Ladies and gentlemen, welcome to the Sartorius and Sartorius Stedim Biotech Conference Call and Live Webcast on H1 2026. I'm Chorus Call operator.

The conference is being recorded. At this time, it's my pleasure to hand over to Petra Mulle, Head of Investor Relations of Sartorius.

Please go ahead.

Thank you, and hello and warm welcome from my side. So today, I'm joined by our CEO, Michael Grosse, by Florian Funck, our CFO; by Rene Faber, Head of our bioprocessing division and CEO of Sartorius Stedim Biotech and also by Alexandra Gatzemeyer, Head of our Lab Products and Services division.

As always, we will start with prepared remarks followed by the Q&A session. The call is scheduled to last 1 hour.

As usual, please limit your questions to 1 so that as many of you as possible can take part. In case we have some time at the end, we are, of course, happy to take on follow-on questions.

I'd like to point out that management comments during this call will include forward-looking statements that involve risks and uncertainties. For a discussion of risk factors, I encourage you to review the safe harbor statement contained in today's press release and the presentation.

And with that, I'm pleased to hand over to our CEO, Michael Grosse. Michael, please go ahead.

.

Thank you, Petra. And a very warm welcome from my side as well.

When I look back at the first half year, I'd say has been an encouraging 6 months for Sartorius, during which we continued our profitable growth trajectory. We delivered solid top line growth.

We've improved profitability and we've generated strong cash flow. Before turning to H1 business performance, let me share one personal observation.

Over the past few months, I've spent a lot of time meeting customers around the world, and what struck me was the incredible level of innovation, investment activity and optimism right across the industry. I talked to CEOs, COOs and procurement executives across all regions.

My key takeaway is that the demand for high-performance single-use products, reagents and technology to substantially improve productivity and total cost of ownership is bigger than ever before. Leveraging AI to drive a step change in speed of drug discovery and in productivity or bioprocessing is becoming a must.

Those conversations have reinforced my confidence that this is an exciting time for our industry and that the long-term growth drivers for our markets remain very strong. Our technologies play a critical role enabling customers to develop and manufacture the next generation of biologics from biosimilars and increasingly sophisticated antibody processes to antidrug conjugates as well as cell and gene therapies.

Also, AI-driven solutions can help further accelerate workflows especially in the laboratory environment, and it's truly encouraging to see how open our customers are to this. I know these are exactly the areas where we are exceptionally well positioned with the right portfolio and the right strategy to capture those opportunities and deliver profitable growth and sustainable shareholder value.

Okay. Now let's move on to the H1 performance.

Group sales revenues on operational basis increased by 7.7% in H1, supported by healthy underlying demand across both divisions. The curing business stays the main driver showing an increase of slightly more than 9%, while the equipment business was going around 2%.

This clearly demonstrates that the underlying momentum of the business is indeed intact. Bioprocessing Solutions, we delivered 8.3% growth on an operational basis in constant currencies, with consumables continuing to be the primary driver.

Importantly, equipment stabilized and even returned to slight growth in H1. That's an important milestone because it reinforces our view that the bottom is behind us.

I'm particularly pleased with the performance in the lab products and services. The momentum continued to build following the return to growth in the second half of last year.

Sales increased by 5.3% on an operational basis in constant currencies, supported by value improving end markets and the contribution of 2.8 percentage points from the MATTEK acquisition last year. Let's have a quick look at profitability.

On group level, higher volumes and operating leverage translated into improved profitability. The underlying EBITDA margin on group level grew 30.3% and Florian will go into details a bit later on.

Let me briefly talk about the recent developments related to the U.S. tariffs.

before the end of Q2, we received a substantial portion of the reimbursements for previously paid U.S. tariffs that have been declared not in line with existing law in February of this year.

While we applied for those refunds, the timing and ultimate outcome has remained uncertain. As we work with our customers in the sense of partnership, we intend to compensate customers for tariff surcharges.

Well, that's all good news. But as you can imagine, it does have an effect on reported revenue growth.

However, and this is the really important point, it does not change the underlying economics of our business. Operationally, our business continues to perform well and is absolutely in line with our expectations from the beginning of this year.

Now let's move on. Beyond growth and profitability, we also made good progress on the financial priorities we laid out in the beginning of the year.

Cash flow development was particularly strong with free cash flow being significantly up. Our leverage ratio to further underscore our commitment to financial discipline and a strong balance sheet.

Let me spend a minute on what we are currently seeing in our end markets because this is probably one of the questions we got asked mostly quickly. Overall, I'm really encouraged by what we are seeing.

Several areas where demand was muted over the last 2 years have either stabilized or are now recovering. This is visible in the Equipment business, which has stabilized and where the order book supports the credible path to slight growth throughout the remainder of this year.

It's also evident in China, where the recovery in bioprocessing continued into the second quarter, and where we are also increasingly seeing signs of a turnaround in laboratory instrument demand, supported by ongoing R&D activity. More broadly, Biotech funding remains supportive and is increasingly translating into customer spending.

While uncertainty in Academia has eased and business activity continues to hold up well. Basing on this, let me now turn to our outlook.

Based on the current business development and the improved visibility, we confirm our guidance, which also reflects the tariff-related impacts, which I tried to describe shortly. We expect group sales revenue to grow by 5% to 9% and underlying EBITDA margin to be slightly above 30% at group level.

Now let me share a few thoughts on innovation. I'm pleased with the progress we've made on our organic growth initiatives, including new product launches.

One development I'm particularly excited about is the progress we are making with Bionic. We reached an important milestone with the launch of the 2 Pionic Modules Quad & Cross enabling customers to run now a fully integrated continuous downstream process.

Customer adoption continues to expand into clinical and commercial CGMP manufacturing, system supporting a growing range of modalities, including antibody drug conjugates, following a recent customer wins across all major regions. Custom interest remains very strong and demand continues to exceed our initial expectations.

Another launch was the new vessel of our high-throughput Ambr 250 biorector platform, which generates structured, high-quality process data for increasingly digital and cell therapy development workflow. This further strengthened Ambr position as the industry standard platform for process development, including next-generation therapeutic modalities.

In the lab division, we launched Cubis III, the latest generation of our premium laboratory balance platform. The new system combines best-in-class weighing performance with enhanced connectivity and digital compliance capabilities supporting increasingly automated and data-driven laboratory workflows.

And last but not least, Incucyte, which remains a strong success story with growing adoption of our AI image analysis tool across academic and pharmaceutical customers, including 3 new top 10 pharma customers this year. Recently, research at Lion University in the Netherlands with our Incucyte further highlighted the potential AI-driven analysis improved drug safety testing.

Now what have these example all in common? They all show our clear focus on helping customers simplify workflows, generate better data and operate more efficiently.

This is exactly the total renovation we highlighted at our Capital Markets Day and a key pillar of our long-term growth strategy. With that, I will turn the call over to Florian.

Financial highlights. Please, Florian.

Thank you, Michael, and a warm welcome also from my side. Over the next couple of minutes, I'm going to take you through the numbers in detail.

And of course, tariff-related effects, even in form of surcharges or customer compensation will play an important role in that. However, putting all the tariff impacts aside, I think there are just 3 points I'd like you to take away from today.

First, the underlying sales development is well on track. In H1, we see healthy consumables growth and the equipment business is gaining traction as expected.

Second, our quality of earnings is improving. The underlying EBITDA margin is showing the expected improvement and negative extraordinary effects are heavily reduced by more than 60% versus prior year.

And third, our cash performance continues to be very strong. Net operating cash flow increased by more than 25% and free cash flow even by 70% in H1.

Okay. So let's start with top line performance at group level.

And this is where the U.S. tariff impact is most visible, not only the regular tariffs we are paying and passing on to our U.S.

customers, but also and especially the refunds we have received just some days before the end of Q2. As Michael explained, because of the Supreme Court ruling against the U.S.

tariff region put in place last year at liberation day, we received refunds from the U.S. Treasury.

We recognized the intended customer compensation for tariff surcharges of EUR 26 million in short-term financial liabilities as of June 30. Revenue for H1 as well as cost of sales were reduced by the same amount.

As a result, these customer compensations had a dampening effect on sales growth in constant currencies of 1.5 percentage points in H1 and almost 3 percentage points in Q2. You will see later on that our guidance is crafted in a way that allows you to distinguish underlying operational growth from the tariff-related effects.

In the first 6 months of 2026, group sales revenue increased by 7.7% on an operational basis in constant currencies. Including the tariff refund related impact, sales revenue increased by 6.2% in constant currencies and by 2.5% on a reported basis.

This positive operational development was again driven by a strong consumables performance of above 9%. Furthermore, and as anticipated, the equipment business stabilized and delivered operational growth on group level of around 2%.

In Bioprocess Solutions, operational sales growth amounted to 8.3% in constant currencies. Including the tariff effects, growth was 6.7% in constant currencies, and 2.8% on a reported basis.

Let me provide some additional color for the BPS recurring business. First, we delivered slightly more than 9% consumables operational growth in H1, broadly in line with our expectations at the start of the year, following the very strong recovery in 2025.

Second, looking beyond quarterly fluctuations, our consumables business continues to demonstrate a highly attractive growth profile. Since 2019, consumables revenue continues to grow at a double-digit CAGR, well above market.

And third, growth in the recurring business was influenced by some volatility in advanced modalities caused by delayed orders from 2 customers and project timing effects. But the important thing is underlying demand trends in our core consumables franchise remained very strong across customer groups and geographies growing at a double-digit rate.

This being said, please note that the consumable sales volume in H1 '26 exceeds the peak sales level we saw during the pandemic, and this is a pretty remarkable effect in my perspective. At the same time, operational equipment revenue delivered the expected stabilization in BPS and even returned to slight growth year-on-year, providing further evidence on the market recovery progressing.

Okay. So let's turn to the sales performance of the Lab Products & Services Division.

Operational sales revenue increased by 5.3% in constant currency. Considering the tariff refund related effects, FX adjusted growth reached 4.3% in the first 6 months and 0.9% on a reported basis, reaching EUR 335 million.

MATTEK contributed 2.8 percentage points to this performance. The growth was primarily driven by the recurring business, which grew on an operational basis by slightly more than 9%.

While Instruments business grew slightly, supported by positive momentum in our bioanalytics portfolio. Now let's talk about our regional performance.

Overall, H1 '26 saw a broad-based positive development with all regions contributing to growth. Starting with EMEA.

Sales increased by 7.2% in constant currencies driven primarily by Bioprocess Solutions and let products and services returning to slight growth. In the Americas, which was affected by customer compensation for tariff surcharges, Sales increased by 5.6% on an operational basis with both divisions contributing.

Taking customer compensation for tariff surcharges into account, sales increased by 1.2% in constant currencies and declined by 4.8% on a nominal basis. As I already explained, we see volatility in advanced modalities with delayed customer orders and project timing effects weighing on H1 performance, especially in the Americas.

Asia Pacific delivered a really strong performance with sales increasing by 12.1% in constant currencies. Growth in APAC was supported by both divisions and benefited also from the continued recovery in China, particularly in consumables.

We are also seeing improving demand for laboratory instruments linked to ongoing R&D activity in the region. While comparables become more demanding in the second half, we remain confident that Asia Pacific will continue to deliver a very robust performance for the full year.

Let me now turn to profitability. I think this needs a bit more explanation given the offsetting tariff dynamics in H1.

Group underlying EBITDA increased by 3.9% to EUR 548 million with a corresponding margin improving by 50 basis points to 30.3%. Positive volume and economies of scale effects more than offset the adverse impact of an unfavorable product mix as well as the negative margin effects from future growth initiatives in LPS.

Please note the U.S. tariffs had only a negligible effect on the margin in H1 as we recorded 2 offsetting technical effects.

On the one hand, we have a negative dilution effect on the margin by U.S. tariff surcharges, and on the other hand, we have a technical uplift in margin due to the negative sales revenue impact by the recorded customer compensation for tariff surcharges.

As said, the net effect of both tariff-related effects on H1 margin is negligible. And therefore, the margin increase is shown here in reported figures are also mirroring the operational margin progress we have made in H1.

Overall, we are pleased with the operational margin expansion in the first half. Similar developments as on group level are also recognized on a divisional level.

In Bioprocess Solutions, underlying EBITDA increased to EUR 477 million, while the corresponding margin improved by 70 basis points year-on-year to 32.3%, primarily driven by higher volumes and operating leverage. Net effects from tariff surcharges and customer compensations also had a negligible effect on the H1 margin here.

And therefore, the 70 basis points is also to be regarded the operational improvement in margin. Same applies in Lab Products & Services, where underlying EBITDA amounted to EUR 71 million while the corresponding margin was 21.2%.

As we've already discussed over the course of the year, we are investing in future growth areas, particularly within bioanalytics and advanced research solutions, which weighs on margin development and they're already taking into account in our full year expectations for 2026. So let's move on to have a look at performance below the underlying EBITDA and both earnings and cash generation developed well in the first 6 months.

Underlying net profit increased by 2% to EUR 172 million, primarily reflecting the improvement in operating profit discussed earlier with some dampening effects from slightly higher depreciation and interest expenses as very cheap financing was running out in H2 '25. Underlying EPS increased accordingly to EUR 2.49 per ordinary share and EUR 2.50 per preference share.

Reported net profit increased strongly by almost 51% to EUR 122 million. This was largely due to extraordinary items falling by more than 60% year-over-year.

Turning to cash flow. Operating cash flow increased substantially to EUR 364 million, up almost 26% year-on-year.

This development was supported by higher EBITDA, lower tax payments and the refund of U.S. tariffs, more than offsetting the growth-related increase in working capital.

And as a result, free cash flow increased by more than 70% to EUR 208 million. The CapEx ratio was at 8.9%.

This is slightly below the prior year level, whereas in absolute terms, CapEx was on par with the prior year period at EUR 161 million. And I think this reflects our continued disciplined approach and investments while remaining fully consistent with our plans to future growth supporting.

We continue to expect a full year CapEx ratio of around 12.5% of sales driven especially by scheduled payments to be made in H2 for our project, which is fully in time and scope and budget. To wrap up the financials, let me briefly turn to our balance sheet.

We maintained a strong balance sheet with an equity ratio increasing to 41.6% at the end of June, up from 39.8% at the end of 2025. Net debt amounted to EUR 3.76 billion at the end of the first half.

Despite continued investment activity, the acquisition of the outstanding minority interest in CellGenix for EUR 72 million and the dividend payment of approximately EUR 70 million during the period. We remain firmly focused on disciplined capital allocation and deleveraging.

Our bond issuance in May was significantly oversubscribed and allowed us to further optimize our financial profile. As a result, the leverage ratio defined as net debt to underlying EBITDA improved to 3.5x from 3.55x at the year-end 2025.

This confirms that we are making steady progress on our deleveraging path. Taken together, these developments underline our commitment to financial discipline and to maintaining a solid investment-grade rating.

And with that, I'll hand back to Michael.

Thank you Florian, very clear. Now let's have a look at our guidance.

Based on the performance in H1 and the continued positive development of the relevant end markets, we confirm our guidance for the full year. While we have increased visibility of our operational business, there are still factors of uncertainty, especially related to the U.S.

tariffs. Let's get the topics out of the way first.

We have applied for the refunds for i.e. EPA tariffs of EUR 40 million to compensate customers for tariff surcharges they paid so far and have received EUR 26 million of this in H1.

So around EUR 40 million are still outstanding. However, the exact amount, the timing or if any of this will be granted at all, remains uncertain.

But the more important message is the underlying business performance remains unaffected by these effects and continues to develop positively in line with our initial expectations. Customer demand, business momentum and profitability are unchanged.

Growth in H2 should continue to be supported by our recurring business as well as by the continued stabilization and recovery in equipment and instruments. However, please note that the first that -- please note that first, the contribution from MATTEK will roll off from July onwards.

Second, while tariff surcharges report to supportive growth in H1, lower tariff rates are expected to turn this effect into a headwind in H2, largely offsetting the benefits in earlier in the year. While a like-for-like comparison for our underlying performance with initial guidance framework, we are introducing an operational view that excludes customer tariff conversation.

Potential further changes in U.S. tariffs after July 24, so tomorrow are likewise not included.

On this operational basis, we continue to feel comfortable broadly around the midpoint of our guidance range for group BPS, and we expect LPS to be in the upper half. Including customer tariff compensation, we expect reported growth in constant currencies to trend within the lower half of the respective guidance ranges for the group and BPS and brought the around midpoint for LPS.

Reflect both views and the tariff uncertainties, we keep our guidance range as is. The Sartorius Group, we continue to expect constant currency sales revenue growth of around 5% to 9%, with MATTEK contributing 30 basis points to group growth.

For Bioprocess Solutions, we continue to expect growth of 6% to 10%. And for lab products and services, grew 6%.

Thereof, roughly 1.5 percentage points comes from the MATTEK acquisition, which closed in July 2025. Based on this, we also confirm our profitability outlook and continue to forecast an underlying EBITDA margin of slightly above 30% for the group, but by 32% for Bioprocess Solutions and slightly below 21% for lab products and services.

We also continue to expect our CapEx ratio to remain approximately at the prior year level and net debt to underlying EBITDA to be slightly above 3x at year-end. Foreign exchange headwinds should be approximately 2 percentage points on the reported revenue growth for the full year.

And please note that besides the headwind in full year, we are expecting a tailwind in Q3 and Q4 to be slightly below 50 basis points each. Overall, our message is straightforward.

Our underlying business continues to be strong. Consumables remain strong, recovery in equipment is progressing as expected and improved visibility reinforces our confidence in the full year outlook.

With that, now I would like to hand over to Rene, who will walk you through the financials of Sartorius Stedim Biotech in more detail. Rene, please?

Yes. Thank you very much, Michael, and good morning, good afternoon, everyone.

Let me start by saying that I'm very pleased with our performance in H1. is unfolding largely as we expected, and we continue to see encouraging developments across many parts of our business.

Underlying demand for biologics remains robust. This continues to drive healthy consumables growth, particularly in monoclonal antibody manufacturing where our core product categories delivered double-digit growth on top of an already very strong prior year comparison.

We are also seeing encouraging signs in newer modalities. Activity in the earlier stages of the pipeline continues to improve while the later stages, some projects, timing effects, particularly in the U.S., temporarily weighed on recurring revenue growth during H1.

Let me emphasize again. This does not change our positive view of the underlying market development.

Equipment is developing very much in line with our expectations. After last year's decline, the business has stabilized and returned to growth.

We continue to see good momentum in process development where our customers remain focused on improving productivity and accelerating time lines. I'm particularly pleased and encouraged by the traction we are seeing with Bionic, our intensified downstream platform.

More broadly, customers continue to look for technologies that enable more efficient and flexible manufacturing and our portfolio is very well positioned to support these needs. Overall, I believe the first half demonstrate both the resilience of our business and the strength of the underlying market.

We are seeing healthy customer activity, solid execution across the organization and continued progress in the areas that matter most for our long-term growth. So let's now turn to our financials.

Starting with the top line. As Michael and Florian explained earlier, tariff-related customer compensation created a temporary headwind to reported sales growth in H1, but it had no impact on the underlying development of our business.

On an operational basis, sales revenue increased by 8% compared with H1 2025. If we include the impact from tariff-related customer compensation, sales revenue grew by 6.4% in constant currencies and by 2.5% as reported, reaching EUR 1.53 billion.

Our operational recurring business increased slightly more than 9% in H1. Let me remind you what Florian said some minutes ago.

First, this is in line with our expectations from the start of the year. Second, looking beyond quarterly fluctuations, our recurring business has grown at a double-digit, well above CAGR since 2019.

Third, we have seen some volatility in vast modalities caused by delay orders due to project timing effects with 2 major customers. So let me tell you what I see in the cell and gene therapy space.

I see healthy activity levels with new molecules entering development pipelines, new companies being funded and increasing number of late-stage programs advancing. Volatility is inherent given this is a young, premature small market, where success or failure of individual programs can have a material influence.

Let me be very clear here. We remain highly constructive and enthusiastic about the market's long-term potential.

Now let's turn to profitability. Underlying EBITDA improved strongly.

In absolute terms, underlying EBITDA increased to EUR 417 million, and the underlying EBITDA margin improved by 40 basis points to 31.4%. Margin expansion was primarily driven by higher volumes and resulting operating leverage.

I think this demonstrates the scalability of our business model. Also, margin development was influenced by offsetting technical effects related to U.S.

tariffs, which had a broadly neutral impact. Furthermore, please keep in mind that we had to increase the brand name fees charged from Sartorius AG to SSB S.A since Q1 '26 by 25 basis points as a result from German tax audits concluded early this year.

Looking at the regional performance. All regions contributed positively to business development in the first half.

EMEA increased by 7.7% in constant currencies. The Americas on an operational basis expanded by 5.4% in constant currencies, accounting for impact of the tariff-related compensation to customers, constant currency growth was 0.8% year-over-year.

Florian highlighted before for Sartorius AG. The same holds true for Sartorius Stedim.

The Americas was the region affected by customer compensation for tariff surcharges as well as by delayed customers' orders in advanced therapy space, which weighed on H1 performance. Asia Pacific was very strong with growth of 12.5% in constant currencies, supported the continued recovery in China and ongoing strength in consumables.

While comparables become more demanding in the second half, we remain confident that Asia Pacific will continue to deliver a very robust performance for the full year. Let's move to net profit and cash flow.

Both showed solid growth over the first half of the year. Underlying net profit increased by 3% to EUR 235 million, reflecting the improved operating profit we discussed earlier.

Underlying EPS increased accordingly to EUR 2.42. Reported net profit increased strongly by almost 18% to EUR 181 million.

This development was supported by lower extraordinary items compared with the prior year period. Turning to cash flow.

Operating cash flow increased significantly to EUR 341 million, up more than 39% year-on-year. The increase was driven by higher EBITDA, lower tax payments and the refund of U.S.

tariff-related surcharges more than offsetting the gross related increase in the working capital. As a result, free cash flow increased substantially to EUR 199 million almost doubling compared to the prior year period.

The CapEx ratio was 9.3%, slightly below the prior year level and are fully in line with our disciplined investment approach to support future growth. We continue to expect a full year CapEx ratio at around the previous year level of slightly above 13%.

A quick look at our balance sheet metrics. At the end of H1, we continue to show a very strong equity ratio of 53.6%, and reflecting our solid capital structure.

Compared with the year-end, the increase was primarily driven by the strong earnings performance, more than offsetting the dividend payments in H1. Net debt increased modestly during the second quarter, reflecting annual dividend payment as well as the acquisition of the outstanding minority interest in for EUR 72 million.

Nevertheless, our deleveraging trajectory remains firmly intact. As a result of net debt to underlying EBITDA ratio improved further to 2.36x and compared to 2.38x at year-end 2025, keeping us firmly on track to achieve our year-end targets.

Overall, these developments underline the strong balance sheet position of Sartorius Stedim Biotech and provide a solid foundation to support future growth while maintaining financial flexibility and financial discipline. So before we move to Q&A, let me comment on our 2026 outlook for Sartorius Stedim Biotech.

We are confirming our full year 2026 guidance based on the business performance in H1 and continued positive development of our end markets. As Michael explained, we have increased visibility in our operational business, but there are still some factors of uncertainty, especially related to the U.S.

tariffs. We have applied for refunds for tariffs of EUR 35 million to compensate customers for tariff surcharges, they paid so far.

And have received EUR 22 million of this in H1. So around EUR 13 million are still outstanding.

However, the exact amount and timing of, if any, of that will be granted at all remain uncertain. Let me emphasize that the underlying business performance continues to develop positively, in line with our expectation and is not affected by these tariff-related impacts.

The recurring business remains the primary growth driver while the continued stabilization in recovery of the equipment business is also supported for growth in H2. However, please bear in mind that tariffs surcharges supported growth in H1.

Lower tariff rates are expected to turn this effect into the headwind in H2, largely offsetting the benefit seen earlier in the year. Despite a like-for-like comparison with the guidance issued beginning of the year, we also introduced an operational view for Sartorius Stedim Biotech, which does not incorporate any potential further changes in U.S.

tariffs after July 24, 2026. On this operational basis, we continue to feel comfortable, broadly around the midpoint of our guidance range.

Reflecting on the effect from customer tariff compensation, we, at this point in time, expect growth in constant currencies to trend within the lower half of the respective guidance range. We keep our guidance range as it is to reflect bold views and the tariff uncertainty and continue to expect constant currency sales revenue growth of around 6% to 10%.

Based on this, we also confirm our profitability outlook and continue to forecast an underlying EBITDA margin of slightly above 31%. We also continue to expect our CapEx ratio to maintain approximately at the prior year level and net debt to underlying EBITDA to be slightly above 2x at year-end.

FX headwind should be approximately 2 percentage points on reported revenue growth for the full year. Please note that besides the headwind in full year, we are expecting a tailwind in Q3 and Q4 to be slightly below 50 basis points each.

So putting all this together, strong underlying business continues strong consumables business, equipment recovering as expected. Based on improved visibility, we are confident in our full year outlook.

With this, I will hand over to the operator for again, over the Q&A session.

One question, please. Based on the underlying performance of BPS in the first half and your guidance, it seems we should anticipate a similar underlying performance in the second half.

Given this backdrop and the developing order book and customer discussions, I wanted to ask how your confidence level in the 9% to 12% growth outlook for BPS in the coming years is developing? .

Thank you for that question. So maybe let me start with what we see as the underlying trends in the bar processing and the momentum in the market.

We see ongoing solid -- really solid growth of demand for commercial drugs driving consumables growth, we see healthy pipeline growth and approval rates. We start to see recovery in advanced modalities, better biotech funding.

So all that think as we mentioned in the call, all that supports really our double-digit growth of consumables. So looking at the 2026 H1, first, we delivered slightly more than 9% consumables, operational growth.

Looking beyond the fluctuations, we are on the double-digit growth trajectory. Looking at the full year expectation, Consumables, we continue to see the double-digit growth on top of strong previous year level.

What is diluting is a couple of late-stage advanced therapies customers with timing effect. So looking full year and with lead times for consumables being 1 to 3 months range, scenarios possible around high single-digit, low double-digit range for recurring revenues for year

Can I just ask a clarification question on Q2. Did the operational growth in Q2 include the tariff surcharge tailwinds?

And if so, how much was that, please? But my general question, sorry for squeezing a clarification one in there, can you give us some color on those delayed programs, please, the rough scale of the headwind whether this will be a headwind in H2 as well and your confidence in those orders coming back.

Thank you. .

So let me take the first part of the question regarding the tariffs. So yes, the operational view is including the general surcharge as a fact of current business life.

The positive effect of these surcharges on group growth was 40 basis points.

Okay. Rene, you will take the second half of the question?

Happy to take the second part, yes, thank you for the question. So maybe starting with the overall advanced therapy market, as I was describing that.

First of all, early pipeline, positive recovery we see in the market, we have seen these 2 customers, key customers in their late stage projects, delaying those, which is impacting slightly our overall recurring revenue growth in H1 and will have an impact on the full year as well, taking that out. Nice double-digit growth continues.

So overall, we remain very confident and encouraged about the overall market, long-term driver for our business. And yes, obviously, we'll see how that unfolds going forward.

So you're confident that, that will come back next year, assuming clinical results are good. .

Yes, we are in close of course, close contact with the customers following how the timing evolves. Yes, so we are thinking, yes, it's orders expecting coming end of the year.

So revenues will most likely be seen in 2027. Some of that may be already this year.

So yes, we are confident. .

In your prepared remarks, you acknowledged that there was a delay in revenue and you elaborated a little bit, but a big player, Danaher, indicated they had a But you attributed it to advanced modalities and they attributed it to monoclonal antibody customer. Do you believe this is a related window, there are different modalities altogether.

We are trying to get at the scope of

I'm sorry, you have been breaking off technically. Could you repeat the question, please?

she is off. So we take the next question.

Is this better now? .

Yes, let's try.

Perfect. So in your prepared remarks, you acknowledged there was a delay in revenue in advanced modalities, but there was a big player, Danaher, who indicated they had a similar issue with 2 customers this week, but that was monoclonal antibody.

Do you believe these issues are related even though there are different modalities we're trying to get to the scope of this issue?

No. Well, I mean, very clearly, we don't see that Subbu.

Again, we look at our basically classical protein-based portfolio. We don't see that implication at that point in time at all.

And then the comment really was isolated, as Rene said, to the 2 customers in the space of advanced therapy. So they're not related.

Perfect. So then what gives you the confidence that this is still coming back?

Why couldn't this be a permanent delay?

That's our view talking to customers, understanding what's happening on the time line. It's more -- very much the project timing on their side in the late-stage phases with the drugs.

So it's so far, nothing about stopping the programs is more timing delay and as I said, expect that coming back end of the year, beginning next year.

I've got somewhat of a follow-up on the first question from Richard. So -- what metrics would you point to?

Did that help to support your confidence that you're seeing strong underlying demand within BPS consumables. But again, that underscore your confidence in double-digit growth continuing that trend that you mentioned since 2019.

Is there anything across different customer types, so pharma, biotech, CDMOs, cost modalities as you sort of highlighted, with hospitalities and monoclonal antibodies. I know you don't give details anymore, but anything you can say in terms of the development of the order book here would also would be helpful.

I can take that, James. Just -- I mean, first of all, again, I think we see that broad level of growth supported by large CDMO and large biopharma customers in basically all late-stage or commercial production, therefore, the visibility and the outlook as well for the continuation of the journey on the basic classical protein-based therapies and some advanced therapies is there and is visible, and that's the reason why we strongly believe in the continuation of that of the journey.

The specific aspect that Rene has already highlighted on the new modalities is a question of delay, and I pointed out in that way. So yes, the visibility, therefore, is there I think what is there -- a bit more the question about how far and what is the , let's say, uncertainty that we have in is more on the Q4 perspective, Here, indeed, it's still the question and that's what we still have as well the guidance range because other than in the capital equipment, where we have clear visibility for the full year in a way, it's more about the timing and realization of revenues.

Here, it is indeed just a question of how Q4 will pan out in terms of consumable.

Could you please share some additional detail on why bioprocessing product groups within equipment and consumables have been relatively weaker in terms of mix, basically wage product groups have been weaker and which stronger to result in that persistent mix headwind you're seeing in both Q1 and Q2. .

Odysseas, thank you for that question. Regarding the mix effect, it is not a classical mix effect like recurring versus nonrecurring because we are seeing that the recurring business remains strong.

It is rather a mix effect within the different product categories recurring and non-recurring. So as you know, there are, of course, consumables that are more profitable than others.

And for example, the topic of the delayed projects in ATS, which come with very high margins is one driver to that negative mix effect that we were talking about.

Charlie Haywood with Bank of America. It's again back on the competitor commentary, it seemed the delays for a few customers in a specific product, the sort of 2 parts here.

to the extent you're able to quantify your exposure to chromatography resins or I guess, purification cells as a percent of BPS. And then secondly, I guess the main unknown here is that this could spread to more customers or to more products.

So have you seen any changes, I guess, in the last couple of months or delays customers based on conversations you'have had, I guess, outside of the ADS you've mentioned? Or anything specific in commercial downstream manufacturing that gives any change in confidence in the drivers there for the rest of the year?

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Yes. Thank you very much for that question.

Our view is that looks like customer-based volatility in the market. We see that, as we described for 2 key customers in advanced modalities that happens.

Other than that, we don't really see any trending here either across product groups or customer groups SP1.

You have been clear that we should assume the midpoint of your EPS guidance for the full year. In terms of the phasing between Q3 and Q4, is it fair to assume that growth should be balanced between the 2 quarters at around that midpoint?

Or are there any specific phasing effects that we should consider when modeling the second half?

Yes, Falko, happy to take that question. And as you know, we are not in generally providing any quarterly guidance here.

I think when we are talking about phasing effects, it's mainly on the technical side, things that we have to take into account. So for example, the effects around MATTEK that will roll off as a supporting factor.

Also, we have been talking about the tariff surcharges, which have been a tailwind in H1, but which is turning into a headwind into H2, at least as long as tariffs stay on the currently communicated level. But on an operational level, currently, we have no reasons to comment on specific developments in Q3 or Q4 '26.

I was trying to get a bit of color on the push and pulls for next year. mean early, the starting point would be your midterm guide, which calls for 9% to 12% growth.

But arguably, there's a kind of triple or 3 support factors. One, the tariff refunds provided kind of a lowered comp you have also a very low comp on the kind of equipment book.

And then thirdly, even these delays may probably support next year. So the question is really, is there any reason to assume not the high end of this 9% to 12% guidance for next year.

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Yes. No, I mean, thank you.

As you know, we will talk about the year 2027 at the right point in time. And that's not now.

So in this regard, we don't want to speculate on some of the clear uncertainties that are still there on the tariff regime and everything. So therefore, you don't -- we have our midterm guidance, we talk about this year right now, and we will talk about 2027 in due time.

But is there any kind of risk factor that you see at this stage? .

I mean if we take -- from an operational perspective, we don't see risk factor from an uncertainty level in the world and whatever happens, we don't know.

Your underlying EPS growth accelerated to 8.4% in Q2 from 8.1% in Q1 despite the delays at the 2 advanced modality customers. All your commentary indicates end markets are improving, and you still expect equipment growth in H2.

So can I just ask why is the guidance for the midpoint of the 6% to 10% range in BPS? And why does this decelerate?

Is it simply an even larger impact from these 2 customers in the second half? And then sort of related to that, what are the swing factors that could drive you higher or lower within the range?

I have to chip in, once again, the technical effect, Harry, which is on the tariff. And as you know, we have that kind of tailwind in H1, also reflected in the numbers that you were referring to for Q1 and Q2, and this turns into a headwind in H2.

So this is just the technical effects that we have to take into account.

And the number was 40 basis points you said.

That's what I said on Q2, right? And we are expecting if the tariffs stay on the current level, that they will even out over the year versus prior year.

So there will be no growth impact from the tariff side in a scenario where tariffs stay on the 10% level.

Charles Pitman-King from Barclays. I actually just have a question on the tariff dynamics and the strategy that Sartorius has taken.

So just can you confirm when the potential for the tariff unwind became part of the Sartorius strategy given it kind of call a few people off hand off guard and today? And then just more broadly, why does it appear surprises alone in announcing these dynamics in Q2?

And given you are being so transparent, can you confirm whether or not this decision to reverse the payment is helping you differentiate versus peers when you're building your customer relationships? .

Yes. Thanks, Charles.

I can take that. I mean, first of all, really, I have to say we were caught by surprise.

So again, I think as many of our peers in the industry have applied for the refunding when this was publicized. We did indeed as well.

And again, we were very uncertain about the outcome of that application. And therefore, as well, I mean it was really rather to the tail end of June when we receive that payment and we then on that basis to do and reflect that in our accounting.

So in this respect, it was not neither part of our guidance strategy because it was not clear this at all when we did the guidance nor it was clear whether it would happen into which degree. So this is really the situation.

That's why we are now dealing with that implication. We are, therefore, as well make that division into the guidance on an operational basis and the tariff refund compensation part of it.

To your second part of the question, we really think that it's our understanding of the way of how we want to operate and we see at our customers in a true partnership. We have been transparent about this.

We -- they paid the surcharges. And for us, it's really a momentum of trust and partnership that we as well now we'll find the right way of compensating them for these statements.

James from Jefferies. Perhaps I can ask around the acceleration we've seen in APAC, BPS constant currency growth, it looks like it was a 16%, 16.5% in 2Q versus around 10.5%.

I mean you mentioned China, but can you give some color on South Korea and if you're seeing any customer stocking there? And maybe if I can just sneak in a follow-up just on gross margins.

I think some expectation this year would see some improvement from the gross margin impact last year, writing off specialized consumable inventories, which I think had around a 200 basis point impact. So are you seeing any benefit of that in the first half.

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Yes, I will take the first part of the question on the APAC, particularly China, you asked about that. So first of all, yes, we're very pleased to see the momentum in APAC, strong growth, expect that continues in H2 moving forward.

China continued recovery also in the Q2, consumables key growth driver there. Now stocking, we have seen some pockets of that, not really meaningful for us.

So overall, I think it's a healthy growth in the region. .

Can I just clarify -- sorry, just to clarify that. So we start seeing some items stocking.

Is that China? I guess the question was South Korea?

Or is this just a more regional commentary on a bit of stocking?

More pockets of different customers than concentrated in any region.

James. And on your gross margin question, so we have been talking also at Capital Markets Day about that there were burdening effects coming from the higher inventory.

And as this is usually a fact -- these things are washing out over time, not in a single quarter, but rather over a couple of quarters, if not years. But specifically looking at gross margin and comparing to prior year, I would like to point to the fact that we had a negative margin impact in the year '26, driven by FX effects, and that they have been compensating positive FX hedging effects that were not visible in gross margin, but below gross margin.

So that there is an overall net zero effect visible on the underlying EBITDA margin, but a negative effect visible in the H1 margin.

Ladies and gentlemen, as we are already over time, we have, unfortunately, only time for 3 more questions. The next question will come from Oliver Metzger from ODDO BHF.

It's about equipment. First, at the Q1 print, you said that you expect a H2 growth above H1 growth.

Do you reiterate that? And would you confirm that we see now consumable growth pretty strong for a while.

And technically, every month improves visibility also on your order book, that the conversion of equipment growth rates towards consumable growth is ongoing? Or do you see any pushbacks which might lead to some verification of growth rates for a longer time?

Thanks, Oliver. First part of the question is really related to the growth in the equipment perspective.

Again, just to clarify what we said and what we see. I said that we would be at least flat across the year and starting with Q1 with H1, we now reconfirm that indeed, we've seen that slight growth of 2%, around 2% that we highlighted.

And then we said not necessarily in growth rate, but we said we talked more about the absolute levels in the second half of the year versus the first half of the year. And that indeed is the fact.

So overall, therefore, we are comfortable with the guidance of the growth. As we said earlier, and as well live up as well to the expectation that second half of the year will be above first half of the year.

Second part was around -- can you just repeat the -- again, your point on the consumable

Okay. I wanted to make it short.

So structurally, consumables and equipment should grow over the cycle at pretty similar rates. And we see now for a while that the consumable demand is very healthy, ongoing partially already in the double-digit territory.

So but equipment is still lagging. And so the delta between equipment sales and consumer sales has widened more and more.

And when do you see more of the inflection point that the growth rates convert closer to each other?

us to do something with the increasing utilization right that's related to the kind of what you are describing. And you are right, we see that continued growth of consumables, which are linked to equipment installed base.

So approaching the points, and we see these orders coming also where customers need to add additional equipment to increase capacities. We are in our communication rather now saying we want to see these orders in to then give you more color and outlook on the equipment there.

My question is just on bioprocessing in Americas. Even if we exclude the tariff refund impact, H1 was around mid-single digits on easier growth comp in H1 last year, softest region for the first half, and H2 is facing tougher comps.

So just if you could help us some on the growth trajectory of the BPS business in North America? And related to that, just if you could tell us if you're seeing anything in terms of orders related to the rig entering in the U.S.?

I think looking generally at the Americas performance in BPS, we were talking not only about the refund topic, but also about the ATS topic. And if -- just to give you a little bit more feeling, if we are adjusting for the ATS topic, we will see healthy growth rates in North America even slightly above the European one.

So underlying business is doing well.

And are you seeing anything on orders for -- related to ensuring -- or is it still too early?

Yes. Again, I think on the reshoring discussion, we see that there's -- we see translation now of the talks from last year more into types of projects on the brownfield side.

So there's reality and realism in this. Again, when we see the related lead times and the time of ordering for our type of , with the lead times that we have we see that the majority of those orders will be rather relevant for us probably in 2027, second half and then realization then of sales of those orders to materialize in 2028 and beyond.

Quick follow-up. It was just on Iran.

I think you quantified the risk at EUR 10 million for 2026 in Q1, Florian. Just wondering if you have seen that come through or whether there's been any change in that estimate, please?

Yes, Charles, no change to that. Number is still valid.

Ladies and gentlemen, this was the last question. I would now like to turn the conference back over to Michael Grosse any closing remarks.

Thank you very much for your time and looking forward to hear you and see you all latest in the next quarter. All the best, and good luck.

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