups that we launched over the next few -- the last few years. The peak start-up investment is behind us and the start-ups of the peak start-up years are starting to be profitable.

As I mentioned earlier, we are opening fewer start-ups now. They have a smaller impact on our results.

So that's part of our nonmature scope. On that scope, we also have companies like Synlab that we just bought and we are restructuring.

And what is interesting to see is the impact of that nonmature scope on our overall results is starting to be less and less -- it's -- we have a target that SDI at EBITDA level will be less than 0.5% of our revenues, and we think we will achieve that by 2027 as planned. Anyway, even in 2025, the impact on the group EBITDA is starting to be negligible at 2.7%.

But we will continue to show it separately and our reported results and the mature scope result will converge. It's nice to note that our mature scope is already achieving the 24% margin we are targeting for 2027.

So overall, very encouraging results. On Page 17, you see that we are self-financing all our investments, including our M&A in -- with EUR 150 million left after that.

And we've had, of course, in 2015, the purchase of our -- of the related party buildings. I'll come to that in a minute.

But -- and that was an exceptional one-off investment. We spent EUR 540 million to buy back our own shares.

And from next year, our cash flow should be such that we will have a lot of headroom for our cash flow to finance further share repurchase, for example, building repurchase is done. We won't have to spend money on that.

So we can have a very compounding -- very well compounding model where with our cash flow, we can continue to do M&A, finance not only our CapEx, but our CapEx will be less. So we'll have more room for M&A financing and even more room for returning to shareholders and preferably through share buybacks as long as our share price remains so seriously undervalued in our opinion.

On Page 18, you see that our teams are starting to do a better job in managing net working capital. We've got a good result this year in managing net working capital.

And there is still potential of improving things further. We're not -- certainly not best-in-class there, but we're making progress, and we think we can do more.

On funding on Page 19, we've continued our prudent financing management. We are well funded for the next few years.

Our leverage is very reasonable considering our cash flow. Also, our EBITDA will increase over the next 2 years, we believe.

So that will naturally bring the leverage down. We will generate some cash.

So we're confident on maintaining our leverage between the 1.5 to 2.5 multiple range that we have set for ourselves as an objective. On Page 21, I illustrate some of the new sites that came online.

We can talk about that. On Page 22, we can have a summary of our footprint.

We have a quite large lab footprint. We are very far along in building our -- and completing our hub-and-spoke laboratory network in Europe and North America, especially.

We still will have opportunities in Southeast Asia and Asia generally for the next 10 years or 20 years, also a little bit in Latin America. We can still add a few locations in North America.

We're not -- we don't have 100% coverage yet, but the impact of what we need compared to what we have is -- will be very modest past 2027. And now we own most of our big sites.

And what is planned for the next couple of years will mean that by 2027, we will own our big sites, and we usually have land next to that existing building so that if the demand increases for those hubs, we don't have to move. We don't have to lose all the investments we did in those buildings, which was our life for the last 10 years as we had to consolidate a lot of acquisitions that were not -- where we found them, they were not necessarily where they should be, and they didn't necessarily have the focus that we wanted or that was optimal for best efficiency.

Now we have that footprint, and that will stay, and we can just incrementally add capacity on the same site as we need. So we're quite pleased about the progress.

That was a 10 years program. Now we own what we need to own.

On Page 23, some discussions on return on capital employed. I think that would be more for one-on-one meetings for those of you who are interested.

But obviously, we have a mix of assets on our balance sheet. We have the labs that have grown organically and that have a very high return on capital employed.

We have the lab that we acquired. And until 2018, we built Eurofins through a lot of acquisitions.

So we incurred goodwill. And of course, that provides lower return on capital.

We have a substantial amount of our capital on our balance sheet, which is those buildings that we own that have a book value of EUR 1.3 billion. Probably if we were to do a sale and leaseback, it would be more like EUR 2 billion or more.

And that has, of course, a lower return. So we give on Page 23, an analysis of the returns of our business as we can see it.

But it confirms that the business we run has a very high return on capital employed. And if we deploy additional capital, especially if we deploy it organically, we're looking at very significant returns.

On Page 24, it covers the start-ups that we've made over the last few years and peak start-ups of '22, '23 as a whole are starting to be profitable. So we have -- and that can only amplify going forward.

So we are very satisfied with what we have built and the impact it should have on our performance, our service to clients and financial results over the next 2 years and later. On Page 25, we give a list of some of the acquisitions we did.

So we continue to be active. We think we also should add about EUR 250 million of revenues next year from acquisitions at reasonable multiple.

That means a lot of small bolt-on acquisitions, maybe not the bigger ones that would be sold at a much higher multiple. But the world is big enough, and we have enough opportunities.

We continue to be innovative. Our labs invent a lot of new tests and new capabilities.

That's on Page 26, and I will not go through all of them. You probably have heard of the baby food -- latest baby food contamination with cereulide, which could be caused by Bacillus toxin.

This is not a test that people were doing routinely most of the time. It normally doesn't happen.

So -- but when the crisis started, we developed the test very quickly. We developed a test that's actually more sensitive than what was available before in the market because most of those things come from encapsulated in this specific contamination, it comes from oil that is added to vitamins or that is added in the form of oil encapsulated.

And measuring it, you have to break the encapsulation to get to the full amount and the true amount. So we make a nice breakthrough here in developing within a very short time when the crisis started, the right test and the most sensitive test in the market, we believe.

But we can go deeper on that if some of you are interested in Q&A. Page 28.

We basically, we can only confirm that our objectives for 2027 are realistic. We think we will exceed them.

The plans for CapEx are unchanged. And BioPharma will pick up in the next few quarters, we believe.

So we're still confident that we can revert to the typical organic growth we've had for decades of 6.5%, just to give a number, but higher mid-single digits, mid- to high single digits. And we are building the network for that.

And also the efficiencies and quality of service we are building should enable us to grow significantly faster than our competitors and than the market. On Page 29, we give some ideas about the returns that we are generating.

So we were -- we are pleased to have returned EUR 1.5 billion to shareholders since 2021. So not only are we quite profitable, but we returned a lot of cash to our shareholders already, although we are still building the house, we return a lot.

And we built Eurofins for a lot of acquisition until 2018, which caused us to incur a lot of goodwill on our balance sheet. But since then, we bought some companies, but much less.

And if you look at the return on capital -- on the incremental capital we've added since then, after this big M&A phase, and you see that even including the goodwill, we already have 23% return on the incremental capital, which shows that we are reasonable in what we pay for acquisitions. We create value from our acquisition and our stock of businesses continue to improve.

So we're very satisfied about the performance of 2025. We're very optimistic about what we think we will generate over the next 2 years and especially beyond.

In fact, I think we are building something that's going to be quite extraordinary in our markets, more and more focused. We've been also reviewing our portfolio, shedding a few small things.

So over the next 2 years, we'll continue to do that to be a true leader in our industry, to the most innovative in our industry. I don't have time to talk about it now because it's a result presentation, but we're investing a lot in new technologies, in AI, in automation to create real competitive advantage, a real differentiation in the speed and quality of our service, which should make us really the partner of choice of all the multinationals around the world in the industries we are serving.

And I don't think anybody else is doing the type of investments we're doing. So I'm very positive and optimistic as to our performance post 2027 when we are done building that.

When we are building that, this causes a lot of disruption to service when you deploy new IT solutions the last 2 years where we started deploying heavily new IT solutions. We've had a lot of disruption to service to clients.

This is not the best when you change the digital tools in the company to show the best performance to clients. But this is now more and more working, and we see -- we're going to see the back end of that.

And then we see the opposite, much better performance, faster performance, and that should help us also in growth and gaining market share post 2027 and where we have in the countries where we are done already, already in '26 and '27. So that's my introduction for today.

And sorry for the very quick speed of my speech and presentation. Now I'm happy to answer questions, and [ Busi ] is here too, if we have some financial questions that I don't know the answer of.

I've got a couple just on BioPharma to kick off and then one on capital allocation. So on BioPharma, specifically within ancillary activities and the Central Lab, Bioanalysis business, you referenced these awards.

Is there anything you're able to give us in terms of additional details on sort of how big, anything slightly more granular about phasing and so forth? Because I was originally expecting some of these to start coming through in sort of mid-2025, and it feels like they got pushed to the right, I guess, because of client decisioning and things like that.

And in your opening remarks, you talked about anticipating potentially a significant sort of boost in demand. But you said by 2027, and then you went on to say that some of those could ramp up quite soon.

So I'm just trying to understand the timing there and what's going on? Because it feels like that when it does come through, it could be quite a big driver to Biopharma and then to group organic growth.

The second one, still within BioPharma, just on the discovery part of the business. It looked like through the back end of last year, we've seen a bit of a pickup in terms of the biotech funding.

And I think that only really accelerated to kind of through Q4. We don't have the kind of longer run, I guess, data on your discovery business by quarter.

How would you think about the sort of normal lead lag time as to when that should flow through to your business, your network and we really start sort of seeing it in numbers? Just still trying to gauge the sort of, I guess, the cadence of BioPharma growth as we go through 2026.

And then just on capital allocation, keen to understand kind of how you're thinking about buybacks. So you mentioned towards the end of your remarks, you've been very -- you've been active in buying back shares and returning cash to shareholders and the share price has developed, I guess.

You've got fairly fixed targets in terms of your added M&A revenues and your leverage is, I guess, within the target range. Would you expect buybacks to be a kind of ongoing feature, maybe not at the levels they were in 2025, but how should we think about kind of ongoing return of cash and whether you'll be kind of pragmatic or consistent about that?

Thanks a lot, Tom. On BioPharma, yes, Central Lab and Bioanalysis, we have some fairly large contracts.

And our best guess now maybe would be H2 -- that we are talking about would be H2 2026 for start of that. It's always difficult to time.

They have to recruit patients, et cetera. So that's our best guess as we can see.

What is clear is the comp has eased now. So going forward, we don't expect anywhere those revenues going down.

And if you do the math, if you have a negative 20% or negative 30%, even on a small part of the scope, that has a big impact on the average growth of that scope. So that -- we don't think we're going to have any negative, especially not of that magnitude going forward, and that should have an impact on the overall growth of BioPharma this year.

And in the second half, hopefully, if we get those programs to kick in, it could become quite substantial. And well, maybe if I said 2027, I think overall, BioPharma, even our core BioPharma product testing could grow more than the mid-single digits where it is now.

And that could also increase. When would that be?

That's what maybe I said '27. But overall, BioPharma, I don't see why BioPharma as a whole shouldn't grow faster than life.

It has been the case for decade. And this -- we've had phases like this again in 2012, where the pharma industry was reevaluating pipelines and so on.

The industry was a bit soft for a couple of years, and then we've had a decade of much faster growth. So I think that will return.

And why will it return? Because simply, the research is providing so many new products that are so powerful that it's just worth it for the pharma industry to spend money to develop those drugs because they will make a lot of profit with it.

Even at lower reimbursement, they will make a lot of profits. Discovery, yes the lag time, that goes from company to company, project to project, but it's not immediate indeed before a project starts.

What is it 6 months, 12 months to get things to flow through depending on the project and the products in actual work for even the coding, it takes 2, 3 months to design a study to design a project. It's not something that you buy off a catalog.

All those studies for BioPharma, they are bespoke and they take time to define. It's like you build a house, you need to get the plans, get the plans approved before you can start building it.

Capital allocation. Well, if you look at -- we're an active buyer in the market, and we also have our own assets that sometimes we get approached by people who would like to buy some of our potentially noncore assets.

So we know what those assets are worth. If you look, ALS is trading at 15x EBITDA, UL is trading at 19 or 20x EBITDA.

A lot of transactions are in that range between 15 and 20. Even with the recent rerating, our stock is trading at 10x.

So obviously, if I have extra capital to deploy, it's a no-brainer to buy back our shares. I know what I buy.

I know the potential of the profit increase of what I buy. I don't have to do -- we don't have to do a due diligence on it.

We know what we're buying. And so once we've done the M&A, we think it will be accretive, and we think we can get our return over our hurdle rates.

And if we have extra possibilities, we are going to continue to do buybacks. And I think we will generate a lot of cash.

And actually, we might buy even more this year as we bought last year. Of course, that will depend on how the market view our share and share price, et cetera.

But in spite of the recent good run of our shares, on those metrics, if you just look like the multiples of, that people pay for assets in the market, either public assets or private assets, we have -- we're anywhere between 30% and 60%, 70% undervalued. And in the capital allocation policy that our Board follows and we talk about, buying back our shares appears very attractive at the moment.

To us, we're insiders. So we -- maybe if you're an outsider, there are other considerations that apply.

As an insider, we will continue the buybacks.

A few from me, please. So you mentioned the cereulide testing that you had launched in January.

Have you seen increased demand for that testing given the recalls seen in the market? And is it possible to quantify the proportion of benefit to revenues?

That's the first one. Second one is on the margins.

Your reported EBITDA margins have seen very strong underlying improvement in 2025. Can you perhaps provide some color on the scale of the expansion that you expect in 2026 and maybe the key risks around this.

FX, obviously, is a little bit of a risk. We can't quantify that.

Synlab, maybe the drag is a little bit less than last year. Or maybe additional M&A?

Just some color around that would be helpful. Thank you.

And I think in your prepared remarks, you had indicated something around EBITDA margins could potentially return to peak COVID levels beyond '27. Just wanted to understand -- get some clarity on that.

And is it the medium-term target potentially beyond '27?

Yes. cereulide, it is just starting.

We don't know how big this crisis will be, how many charges, how many lots were affected. I'm not sure it will become a routine test because that was apparently caused by a contamination from contaminated oil from China.

So hopefully, that will stop and be put under control. So we -- and considering the size of Eurofins, for something like that to become material, it would have to be a really massive, massive global recall of all the milk in the market.

So we don't expect any impact -- any material impact on our revenues. But still, it's good for our clients to know that when there is something like that, we are there and we have the most sensitive methods, much more sensitive than the ISO method.

So if they want to check their supplies, we can do that for them very well. Yes, we've gone on the advice of many of our investors and potentially analysts, we've gone away from giving specific margin targets.

And some companies do that. We've done it for 2027, and we stick to that because they were there and we believe in it.

And hopefully, we can do better than that. So for this year, what we've said we will improve.

And as you say, some of the factors that you mentioned will play a role. FX, we don't exactly know what it will be.

M&A, we don't exactly know. We have a number of start-ups.

We have to see exactly how fast they ramp, new buildings when they come online, et cetera. So what we can say is we think we will improve.

We think we'll achieve or do better than the 24% margin next year in '27. I can't be more specific this year.

What is clear is we have massive investment in IT that we hope to largely complete this year. So that should help definitely next year.

How fast all those programs get deployed, all those software gets deployed, how fast do they get -- do we start to accrue the benefits of it is also a little bit difficult to plan quarter-by-quarter. And what I said about margin, maybe don't get too excited too quickly.

But it has always been the case that our best scopes have -- EBITDA margin in excess of 30%. The whole of Eurofins will never be there, but there's no reason why 24% should be a cap.

Of course, we will talk about that once we complete that period. And depending on our perimeters then on potential M&A, we might do then, et cetera, we'll try to set objectives beyond 2027 when we publish 2027 results.

But all things being equal, staying in our market, staying in our current perimeter, there's no reason why we shouldn't go beyond that because every year, we're improving. And there's a very long -- if I look at what we plan to achieve this year, there's a very long list of things we are doing that will improve our results substantially.

And if on top of that, BioPharma starts to pick up a bit, it could be even more faster and more meaningful.

A couple of questions on my side and a bit of a clarification regarding the infant baby formula product and how big that is actually today into the food business. And sticking with the food business with a broader vision, where are you taking the most market share?

Or where have you been taking the most of the market share over the course of '25 when it comes to segments or region into that field? And second question, dealing with the CapEx envelope for next year and probably the year after in the range of EUR 400 million.

I was wondering how much of that is dedicated to the regular, let's say, IT ongoing and to the IT transformation you're coming to a close now. Can you detail that a bit more, please?

Thank you. It's really hard to say where we gain share or where we don't.

I think we gained share, especially in the markets where we are strong in North America. I think we continue to gain share in the many European countries we do too.

And this baby formula testing, this test is not something we were doing in the past. By the way, we just developed the test, but it's not going to be a huge market, a huge -- I hope so for the milk industry.

Although from time to time, there are issues in the milk industry, and there were issues in North America and a lot of recalls in North America. We helped our clients a lot to go through the shortages to help them mitigate the shortages of the milk powder in North America over the last few years.

So this is -- we work -- what we do is essential. People forget it, but there are segments of the population who are very fragile.

And when they eat contaminated food, it can be fatal and especially babies. And we also test a lot of supplements, sport supplements.

If you put not enough or too much vitamin in certain products, it can be toxic. It's not only the bacteriological contaminants.

So this is more like a reminder of you can't stop testing food. If you stop testing food, bad things happen.

And actually, it shows maybe nobody could have guessed that, that would happen. But it shows you have to have very broad testing programs because even if a contamination hasn't happened in 5 years, it doesn't mean it won't happen again.

And if you have a brand that is valuable, you don't want to be the one whose products are contaminated. I think that's maybe one of the many wake-up calls.

It's not because you haven't had a problem with your products in the last 5 years that you won't have one tomorrow. So testing is important.

It's like having a fire detector, maybe you haven't had a fire in 20 years, but you best [Technical Difficulty] detector in your house or in your [Technical Difficulty] that can still happen. On the [Technical Difficulty]

Thank you. Sorry, everybody.

I don't know what happened with the telephone line. So I was answering the answer -- the question on IT CapEx and indeed, maybe EUR 50 million of the IT CapEx is linked to this development of new IT solutions for digitalizing our full network of laboratories.

I think we can take the next question.

Just one last question remaining on my side. I think there's been press coverage around the potential divestment of part of your consumer and tech product testing business.

So can you maybe tell us how you're thinking about that division in the context of the perimeter of the company? And if overall divestments are still very much on the table as you flagged on previous call and how we should think about you going into 2026?

Thank you. Well, we get a lot of inbound calls.

There are things businesses that we look from inside what we like, what we don't like. As I mentioned, there are smaller businesses in Clinical Diagnostics last year that we closed or sold in countries where we had no path to become market leader.

We like our consumer product testing. We like our material science testing, although material science was softer in '25, we see a great potential with all the AI chips and the memories now that are in great demand and the needs for tools that's going to pick up.

So we like that division. We like consumer products, and we'll never part with certain elements of it.

They are very close to the core of our business of medical device and testing for life, et cetera. But we do get inbounds.

And then we are -- when our boards get inbound, we have a duty to look at it because, of course, we get very attractive offers sometimes, extremely attractive compared to our current valuation. And so we have to look at it.

What comes out of those reviews, we never can know, and we'll look at it. But I'm running a company as a CEO, but also as a member of the Board, I'm a capital allocator, and we have to look where we put our shareholders' capital to work.

We have no limitation. We're not limited by the amount of capital we have to invest in our core sector, but maybe there might be at some point, M&A opportunities in our core area of business that are larger that we want to take on.

And then maybe it's worth to have an active review of the value of all our assets. That's all I can say about that.

A couple from me, please. Firstly, just maybe a financial question.

I just wanted to understand some of the moving parts on the free cash flow for the business. Obviously, solid reported number, but it does include another working capital inflow in Q4 and obviously, year-on-year reduction in CapEx.

I just wondered how you guys are thinking about the sustainability, particularly of those two variables as we move back towards the ambition of a mid-single-digit growth level business. Maybe you can talk a little bit about the drivers of that working capital movement because I think it's the second year in a row you've had an inflow at the full year?

And likewise, on the CapEx side, it sounds like you expect similar levels of CapEx in 2026 versus 2025 or maybe even slightly lower. Can that level of CapEx support an acceleration in growth up to the kind of 6.5%?

That's my first question. And secondly, just a follow-up question on [Technical Difficulty] net-debt-to-EBITDA towards the upper end of your, I guess, preferred range.

You talked about the potential to do more buyback of shares in 2026. But if I assume a similar CapEx and M&A trends, it doesn't look like that will be self-funded at least on my back of the envelope calculation says.

So are you happy to run net-debt-to-EBITDA up towards the top or even above the top end of that range?

Very much. Yes.

Well, we did a good job in working capital this year. And of course, that is finite.

We're not going to get very big negative net working capital. I think we might still have a little bit of room over the next 2 or 3 years to be better at collection.

We're not as good as maybe we should be at collection. And so -- but that's always a fight, of course, with our clients who want to pay later.

And we -- but they don't always pay on time like in any business. So I think we can be better at getting our clients to pay on time.

And we're kind of kind to many suppliers. So we pay maybe a bit too fast.

So I think I couldn't tell how fast net working capital will be improving, and it can maybe 1 year be a bit less good and so on. So that element, I think it was a good year of EUR 40 million or EUR 50 million this year and last year will not be a gain of EUR 50 million every year forever, obviously.

I think long term, we can do a little bit better. That's what I can say on the net working capital.

On CapEx, I think we have a high CapEx at the moment. Our maintenance CapEx is 2% or 3%.

And with that, we can grow mid-single digit. And so with CapEx at EUR 400 million ex investment in own sites, we have headroom.

We didn't quite spend the EUR 400 million in the last couple of years in '24 and '25. So we're a little bit below in '24 and '25.

But we are confident our EBITDA will increase. If you run the numbers, we don't want to give a number, but if you put 24% of whatever revenues you model based on M&A, et cetera, you're getting close to EUR 2 billion or around EUR 2 billion of EBITDA.

And if the free cash flow conversion is over 50% -- significantly over 50%, that's a lot of cash to use for buybacks and M&A. So we have headroom -- and as we talked about assets, when we look at certain assets that could give even more headroom.

But we cannot predict the future. A lot of those things look at what we could buy for M&A.

I don't know what is going to come our way at a value where we find we can get a good return. That is definitely very hard to plan.

And the same thing, are we going to keep all our assets or maybe some marginal ones we will dispose of for very high multiples. We did it already for the -- what is it called our software testing business and media testing business.

I think we sold it for 18x EBITDA because we've got a really good offer. This is -- there's a bit of opportunism on that level of capital management depending on our own M&A opportunities and the level of our share price.

So net-debt-to-EBITDA, on the other hand, we don't want to exceed the 2.5x. That's clear.

And I think overall, if you look at all the cash flow we should be generating this year and next year, unless our share price would be very depressed for that period, we should rather move down than up on the net-debt-to-EBITDA multiple.

Can I ask one kind of additional question? Just looking at the numbers around Europe as well.

We know obviously that growth accelerated in Q4 to 5%. That was on a slightly easier comp.

It looks like a chunk of that improvement was the diagnostics business, which we know there was a bit of comp effect. Was there any contribution in that Diagnostics business from the organic growth in Synlab or maybe what's the organic contribution from Synlab in there?

Because obviously, I know that you account for the organic growth from day 1.

I think it was 0 in Synlab. It's negative actually because we are shedding some contracts that were loss-making.

So...

Just the Diagnostics, the underlying Diagnostics business coming back, nothing from Synlab?

And I think also Synlab is part of M&A. And so it's -- so no, Synlab is not-- another thing, I think looking at figures after the comma in organic growth per quarter and trying to analyze changes that post-comma changes on organic growth quarter-to-quarter is not really meaningful.

It can be one contract, it can be just when something finishes, the contract finishes, doesn't finish. I wouldn't extrapolate too much, especially if you look at it at smaller slices like one activity in one continent.

I will -- maybe just a follow-up on cereulide analysis. Could you share with us how quickly you were able to roll out these tests?

You shared already that the commercial implication is limited, but it's interesting to understand how you have processed through that, the first question. The second question is on BIOSECURE Act in the U.S.

Do you expect it to be a tailwind for you? Or could your France, European nationality in state prove to be a disadvantage in the U.S.?

Well, we have several labs around the world doing this test at the moment, and some are still setting it up, and they are cooperating to exchange method because that could be also an issue for clinical diagnostics in human health. I don't know if you heard, but in some countries, even the government labs didn't have a proper test to test the stool of the babies that were affected.

So I don't know the exact minute how many of our labs are actually doing it. But when it all started, I think within a week, there was a test running at one of our labs.

And maybe we might have had a lab that was already able to do it, but was not performing the test routinely because the demand was not there. And BIOSECURE Act, I don't know that it will have any impact.

I mean I'm not sure I've heard from anyone in our company that would have an impact one way or another. No, we do our own testing locally in every country.

So we have local companies that do testing in Europe, others do -- are based in China, the local testing in China, local companies in the U.S. doing testing in the U.S.

I have to conclude -- sorry operator. Yes, I have to conclude and thank everybody for joining our call.

It was a long presentation. I apologize, but I tried to give some color from the management perspective on our numbers.

I will be happy to meet some of you in London and for other meetings over the next couple of weeks and later during the year. Thanks a lot for your support, and have a great day.

Goodbye.