Sartorius AG

Yes. Thank you very much for opening our conference call today, and welcome, everyone.

Thank you for dialing in. Thank you for your interest in Sartorius and Sartorius Stedim Biotech.

As always, we will present our results in a way that I will start with some highlights, and then Florian will expand on the financial results in quite some detail on the Sartorius Group. And then after that, René will talk about the results of Sartorius Stedim Biotech.

So, the highlights for 2024 for the Sartorius Groups are, first of all, we have fully achieved our reverse guidance that we have been giving in July of last year. We have seen that and that is for the group and both divisions for both top line as well as profitability.

This came in on basis of a market that is gaining momentum in its recovery. We see that increasingly, the underlying growth drivers are, yes, getting back to center stage, I would say and becoming more relevant now after the dominance of more volatile temporary drivers.

For Bioprocess Solutions, in particular, we have seen that sales are pretty much on previous year’s level, roughly 1 percentage point above, particularly because the consumables business has been growing nicely towards the end of the year as customers and increasing number of customers has now reached the target inventory levels is still about reaching the target inventory levels, whereas at the same time, equipment business is still muted. More details later.

For LPS, we are slightly below previous year’s level. This is particularly because in China we still see a very soft market.

But also here, we have seen a nice positive momentum towards the end of last year. I think it’s worth noting that our profitability, whereas it’s slightly below the number for 2023, is on a very robust level.

And I think it’s fair to say that Sartorius has been navigating through the last 5 years with the – maybe the most robust and resilient profitability development. And of course, one contribution to that has been our efficiency program that we have been conducting during last year, which has compensated for lower capacity utilization.

Outlook for 2025, we remain being cautious in that regard. We expect the market to return back to growth, but yet below mid-term average rates.

And for Sartorius, we expect profitable moderate growth, but above the market growth. So – and with that, I hand over to Florian.

Thank you very much, Joachim, and also from my side, a very warm welcome to the group outside. Yes.

Let’s have a look at some financial key figures of that transition year 2024, starting with sales coming in at €3.4 billion on previous year level. And with that slight increase in constant currencies of 0.1%, we are also very well hitting the midpoint of our guidance.

Digging deeper into these roughly flat sales developments, we are seeing the expected picture of a consumable flat normalization. The recurring business, as you know, is the dominant part of the overall group.

And this recurring business is showing a mid single-digit growth figure while the non-recurring or equipment business developed weaker with negative double-digit growth in 2024. Order intake is double-digits ahead of prior year, looking at the 12 months.

And also here, the consumables order intake is stronger than equipments with improving dynamics over the year. On the equipment side, we are still seeing some reluctance to invest on the customer side.

But at least looking at order intake, order intake in H2, it’s above the order intake level that we’ve seen in H1 of 2024. The underlying EBITDA margin stays on a very robust level, as previously mentioned, with 28.0% and €945 million in absolute terms.

So we have picked the guidance midpoint, not only in sales, but also on the EBITDA margin. And looking at the margin, as you know, we have implemented a comprehensive efficiency program in 2024 that took above €100 million out of the P&L, compensating the dampening effects that we had of the lower capacity utilization and also the inventory reduction.

Let’s have a look at our regional performance, which shows a quite heterogeneous picture influenced by general market conditions and product mix. In both divisions, we see EMEA being the strongest performing region with an overall growth of 5.5%.

Looking at Americas, the performance has to be seen in connection with the fact that the American business is even more focused on life science and pharma than the European one, and this is also the reason why we are seeing more effect on the temporary industry trends here reflected in this region. But it also has to be noted that the recurring business was up in the Americas in both divisions in 2024 versus prior year.

With regards to Asia, the performance of plus 1.4% is very much still affected by China, where markets have heavily corrected in 2023, but since several quarters seem to have found their bottom. We see a lot of customer interaction going on in China and people are looking in the stimulus program.

But so far, we are not seeing too much of business materializing out of that yet, I have to say. Excluding China, the Asia sales performance would have been up mid single-digits.

And just to remind you, China currently accounts for approximately 8% of our overall sales. So you also see the portfolio still is quite balanced with 41% of sales in EMEA; 36% in America; and 23% in APAC.

Now coming to BPS, where order intake is up approximately 13% in constant currencies to €2.7 billion. And here, we saw a very good finish in Q4 with an order intake of over €850 million driven by consumables.

Overall, sales grew around 1% in constant currencies to €2.7 billion with the same kind of pattern described already for the group, meaning recurring business is doing good with plus mid single-digit growth in the whole year and also positive dynamics, while equipment business is shrinking and stays muted up to now. Besides positive recurring business, it is also worth mentioning that the ATS business showed above average growth in mid-teens arena.

Underlying EBITDA and corresponding margin is up 10 basis points versus prior year. And in 2024, we saw some margin pressure from some mix effects, but especially pressure from lower production volumes alongside with our inventory reduction program.

And we have successfully been working against these effects with the already mentioned efficiency programs that delivered the expected three-digit number. Coming then to LPS, where market environment stays challenging and where we have also to digest the much weaker China market and still also seeing across the board customers still somehow being reluctant to invest into instruments.

And in this environment, I think we can be satisfied with an order intake that came in plus 4% above prior year in constant currencies. And also worth mentioning that order intake was strong, particularly in Q4 in the lab essentials and bioanalytics areas.

So overall, Q4 order intake for LPS was up double-digit. Sales were down in the full year ‘24 by 3 percentage points in constant currencies against quite high comps, especially from China.

And if you exclude China, for LPS, the sales growth would have been flat even versus prior year. Especially, as already mentioned, the equipment business with bioanalytic instruments, were somehow weaker.

The broader lab essential business is over the year ‘24 doing better. And as you know, lab essential business is coming with lower margins than bioanalytic instruments.

So there is a negative mix effect. Also we have to digest the overall volume effect versus prior year and the output reduction to reduce inventories, were weighing on the margin.

So as a consequence, the underlying EBITDA is down to €158 million with a margin of 22.9% for the full year ‘24. Then if we move on.

As usual, we have added that page in the deck with some other financial key data that some of you use for modeling, some comments from my side to this. The extraordinaries are above prior year level on the back of the sizable efficiency program that we implemented in 2024 and especially the Q4 expenses are above prior year level.

But as you can imagine, these extraordinaries come in connection with the efficiency program and a lot of these Q4 expenses are non-cash items, so are contributing to the very good free cash flow that we have achieved, and I would come in a minute to that. The financial results in prior year, was heavily influenced by positive non-cash earn-out valuation effect.

And adjusted for this non-cash one-off in the prior year, the financial results is down only due to the increase in the average debt level versus prior year. Underlying net profit came in lower than prior year due to increased depreciation and higher level of financial expenditure as just explained.

And for me, for most line here, of course, is then looking at cash flow. As you know, we wanted to focus on cash flow, respectively, free cash flow performance in 2024 in order to reduce our leverage.

And here, I would say we have been quite successful with doubling our free cash flow versus prior year from €271 million to €550 million. And this is the result of our working capital initiatives, especially in inventory, but also a tighter CapEx management.

And looking at CapEx, of course, the prior year number is impacted by the Polyplus acquisition. But even adjusted for that, we have trimmed CapEx in the year 2024 down and the CapEx as a percentage of sales is accordingly also down from 16.5% in prior year to 12.1% in the year ‘24.

And therefore, also the key figure is fully in line with our guidance given in July ‘24. Then coming to balance sheet and deleveraging on the back of our clear commitment to an investment grade rating.

Non-current assets are slightly up to €8 billion. This is because of our CapEx program that still included several growth projects that we are adding to property, plant and equipment position in non-current assets, but also due to the stronger U.S.

dollar and therefore, foreign exchange effects, especially at year end. Equity ratio stands at 38.6% and the increase is mostly driven by the capital increase that we did in Q1 ‘24.

And the same reason is to be mentioned for the reduced net debt number to €3.746 billion. But please, besides the capital increase, let’s not forget the strong free cash flow as one driver that we have delivered.

These points then bring me to the leverage ratio, net debt to EBITDA, which stands at 4.0 at year end, meeting also in this KPI our guidance from July. And if you allow just to be clear that organic leveraging that we have done was not a onetime exercise of ‘24.

It will stay also a focus point of management in ‘25 and we want to further bring net debt to underlying EBITDA down of course, in the first place by increasing EBITDA, but also based on continued net working capital and CapEx management. For the broader outlook, I would like to hand over to Joachim Kreuzburg again.

Yes. Thanks, Florian.

So I already said at the beginning that we now see the fundamental growth drivers to become more visible again, more relevant again in a certain way as the fluctuations. The volatility is driven by temporary effects that you all are aware of are phasing out.

And I think that’s a very positive one, because I think we never stopped saying that the fundamental growth drivers in our industry are fully intact, very strong, very robust, and in a way, also very visible, because the different elements are very visible and based on publicly available data. So what you can see here on this chart is on the left hand side, that even in those years that I think we all would say, have been more on the challenging side, ‘23 and ‘24, there has been a record number of approvals for biologics.

And that also includes record numbers for cell and gene therapies. So, we really have a very healthy pipeline at our customers at the broad, yes biotech and biopharmaceutical industry.

And you also see that increasingly advanced therapies are playing a role within this industry. This all translates to attractive underlying growth rates.

You can see on the right hand side that the pharma market overall provides already a robust growth level. But then on top of that, we see that the biopharmaceutical market is growing significantly stronger as we always have said.

And as you know, since significantly more than a decade, as the share that biopharmaceutical products are half in the overall pharma market continues to expand as within the pipeline overall, biopharmaceutical product, biotech products are dominating. And therefore, the growth expectation for the biopharma market is approximately 10%.

And then there are certain pockets within that market of which we expect and others expect as well, even higher growth rates as biosimilars, for instance, but also then cell and gene therapy is an area of which you know we are focusing on, in particular, by our unique and very strong and differentiated product portfolio. And then another aspect, but still underlining how well we are positioned to benefit from these growth opportunities is single-use technology.

This is not a new topic for sure. Sartorius is focusing on that since, you can say, two decades or something like that.

But nevertheless, it still provides growth rates around 15% as it is the, yes, you can say, technology paradigm that enables our customers to develop new products faster and more efficiently and to manufacture such products in a more flexible and efficient way. So this is the set of underlying drivers.

And of course, even below that you could say there are drivers like demographics, etcetera, I think we don’t need to mention them here and also numerous diseases that still can’t be treated. But I think where there is good hope, reasonable hope why there will be an increasing number of drugs being available to treat such diseases I think you all are aware of that.

And the key message here is that now increasingly, these drivers, again, take over when it is about how the industry and also how the market for life science tool providers as we are is developing. So how does that translate into our outlook for the year 2025?

We expect profitable growth in both divisions. We expect to see larger contribution to that from our bioprocess solutions division.

When you maybe look into how we build this outlook, first of all, we expect the life science tools market to grow, but and I said that at the beginning, yet below its mid-term average. I think we expanded on the fact that we see the destocking to be very advanced now and an increasing number of customers have probably reached their target inventory levels now, but we also have talked about that some other segments like the more, our CapEx, yes, intense activities of customers, investments into systems, equipment, instruments, etcetera is still a bit muted.

So therefore, we expect the market to not being fully back to the average rates. And within this environment, we expect Sartorius to perform above market, but we still would describe that as a moderate profitable revenue growth that we want to achieve in 2025.

And when we say profitable growth, this means we expect being able to expand our underlying EBITDA margin to some extent. But of course, we would now translate that or describe this as a slight increase of our EBITDA margin based on a moderate revenue growth.

We just have talked about our further organic reduction of our debt leverage. I think I don’t need to add to that.

I think that’s very clear. And then – and I think we have talked to most of you during the last couple of months quite a bit that we then will issue a quantitative guidance alongside our Q1 results in April of this year.

For the mid-term targets, these are unchanged. So – and with that, I hand over to René.

Thank you, Joachim and hi, everybody. Welcome also from my side to today’s call.

Let me quickly walk you through the Sartorius Stedim Biotech preliminary 2024 results. It was very encouraging to see increasingly positive trend in the second half of the year and especially in the fourth quarter 2024.

Development in the consumables business was particularly positive as most biopharma customers are reaching their target inventory levels. Also, sales revenue from products for advanced therapies, continue to grow at an above average rate, while business at bioprocessing equipment remained muted.

We closed the 2024 with sales revenue of €2.78 billion, reflecting a slight growth of 0.6% in constant currencies, including a non-organic contribution of 2.4%. Order intake developed even better with – very much driven by consumables recovery increasing by a double-digit 12.9% in constant currencies.

Our underlying EBITDA was at €179 million with a margin of 28%, which was close to the prior year level. Regionally, we observed very vary dynamics.

In the EMEA region, sales revenue increased by 5.9%, driven by recurring business in the Americas sales revenue decreased by 6.7%, impacted by soft equipment demand. However, with quite positive Q4 development, the recurring business was slightly up in this region.

Asia-Pacific grew up by 4% despite the ongoing weakness in the China market. Net operating cash flow increased by 9.2% to €850 million.

Florian gave all the details to that chart already. So maybe just to highlight, we invested €340 million in our R&D and global production infrastructure with the CapEx ratio standing at 12.2% at the year end compared to 17.1% in the previous year.

Looking at the key financial indicators also quickly here, deleveraging progress is as expected, with net debt down to €2.191 million, resulting in net debt to underlying EBITDA ratio at 2.8%, as expected. And now finishing with the guidance very quickly for Sartorius Stedim Biotech Group, in line with what Joachim said, we expect continuous demand recovery in the life science market.

We aim to grow profitably above the market level with a moderate increase in sales revenue driven by recurring business with consumables and the underlying EBITDA should increase over proportionally compared to sales revenue. Our focus will remain and we will stay focused on the organic debt reduction.

With that, thank you and we are now happy to take your questions.

Hi, thanks for taking my questions. Two, please.

So you focused on the strong order development for consumables in Q4, I think you previously suggested double-digit growth at the 9 months for consumable orders. So how did those consumer orders develop in terms of year-on-year growth in the fourth quarter?

And do you think customer order patterns on consumables reflect any catch-up related to customers running their inventory levels too low? And then just quick second question, could you give us some help on market growth for ‘25?

You clearly highlighted lower than long-term market trends. But how are you thinking about the pace of recovery from the low single-digit decline, I think we’ve probably seen in 2024?

Thanks very much.

Yes. So book-to-bill for bioprocessing overall has been close to 1.2 for the fourth quarter and consumables above that figure.

But exactly as you pointed out already and as we always have said, let’s not over interpret a single quarter. We don’t have indications that customers have run down their inventory levels too far.

So we wouldn’t say that this now again like compensates for that and we see the next volatility in that regard. But order levels have been relatively low in the quarters before picking up only slightly in Q3.

So I think it always makes sense to look on those trends more in a cumulative way. And here, we can see that order growth year-on-year has been encouraging.

I think both Florian as well as René were talking about that for bioprocessing, respectively, SSB. And as both have pointed out, equipment business is muted.

The numbers that we show there translate into even a little bit higher numbers for the consumables business. So we would say we see now increasingly those repetitive, more predictable order pattern from customers that we are used to, not fully back to normal, as we I think pointed out, but we see this, yes, getting more and more substance.

And then on the growth rate for 2025, we intentionally stay qualitatively here and do not want to provide any quantitative assumptions at this point. As we said, we want to give a quantitative guidance and we will put that into relation to what we see, how the market is developing in April.

And then I think we also have the numbers for 2024 in total. As you said, maybe a low single-digit decline overall for the market in ‘24, but I think yet we don’t have all the data points available.

So I think that’s a discussion to have a little bit later this year.

Perfect. Thank you very much.

Hi, thank you very much for taking my questions. Two for me.

First, on just kind of typical seasonality of orders, I was just wondering if you could give us an idea of the typical seasonality that you would expect in customer orders before COVID? And as the industry return to a pre-COVID norm, what proportion of consumables would typically be ordered in 4Q to support customer manufacturing for the next year and if you could just confirm where the current orders are reflecting this new normal seasonality or not?

And then the second question for me, I am just curious to get an update from your ongoing and substantial expansion activities in South Korea and get an update on your plant there. Is this sort of on track for becoming operational in the ‘26 timeframe and how might that impact margins?

Thank you.

Yes, sure. So seasonality is honestly difficult to say, because we always have seen.

And of course, I think we can also say before and even including the high times of the pandemic, nobody was really bothering. But there was always some fluctuation, some volatility regarding order intake and it was not necessarily a clear pattern that, for example, Q4 was the strongest or so.

Maybe on average, it has been a little bit more on the stronger side. But the extent to which this has been the case was quite different year-on-year.

And even if we take the equipment out and just take a look on consumables, I would say it’s not such a clear pattern. And therefore, we always recommend it to rather look on full years because then there was typically a much more stable trend regarding order growth, sales revenue growth, etcetera.

So having said that, again, I think your question, at least, I would understand that very much is about, okay, how shall we – what should be the right evaluation of this quite healthy, quite strong fourth quarter. And our view is that it definitely has been a very good finish to 2024.

And it fully supports the view that we, I think, also have shared with the market that we are getting closer and closer to a normal market condition and we indeed see the more usual ordering behavior of customers as I tried to say before and that relates to consumables, because for equipment, you couldn’t say, well, it doesn’t make sense to say, oh, this is a usual ordering pattern. So we see this increasingly, but we definitely wouldn’t over-interpret and overemphasize Q4.

And that is also why we issue the guidance that we issued. I think it makes sense to take this as a very good start into ‘25, no doubt about that, but we remain a bit more on the cautious side going forward.

So in South Korea, we are on track. We are building our facility at what we would call the best spot in Songdo.

And Songdo is the new epicenter of monoclonal antibody manufacturing worldwide. So happy to build our capacities there.

We are in close contact, of course, to the relevant customers in South Korea and beyond and we expect to start qualification of that site during ‘26 and then let’s see when we will start to deliver products out of that side.

That’s great. Thank you so much.

Thank you very much. Two questions from me, please.

If I just look at full year ‘24 bioprocess order intake, up 12.7%, I think a discussion we’ve had a lot is that the time to delivery of customer orders has been reduced quite significantly because there is a lot of free capacity within your manufacturing system. So why would 12.7% order intake not translate to low double-digit sales growth in 2025 for the bioprocess business?

And then secondly, a much bigger picture question about the Trump administration and their potential focus on trade tariffs. Do you expect that bioprocess consumables would be included in any trade tariff discussions if they were to progress forward?

Have we got any historic context as to whether they were excluded in the past? But more importantly, what proportion of your U.S.

bioprocess demand do you currently manufacture in Puerto Rico and how much could you expand that if it became necessary?

So I’ll start with the first question. So, absolutely right, healthy growth in orders year-on-year.

We shouldn’t forget the level of orders in ‘23. And therefore, again, I think we should put it into perspective.

Again, I think, very solid base, how we are starting into ‘25 now. So I think we definitely confirm that.

At the same time, we definitely stick also to our cautious outlook. We would not recommend to speculate about double-digit growth rate at this point of the year.

And René?

Yes. So on the tariffs, that’s more speculations today, we don’t – we will not do that.

On Yauco, Puerto Rico, that’s one of our largest manufacturing sites in our network, where we have installed capacities for all major consumables product in the portfolio, meaning including casting lines for membranes, filters manufacturing, all different types as well as the single-use portfolio more or less complete. So I think we are well prepared with our network.

We always have been saying how important it is to build that network continuously, which we continue doing. We just talked about the Songdo in Asia.

So I think we are well prepared in case of need to increase the capacities in the U.S. market.

Thank you. René, could I just come back quickly with a follow-up.

So you currently have the ability to manufacture all of the components of your product portfolio. But is it fair to say you currently don’t satisfy the U.S.

fully from Puerto Rico?

Correct, correct. Yes, there is still capacity free, yes.

Thank you.

Good day and thank you for taking my questions. The first topic I wanted to push on a little bit more is the growth outlook for 2025.

So specifically, I was wondering if you would be willing to just clarify when you referenced better than industry growth. What is the growth rate that you are referring to?

And from a pacing standpoint, should we continue to assume a gradual sequentially improving, not inflecting growth rate as we think about pacing over the course of the year? And then the third part of the question would be building off of that, would you ultimately expect the 2025 exit rate to be within the range of your LRP?

Thank you.

Maybe I’ll try to answer the first question first. And then the second, I guess, we would like to ask you for repeating it, because it was a little bit difficult acoustically to understand that.

So I think what we are talking about here is a growth rate of the market for bioprocessing products in the upper single-digit percentage CAGR rate. And for lead products, it typically has been rather around – so I mean, for the type of portfolio that we have, 5%, 6% or so.

So that has been roughly the underlying market growth rates being relevant for Sartorius. And as we said, for now, we would expect ‘25 to grow a little bit below that.

And the second question, please, I could repeat that?

Absolutely. And sorry about that.

So my second question is, as we think about the cadence for the year, should we continue to assume a gradual basically better quarterly growth quarter by quarter as we progress through the year. And if that is the case, would you expect the 2025 exit rate from a top line growth standpoint to be within at least the low end of the range as we think about your long-term targets?

So do we expect gradual improvement and do we exit the year within your LRP?

Yes. So we would not like to give any guidance for H1 versus H2 at this point.

I guess we become more granular in that regard in April when we issue our quantitative guidance. So – and therefore, it’s a bit difficult for us to answer, therefore, also when this question about the implications for mid-term and how the growth will develop there.

And maybe that sounds a little bit like a surprise or so to you, but we shouldn’t forget that we typically don’t have such strong seasonality, as I said before. And it’s not the case that sales in H2 of a given year, is a good indicator for sales growth in H1 of the following year or so.

So therefore, let’s build this one by one. ‘25 more granularity in April and then let’s see whether we can already talk about the period thereafter.

But for now, we wouldn’t be able to guide for any seasonality in ‘25.

Okay. Thank you again for taking my questions.

Thanks for taking the questions. The first is around capacity utilization of your customers.

Clearly, we are approaching normalization on the consumable side. But if they are not buying equipment, presumably, they haven’t yet reached normalized capacity utilization.

So do you have any insights from speaking to them about how that’s trending at your customer sites? And then the second question, please, on margin in 2025, you have talked about margin expansion, but there are a number of puts and takes.

I think there is your efficiency savings that you’ve talked about and quantify it for ‘24. But that could annualize, there is presumably improving utilization given the destocking of inventories that you did in ‘24, has that finished and how much of a headwind was that?

And are there any other major drivers of margin that you could perhaps quantify that effective ‘24 that we should think about for ‘25? Thank you.

Thank you very much for the questions. I will take the first one about the capacity utilization at our customer side.

So, it’s a very mixed picture, I would say. It’s hard to say an average industry.

There are customers who clearly are very busy well utilized, investing in additional capacities. And on the other side, there are also customers, rather smaller ones, which still have quite a bit of unutilized capacities as well.

So, really a mix picture, I think overall trend is rather positive that we see even for those customers who sit on unutilized capacities, projects coming in, especially in the CDMO area. So, I think what we hear is the trend is positive.

The projects are coming in, which is very much in line with also the trend we see in our business, which we discussed today with the very positive recovery, especially in consumables equipment, investments in capacities kind of follows the same mixed picture in the customer base for those who are investing. Of course, they are active and we are very much involved in providing the equipment for those who are not, yes, that still, you can see in the pipeline and the funnel already coming activities preparing for that, the orders in revenue still to come.

Yes, Charles, and on your margin question, when we talked about the outlook of ‘25, we are also mentioning that we are assuming that we will see a stronger development in sales in the consumables or recurring side of the business versus the equipment or non-recurring side of the business, which tells you that on the one hand side, we are expecting here a positive margin effect from mix as the recurring business normally comes with a higher margin than the non-recurring business. So, this is one component of the margin expansion.

And the second component clearly is our operational leverage. We have invested a lot in ‘24 to right size and right structure, so to say, the platform, making it ready for then a more normalized growth coming along in the upcoming years.

And therefore, the expectation is that clearly, operational leverage should be the contributing factor besides mix to the margin expansion we are foreseeing for ‘25.

Thank you very much. Is it still possible to quantify the headwind that you faced in 2024 from the utilization of your – given the destocking?

We are not giving that number, sorry.

Okay. Thank you.

Thank you, guys. Thank you for taking my question.

I have two questions. The first one, could you identify potential drivers of upside and downside to the 2025 qualitative guidance that you provided for sales?

And the second one, while still speculative, could U.S. driven trade disruptions, be an opportunity for Sartorius in terms of upside share gain similar to what supply chain disruptions in the pandemic were an opportunity for share gains?

How much upside could this do? Thank you.

Thank you very much for these two questions. So, up and downside, yes well, I think the variables are largely on the – on that side in how far new projects at customers really materialize, let’s say, a, in general and b, on the timeline.

This is always a variable that is, yes, pretty much out of our control and out of the control of our peers. We believe that the destocking shouldn’t be much of a variable now.

It’s an interesting factor, but shouldn’t be – the remainder of that is an interest factor, but it should be a source of significant volatility as far as we see it. But timing of approvals, timing of investments at customers, timing of starting manufacturing campaigns, etcetera, this is pretty much the variable, which you can say can go into both upside and downside.

And then on the lab business, of course, we do have a bit the variable of the biotech funding environment, which is different – a couple of elements that can be public budgets, but of course also in how far venture funding in the U.S. is continuing to pick up.

It has been picking up already a little bit, but not very much yet. So, this is a potential maybe upside.

But of course, also if there is a significant uncertainty in theory, it could be also a downside. And in China, I think we spoke about that we base our expectation here on a couple of assumptions.

Not too optimistic ones, we believe for China, but yet, of course, this is also a certain or it’s an uncertainty. Currently, we believe that we didn’t factor in two optimistic assumptions.

But nevertheless, this would be also an uncertainty to be mentioned here, I believe. And maybe with a little bit of more influence for LPS, I think we spoke about that China plays a large role for the LPS division and for the Bioprocessing division, so therefore, I mentioned it here.

And then as an interesting aspect that you asked for the potential, yes, the opportunities that may be in stricter and more challenging tariff environments being triggered by the new U.S. administration.

It’s – and I think René said that when answering the other question a couple of minutes before, it’s a bit, of course a speculation here. But I would agree that one couldn’t exclude that because we are well positioned.

We are not very much negatively exposed. But of course, we – I would say, our positioning is very comparable to the one of our main competitors, even though these main competitors are U.S.

based, but they also have manufacturing sites out of the U.S. and some intra-group logistics there.

So therefore, we would say it’s – for me, it looks more like a level playing field and not so much of carrier where I would expect too much of an influence.

Very helpful. Thank you so much.

Great. Thanks for taking my questions.

I have got two, please. So, firstly, on the geographic outlook, so in BPS, Americas saw a decline of 6% of revenues.

That was flat to growing in Q4. How much of the fourth quarter order intake was from the Americas region?

Just wondering if there is a significant order intake in Q4 reflected a step-up or a catch-up in orders in the Americas, where there is potential for additional order book upside in BPS once the Americas recovery is up and running? That’s the first one.

And the second one is, can you comment on market share dynamics across the key subcategories. In the guidance, it implies you are expecting to gain some market share by going ahead of the market.

But is this market share gains, or is this just a mix impact given you may be slightly more exposed to cell and gene therapies, for example? And also during COVID, particularly in filtration, you gained market share and then gave it back over the past few years.

So, into 2025, what gives you confidence that the share dynamics have normalized and in which areas could you expect to gain share given the guidance? Thank you.

Thanks for the question. Regarding the first question on dynamics on order intake in Q4 on a regional perspective, what I can tell you, to give you a rough feeling, is that the general pattern that we have seen with Europe and Asia Pacific, ex China, leading somehow the development and Americas being lagging a little is also the case for Q4.

And the market shares, a couple of words for me. Look, we have I think well, a strong good track record on growing above the market, above market segment over the years.

What makes us optimistic is the wins we continue to see currently and also last year. Last year, we have seen very nice wins and conversions, especially in the area of consumables.

So, I think we are well prepared with the portfolio with the organization, the sales team being well trained and aggressive with strong technical support to continue on that market share gains.

Thank you.

Hi. Thank you.

Thanks for taking my questions. I have two, please.

First on order intake and the BPS [ph] in the 40% sequential increase, can you impart this, please, for us? Is there any large order impacting that?

And can you expand a bit on the type of customers? And as it’s driven by primarily consumables, is there any price in that growth?

Can you please quantify it? On the order book as well, I think I remember in Q3, you mentioned that there was still a tale of COVID order in the order book, is it still the case?

And back to my question on year [ph], could you confirm the average lead time, please? Thank you.

I will take the first question on the sequential order intake growth in the fourth quarter for BPS. Look, I think there is no one-off really there.

I mentioned some – a couple of new business wins we have seen, which came in, in Q4. We have seen kind of across the board continued recovery from the destocking recovery kind of more customers, broader, but also across the portfolio, additional products kicking in.

So, that contributes, which is kind of again, showing and confirming that this trend is going on and well going on, but no significant relevant one-offs.

Yes. Maybe order book, I guess it was also mainly related to SSB or BPS, but nevertheless, I can take that as well.

So, the portion of, yes, like COVID related, you said I believe orders in our book is of course, very small now. Maybe let me redefine that any way a bit.

COVID related, I guess that is what you meant, orders that have been placed during COVID, but they were meant to build up stock levels at our customers. And as I have said, customers have been quite advanced now in regards to reducing their stock levels back to the target level.

And therefore, our order book doesn’t include much of that any longer. And then average lead time, absolutely right.

It has been a big topic during the pandemic, and lead times have been partially very long. We were performing quite well in that.

And that situation, lead times have come down substantially across the different players in the industry. And we now see lead times have started to get a little bit longer again, but yes, but not to any extreme extent also.

But just the normal course of business, it always fluctuates a little bit with the demand dynamics.

Okay. Thank you very much.

Just a quick follow-up, if I may. Could you confirm on the FY ‘25 revenue guidance, there is no contribution from M&A?

Yes. Confirmed.

Thank you.

Good afternoon and thanks very much for taking my question. So, it’s about order intake in consumables and the respective sales recognition.

So, you commented in the past the lead time from order to delivery has come down. So, also the order pattern has changed towards more frequent smaller orders.

With improving order intake, eventually, you get more data points about this relation and also the breadth of your visibility should improve. So, can you describe the dynamics, or at least give us an indication which portion of your orders are fulfilled, say, almost immediately and which share of orders may take weeks, months or even quarters to be fulfilled.

Thank you.

Yes, sure. So, maybe this is – it’s a relevant aspect of our business in general.

And therefore, let me answer this question maybe also along those lines. So, for our consumables business, and that is where we – as we, I think explained quite a bit here today, that is where we see the demand dynamics and therefore, also the order dynamics.

Here, we are talking about partially products that are made to stock that are available within a rather short period of time. Here, we are talking about sometimes a couple of days or maybe really only a few weeks.

And then those that are needs to order. And here, we are talking about maybe eight weeks, for instance, something around that, depending of course, on the product and such factors.

Lead times that are beyond that, like a quarter or something, we have in the equipment business, particularly when we are talking about non-standard somehow customized equipment. So, a bench top bioreactor, for instance, would be typically a standard type of instrument/system.

And here, we would talk maybe about 8 weeks, 12 weeks or something. But when it is a customized, maybe more complex system where some engineering is involved at the beginning, then we partially talked about two quarters.

It can be even longer if we are talking really about larger, more complex systems. So, again, consumables is on the shorter end typically.

However, that made one thing, some customers because you said, well, back to smaller orders, yes, but not necessarily completely across the board. Some customers place orders, say, for the next three quarters just to say something, yes.

So, it may – sometimes we get orders where the customer expects the fulfillment to happen only within the, let’s say, next nine months. And so there is not necessarily the translation of every order that we received today into sales in the next 10 weeks or so.

Okay. Great.

Just a very quick follow-up, so in particular, on the last few sentences you mentioned. So, is this still a relevant size for you, or is this really that you say, okay, well, bulk is pretty short-term service for orders, which are negotiated in advance.

Okay. So, it’s pretty much as it always has been.

It also depends partially on customer preferences. Some customers tend to place larger orders for the next few quarters, others never do that.

So, it’s pretty much a normal ratio now, I would say.

Can you describe that ratio?

No, we don’t give a quantitative number for that, sorry.

No…

Thank you for your understanding.

Hi guys. Thanks for taking my question.

So, I just wanted to clarify two short things. One is just on the split between the ordering dynamics.

Could you confirm that between pharma, biotech and CDMOs, this is similar? And then secondly, just as a follow-up, just is there still positive pricing expected in 2025?

Yes. So, there is no shift in pattern regarding originators and CDMOs wouldn’t talk about any particular pattern here.

Of course, we do see different ordering activity of different customers, but that very much depends on, yes, the business level, the order intake level that these customers have and not so much on the question of whether they are originators or CDMOs. And for ‘25 price – adjustment price increases very – on a very normal level as in other usual and average years, so low-single digits.

Excellent. Thank you.

Yes. Hi.

Thanks for taking my questions. And first one, Florian, I think in your prepared remarks, you talked about bioanalytics sort of somehow being lower.

It sounds like that was perhaps a surprise. Just wondering if you can give some dynamics what was going on there just given the profitability of that segment.

And then my second question is just on your market definition, not quantitative guidance for the year, which I know is coming at Q1. Previously, you presented data that the pharma market growth is 6%, biologic share is 2% and biosimilars is 2% to get this biopharma market growth of 10%.

So, just wondering how we should interpret the 3% to 6% pharma market growth, which you presented, I think on Slide 10, to get to this 10% biopharma market growth. And you mentioned bioprocessing growth is high-single digit, which is less than biopharma, or is the biopharma market actually growing more like 7% to 10%?

Thank you.

Okay. There were a lot of questions, James.

So, let me start clarifying on bioanalytic instruments and lab essentials. So, we are in first stage.

We are not giving any concrete numbers on profitability of the segments. The only thing that we are stating is, that of course, the Bioway [ph] instruments have a higher margin versus the broader lab essential portfolio.

So – and within that, what we also have been saying in terms of the dynamics is that on back of the overall still reluctant customer behavior, we are still – we are seeing that the BioA instrument part of the LPS business is harder hit by the current market phase that we are seeing.

Yes. Maybe in addition to that, our BioA business has developed very, very nicely over the last couple of years.

And we have seen a very positive adoption of our main products here, which are – is the intra side, the lifestyle imaging system and then the protein analytical system, Octet. And I think it’s fair to say that you find them in pretty much any biotech research labs globally and particularly in the U.S.

as this is the hotbed of life science research. Of course, sales ratios have been or sales has been very high for those products.

And from that very high level, though, in a more challenging funding environment, ‘24 was a bit of a challenge and difficult year. And that is why we made that comment earlier, that mix because it’s perfectly strong in regards to gross margins, mix was a little bit dilutive in LPS in comparison to the very strong year ‘23.

And the same is top line, particularly in the U.S. So, comps is very important here I think to add.

And then on market definition and dynamics, so of course, the slide that we were sharing with you is not the ultimately exhaustive description and analysis of all market segments and its growth rates, etcetera, etcetera, so bear with us. I wanted to also highlight a couple of key dimensions here.

And it is meant in the following way that the pharma market, it’s not the market for pharma tools or biotech tools. But the pharma market as such as a market of medical drugs that are being sold to patients ultimately should grow around 3% to 6% over the next couple of years.

And then as you can see that within this market, and of course, you could also sort this a little bit different. We see different dynamics.

One is a biopharma as a sub-segment of pharma overall, but again, the same kind of dimension, so like end market should grow around 10%. And then there are different parts of this biopharma market again, which are biosimilars and cell and gene therapy is growing faster than the entire biopharma market, okay.

So, that is how we define that. And then a different dimension to this is single use, which we expect to grow around 15%.

And this is a technology that is particularly being used in the biopharma market. partially also in classical pharma but mostly in biopharma, and that means including biosimilar CGT, but also monoclonal antibodies as a more classical biopharmaceutical market.

And then the other piece of information that is included here is lab equipment and consumables. And that, of course, we could have sort it also elsewhere, because this is again, across the different parts of the pharma market, it’s mostly addressing research, partially also quality control for both pharma and biopharma, and the type of equipment that we are having and where maybe also most innovation is happening across the board is addressing more the biopharmaceutical market because here, pharma parameters are being analyzed and observed, etcetera.

So – and therefore, one can say that this lab equipment and consumables market should grow roughly 5% and that would be a tools market. So, therefore, one could sort that also differently.

But through this, you pretty much have all the numbers that I think are relevant to assess what is the – what are the driving forces for the markets that we are addressing, which is lab equipment and consumables through our LPS division. And then we are addressing those that are developing and manufacturing biopharma products through our bioprocessing division.

I hope that helps.

Thanks very much.

Yes. Thank you very much for taking my question.

Just a quick one on the mix of equipment versus consumables, just if you could give us a picture for Q4 and for the full year of what that mix looks like? And then when we think about this mix going forward, I think historically, Sartorius was a bit more retail equipment than peers.

Do you expect this to have held back to the situation, or do you think that long-term, the mix of consumables is going to remain higher than it was in the past?

Yes. On the Sartorius Stedim Biotech level, you could say 75% consumables, 25% equipment.

And by the way, this is our average number. It’s not the most recent number.

We are more heading towards higher recurring revenue portions. And so therefore, maybe at some point, we will have reached something around 80-20, so that ballpark.

But again, we are giving ballpark numbers here. It’s not a KPI that we intend to report on a quarterly basis, but that’s roughly the proportion.

And it’s also worth mentioning that most of the equipment that we are selling, if not all, to some extent, is linked to consumables sales. So, it’s not necessarily the case that one would say, well, equipment sales is lumpy, less profitable, it’s not so much fun, it’s partially a very relevant anchor and door opener within our portfolio.

So, that is, I think how one should look at it.

Thank you.

Thank you. Two quick follow-ups, please.

And firstly, could you confirm that the sequential order intake was up in Q4 for both consumables and equipment? And then my second question, could you confirm that you didn’t notice a more significant pull-forward of orders in Q4, meaning that customers ordered a bit – pulled their orders forward essentially for 2025.

Thank you.

Yes. Maybe first on the sequential order intake view in Q4, where I can confirm that recurring as well as non-recurring business was up sequentially double digit.

So – and that is a very good bridge to answering the second part of your question, and that is let’s, again, not over into pre-single quarters for different reasons that are partially speculative because – and I fully understand that question. Don’t get me wrong.

You said, oh, might have been pull-forward effects, well, yes, but there might have been also push-out effects from the quarters before. So – and that is why we never would encourage to over-interpret in this case, Q4, but not necessarily because we would say, yes, there has been massive pull-forward.

But we – as I said that earlier during our call here, we were waiting for order activity to pick up and it was pushed out also by customers, so you could also make the point that maybe some of the quarters that we have seen in Q4 in other times would have placed a little bit earlier already, yes. So, both might have played a certain role.

But bottom line, I would come back to our point of view, which is really a good quarter, really good starting point into ‘25. But let’s stay cautious and see how things develop during the next couple of months, and then we will talk about the quantitative guidance for full year ‘25 in April.

Thank you.

So, thanks everyone for your interest in Sartorius. Thank you for all your questions.

Thank you for your understanding that we have to limit the number of questions a bit to being able to finish this call after roughly 75 minutes. It was a pleasure, as always, looking forward to talk to you again in this format in the mid of April.

But I am sure there will be a lot of interaction in different formats, on different channels before that. Take care, all the best, talk soon.

Bye-bye.