Getinge AB (publ)

Thank you very much. With me on today’s call, I have Lars Sandstrom our CFO, who will take you through the financials a little bit later here.

But let’s start with moving over to Page number 2 right away and look at the key takeaways from the second quarter of 2021. Organic net sales growth was 3.6% for the quarter.

This is mainly explained a tale of demand related to the - related to COVID-19 in India in combination with continued strong development in ECMO therapy products in Life Science and business area and the comeback in cardiovascular devices. Order intake decreased organically by 6.1%, compared to 2020 when we had an exceptional COVID-19-related order intake especially in ventilators.

We had a favorable product mix and continuous productivity improvements. This resulted in higher margins overall, very strong free cash flow, lower net debt and consequently, overall strength in financing efficiency.

We then move over to Page number 3 please. So, if we take a closer look on where we are trend wise on orders, we can clearly see that the trends largely continues to move towards where we were in the beginning of 2020 after quite an exceptional period here due to COVID-19.

However, orders of ventilators were still quite strong in the quarter due to demand from India. But overall though, we expect orders to decline in the coming quarters because ventilator orders post.

ECMO orders continued to be at a new higher level overall confirming our strong position in this segment for the market. Cardiovascular products also continued to improve during the quarter and we moved slightly above the level of Q2 2019 for the first time since the outbreak of COVID-19.

In North America, if the – when it comes to the recovery to a large extent explained by a successful roll out of the vaccine. There are good reasons for expecting this part of the business to continue to gradually improve as even more people get vaccinated in North America, but also in Europe and the rest of the world here as time progresses.

Hope we can [Indiscernible] can talk with more of their entity and on handling the back of the surgeries which is still very significant. We also continued to see good order intake, good order growth and started to work with our competitors why the weak order intake one year ago.

We expect this trend to continue as doctors hope using more and more – In the surgical work thus in order to take care of the backlog of surgeries in tested way. However, we are still in the low 2019 level on order intake yet.

In Life Science, we continue to see strong order growth in all product categories taking us to a level that is materially above the level since the first half of 2019 and 2020. So, all in all, it’s migrating back towards the pre-pandemic levels with the exceptions on that cycle.

We can then move to Page 4 please. If we then take the trends in orders that we just saw and look at what this could mean in terms of their net sales for 2020, compared to 2019 it might look like something that you see on this picture.

In Cardiopulmonary, we expect the high demand on products for ECMO therapies to continue, driving growth throughout the year supported by our increased capacity, which is now that you and seeing it we are at the higher level. Thanks to the investment program that we’ve been rolling out for a while now.

In Critical Care we expect the year to be slightly above 2019 due to us having a strong first half of 2021 even though demand is expected to be lower in the second half of this year. In products for Cardiac & Vascular procedures, we grew strongly year-on-year too and there are good reasons for us expecting – for us to expect that continue to be at a new higher level from here in order to meet the demand leads with the backlog of certain periods.

North America, as I mentioned is the first mover here. They have come further in the vaccination rollout and there are good reasons to expect the same thing to happen in the other parts of America and of course, EMEA of course depending, based on the success of the vaccination rollout and the capacity in hospitals returning to normal or even above normal levels.

At Surgical Workflows order intake was a positive in the first half of this year and we continue to take in the period more tenders today which is also promising. In North America, it’s first out of the starting blocks either in placing orders, I mean, number of ongoing tenders.

We expect EMEA to come to the same situation further down the road. The need for our product is clearly there and we expect to grow orders and net sales from here.

However, there is some of the orders will take longer lead times than the normal and be derived in 2022 and this is due to capacity constraints in hospitals and potential risks put by constraints – constraint in demand and constructors doing the actually the liaison work in hospitals. In Life Science, we expect the strong growth since there are transfers to continue at a higher level accompanied with a strong development for the Applikon bioreactors.

We also expect a strong order intake in sterilizers and washers to transforming to increase net sales in the second half of this year. So, all in all, this takes us to a better first half than expected followed by a good second half for all getting as a whole when compared to 2019.

So are there any risks in this? Yes, of course, there are.

We are still in the pandemic with the fact there is spreads of the Delta variant of the virus. However, we see the vaccination rollout and doing it beyond in a good way and opt to pull – hospitals are in a different and better position today compared to this challenge.

So, the capacity constraints that were really evident in all parts of the globe in the middle of the pandemic they are managed in a much better way right now. We also often get questions on the supply and how potential constraints could impact the different businesses.

The risk areas that’s imminent at the moment for us, but if the global constraints on electronics for example gets worse and continue for a long period, we will most likely be back at a sound way as well creating a timing issue or facing of net sales going forward. In this context, it’s also worth mentioning that we are better prepared than ever to mitigate this using the best practice from lasting ramp up in ventilators.

We learned a lot of things when it comes to managing our supply chain. Another risk is of course that large parties that agreed since the hospitals are delayed due to other products and consequently contracted customers ask us to delay or delete this.

At the moment, it’s not a huge risk. But I thought it would be prudent to mention within the context here in order to be clearly transparent.

Having said this, we can move to Page number 5. So, based on what I just said here is and despite the more negative FX impacts than expected, we choose to keep the outlook for 2021 unchanged at SEK 27 billion in net sales as a slower for the full year.

We can then move to Page number 6 please. I want to mention some of the key events and activities during the quarter, as well.

We had a number of launches which I think is worth mentioning in this context. One of them is that we have 510(k) clearance by FDA for three products strengthening the offering of advanced ICU Servo Ventilators in the U.S.

markets. And we are doing the commercial launch of the heart lung machine HL 40 in Europe with a really good traction and good success so far.

We’ve also launched Torin AI helping hospitals to bring down the surgery backlog in an effective way. We’ve also launched a new framework for social financing and a new social bond of the SEK 570 million.

We’ve also, as part of our consolidation efforts in part of the group decided to establish a Customer Experience Center in Frankfurt, which would be very accessible to customers from all over the world. In general that when it comes to productivity improvement journey continue.

It continues to be very happy with the way that our organization has addressed these journeys to monetization topics that we have despite the ongoing fight against COVID-19 and the ramp up of surgeries. So, one example here is the consolidation of operations in New Jersey in the U.S., going from three factories into one.

This is going according to plan. It’s expected to be finalized at the end of 2021 and it’s one example of many that will continue to drive higher productivity in getting it.

With that, we can move over to Page number 7 please. Order intake declined 6.1% and net sales grew 3.6% organically.

So, even if you see a strong come back in many product categories, we couldn’t quite match the last year’s exceptional and COVID-19 related order intake in – especially, when it comes to ventilators in EMEA. We can clearly see a pattern in the picture and the reason for this is mostly linked to how far each region have come in terms of handling COVID-19.

Clearly, North America, our part of the head when it comes to the vaccination roll out and consequently better able to take on orders and deliveries. For example in Cardiac & Vascular devices, we also started to work those forward I mentioned.

The strong improvement in Asia Pacific is the attributable to orders of ventilators for India and very strong growth in several product categories within Life Science, especially in China, we are also been progressing well in terms of vaccination. One conclusion from this is that we can expect some kind of come back in EMEA as well to take place as vaccination starts to pay off.

Could I move over to Page number 8 please? Order intake in actual numbers amounted to SEK 6,934 million in acute care therapies.

We had a 24.7% organic decline in orders and a SEK 1.5 billion decline in actual. So, this decline is of course the south of the challenging comparative figures due to large orders for Advanced ICU ventilators in 2020.

We had good order intake – good organic order growth in all other product categories in all categories in the business area which is a very good sign. In Life Science, we had a 27.9% organic increase of orders or SEK 154 million in actual.

We saw very strong growth in several product categories within Life Science and a particularly positive development in Asia Pacific. When it comes to Surgical Workflows, we had an 18.8% organic increase or SEK 199 million in actual numbers.

We saw significant organic growth in order intake in all regions from very low levels last year, which means that the order book is recovering in a good way. Growth in Surgical Workflows was particularly high in packing control.

We then move to Page number 9 please. Looking at sales, our net sales amounted to SEK 6,587 million in the quarter.

If you compare with 2019, our net sales is up more than SEK 300 million all in all. Acute Care Therapies had 1.3% organic growth, but a decline of SEK 370 million in actual numbers.

We saw strong organic growth in Cardiac & Vascular Surgery products. That’s a result of the increased surgical volumes mainly down in North America.

We had also continued good growth in ECMO therapy products in the quarter. We had challenging comparables as I mentioned in ventilators in the second quarter of this year compared to last year.

But this contributed to a sharp decrease in organic net sales for this product category and this is despite the significant deliveries to India that we had in the quarter. When it comes to Life Science, we had 36.5% organic increase and SEK 184 million in actual and here we saw strong organic growth in sales in Sterile Transfer products, in dish wash and disinfectants and also the bioreactors from Applikon.

Invoicing also increased in service and sterilizers even it’s not to the same extent to the abovementioned. Strong growth in all regions, say from a position in geographical perspective and particularly good development in Asia Pacific.

Certainly well close from a sales perspective, we had a 3.2% organic decline or SEK 198 million in actual numbers. We had slightly negative organic development and it’s explained by long lead times from order to delivery and a smaller order we booked at the beginning of the quarter compared to the previous year.

We had very good growth in integrated workflow solutions during the quarter. So this is worth highlighting I think.

We saw organic growth in both North and South America all based from low levels the organization’s focus of the offering is service and consumables as well as contributed positively during the quarter, which is a very nice, also long-term benefit. Currency had a negative impact on net sales for the quarter.

It was minus SEK 642 million, which equals 9.2%. We can then move over to Page number 10 please.

We had margin improvement in all of our business areas. So our adjusted gross profit decreased by SEK 99 million to SEK 3,624 million in the quarter, negative FX effects accounted for minus SEK 371 million here.

If we compare to 2019, gross profit is up more than SEK 0.5 billion all in all. For the Group as a whole, the gross margin improved year-on-year.

The product mix is flat, product mix is effectively flat despite negative effects from net sales of ventilators because this is offset by the recovery of products in elective surgeries. We also saw factory absorption and service performance supporting the margins and FX had a negative impact on the margin overall.

So, with that overview, let’s move over to Page number 2 and I’ll leave it to you Lars.

Thank you, Mattias. Adjusted EBITA increased SEK 32 million in the quarter and the margin improved 1.5 percentage points to 19% in the quarter.

Adjusted for currency, gross profit at 1.9 positive impact on the margin due to improved results in Surgical Workflows, combined with the recovery of 0.1% in products closed in elective surgeries. Regarding OpEx, our new way we work continue that positive effects.

However it works compared to last year’s disposition we locked down our attrition all that take place in fact a slightly negative on the margin with 0.7 percentage points. And as we come into 2021 with lower level towards depreciation and amortization, use that is rolling off the balance sheet D&A adjusted for FX is impacting the margin positively by 0.9 percentage points.

Currency had a negative impact of 0.6 percentage points on the margin. All in all, this resulted in an adjusted EBITA of SEK 1,250 million, compared to SEK 1,218 million in Q2 2020.

And in 2019, we were at SEK 591 million and EBITA margin of 9.4%. Over to Page 13 please.

As we have mentioned before, currency had a material effect on our net sales and profit for the quarter due to the strengthening of the SEK year-on-year versus most other currencies. This is, of course, taking into account when we set the outlook for the year.

And on the left, on the page, you see three major currency pairs for us, followed by a combination of smaller currencies with high volatility against SEK. And each of them represents a smaller portion of our business.

Put together, they stand for approximately 10%. And of course, we use strict pricing discipline and use price in major currencies in these countries in order to secure a good integrated margin, but you cannot mitigate all effects when you see volatility like this.

The dark blue and solid line in each graph is average rates, which we use in our financial reporting. And as we can see there is quite a substantial difference year-on-year.

The dotted line represents the closing rate each month. The steep decline in the middle of each graph is further shift from 2021 and we calculated on the average rate that comes with that.

As we are long in U.S. dollars, i.e.

more revenue and cost, U.S. represents more than one-third of our total revenue, depreciation of the U.S.

in relation to the Swedish Krona of well above 10% is of course having a negative impact for us. I also want to show you this as a reminder when taking FX into account.

You’ll also find some good information on this in the annual report that was released at the end of the March. Over to Page 14 please.

Free cash flow continues to be strong amounting to SEK 1.2 billion. This is the result of the raising profits in combination with continued good control on ROE with good working capital at work.

Working capital then it continues to decrease. We are now down 39 days on the SEK in Q2 2018.

We also see continued increase in our operating return on invested capital where we are at 21.8% on a rolling 12 month basis. And we also expect to see some kind of reversal towards the long-term plan on working capital days and when it comes to working capital, where net sales moved more and more territories.

Then let’s move to Page 15. Net debt was positively impacted by the free cash flow, taking us to SEK 5.6 billion.

This also includes paying dividends of SEK 870 million in the quarter, no dividend was paid in Q3 due to a delay connected to the COVID-19. And if we adjust for pension liabilities, we are at a net SEK 2 billion.

This brings us to a leverage of 0.7 times EBITDA and if we adjust for pension liabilities, leverage is at 0.3. During the quarter, a further reduction of loans have been made and cash amounted to approximately SEK 8.5 billion at the end of the quarter.

Let’s move to Page 17, and over to you, Mattias.

Great. Thank you, Lars.

So, on Page 17, just wanted to reiterate and summarize some of the key takeaways from the quarter. So, as we highlighted already at the end of 2019, and again after the first quarter the market continues to move towards a new normal.

We’ve seen the recoveries that we expect to when it comes to both elective surgeries, when it comes to the investment patterns among customers from the long-term infrastructure type of investments and with being able to fight the third wave of COVID-19 to get with our customers in a very good way. As I mentioned initially, I am also very happy with the activity level and the progress on strategy implementation.

This can be seen not the least when it comes to the margin progression which is really positive. The improved results from our operations generated very solid financial position as well.

All things considered are our outlook for 2021 is unchanged at, at least SEK 27 billion in net sales. So, with that summary, we open up for questions.

Thank you so much and congrats on the very strong results in particular to the margins. And my first question goes exactly to that area, the exceptional high margins you had here in Q2, how much of this is reproducible or sustainable for the remaining part of the second half and maybe if you are not willing to answer on that, maybe you can try to help us to indicate how much of this margin contribution is coming from these additional short events to the Indian market?

And then, another question alike, if you could elaborate a little bit on that, how could you see the potential new Delta version of C-19 and maybe in some regions we would see more lockdown. Are you prepared for this?

And do you think that we could risk or have a chance to see more demand for some of the C-19 related products you have in your pipe? Thank you.

Alright. Thanks for that.

When it comes to the first question, you are absolutely right, we don’t guide forward-looking on margins, but we – I alluded to in the summary and also in the beginning we do see better progression than expected maybe from some of our strategic initiatives underlying. So, there is a big move for optimism in that sense and we also have some good product mix effects.

We kind of highlighted already at the end of 2019 and also Q1 that this would be positive when things result normal especially related to our elective surgery type of products. The ECMO therapy product as well provides a good mix effect also.

When it comes to – I am sorry. Go ahead.

Just could you say anything about the – how much is, I mean, additional margin? Is it a 100 or 150 basis points coming from these additional ventilators sold to India?

No, we are not disclosing that type of granularity when it comes to our margins. And so, I only want to highlight will there be – the good underlying progression that we mentioned after the first quarter see, is going a little bit better right now and I think the – we get in the traction that we won from the strategic initiatives.

There is a positive product mix effect in this. We should also keep in mind that as we still have the lower levels of costs, because things haven’t ramped up entirely when it comes to customer activities and some of the internal activities that’s been under restrictions for quite some time now.

So that has a positive impact. We also had good utilizations of factors which you look at Q3 normally is on a lower level because of a vacation period to launch parts of the world.

And so, when it comes to Q4, as well, if you look at the normal type of marketing effect that we had we will be dampened a bit because of the order of tax and increasing on care, but also because of the delivery pattern that I mentioned when it comes to Surgical Workflows– if you go to Surgical work place for like operating room products and infection control products, there will be sort of normally longer lead times and right now with supply constraints around the world, possibly a little bit longer. There were some negative leverage effects from this also.

But underlying you are absolutely right, it’s going better than we guided for the first quarter and that we believe it is the same. We don’t have published a magnitude on this.

Okay.

And then, when it comes to the question about the Delta version, we are certainly ready to support. The team has done excellent job I think in doing in a mini ramp up to support the ventilator demand.

We had a lot of really strong book and return in the second quarter of ventilators. So we are really able to provide competitive lead times on this and we will be able to do that also for the second half of the year if the outbreak comes worst than that and then we go.

Okay. Thank you so much.

Yes. Thank you.

Three questions. First one, could you just give in volumes ventilator sales now in the second quarter versus what you had in the first quarter and also year-over-year?

And then, the financial cost has come down quite a lot for second consecutive quarter here. Is this a good level going forward if you look at the financial map?

And then, finally, on - talked a little bit about this, but if you could give some more detail for the lag we see in surgical sales that’s down now organically versus strong orders we have seen now for two consecutive quarters? And when do you expect surgical sales to really start to grow?

Thanks.

Yes. Sure.

When it comes to ventilator, it’s important to think not only units of ventilators now, but look at the actual revenue of ventilators. We’ve highlighted the number of times that the product is where you can cash.

There will be more and more connected services consumables related to this. It’s important to not just get back on the number of vents, but…

But, Mattias, now that’s more of the recurring type of business. What I am after is the exceptional launch number of machines you have been selling and I guess, they must have been down quite dramatically we hadn’t still – basically it’s increasing and if we adjust for FX, I was just trying to understand or the underlying business just doing?

Yes. Sure.

Now, if you’d look at the number of vents, the 3,600 vents that had sold in Q2. But the other categories are going really well.

We have a, call it, a mix effects from this as you probably know vents are notably higher margin categories for us in acute care therapies. As we say, the total first half, the number is about 7,500 vents and we have remained comfortable that the number of around 12,000 that we given as full year it’s still valid.

[Technical Difficulty] big order in Q2, but[Technical Difficulty] But that’s the first question. When it comes to financial cost, I think we acted rather the same, but I’ll let Lars add there is anything on to this, but.

But what you can see in Q2 is we are effecting the lower net sales and the SEK 1 million cost that we have now and that we can also be big changers going forward.

And when it comes to the – the work of sales, this is something that we also believe it’s difficult to estimate right now. But we do see some constraints among customers and other sub-suppliers into different parts of the product that is kind of out of our hands.

Normally, the lead time, which is about six months, but there is a bit of more uncertainty right now. But even if you wanted to, I couldn’t give you a better indication of this right now.

Okay. Thanks.

And still good gross margin or improved gross margin in sort of two work stations. If that’s…

Yes.

And a mix that you mentioned critical care or infection control was strong for example, so would you say if this a mix effect or efficiency against you have a bump.

Yes, well, it is both. I mean, we also have IWX which has rather good gross margins.

So they have very – they are even a smallest part of work, but they do have the positive effect. But I think the main reason is that rather if you look at the assets-to-assets and compare the same volume, the work that they started to work those team have done with the improvements at which when it comes to productivity is really paying off.

And so, that’s really the bulk of.

Okay. Thank you.

Hey, good morning guys and thanks for taking my question. My first one is just on Surgical Workflows, I guess, you mentioned some delays in the delivery timing.

But just in terms of the productivity measures that you are working on, is that going to improve as well, going into the second half or it’s margin now going to be more dependent on your sales level? And then my second question is on sterile transfer.

Just wondering how much of the additional capacity that you are planning to add at the end of this year. It’s now already been taken up by the customers and I guess, for 2022 as well, if you can give some color on the revenue growth for sterile transfer that’d be great?

And I will come back with my third question.

Okay. Now, when it comes to Surgical Workflows productivity, I mean, the – everything that is implemented in Surgical Workflows is really aiming for structural improvements.

So, that will continue to be there. I should mention as well, again good progression when it comes to service and service margins, which is not only good from a margin perspective, but also from a customer satisfaction perspective.

So, we expect this to continue to support us really going forward. And we haven’t changed anything when it comes to our longer term outlook for the margin progression and started to work.

So that remains unchanged as well. When it comes to sterile transfer, capacity, everything is going according to plan.

We’ve added the shifting factories. The investment in the U.S.

is going according to plan, a well and will come online in the fourth quarter. We still have capacity to take orders and think our customers in Life Science and related to the sterile transfer offering, they are very good at planning long-term.

So we do have good visibility and good situation when it comes to planning and supporting on capacity, so no weak concerns there. And the outlook that we gave also in terms of volume for this year still holds.

We expect it to be over SEK 1 billion and around SEK1 billion in sales. For 2022, we haven’t given any more detailed guidance other than that we believe that there is continued growth both from vaccines, but also the underlying business related to biopharma manufacturing.

Okay. That’s great.

And then my third question, just on ECMO, you talked about the increase in production capacity there. Can you just talk about what’s been the rates of that, is that’s an increase?

And I think for the second half of this year as well, are you planning to add more capacity compared to the first half or is that going to be both a steady state for the rest of the year?

Well, we don’t guide on these when it comes to capacity. But we’ve been on a significant investment program for quite a while now that really is to take out some of the bottlenecks.

So we are in a completely different situation right now to support to market where up until this point in time, we’ve been the bottleneck really for growth and we are not anymore. So, we can be a little bit more forward leading when it comes to drastic selling of these products as well.

And we’ve said that longer term we believe that this is a 15% to 20% growth category of our business. And so, that’s probably the best outlook I can give you.

Okay. That’s very helpful.

Thank you.

Thanks a lot for taking my questions. Just to follow-up on the last one on ECMO.

Does your comment also imply that you will be much above those figures that you provided for your long-term growth rates, i.e. above 20% for this fiscal year?

And also a quick one on your order intake in Life Science. I note the quite flattish figure in Americas.

I just want to hear your comments regarding that figure and some more granularity on the performance there, especially for sterile transfers. And then, I have one last one.

Thanks.

Yes. When it comes to ECMO growth, there is no more clarity I can give you other than the longer term guidance of 15% to 20% to growth.

Of course, the main variations related to ECMO is as we reported the COVID-19 impact of this and then there is the flu season impact. So, that seasonality pattern I think is important to be aware of.

But there is an overall long-term growth 15% to 20% I think is a good estimate for this. And also the second question, can you repeat that please?

That, on Life Science and your order intake, I think that the Americas figure was quite flattish. I would just like to get some granularity on that figure overall?

It is the – just by nature a bit of a lumpy business. If you look at the sterile transfer that there normally it’s a quite cyclical contract in terms of order intake with more linear development of deliveries.

It’s also a business that has a lot of large projects and it’s not unusual have projects about SEK 50 million in volumes. So, when these fall into different quarters, it can give this pattern.

But there is nothing underlying, I think to be aware of it. It’s generally a good development on all of our categories in Life Science.

Okay. Great.

And just a final one. In terms of your remediation working attaching on sites, I was just curious also if the stronger gross margin is somewhat supported from you being able to take out some cost here faster than anticipated and also what is your expectations or some details on the timeline here for the coming quarters?

That would be interesting. Thanks.

Yes. The remediation enhancing and it’s progressing according to plan.

We’ve said that it should be done with this – at the end of the third quarter and that’s work us still. The margin progression has nothing to do with us being able to take out cost.

We’ve not being able to do that it’s going on in full swing right now. So, that improvement will have to later.

It’s more of a volume and we can make it right now.

Great. And any sort of guidance on what that could be in terms of cost been taken out?

No. We don’t disclose that.

We just said that we have a significant cost related to that. But we haven’t given any numbers.

Alright. Thanks a lot.

Good morning guys. Thank you for pleasing me.

First, on the Capital Markets Day, I just wonder if you were planning to give the target guidance you might give and first what you might look to update your long-term top-line guidance and also you are trying to give margin targets at the event. And a second, just a latest update please on where we are on the magnification that might come to course.

Thanks.

For the Capital Markets Day, I mean, the thing is set but not the content. We do expect to give a clearer picture on top – longer term top-line guidance.

I know that there are lot of questions asked about that after gravitating to more towards higher growth categories. And I think this is a valid hypothesis.

But we would like to see through the back of all the effects of COVID-19 and really understand it longer term dynamic. But we do expect to be able to do that at the Capital Markets Day.

When it comes to margin targets, again, we are not promising anything in terms of what we are looking, but we will certainly be able to provide a bit more information on the actual performance historically for certain of our categories or sub-categories during the time, we will give explicit EBITA margin guidance for that. And when it comes to matching, there is nothing new development.

It’s an ongoing process. Nothing has changed that makes us to change our mind on the improvement that we have for this work.

It’s been driving out in time a bit because of COVID-19 and these are complex discussions, as well. So, we will provide more information as soon as we have it.

Thanks. And do you have any line of sight in terms of when that co-pays money coming through?

No, no. Not at this point in time.

We don’t.

Okay. Great.

Thank you.

Yes. Good morning guys.

Thanks for having the questions. So first on Life Science, if you could help dissect a little bit the growth performance this quarter for your bioreactor business and sterile transfer, that would be helpful given the moving parts there.

And furthermore, can you talk a little bit more about some of the dynamics you are seeing in bioreactors which is since in recovery from the bites or the new products in demand that are driving through here. A similar question really on sterile transfer, perhaps talk a little bit about your offer for in-store base and we just think it’s a leading indicator to consumables.

So that’s the first question set please. Questions very brief, can we touch give us some update on the GPO status across the North America.

It’s good to see you on tenders. I wonder if this has anything to do with a change in status or your ability?

And also perhaps the question you always get from me, and an update from the regulator on your current spend approval, which I think we do market for some time. Thanks

Yes. Thanks.

If we start with the first one, and we don’t give a breakdown of how much has been sterile transfer versus bioreactors in the quarter. I think we’ve done something, sterile transfer, there is nothing that has changed in the underlying market dynamics or the performance that makes us change our mind on the full year outlook for sterile transfer.

And we don’t disclose in full base about the approach either. But things are progressing according to our plans and what we have communicated earlier.

When it comes to bioreactors, it’s going a little bit better than – I think anyone have expected. There is a very strong interest in the market for our type of solutions.

So this is looking really promising and that we have a bit of a ramp up challenge now. So we can meet the market demand.

We are trying and we think that we have done from ramping up other parts of what businesses before to really support this. So, that have maybe a change to the type of actions we have seen before.

So when it comes to sterile transfer, it’s in line with what we have mentioned in the past. When it comes to the GPO status, there is no decisions made yet either.

They keep delaying this. So, we hope to be able to come back in the next quarter or so with some decisions here.

But there is nothing to announce at this point in time. And when it comes to the current spend situation, we have a constructive dialogue regarding this.

But I really can’t give you a timeline for approval. We are hoping to have this in place by the end of the year.

Nothing has changed that makes us change our mind on this. But it’s still in an ongoing dialogue with the FDA.

So it remain a constructive way absolutely, but very difficult to predict a timeline.

Understood. And just a last question please.

Balance sheet looking very strong and I Getinge has been a serial acquirer over the last twenty, thirty years and according when the situation where your leverage has stayed at these low levels, so, a prolonged period. So, can you talk a little bit about how inorganic growth is shaping more consideration for opportunities for the future and active targets you are working on, is the pipeline rich or is it more difficult in this environment, I’d like some thoughts there please.

Yes, I think, it’s certainly a very active pipeline with concrete opportunities on a weekly or monthly basis. So, we are engaged from that perspective.

Then the main thing that’s holding that back is that valuations are very, very high right now and have been for a while. So, it is difficult to find the type of target that is a good strategic match and attractive valuations that we have enough still use so we can really create value from that.

So, it is actively ongoing. We are screening several hundred companies every year and I think we will continue to do so as well.

And it’s a low hit rate type of activity.

Thank you.

Thank you. Anymore questions?

Yes. Thank you.

Yes, I need to follow-up on your comments about M&A and valuation. I think valuation is just so far continues to go up I guess for targets and balance sheet is just getting stronger.

So, how patience are you and what we need to do is, if you don’t find the good targets that you execute the balance sheet or would you consider paying out more cash to shareholders?

Yes. Well, first of all, we do have patience.

I think that’s very important to underlying and I’ve said lower - long before we talk about - started financial positions where that we never felt constrained when it comes to looking for acquisitions even that we have a supportive majority shareholder, as well. So, we’ve been active for quite some time.

But we’ll continue to be active but with patience and discipline. It’s important to look – erode the good position that we’ve created here.

And we have no plans for any other type of capital distribution right now. We do believe that there is enough opportunities to act on here and we remain patience.

So, there is no plans for any share buyback or additional dividend at this point in time.

Okay. Thank you.

Yes. Good morning.

Just one question around margins from me. So, I think the margins in the quarter were substantially strong and even compared to what we had last year which already compared fairly high.

So, what have you trying to understand if that you know what’s driving margins? Of course, you did a nice thing that containing of cost control was one reason, but then the last in terms of sustain here, if we do think there margins are sustainable going ahead or do you expect some kind of a pullback from these kind of levels if you expect them to be slightly lower than here?

So that’s it from my side.

Yes. Unfortunately, we don’t provide forward-looking margin guidance.

But I think, as I mentioned earlier, we do have now a positive product mix effect from the recovery of elective surgeries. We do have some cost benefits there because of lower activities in the way COVID pandemic as well.

And then that we really want to took the attention towards the structure improvements when it comes to productivity that’s also supporting the margin progression right now. So, the mix effect I think is turning towards from more of a new normal and we are gravitating towards better margin categories in general.

If you net everything out, and we do expect to have continued positive benefits from the productivity improvements as well. So, what will go away is the leverage effect of high ventilator sales.

That’s kind of a temporary benefit and of course some of the overall costs that have been dampened by COVID-19, as well as activity regarding to normal when it comes to customer activities and some of the internal activities even if we find some new better way to working, that will also normalize a bit. But the net is up in the possible – in the positive and a bit better than maybe with the underlying margin progression of the guidance we are off to the first look.

Okay. Just a quick follow-up on this like, if you look at the efficiency improvements and then base with of 2019, so, how much of these margin improvements would you tie down to the structural improvements so then you put it like, I mean, both mark around on that?

Yes. No.

I understand the question. But we don’t guide on this.

We said after the first quarter that we have had – when you clear off the pandemic effects and everything, we have had about a 1 percentage point on a Beta level improvement due to the structured productivity improvement that we do. That’s a little bit better right now and going better than maybe we guided for after the first quarter.

But I can’t give you a magnitude of that additional improvement.

Thank you.

Alright. Thank you very much.

Thanks for engaging in the Q&A, as well and I think we were in a major summary at the presentation. So nothing further to add from this.

So thanks for the attention. I wish everyone a good rest of the day.