STRATEC Aktie

And welcome, everyone, to our Q1 2026 financial results conference call. With me, as usual, are Marcus Wolfinger, CEO of STRATEC; as well as our CFO, Tanja Bucherl. As usual, following the presentation, we will have our question-and-answer session. Be aware that this conference is being webcast live, and you can download the presentation either from the webcast or from our website. And last but not least, please allow me to draw your attention to our safe harbor statement, which we have on Page 2 of that presentation. And with this, it's now my pleasure to hand over to Marcus.

Good morning, good afternoon, ladies and gentlemen. Welcome to our Q1 disclosure call. Let me briefly walk you through the quarter in a glance or at a glance. First of all, we had a soft start into the year. I hope we managed to not surprise you with that. We have mentioned that in a variety or during a variety of occasions. However, definitely worth discussing what happened here. First of all, we think this compares to strong comps in 2025 on the other hand side, we had a solid instrument business on the other side.

And that was like we actually saw that like for more than 3 months now that the start in the year is going to be soft as far as revenues with development activities as well as particularly our service parts and consumables business, which tends to become more and more back-end loaded over the year. The reason is that -- and actually, we are trying to work against that over the last 4, 5 years, and we were trying to pull things into the early months of the year. However, the observation is that over the past 3, 4 years, it could actually way worse.

And even this year, it gets worse "of worse" than it used to be the case in 2025 and 2024. We see that there are end-of-year budgets that our customers are actually planning for end-of-year business. On the positive side, we can disclose that we managed to put more customers away from a forecasting system giving us concrete orders, which makes the second half of the year and particularly the fourth quarter more plannable, which means that we have already initiated logistical and manufacturing measures in order to cover that.

And again, transparency is fairly high. This is no longer a phase where forecast can be materially changed or actual orders taken out of the system. Again, worth mentioning that the thing we have already guided for is starting to show traction is that our instrumentation business is getting better and better. We had a strong growth in the first quarter. Unfortunately, the product mix is not working for us at this moment in time. But again, if we are looking into the actual allocation of resources of the relevant products for the remainder of the year, in terms of margin, not just the product mix, but even the actual participation of the relevant revenue groups within this forecast and within that guidance given is showing good traction and is positively supporting the margin development over the year.

I mentioned that we had that negative scale effect, obviously. I think that's quite common. We see that there is a minimum threshold when the company can operate with scalability. We went south of that threshold in the first quarter. However, we see the momentum coming back. On the other side, and that's the swapover effect of the accounts receivable from 2025 and particularly the very strong December is that the cash flow dynamic improved significantly and again, as we see this year, fairly back-end loaded, we are expecting similar effects this year.

Let me briefly talk you through this phase where we see a lot of transition happening between development projects and serial production. We have given detailed information actually first time over the past 10 years about when will those products hit the market and what are the -- what is the mechanics to be applied in terms of how steep is the ramp-up going to be? Is there a kind of normalized ramp-up with assay menu development happening in parallel through our customers or if the products are concrete drop-in replacement. I think we have nicely shown that there is a lineup of products which are coming in the next couple of quarters into series manufacturing and the relevant role in terms of that particular -- the 2 most actual products are direct drop-in replacements with market extension, which will lead to that forecasted growth.

We confirmed our financial guidance for 2026 this morning. And obviously, in a time where the entire industry had a fairly soft start into the year. We obviously got even more cautious and have performed several reviews over the last weeks and actually days, went again through a solid bottom-up planning. So about likelihood is it and how solid is our guidance. We went through that and with the relevant diligence, we confirmed our guidance this year. However, it is going to be fairly back-end loaded. Q2 should slightly pick up, but Q4 will definitely be the strongest quarter in 2026. With that, for details, I would like to hand over to Tanja.

Thanks, Marcus. Also a warm welcome from my side. So as Marcus has mentioned, overall, Q1 2026 was a quarter that was largely in line with our expectations. So we had already indicated that 2026 will be a significantly second half year loaded year, and this is actually precisely the trend that we are seeing in our current business. The trends in revenue and profitability are also mirroring the market that we are seeing in the last weeks. When we look at the financial figures at a glance, we first see the expected decline in revenue and earnings compared to last year's quarter 1.

The revenue stood at EUR 53.4 million, means below prior year figures and both the adjusted EBITDA and the adjusted EBIT also declined. The main drivers behind this development are the already mentioned timing shift to the second half of the year and the unfavorable product mix, especially when we compare to the strong prior year quarter, the baseline is actually quite challenging. A very positive trend that we have actually already mentioned in our 2025 call 2 weeks ago is the cash development.

So the free cash flow has improved significantly to EUR 18.6 million due to the back-end loaded December 2025. So let's have a closer look into the EBIT. So this slide shows you, again, the reconciliation to adjusted earnings. This rather is very important from a transparency perspective because, as you know, the IFRS figures reflect PPA amortization and other nonoperating onetime items. So we see on the adjusted EBIT, EUR 700,000 positive, where PPA amortization and other nonoperating effects are deducted. This effect is actually similarly visible in the consolidated net income that you see on the right side of this page.

For our internal operational management and for our comparison across the period, we therefore continue to focus on these adjusted metrics. In our view, this best reflects the current business situation and the comparison and deviation analysis. So what is causing the drop in the adjusted EBIT? As mentioned, the main drivers are the volume mix effect. Therefore, I would like to go to the next slide where we have a deeper look into the sales figures. In terms of revenue, we see the decline of 8.8% at a constant currency rate and 11.5% on a nominal base in the first quarter.

And this trend is mainly driven by 2 factors. The first one is the decline in our high-margin service parts and consumables business. Here, we faced again, as we saw it already in Q4 last year, this temporary working capital optimization measures at our customers. Nevertheless, we see a stabilization in the second half of the year or we could call it more a coming back to the run rate of the first half year 2025 in that business segment area. The second main driver is a difficult, let's call it that way, year-over-year comparison in the Development and Service segment, which gives us a hit.

Nevertheless, despite these 2 factors, we see an ongoing positive trend in the systems. Here, we continue to see the double-digit growth, which is particularly important to us because this confirms that the overall demand remains stable in our business and that we are well positioned in the market with our system. And at the end, with that trend, we are securing our future service and parts and consumables business. All in all, as I mentioned, the revenue trend is a reflection of the expected annual top line development. And this year, it's helping us also to deal with that strong second half year in a much better way.

Coming now to the adjusted EBIT for the first quarter. As mentioned before, it stands at EUR 700,000, corresponding to a margin of 1.3%. And this, for sure, represents a significant decline compared to the prior year. Out of these lower revenues that I explained to you, especially with the high-margin service parts and consumables, we faced the lower capacity utilization, negative scaling effects and the smaller share, especially on the service parts consumables, but also on the development and services.

As we have informed you in our annual call 2025, we are actively working on our cost base and structure. Therefore, let's move to the cash flow and the balance sheet development. Again, the very positive effect in here is the cash flow performance. So the operating cash flow stood at EUR 21.5 million, resulting in a free cash flow of EUR 18.6 million. This represents a significant improvement over the same quarter last year. The key driver is the reduction in our accounts receivable balance that has built up by the end of 2025 due to the very back-end loaded, especially December loaded business development.

But you see it also reflected in the working capital on the right side of that chart. The trade receivables have declined. At the same time, the inventories and liabilities remained stable overall. We also see an improvement on the balance sheet side. So the net financial debt has decreased compared to the prior year and at the end of last year. And this is what you're seeing also in the leverage. Leverage means the ratio of the net debt to the EBITDA LTM stands at 3.1x. While at last year, at the end of 2025, we stood at 3.3x.

What you also see on that chart is our capital expenditure ratio, which stands at 5.4% of revenue. So it's slightly below the planned range, but also in line with our expectations. And I would call it more an aligned phasing into the upcoming quarters. So all in all, the message here is very clear. Despite the weaker earnings quarter, our cash generating is developing positively. And with that, we are strengthening actually our financial flexibility. And with that positive note, I would like to hand over back to Marcus.

Thanks, Tanja. We have given guidance, which is expected to be top line growth in a medium to high single-digit percentage range on a constant currency basis. Again, I mentioned a couple of times, very H2 heavy. On the EBIT side, we have guided to be at the level with 2025, which was at a 10% level. And for the investments intangible and intangible assets, combined, we expect it to be between 6.5% and 8.5%. And please allow me to say we are certainly deeply looking into our earnings improvement program still ongoing with high cost discipline, et cetera, and actually looking into the relevant sources of income, looking into price increases, et cetera, all that's still ongoing.

And definitely on the investment side, we work on the -- if in doubt, then on the side of cautiousness principle, which we did over the past couple -- of the past years and clearly showed how resilient we stayed during that time when like our peers took some hits. Again, I think the message I would like to give you here is that we were trying to assess how robust that guidance is over the past couple of weeks, particularly over the last week, and we managed to talk to a number of our customers, and we're trying to find out how robust they saw the orders given and the forecast placed.

In particular, this clearer order pattern versus forecast supports a more balanced H2 manufacturing, which means even if some revenues will be back-end loaded, I think from a manufacturing perspective, this may come out way better than it used to be the case in 2024 and 2025. Long term, we have given guidance to grow 6% to 8% in the period between 2025 as a basis year to 2028 with several assumptions. The assumptions were that the new product ramps up phase into the main revenue driver. We see this already. We see our customer confirming their market launches.

Then to the contrary of the past, we -- the past in terms of the last 3, 4 years, we are now only expecting a slight recovery of molecular systems for the demand post-pandemic disruptions. And if you are following the announcement of our customers, you probably saw that actually some customers are already showing nice traction here with MDX systems placed in the market. And then certainly, the -- doesn't have to be under expected is the initial revenue contribution from early-stage products like not only development revenues, but actually instrument sales for pre-series and pilots, which are typically coming at a higher price point.

Then from 2028, particularly when those products, which will be launched in the next quarters are becoming more mature, and we are going through that learning curve in manufacturing where volumes are showing nice scalability effects, we expect a further margin expansion through 2030 based on the growing installed base, as Tanja mentioned before, and as a derivative of that, the dynamics growth getting back to like not just pricing contribution, but even volume contribution for service parts and consumables.

The margin targets for the same period between -- by 2028 to get to at least 13% margin and by 2030 to get back to the pre-COVID level of 15%. Allow me to remind you that during COVID, certainly with the product mix, which was very favorable for us that we got to a 19%, 20% EBIT margin after that very much driven by negative scaling effects coming in parallel to higher input costs and the lacking ability to increase or put price increase on the input side forward to our customers that led to the margin pressure. We are maneuvering out of that our contractual structures as well as the product mix foreseen for the time between now and 2030 are actually supporting this EBIT margin development. With that, I would like to hand back to Moritz, who will explain us how to commence with the Q&A session.

[Operator Instructions] And the first question comes from Oliver Reinberg from Kepler Cheuvreux.

Three questions from my side, if I may. Marcus, you talked about the order forecasting system has been adjusted. Can you just provide some more clarity? So does it mean now all orders for Q4 already firm? Or can you provide any kind of color what percentage of your full year sales guidance is already backed by any kind of firm orders?

Secondly, just to get a feeling for the phasing, how should we think about Q2? Do you basically plan to at least move towards positive sales growth? Any color here would be appreciated. And then thirdly, just on this overall pressure from clients to produce more locally. Where do you stand on this? What can you contribute? And I think as part of that in the past, there was also M&A discussions. If there's any update would be great.

Yes. Thanks, Oliver. Let me start with your third question. At this moment in time, we are actually very cautiously trying to cover the Chinese markets, particularly as far as our customers do have exposure in China with local final assembly and final testing with certain materials to be sourced in China. We have plans to do something similar for a, let me call it, maintenance part in the United States, which at this moment in time, has a nice balance of complexity, sales volume and tariffing in the United States. We are very cautious about that.

I think it's worth mentioning that particularly in the consumable space, some of our contracts actually foresee that as soon as we are building a second or third liner that these liners would have to be localized. I think the discussion in instrument is slightly behind that as everyone sees that splitting up already and don't get me wrong in saying that low volumes, you see we are manufacturing in the hundreds, not in the thousands or 10,000 that splitting up that volume immediately comes along with a price tag.

At this moment in time, our customers see that the relevant end markets are not prepared to cover that. But certainly, the pressure is increasing more and more, particularly as we see that our customers in the United States have -- obviously see the tariffing and actually see that some activities have to happen. At this moment in time, I think quality and actual pricing coming out of Europe, particularly with strong support of low-level manufacturing in Europe at this moment in time has a positive contribution to pricing as well as to quality, but we believe that there is a threshold. That means that in each and every case, when we are discussing that we are offering that. But at this moment in time, our customers still see the advantages of maintaining the setup, but this may swap fairly fast.

Now getting to your first question, and please allow me to not provide you with any percentages. What I was trying to get across is that we obviously have a number of customers which are used to a fairly precise forecasting system, which rolls in the next 3 to 6 months as actually binding orders. The forecasting system within these customers is established. They are actually transferring their own forecast coming from their relevant country organizations into a centralized forecast and are providing that.

If we look into the statistics of the past, we have high forecasting realization and actually have an excellent cooperation in terms of what makes our customers positioned to actually fulfill their forecast. On the other hand, over the past years, we had issues that particularly smaller ones or actually customers which have an early-stage product tend to move their forecast. And in that case, it like the latter cases, we have switched away from a forecasting model, which can be adjusted over time into a real firm order system and particularly for customers with high volumes by the end of the year. But having that history of moving forecasts and orders, we have switched this forecasting system into an order system, which makes it like the end of year business way more transparent already at this moment in time as it used to be the case in the past.

Oliver, thanks for your question. So regarding Q2 for the expectations. So when we're looking into the top line, I think we can fairly assume that we are coming back to the revenue level of last year of the second quarter 2025. And we are even expecting a slight increase on the service parts and maintenance, which would help us also on the earnings side. So we will definitely see, for sure, an improvement compared to the Q1 and coming back to the level of Q2 last year, maybe even with a little upside.

Q2 margin will be up year-on-year is what you said, Tanja?

No. Q2 this year, you could imagine from the revenue side to come back to the level of Q2 2025. But with hopefully even a better participation of the service parts consumables business, which would give us also a little bit of an upside on the earnings side compared to last year's Q2.

And the next question comes from Michael Heider from Berenberg Bank.

I have one left. So in Q1, your gross margin dropped quite significantly, and I presume this is mainly mix. You explained this. And I would assume that this is more being driven by low consumables and spare parts sales rather than mix within the instrument sales, but maybe you can elaborate a little bit on this.

And then the related question to this is, well, I mean, you already mentioned that you expect service parts and maintenance coming back somewhat in the second quarter, but still how -- I mean, can you give a little bit more light here as well? How sure are you that it's just working capital optimization? Are we talking just about one larger customer? Or do you see this with several of your customers at the moment? And yes, what is your visibility here when this will be over?

Yes, Michael, thanks for the question. Actually, in terms of product mix, unfortunately, both is the case. It's -- let me say, the mix is unfavorable in terms of gross margin coming from the instrument and then the relevant contribution of instrument versus maintenance parts and spare parts. We were actually trying to analyze if this kind of correlates to Q4 last year, which is actually not the case.

So we don't see that our customers bought certain maintenance part, consumable service parts in Q4, which are now not bought. We just see that the volume is fairly volatile. We definitely have one customer predominantly trying -- so obviously, I think it's worth explaining how service actually works. In the case of consumables, we actually ship that we find a nice correlation of shipping volume and the correlating costs as to volume, which then have to be stored at customer side and obviously shelf life. So this is actually like a relatively short-term business.

In the case of maintenance parts, actually, we are offering certain minor discounts to our customers if they are ordering bulk. But typically, we are shipping like at least 2 to 3 bulk shipments per quarter. So this is not the case here as well. And then obviously, for -- particularly for spare parts, we are delivering based upon minimum inventory levels to our customers. And then they are typically shipping to their relevant country organizations or even to card trunk stock, which is then taken by the field service engineer directly to the customers. And in the relevant chain, we fill up again. And what we clearly saw here is that certain customers were acting on a minimum inventory level derived from actual run rate.

And driven by the acquisition of one of our customers, we definitely see a more cost cautious behavior, but this is a means to an end. And if we are looking particularly derived from the communication we have with our most important customers in terms of spare parts, maintenance parts that they have achieved a level which from now on makes it more like steady as we saw in Q1. Actually, I think we reported the same thing already in Q4 last year, particularly towards the end of the year. I hope that helps.

Can I -- may I ask, can you give a hint on your gross margin development, which was the main driver here or which had the biggest impact? Was it the mix within the Instruments division or between the divisions?

Largely between the divisions.

And the next question comes from Jan Koch from Deutsche Bank.

The first one is on your product launches. During the full year conference call, you presented several systems that you expect to be launched in the coming years. Which of those are anticipated to be launched this year? And are there any contributions reflected in your 2026 guidance? And then secondly, on input cost assumptions, your margin guidance includes an assumption of rising input costs. Could you quantify this assumption? And additionally, have you already observed an increase in cost due to adverse geopolitical failures effect?

Thanks, Jan, for the questions. Let me high-level answer those questions. Actually, the growth foreseen in 2026 is not driven by actual operational sales from any new product launch, particularly those ones happening in 2026, whereas we have a higher number of highly priced pre-series and pilots. The growth in 2026 is actually derived from the launches which happened over the past couple of years. And then from 2027 on, we will see new product launches. And definitely, we see some input cost increases as a result of the geopolitical situation. Some of them have actually already been factored into our guidance already from the beginning.

And obviously, we put some leeway in. However, again, this is a means to an end. At this moment in time, the input prices coming along with certain product shipments are covered by our guidance, and that's why one of the reasons actually in the review why we could confirm the guidance. We definitely -- and I hope I managed and Tanja actually mentioned that during her speech as well is that we are super cost cautious. And definitely, we have to make sure that we are establishing further cost saving methods in order to underline our guidance. However, at this moment in time, and based upon the things we know so far for the remainder of the year, like product mix, like orders placed, we were able to confirm our guidance.

Got it. And one follow-up, if I may. Could you provide an update on the expected compensation payment from the large German company, which you still anticipate?

Yes, I can do. But certainly, we are progressing but progressing in a way that things are not yet sorted out. So let me inform you that there is arbitration ongoing. The result of that settlement is not factored into anything, not in any KPI. At this moment in time, there is one further loop of statements to be made. We should not expect like managing expectations cautiously. We shouldn't expect settlement this year, but next year, if everything runs smoothly, we can expect settlement by the end of the year. However, nothing factored in so far.

[Operator Instructions] And the next question comes from Sven Kurten from DZ Bank.

First of all, I would like to know what do you think is the biggest risk for your guidance for 2026 and also for the quite positive midterm outlook, you guiding sustainable margin improvements for 2027 and 2028. And then secondly, on the inventory level, I remember that you mentioned you think it will come down, but not to the level of the pre-pandemic levels. What do you think is a sustainable inventory level in the midterm?

Yes, Sven, thanks for the question. Actually, we were trying to flag the risks which are related to our 2026 guidance and actually even further downstream, we were trying to mention those risks, and we have put it in the presentation as basic assumption. It's actually on Slide #11, but let me briefly walk you through that again. For 2026, it's definitely not instrument sales or consumable sales. It's more like service parts and maintenance parts, which to a certain degree or let me word it positively, which is only forecasted and ordered partly for the remainder of the year, which means it underlies basic assumptions, some forecast, some historical data, some statistics, some utilization rates, some derivatives from installed base, which is giving us good indications.

However, some of the orders are not yet in the book. So that's probably the biggest risk factor in our 2026 guidance. And again, allow me to mention that a product launch is not required to -- a meaningful product launch is not required to fulfill the 2026 guidance, whereas particularly for the guidance thereafter, there is a number of lineups. And again, allow me to refer to our full year presentation where we have put some light around the relevant stages of the product launches, particularly those ones for the short term are in the very last stage prior to launch, actually already some of the approvals already in the books, whereas those launches happening in '28 that certainly this means not just for us finalizing development.

And again, only the products which are contracted in those development and sales programs, which are contracted have been put in that guidance. However, there are milestones and approvals in between. We were trying to assess that with state-of-the-art methods and statistics, certainly contribution in terms of assay development from our customers. And again, we didn't put aggressive time lines, but certainly, there is a way to go in order to get there. I think we have gained enough experience after COVID how product launches and ramp-ups were elongated and particular ramp-up curves are flatter than they used to be before COVID-19, but that is all reflected. Help me out, what's the second part of the question?

And the second part was a sustainable inventory level. I think you mentioned that it will go down, but not to the same extent as it was pre-pandemic.

Yes. So let me get you like some explanation. First of all, we have extremely elevated inventory levels. However, we managed to get to significantly work down purchase obligations almost at the same level as we haven't had inventory levels. There are 2 factors which at this moment in time are a little bit the limiting factors. We have 2 products where -- which at least one of those programs is contracted where we build inventory level based upon data provided by the customer, where the minimum business guarantee is still to be taken.

And as this product has a very low run rate, we expect the run rate to go up already towards the end of the year, but mainly in the year 2027 and 2028, we are expecting higher run rate. And only then we will manage to work down inventory levels. And then on the other side, and that's probably a little bit more complex to explain that is that towards the end of COVID-19 and the beginning of the supply crisis, we saw that a certain number, particularly the bigger electronic components manufacturers took advantage of the situation and cleared out their product portfolio, which means the legacy products were and still are no longer available. They are trying to keep their margin heavy younger products up.

And at the same time, we saw that the expectations regarding product life cycles, particularly derived from regulatory and from investments made by our customers are pushed out, which means on the input side, the product life cycles are shortened, whereas on the output side, the product life cycles are getting longer and longer. There are like mainly 3 ways to mitigate that. One is a more modular development approach. Obviously, we are following that whenever possible.

Secondly is a redesign. You only do redesign, which often leads to reverification, revalidation, reapproval, so very costly. You only do that if the product life cycle of the actual product still has a certain spend. But let me say, as soon as products are getting mature or even beyond that in like the sunsetting phase, you do not do redesigns on those products. What you actually do is that you do last-time buys. And we have a volume of about EUR 10 million, which will not vanish. And we will work that down as long as those legacy products will be sold. So these products are of value, but we can very much derive from those 2 components.

One, that the product run rate for certain products is not where we expect it to be. And secondly, obsolescence management and last time buys, these are the 2 positions, which will be residual for the next 2 years for obsolescence management even longer. However, some of those costs are paid by our customers. And please let me assure you that particularly for the high runners, we have highly optimized turnover rates in our warehouse. However, that's not reflected if you are only looking into the accumulated volume.

But you won't give a target ratio for inventories of sales?

If you look into our P&O development over the last years, we stood at EUR 330 million, EUR 350 million roughly. So I think a short-term target is definitely to come down below to the EUR 330 million. And then we have also a long-term target. So the EUR 200 million, slightly below. But as Marcus mentioned, it's always also balancing out of our scaling effects with the suppliers and the customer call-offs, but this would be a short-term and a long-term target for us.

So there are no further questions at this time. So I would now like to turn the conference back over to Jan Keppeler for any closing remarks.

Thank you, Moritz, and thank you, everyone, for joining us today. If you have any follow-up questions, please do not hesitate to contact us and the Investor Relations team. And thank you again for joining us today. Goodbye.

Welcome, everyone, to our full year 2025 financial results conference call. With me today are Marcus Wolfinger, CEO of Stratec; as well as our CFO, Tanja Bucherl.

As usual, following the presentation, both will be happy to answer your questions during our question-and-answer session. Be aware that this conference is being webcast live, and you can download the presentation either from the webcast or from our website. Finally, please allow me to draw your attention to our safe harbor statement, which we have on Page 2 of that presentation. And with this, it's now my pleasure to hand over to Marcus.

Yes. Thank you, Jan. As Jan mentioned, we would like to give you an overview of our actual events in 2025, followed by the financial review and certainly the interesting outlook over this year 2026, but certainly looking a little bit further downstream about our funnel and pipeline and everything else we believe will drive the company's growth in the next couple of years. And after that, we would love to answer your questions.

2025 was certainly impacted by geopolitics and uncertainties in the global markets, creating challenges not exclusively in those reported fields like supply chain and sales, but also in like decision-making processes worldwide, particularly within our customers' development funnel and so on, et cetera. As a result, we have to perceive it as an above peer group achievement that the company's top line could be kept stable and with that, robust. Despite these difficulties and still lacking scalabilities and economies of scale, the overall performance in 2025 was satisfactory as the profit margin remained within the initially targeted range. This demonstrates the resilience of the business model and the effectiveness of cost and earning management measures. We made significant progress in the development partnerships and particularly the outlook after 2026 shows that the area where we brought in new partners or new programs over the past couple of years is now leading to that we really get the rubber on the road with new development programs and new programs which are coming to the market in the upcoming quarters. At the same time, we have to observe that particularly with the uncertainties in 2025, the development funnel is not as strong as it used to be. So the next couple of years will most likely be dominated by the programs coming to the market. Probably a lot of follow-up systems, a couple of new systems, but the growth, which is coming in the years between 2026 and the year 2030 will be driven by instrumentation sales. I think that's the positive sign. And with that, certainly returning economies of scale and an improved margin profile.

We have this positive outlook for 2026 and beyond. I will touch details later on. And one of the key highlights certainly is that despite those effects, we are keeping the dividend proposal stable with EUR 0.60 per share, which has to be confirmed by the AGM in June.

With that, I would like to hand over to Tanja. She'll give us the financial review of 2025.

Thanks, Marcus. Also welcome from my side to today's call. So let's take a look at the key financial figures for 2025. As Marcus has mentioned, we actually continue to operate in a very challenging environment that has also affected our customers' order behavior and has given us additional strains on our supply chain. Having said this, you see in that volatile market environment, we generated revenues of roughly EUR 251 million. This actually represents a decline of 2.6% compared to the prior year or 1.1% on a constant currency basis.

As expected, also the earnings level declined in 2025. So the adjusted EBIT is around EUR 40.6 million with a margin of 16.2%, down from 19.1% in the prior year. The adjusted EBIT amounts to around EUR 25.2 million with a margin of 10%, down from 13% in the prior year. So this decline in the profitability versus 2024 is actually mainly due to the higher earnings contribution from our development and service recorded in the prior year 2024, which was expected, forecasted that this will not will be repeated in 2025.

In addition to this contribution from the development and service high-margin portfolio, the product mix effect in other areas, increased input costs and currency exchange rate effects had actually a negative impact on our margin development. Nevertheless, very important for me is that at the end, we were at the lower end of our initial guidance for the adjusted EBIT margin of 10% to 12%, and we achieved that despite this lack of the planned revenue levels that we actually had. And this was mainly due to our ongoing cost management that had a positive impact in the year.

On the next slide, we see now the transition from the adjusted to the reported earnings. Based on the adjusted EBIT of EUR 25.2 million, several onetime items occurred in 2025. The first one that you see on that page are the regular and planned PPA amortization of EUR 3.1 million. Second, there was the extraordinary inventory write-off of EUR 4.3 million. The third bucket are the impairments on intangible assets of EUR 6.1 million.

As you know, during the preparation of the consolidated financial statement 2025, the annual impairment test is required to be tested. And out of that, we recognized this impairment loss, which is actually not cash effective. This is also a very important note on that side. The impairment that we show here is mainly related to a delayed market launch and reduced sales potential for one product family of the DiaSorin brand. Adding to these 3 effects, we have another onetime effect such as consulting and reorganization costs of around EUR 2.5 million. That means in total, the result of the reported EBIT is EUR 9.1 million and a slight negative consolidated net income.

So we are showing you this reconciliation very transparently because the adjusted result is reflecting much better our operational profitability of our business, while these onetime costs, especially the impairments, are mainly addressed for the balance sheet cleanups and our ongoing focus on the future growth.

In terms of revenue, as we mentioned, we see the slight decline of this [ 1.1% ] on a constant currency basis. But there is also one positive note. So the demand for the MDx systems has continued to stabilize following the disruptions caused by the COVID-19 pandemic, as you all know. At the same time, we are seeing a growth in immunoassay systems. We also see that the performance, especially towards the end of the year, is particularly encouraging. In the fourth quarter, we achieved actually a double-digit growth in our system sales.

On the other hand, these ongoing uncertainties in the global trade, geopolitical tensions and the resulting effects on our customers' ordering behavior and the supply chain has had a negative impact. In addition to the prior year comparison, we see again this huge impact from the high-margin service parts consumables and the development in service segments, which were exceptionally high.

Overall, we could frame out for the picture as follows. So the environment remains very challenging for us. And based on our 2026 order forecast, we see that this trend or let's call it, this shift to the second half year of the year continues also in 2026.

Now we see on the slide the breakdown of our revenue by the business segment. So you see our systems business remains our most important revenue driver and is benefiting from the growth momentum mentioned earlier, particularly in the immunoassay segment.

On the second part, you see our service parts and consumables, so the recurring revenue, driven by our installed bases of systems, which is for sure also very important to our business model. In 2025, we actually see especially here the volatile ordering and -- ordering patterns of our customers, mainly attributable to logistics and cash flow optimization at our customers. Last but not least in the bucket, you see the development in service revenue. You see as well here the decline. As also mentioned earlier, this is particularly given by the strong year comparison to 2024. Overall, the revenue structure that you see on that chart confirms that we are building on a very diversified portfolio with a growing share of recurring revenue.

Let's have a look to the adjusted EBIT and the EBIT margin. So the adjusted EBIT declined by 24.8% to the EUR 25.2 million. The adjusted EBIT margin stands at 10%, down from the 13%, as mentioned also already. So this is a decrease of 300 basis points. The factors are contributing to this. First, we had this exceptional high earnings contribution from the development services and also from the service parts in 2024, which could not be replaced in 2025. Second, we faced the margin pressure due to the less favorable product mix, the higher input costs and the negative currency effects. On a positive note, our efficiency program that we have installed already several years ago and structural measures are having a noticeable impact on the cost base. And this is giving us the confidence that we will be able to increase the profitability again in the coming years as a growth and economy of scale, scale took fully place. Last but not least, we see now a very mixed picture in the cash flow for 2025. So you see the operating cash flow is in a minus of EUR 0.4 million. This is actually significantly below the 2024 figures. The main driver for that is our very strong back-end loaded business performance in 2025, especially into December 2025, which leads to a significant increase in the trade receivables with the related contribution later on now in the Q1 of 2026. At the same time, we have started to reduce our inventory levels, which remain elevated. So the inventories, as you see, stood at around EUR 113 million at year-end, already below the prior year figures of 2024.

Our investment ratio in property, plant and equipment and intangible assets at 6.5% of revenue was actually below the targeted range of 8% to 10%. Here, we were intentionally selective and focused without jeopardizing the strategic projects of Stratec for the upcoming years. The net financial debt has risen to approximately EUR 112 million. This is corresponding to a net financial debt-to-EBITDA ratio of 3.3 compared to 1.9 in the prior year. Despite this increase, our balance sheet remains solid. So the equity ratio stands at around 55.7%. In addition, as you know, we successfully completed the refinancing of the bridge loan in 2025 and negotiated and signed a new syndicated loan of EUR 125 million. These measures secures our financial flexibility while we are still working in parallel to improve our cash flow and the debt ratios again with a very strict working capital management program.

With that, I would like to hand over to Marcus again.

Thank you, Tanja. Let me walk you through our financial guidance for 2026 and beyond. Sales in 2026 is expected to grow in a medium to high single-digit percentage range on a constant currency basis. As always, the important information lies within the imprint. As already mentioned into our ad hoc announcement where we disclosed, among others, the prelims, we clearly mentioned that the sales growth will predominantly materialize in the second half of the year. I think this is something which was observed over the last couple of years that we were always trying to pull in the back-end loading of the year, and it got actually stronger and stronger. This year, we actually foresee that we move the customer forecast more towards like midyear in order to be able to supply the products then towards the end of the year. And as a result of that, the first quarter is expected to see a sharp reduction in sales, which comes along with a dip in profitability. We -- this should -- first of all, this is not happening as a surprise. And secondly, we have those measures in place. And if we are looking into our resource allocation and in those elements, like incoming goods, et cetera, that we are have well-established structures to satisfy the requirements of our customers and to satisfy the orders, which came in and are coming in these days, as mentioned, in some cases, we actually moved the forecasting system in order to be super safe in terms of abilities to supply more towards like an ordering system away from forecasting.

Regarding the EBIT margin guidance, we foresee a previous year level of 10%. Certainly, we see some further effects from our efficiency gains as well as from scalability. Unfortunately, those gains will be partly offset by a higher input cost contribution. And we actually foresee and actually already see the impact of the geopolitical conflict that certain raw materials are actually seeing further price increases.

On the investment side, the intangible and intangible assets combined, we see a range of 6.5% to 8.5% of sales. Long term, and again, even further important is here the imprint for the years between 2026 and 2028 on the basis of 2025, we have a nice ramp-up in certain products. I'll touch base on that in a minute. And the new products are certainly the growth driver. New products doesn't necessarily mean new products. Often, we have drop-in placements, which are then positioned in like slightly different markets, even those markets where higher throughput or worldwide distribution is happening for those products.

We see and foresee a slight recovery, not a material recovery. However, a slight recovery in the MDx system demand. I don't want to like stress the situation too much how many molecular instruments were placed during the pandemic. And after that, certainly the market was saturated for a certain period of time. And we definitely see that this is coming to an end. However, in our forecast for 2026 and then beyond between 2026 and the year 2030, the recovery doesn't play a meaningful role anymore.

Then certainly, we see an initial contribution from early-stage products as well as from those transitions of new product generations with partly higher selling prices or the fact that at the tail end of the positioning of those instruments, other instruments will accelerate as well. Then between 2026 -- sorry, then between 2028 and 2030 after the 6% to 8% growth in the period between '26 and '28, we foresee a 10% to 12% compound annual growth rate for those years. Again, continuously increasing revenue contribution from new products. And again, new products doesn't necessarily mean products which are launched then. These products are hitting the market between now and then and are then in their actual growth rate. And then we foresee dynamic growth with the service parts and consumables business as a result of the growing installed base. I think this is only a natural evolution that as the fact that we went sideways between literally 2022 and 2025, certainly, the installed base didn't grow anymore. And as a result of that, our service parts and consumables business didn't grow, particularly not those elements which are related to our installed base, the consumables -- consumables business certainly grew during that time.

I think, again, it is super important to highlight that if we are looking into the breakdown of revenues that we certainly saw 3 material changes over the past 5 years. So historically, we are coming from a development contribution of, say, 10% to 20% with the service parts contribution from 30% to 40% and then the remainder instrument business that certainly changed, twice during the pandemic and then the years after that with supply crisis, et cetera, that changed the budgets of our partners were allocated into more product life cycle management in order to keep the products young in order to overcome that situation that on the input material side, product life cycle shortened.

On the other hand, everybody was trying to prolong and push out the product life cycle on the sales side because of grandfather renewals and regulatory and because of like you can do that, that's a means to an end to push out product life cycle by 2 or 3 years. And we are coming to the end of that situation, which means development budgets are now reallocated into new product development. Downstream, that means that on an absolute like euro or dollar level, development and sales will continue to see nice growth rates and a robust, but it will be overtaken by instrument growth. So if we look into the review mirror in like [ 20 20 30 ] we will see that at least partly we are returning to the historic percentages of contribution of the relevant product classes like split into instruments, consumables, spare parts, maintenance parts and development. And the return of economies of scale and our cost efficiency improvements will then drive the margin going forward.

That's why our margin targets based on a real bottom-up calculation and a bottom-up approach. So we only took certain instruments into consideration. I'll touch base on that in a minute. The adjusted EBIT margin will be on an at least 13% level by 2028. And then followed by the 2 years between 2029 and '30, the EBIT margin will be at least on a 15% level by 2030. So back to historical EBIT margin strength, certainly coming along with the associated cash flow and all other KPIs to where we believe that we can return into historical areas.

However, I think it's worth mentioning that there is one KPI which we don't expect to return to historical levels, which is probably inventory level. I mentioned before that we see more obsolescences on the input side at a higher cadence and within shorter time frames as compared to historical data points on the same talking that our customers are pushing and continue to push our product life cycles in terms of longer sales of the same platform, which means that we will face last time buys. In most of the cases, these last time buys are then paid by our customers, but they are sitting in our inventory. So in the meantime, about 10% of the -- Tanja mentioned that elevated inventory levels are actually for those last-time buys. So inventory level has to be perceived like more specifically where are they coming from. This is not from products which have run rate. This is actually saving supplies in the future. And certainly, we have to see that there is a threshold. If a product is only like 5 or 7 years out to sunsetting, typically big interventions into development, which are then leading to reverification and revalidation and reapproval and [ re re re ] in such senses redevelopment or in such cases, redevelopment doesn't make too much sense. And in this case, we are more shooting for like last-time buy in order to tackle of the latter.

I think it is important to mention that our guidance does not include our full funnel and our full pipeline. The forecast does not take into account any revenues from analyzer systems in the OEM setup, so which means our classical business model where we use background technologies based on new developments and background technologies that we develop analyzer systems and consumables, which are then specific to the customer, but they are our technology, like this is what we call an OEM setup. And again, allow me to repeat what I started to say that this forecast does not take any -- into account any revenues from analyzer systems in an OEM setup where the product is already in development, but the development and supply agreement is not yet signed or finalized and the customer has not yet placed an order for that. And the sales growth is actually tackling sales growth rate at a constant currency level.

I mentioned the upcoming launches. And this is one of the first times where we have decided to try to put a little bit more meat around the bones what's actually coming up and why do we derive growth from that. Like in the discussions we had at the tail end of the pandemic, we believe that the launches, which -- the product launches, which happened through our customers during the pandemic and shortly thereafter could offset the dip in the molecular space as a result of the saturation of the market in molecular during the pandemic. The ramp-ups were slower than expected. They are only able to show traction these days and only in some of the cases. That's why I think it is important to talk about launches and what launches actually means for us and for our customers.

So we have given the product names. Please bear with me that these are actually random and a slide hints to the actual technology behind that or product names or foreseen product names of our customers. So please do not expect us to follow up on the project names. Internally, certainly the project numbers differ from that.

So we have here Project L on our list, which is a next-generation, fully automated immunoassay analyzer for an existing customer. The beauty here is that this instrument is a direct drop-in replacement, which means it is not foreseen to go through this growth phase from day 1 on in the mature markets and in the majority of the markets. It will replace the predecessor solution one by one. The menu is comprehensive. The menu provided by our customers, obviously, is comprehensive from the get-go. So we do not expect to go through a phase. On the beauty side here is that the product comes along at a higher throughput range and for a slightly elevated price. So this is not actually a volume driver. This is a price driver on the one hand side. And on the other hand side, the positioning of the instrument in a higher throughput environment is actually giving a chance to the smaller brother of that instrument, which is coming from us as well. And that segregation is actually leading to a demand effect on the lower platform as well. So I would actually consider this as a double strike.

So then Project M is a next-generation molecular instrument, again, a direct drop in replacement. Status as in the previous case for Project L is design transfer to series manufacturing. So no technical challenges anymore and a clear timetable and time line together with our customers. And the Product M is actually specifically made for decentralized testing in the molecular space. So again, derived from the market need for solutions like that to be positioned mainly in the United States and markets where decentralized molecular testing is playing a meaningful role.

Then we have Project R. By the way, this is assorted by when those products will hit the market. It's not assorted by size or how meaningful that is. That is actually like on the time scale. So Project R, again, is a product family for an existing customer. The predecessor solution consisted out of 2 solutions, out of 2 instruments. One came from us. The other instrument came from one of our competitors. We got a competitive win. So we have set a scalable solution for the high throughput markets and the lower throughput markets with the same -- we call that core modules. So the core of the instrument is comparable. This has huge advantages for our partners in terms of serviceability and service part supply. And at the end, it gives us a real scale because, like I said, it's not only replacing our solution, it's replacing the solution of one of our peers and therefore, will lead to aggregated growth here. The status is in -- the system is in system verification and validation on customer side. So again, minimal technical risk.

Then we have Project N, which is a multiplex molecular solution, again, particularly placed in the United States market is designed with the specific needs of highly decentralized testing environment. And again, instrument design is completed. Assay transfer is happening within our customer side. And you see this actually means that the launches are now not happening within the next few quarters, but downstream then. But again, nice supplement, nice allocation of those resources, which are ramping up manufacturing here at Stratec.

Then we have Program H, which is a product we won at the beginning of this decade. Status is prototype design is completed and assay development at customer side is ongoing. High-sensitive immunoassay, one of those market niches where everybody expects huge growth rates. So high-sensitive immunoassays are particularly used like in neuro or oncology. So those areas where like the aging population and the demand in the Western world is leading to further treatments where at this moment in time, a couple of hundred of different kinds of treatments are in development or in their approval phases. What we typically see in diagnostics is that new treatment leads to new diagnostics and new diagnostics demand particularly for neuro, high-sensitive immunoassay will play a meaningful role in the future. This is where we already have a good footprint. We have a number of instruments and consumables in the high-sensitive immunoassay market. So one of the growth drivers we see.

And then certainly, we call it -- it sounds a bit boring module business, but it's definitely important for us and growing is that still there is a number of customers which are doing in-house developments. They do not reinvent the wheel. We are providing customer-specific setups where we are not selling modules in terms of we sell a pump and everybody could use or build such pump, which is commoditized. We are developing specific modules, which are then fulfilling and only fulfilling the requirements of the customers, which has huge advantages from a pricing perspective, but also from approval perspective.

Let me briefly walk you through the market trends in our different -- typically, we call it franchises, application segments. We call it franchises in order to take a different throughput classes and technologies alongside with applications. So there is no good work for that. We internally call it, therefore, franchises.

If we are looking into the surveys provided, the growth of the IVD space is not as high as it used to be before the pandemic or even during the pandemic. However, still very solid growth rates. So low to mid-single-digit growth rate is expected to happen during those forecast periods we have given.

In the immunoassay space, everybody expects a strong growth rate. Certainly, this is no longer ELISA or those, let me say, very old technologies, certainly, high sensitivity or the transfer of single molecular [ non-plaque ] technologies into immunoassays is playing a role. Certainly, like for applications like in the neuro space where no DNA or RNA is concerned, but enzymes are concerned. Certainly, the immunoassay choice is the method of choice. So we have a number of applications within proteomics and therefore, certainly, immunoassay is accelerating faster than everything else.

Then in the molecular space, definitely the ongoing trend so far only happening in the main markets in the United States, not that much in Europe or Asia. The ongoing trend to decentralization in molecular. But certainly, as in most of the cases in this world, the United States has a leading role. So the decentralization is actually in the United States is actually mainly coming from the reimbursement system. The reimbursement system in Europe and Asia does not yet support a higher degree of decentralization in the molecular space. But for us, we believe that Europe will come at the tail end of the development.

Then certainly, the molecular space will see certain recoveries as particularly those instruments, which were placed prior to the pandemic or during the pandemic saw some extraordinary high wear and tear. The field service organizations of our customers and therefore, our supply with spares and replacement parts certainly showed that, again, this is a means to an end. You can only keep a product so and so long in the field with service measures. And then there is a point where the placement of a new instrument is making an economical sense. And we see that some of our customers are in accelerating cadence moving towards that trend.

Then certainly, what we see our franchise of complex sample prep, we see that the breakthrough discoveries in genomics and cell therapy are driving a way, way, way higher demand in sample prep than that used to be the case. If we were talking sample prep 20 years ago, this actually meant pipetting from a donation vessel into a microplate. In the meantime, often the complex sample prep is actually more complex than the full analytical process used to be the case 20 years ago. That's definitely one of the drivers here.

Then hematology and other routine testing. Certainly, the area sees material pricing pressure and a lot of competition coming out of China. Highly commoditized market. We still see opportunities here and there, but only like in markets where specialization plays a role and where differentiation from the commoditized suppliers are playing a meaningful role. This market, like in the Western world, is almost entirely in the hands of Sysmex and Beckman Coulter. There is a number of smaller players like us, but probably only like 5 to 10. The majority of them highly specializing like we do, so like in those areas where instruments are put into the big track systems, the players I've named before are playing a role and only special markets, players like us are playing a role.

And then certainly, immune hematology overall market which is not growing that much. There is only like only a few players, not even a handful of meaningful players as we have an active cooperation with one of the market leaders, particularly high throughput, the cost efficiency requirements and workflow optimization is calling for new instruments and innovation, and that's actually what we do here.

Let me hand over to Tanja now. She will walk us again through the bridge, how we believe that the historical profitability will return in the years to come. And then we would love to answer your questions.

Thanks, Marcus. So despite these market trends that we heard now and our internal launch pipeline, we are introducing also our business excellence initiatives, means different pricing measures, targeted portfolio optimization, operational excellence and therefore, also higher capacity utilization in our location. And those are building up actually the key drivers of our planned margin expansion.

So when we start on the left side on that chart, you actually see the starting point of the adjusted EBIT margin 2025, 10% in 2025. The next blue bar is showing you our target for 2028, where we want to achieve a margin of at least 13%; and by 2030, at least the 15% on the right side of that chart.

So how do we will achieve those figures? Between 2025 and 2028, we expect actually headwinds together of around 260 basis points due to exchange rate effects, mainly driven by our U.S. dollar exposure as well as a less favorable sales mix. But we are countering these headwinds with targeted measures with our business excellence initiatives. So the commercial initiatives and the portfolio optimization will contribute positive 100 basis points. And the biggest ticket and lever in that will be the operational excellence and improved capacity utilization. This will deliver roughly 460 basis points.

In the period from 2028 to 2030, we anticipate another mix effect as we expect our system business to grow more strongly than the service parts. At the same time, we plan additional improvements in pricing and portfolio as well as further efficiency and economy of scale. Together, this lever will enable us to increase the adjusted EBIT margin to this 15% by 2030, as already mentioned.

With that, we would end our today's session, and we would like to hand over back to Sandra to open the Q&A session.

[Operator Instructions] Our first question comes from Michael Heider from Berenberg Bank.

Yes, thank you very much for the presentation and for giving the details on your future sales growth and margin expansions. I have 4 questions, 2 are related to the future plans and 2 other ones.

So the first one maybe on the DiaSorin write-down that you had. Can you maybe be a little bit more specific on the projects that you are talking about?

Then secondly, you're expecting a sharp decline in the first quarter in revenues. So sharp decline. Is this something around minus 15%? Or how would you phrase this?

And then on your targets, midterm targets, you also talked about new customer wins of some of these projects. Can you give a little bit more insight here to what kind of customers are we talking about? So these are be bracket customers in what area are they active? And how did you get these new customers?

Then on the margin expansion, as just explained by Tanja, so the main margin expansion is coming from the CE and OE excellence programs. Can you also be here a little bit more specific? I mean if we look at the time frame '25 to '28, if I'm not mistaken, this should mean something like EUR 10 million cost savings? Or where is this exactly coming from? And that's it for the moment.

I will start actually with the first question on the DiaSorin write-offs. So as we have also communicated in our talk announcement, it's actually one product family of the DiaSorin business that we have needed to impair. It's attributable to not of our -- one of our core businesses, actually one of the niche businesses where we wanted to enter. It's the veterinary business. So this is the project that we are talking about. And as we said, this is mainly due to the cost increases that we have faced due to the delay of the project start and the revenue drop that we have seen in the forecast for the upcoming year for this project.

Then, Michael, you brought up the Q1 again. Again, we want to be super careful in trying to comment that we probably saw that Q1 was not one of the best quarters of this industry with the profit warnings we saw like with bioMériux, Qiagen and others.

Again, like let me try to set the stage. This has absolutely nothing to do with the strong quarter 4, at least not as far as we are concerned. So we didn't pull in 2026 Q1 activities into the last quarter in order to meet our goals there. We definitely see that the demand coming from the markets are tremendously shifting to the second half of the year and even there towards the last quarter. And we see -- definitely see that in our forecast in [indiscernible] where we see that.

So Q1, and again, it will not be super good. We flagged that already in the -- announcement. I mentioned that before, where we covered Q1 and covered our prelims as well. So I think if you would expect sales in the area where we used to be in Q1 of 2024, this would be a rough guidance as far as top line is concerned.

Then certainly talking about new customer wins. And allow me like I'm typically saying everything in Stratec as a story. We have to see that the growth which we foresee to happen between let me say, 2026 in particular, but then in the quarters thereafter with those platforms I walked you through, this has nothing to do with new customer wins. These were the new customer wins we saw between -- to give it a widespread between 2019 and say, 2023. What we definitely see these days is that particularly in 2026, that the funnel became thinner and more technological driven. I think like those crisis do not make it our customers easier to take decisions. We have to see that over the next instrument platforms will be driven by a higher degree of local for local. So we expect that the Indian market, the Chinese market, the U.S. market will see derivatives as compared to those markets which will be addressed in Europe and the regions of the world.

Back in the days, an instrument was developed under, say, a global umbrella and then only in really small areas customized for the local market. We believe that these times are over. At this moment in time, nobody wants to pay the extra cost for the local-for-local approach, but everybody needs it, and that's actually leading to a certain paralysis in terms of decision-making processes. Our development pipeline, particularly towards market launches like with software development verification is super strong. The area where we have to catch up is actually early stage to bring in new development pipelines. We see a lot of opportunities, have more leads than ever. However, we have to put this through the funnel in order to make it real development programs. We see huge demand like in proteomics, I mentioned that before. We see huge demand in like cell and gene therapy. We see huge demand and obviously, the associated diagnostics with that. And what we definitely see is that there is a transfer from the traditional detection methods more towards optics and high-precision optics, and this is where we are really very well positioned.

Your last question was about margin expansion. So at this moment in time, we had to set up a plan. We set up a plan in a way that we know which instruments will come to the market. We have already dedicated plans with our customers, particularly for -- on that pipeline slide, those elements on the left-hand side, they are already set on a time scale. So we know when those instruments will come to the market. Margin expansion during that time will not come from product mix. Actually, product mix will provide a certain headwind. Therefore, we have set up margin expansion. Margin expansion here means, and Tanja mentioned that already. It means that we have and are looking into manufacturing there. It means that we have to look that we are doing the right products at the right side of Stratec and probably pull in back development depth and probably outsource the right part. So there is a number of programs ongoing, certainly supplier management and other areas. So there is -- this is not just that we set up a plan and set up a goal. There are actually already concrete measures.

Here, we have to see that our supplier network is a very robust one. And we have to see that changes to such a supplier network means a lot of work in terms of qualification, in terms of regulatory, in terms of incoming goods and so on. And then certainly, we are working in an environment where we have to ensure supply, which means we have a certain lineup of contracts with existing partners. And that's why all those measures will take some time, but they are already lined up. I hope that helps.

It seems that there are no further questions. Back over to you, Mr. Keppeler, for any closing remarks.

Yes. Thank you, everyone. This concludes the conference call. If there are any follow-up questions, please do not hesitate to contact us and the entire Investor Relations team. Thank you, and goodbye.

Thank you, Sandra, and welcome, everyone, to our 9 months 2025 financial results conference call. With me today are, as always, Marcus Wolfinger, CEO of Stratec as well as our new CFO, Tanja Bucherl. Be aware that this conference is being webcast live, and you can download this presentation either from the webcast or from our website.

And of course, following the presentation, we will have a question-and-answer session as usual. Finally, please allow me to draw your attention to the safe harbor statement, which we have on Page 3 of that presentation. And with this, it's now my pleasure to hand over to Marcus.

Yes. Thanks, Jan. Good morning in the United States, and good afternoon in Europe. Before we start, ladies and gentlemen, I'm truly excited to welcome Tanja Bucherl, our new CFO. From minute 1 on, it was clear that she brings not only a super strong financial background, but also the energy and team spirit that defines who we are. With her expertise, she will play a key role in future strengthening our financial stability and setting the course for future growth.

We are thrilled to have her on board. Welcome, Tanja. A big thank you goes out to Oliver Albrecht, our Interim CFO until last week, who very professionally bridged the gap until Tanja joins the senior management team. So with no further ado, let's dive into the agenda. I'll try to walk you through the first 9 months at a glance.

Then Tanja will give you the financial review and some further financial details, followed by the outlook and focus and the two of us then will try to answer your questions thereafter. We had a positive sales growth despite supply chain interruptions, which already kicked in, in Q3, not material, but already very visible. What we definitely see is a stabilization in the market.

Like during the past two or three crisis, we had, say, the dot-com crisis after -- financial crisis and after that COVID, certainly, only a few months after this kind of hits we took in this industry, it was very visible that the end of the crisis is in sight. In this very case, I would like to remind you that after COVID, we had the supply crisis and then certainly geopolitics and war and the tail end of COVID.

So as a matter of fact, I think it's a well-accepted fact that this crisis took longer. If we are looking into those signals between the lines sent by end customer by our customers, I think we really dipped out at this moment in time, and I think the worst is over. I only returned back from the United States, where we met key customers.

And I already mentioned that a couple of times that particularly after Q4 last year, they started to grow again. And please allow me to remind you that in our industry, us as an enabler. We build infrastructure from the perspective of our customer. This is CapEx. They place the instruments. They use the consumables as soon as they, let's say, bring new tests on instruments, they can actually grow with the fleet, they already placed years and months ago, whereas we are coming at the very tail end of things, which means only if the market grows to the extent that our customers are investing into their own growth, into their own future, growth for Stratec comes in.

And I think this is actually the inflection point where this is coming back. So we see that the testing volume stabilizes. It was already very stable. And if you look into the statements made by the quarter reports of our customers, you definitely see that they are very positive in terms of testing volume despite geopolitics. And some of them, particularly in immunoassay and some other areas like in complex sample prep, the growth already came back, but it actually could not yet offset the declined volume after COVID-19 with molecular tests where the saturation took place during COVID-19.

And after that, everybody took advantage of those instruments, which were launched and placed during COVID-19 and haven't been forced to buy new ones. We see that the discussion started into the investment of new platforms, into keeping those platforms young. But on the other side, even for those instruments, which are, in the meantime, worn down after COVID-19 and the years thereafter, that our customers are openly starting to discuss that even those instruments will have to be replaced.

So I think we are really through to growth. We had a fairly good margin development. However, the margin development held back by the product mix. So at this moment in time, a little bit unfavorable. Our products with high gross margin are still weaker. Those ones with the weaker gross margin are stronger, as always [indiscernible].

And then certainly, particularly towards the year end, we have a number of development activities, which will be accounted, which will then drive the margin. That's factored in -- into our guidance and into our financial guidance, and I'll touch base on that. On the other side, I think like everyone, the headwinds we experienced in H1 got a little bit better, but are still material. All that is leading to the margin as is. We have confirmed our margin guidance, but I think it's important to again reiterate that as last year, 2024, we could make the statement at this point that we will probably end up at the upper edge of the guidance given.

And actually last year, we even exceeded this. I think this year has to be understood that this is closer to the lower end of the guidance. We made material progress in the development of partnerships. Actually, we got a new customer in with finalizing development work, which was actually done mostly in-house and the transfer is ongoing. So we got a new partner. We see a significant upturn in development activities and in talks. Still highly fragmented. I think it's unrealistic to expect that -- such development work where the partner commits from the very get-go to a $40 million development investment and a $200 million downstream procurement commitment.

I think this is some limitations at this point. Things are getting more fragmented. However, our business model fits that very well. And we definitely see that the demand not only in system development goes up, this affects product life cycle management, which is very margin heavy and certainly, instrumentation picks up as well. I think it is worth mentioning that in the budget round, we are finalizing these days, we see a development resource allocation of 105% across the group.

And I think this nicely mimics what's going on. I think demand for development activities coming back and development activities is the leading indicator for downstream manufacturing activities, and this is where we make the money. So as already mentioned, lower end of 2025 margin guidance confirmed despite a lower sales outlook. I think it's a good signal that we had these issues with the magnet. I don't want to go too deep into details. We have almost sorted out the supply issue.

So we just need to catch up. We'll certainly not catch up entirely by the end of the year, but I think we are showing good trajectories with the measures established. Talking about efficiencies and measures established, I think the fact that we had to slightly cut the top end of our top line guidance and still can maintain margin.

I think this shows the efficiency measures are really tangible, are really showing efficiency. And I think this is a good point to start from growth here again. And I think we'll talk about growth as soon as we show our guidance for 2026, which will not happen here. That only happens when we talk about full year's results. So that gets me to the point where I would like to hand over to Tanja.

Thank you very much, Marcus. Good day, everyone. Also from my side, a warm welcome. My name is Tanja Bucherl. As you have heard, as of November 1, I joined Stratec as the new Group CFO. And I can tell you already after my first week that this is a company with a really great potential and a remarkable team spirit. So I'm really looking forward to actively shaping our continued development and supporting the next steps on our path of a sustainable growth.

But with that, let me now take you through our financial performance for the first 9 months of 2025. As you can see on the chart, the sales increased by 2.5% at a constant exchange rate. It's reaching to EUR 175.6 million versus EUR 173 million in the prior year period. As you also know, we had a very positive momentum in the first half year. The sales in the third quarter declined by 3.4% at a constant exchange rate.

It was mainly impacted by the already mentioned supply chain disruptions as well as, let's call it, a softer momentum in the Service parts and Consumable business. But more to that later on in my presentation. Let's have a look to the adjusted EBIT margin. So for the first 9 months, we stand at 7.3% versus the 8.8% in the prior year. Also, as a consequence and driven by the temporarily increased tax rate in the third quarter and despite an improved financial result, our adjusted net income for the first 9 months decreased by 15.8% year-over-year to the EUR 7.1 million that you can see also on that chart.

This leads also to a corresponding adjusted earnings per share of EUR 0.58. But maybe let me take also a note here regarding the outlook. So we expect a significantly improved earnings dynamic in the fourth quarter. And given the implied regional mix, a notable better tax rate in the final quarter of the year 2025. And as a result, the full year tax rate should be significantly below the 26.5% that we showed in our report for the first 9 months.

Coming now to the adjustments with a closer look in our adjusted EBIT and adjusted net profit. There is not too much to say on that slide because nothing unusual in the adjustments for the first 9 months happened. For the period, we adjusted EUR 2.3 million in the PPA amortization as well as EUR 1.7 million in other adjustments.

They are mainly attributable to the so-called one-off, and its advisory expenses that we have already recognized in the first half year of 2025. Therefore, we are going straight to the next page, the sales. We will have now a bit more deep dive on our sales development. In the first 9 months, the sales increased by 2.5% year-over-year at a constant currency to the already mentioned EUR 175.6 million.

This was mainly driven by a double-digit increase in the development and in the service sales. And thanks to the ongoing high development activities and large numbers of active customer projects we are having. The system sales was more or less flat year-over-year. The ramp-up curves of the newly launched systems continued to be flatter than actually expected. Already mentioned supply chain disruptions, they impacted us negatively already in Q3, causing especially some delivery shortfalls in the immunoassay franchise, and this was hitting us actually a lot in the Q3, but we are looking for coming back in the next quarters or in the Q1 next year 2026.

In Molecular Systems, we observed a promising and actually ongoing stabilization in customer orders following demand disruptions that the industry faced after the post pandemic. The service parts and consumables, last but not least, for the 9 months of 2025, they were slightly down year-over-year as volatile global trade restrictions, as you all know, led to some logistics optimizations at our customers.

And therefore, we actually have seen order volatility, especially in Q3 2025. Coming from the sales now to the earnings. Closer look now to the adjusted EBIT and our EBIT margin on that slide. you see that the adjusted EBIT margin declined by 150 basis points year-over-year to 7.3%. I told you already, this is mainly due to the decrease in the gross margin from 27.4% last year to 25.8% in the first 9 months.

Yes, the decline results from the still, let me call it, less unfavorable product mix in the System business, and a reduced share of our high-margin service parts and consumable sales in Q3 as well for sure also the unfavorable FX rate environment that we are in compared to last year. However, a good sign also here, the progress was made in the functional cost areas. So we have done, we have started early our homework.

So we are confirming the strict cost discipline and also initiated efficiency measures to have the countermeasures in place for all of these negative environments that we are facing currently. Coming now to the cash flow and our net debt development. So the operating cash flow remained negative for the first 9 months, mainly due to high tax cash out that we have recognized in the first half year and as well reduced trade payables compared to last year.

However, the operating cash flow improved in Q3 and amounted to positive EUR 4.4 million. As of September 30, also the investment ratio continues to be slightly below our initial budget. And for the full year, we expect a total investment in tangible and intangible assets to remain slightly below the predicted range of 8% to 10% of sales.

Our leverage, you see as well here on that chart, means the ratio of net debt at the EBITDA LTM is currently at 2.4, up from 1.9 at the end of the fiscal year 2024, but it is still on a very solid level. Last but not least, I would like to highlight the successful closing of a EUR 125 million syndicated loan during the third quarter. This facility replaces the bridge financing related to the Natech Plastics acquisition back in 2023.

And I'm really, really happy with that move because with that transaction, we were able to further optimize our financing structure. And at the same time, it is providing us the sufficient flexibility to support our future development. And therefore, I really would like to take the opportunity to thank all of the Stratec colleagues that were involved in that process and especially also my predecessor, Oliver Albrecht. This brings us also to the end of my part of the presentation. For the full year outlook 2025, I will hand over back to my colleague, Marc.

Thank you. Financial guidance, we already touched base several times already during the presentation. So as mentioned, we confirm to go flat top line. So we are expecting approximately to match previous year's top line figures on a constant currency basis. Adjusted EBIT margin, we have forecasted at the beginning of the year financial guidance between 10% and 12% after 13% last year. We confirm that we will match the guidance, but clearly mentioned that we'll most likely end up towards the lower end of this guidance.

In order to achieve that, we are certainly tracking a number of KPIs very closely, as Tanja already mentioned. So there is a high earnings contribution of high-margin development and service sales expected in the fourth quarter in order to achieve it and certainly better scaling effects by the utilization under the System business and upcoming supply chain interruptions is really that we are keeping a very close monitor on that.

Again, as Tanja, already mentioned, we will most likely end up a little bit south of the investments intangible and intangible assets, so even better than expected, which was already good after last year's 7.1% most likely end up like in between the 7.1% and the 8%, so better than expected. Let me try to walk you through our activities over, let's say, the next 3 quarters and give you an outlook.

So as already mentioned, we are maintaining cost discipline. I think we found the ideal balance over the past 2.5, 3 years to, on the one hand side, make sure that everybody understands that we are really looking into the details and are trying to be super disciplined, but still not saving costs for the sake of saving costs, but still being very potential oriented, invest where investment makes sense and still be disciplined.

And I think that's the right thing to do. We didn't oversave. We see a lot of companies who oversave and now are really struggling. We didn't do that. Let me remind you that just one example, looking into development activities, it doesn't make too much sense to cut into activities, which will lead to growth and earnings in 2, 3, 4 years from now, particularly considering that we have existing agreements with our customers. So we want to make sure that we are delivering on milestones.

So we continued a nice investment policy into future, into our colleagues, into the education and training of our colleagues. So we are very proud that we didn't only try hardly to find this very narrow balance. I think we managed that fairly well. Then we want to execute on the deal pipeline. That was actually an area where we focused a lot over the past 6 months. A lot of things are ongoing. We mentioned that from a couple of times though. From here and then, we did new feasibility work.

We brought a couple of new things on board, which a couple of them will replace our own instruments in -- after the development, like just as an example, we do the LIAISON XL 2.0 for DiaSorin, where we do the predecessor. We do the successor instrument for other instruments we have in the field. So we are very proud that our customers are coming back. And on the other hand side, we really managed to bring new customers or new programs within existing customers on board. So this is not just saving legacy. This is actually investing into growth and the likelihood that growth returns is getting closer and closer.

And again, allow me to remind you that during the discussions at the tail end of COVID-19, we were very keen on the fact that during COVID-19 and right after, we launched a number of new platforms, and we thought that we could offset the dip. I think it was everyone very clear that particularly the molecular market will dip after COVID-19. And we said we can most likely offset this dip with the three instruments which were launched during COVID-19 or thereafter.

Unfortunately, the growth rate and the ramp-up curve is and used to be slightly flatter than expected. We can report that one of those instruments is starting to show nice traction, and we are expecting the same thing to happen with the other two instruments. Then certainly, we continue to grow our footprint in selected markets like in areas where we believe that we find this, again, narrow balance between not doing the Spearhead, Spearhead Technology, but being the second one.

So when markets are starting to get more mature, like in high-sensitivity immunoassays, where we were together with our partners, the first one here where we have nice development programs ongoing. Same applies for advanced imaging and cell & gene therapy where we have started to try to build our footprint as well. Then certainly, we want to manage our well-filled M&A pipeline, as always. And allow me to remind you, this is very binary. We continue to look into opportunities.

At this moment in time, we have a handful of opportunities, nothing super concrete. It's the full spread. We are typically looking into technologies. We are looking into markets, and we are looking into geographies. Again, it has to be understood that probably the next decade in this industry will be dominated by local-for-local. So we'll definitely have to do more in the United States. We'll definitely have to do more in China and continue to have high investment in activities in Europe.

Local-for-local is probably the thing in order to overcome geopolitics and other activities, which are limiting abilities to do business with goods across the continent these days. Then I already mentioned the localization, very important, certainly cash flow in order to make sure that we can do investments.

We want to continue to improve our cash flow dynamics. Here, we already achieved good results over the last quarters and over the last years. However, there is still room for improvement and getting closer from a cash flow perspective, more closer to the earnings situation. I think that's the actual goal here. And definitely, we have to put a strong focus on inventory management for you who continue to have these discussions with us at this moment in time, still our inventory levels is too high. We still have a number of products where the products are very young.

We have high inventories, low run rates. So -- although we nicely work down inventory levels already in 2025, we continue to sit on an elevated level of inventories. For those products which have high turnover rates, obviously, the inventory levels are highly optimized. So without a solid recovery of the market in those areas where we are really sitting on a high inventory level, it will definitely continue to be a challenge to materially reduce the inventory levels.

But if we think about where we used to be in the past and offset that by last time buys we had to do on the procurement side, I think there is still a room of EUR 20 million to EUR 30 million on inventory level, which could be reduced over the next couple of years, and that will certainly lead to the equivalent cash release. So this gets me to the end of the focus.

And now I would like to hand back the word to Sandra, who will explain us how to do Q&A. Thank you so far.

[Operator Instructions]. Our first question comes from Jan Koch from Deutsche Bank.

I would like to take them one by one. The first one is on your guidance for 2025. Is there any risk that development sales that you plan to recognize in Q4 will only be booked in Q1 2026?

Yes, thank you for the question. As always, this is forward-looking. So there is always a certain risk associated, but I would really see this as minor. So obviously, we know that in this tight situation that we have to monitor things very closely and that we are in continuous communication, not only with the project -- with the internal project teams and the internal project management, but they certainly keep communication up with their counterparts within the customers if approvals are required.

So we are definitely very confident that this is not going to get an issue. However, this is forward-looking. Things can happen, although we don't expect. And again, allow me to remind you that certainly things continue to be extremely back-end loaded. So I think you see what has to be achieved top line and bottom line-wise in the third quarter. We have already asked the teams, the manufacturing teams and the associated development teams to work like between Christmas and New Year. So allow me to, first of all, thank them again and secondly, make that very clear that this is super back-end loaded, therefore, inherently risky, although I don't see any risk to fail.

Okay. Great. And then secondly, your largest customer is in the process of being acquired by private equity. Do you believe that this could have any kind of implications on your business?

No, Jan, thank you for bringing that up. So we shouldn't get that into a situation where we are talking about gut feeling and things like that. I think on a professional level.

And actually, I only returned back from this very customer on a -- I was there on a scheduled trip, but certainly this was one of the topics we discussed. So they made it very clear that their communication with private equity is about growth. We have ongoing programs where we are a supplier, a key supplier supplying with our products, our products, which bear our own IP.

So the risk of walking away is very, very small. We have ongoing development programs where we are not only a contributor in terms of development work, we are a contributor in terms of know-how and finalizing things and getting things done and getting things done right.

So I think the level of contribution we have within this customer is key. And I think that private equity invested in this company to return the company into higher growth rates to take advantage of the synergy, which exists here and there in order to focus on what makes them strong.

And I think if we see the position of, in this very case, the Panther instrument, although an instrument being in the market for a couple of years, still the gold standard, still the instrument, which provides the benchmarking for every competitor to Hologic and on the other side, with a quality which is unprecedented. So if we put that all together, I think our position within this company is very, very strong. I think they understand our contribution to their future success. So I'm not worried about that.

Understood. And then finally, you mentioned in the press release that you recently initiated a partnership for well-established high throughput product in the molecular diagnostics area. What does that exactly mean? Are you going to produce in that system for the customer or develop the next generation? And how big is the installed base is? And when do you expect to receive the first revenue? And what is the potential for you here going forward?

Yes. Please forgive me, it's way too early to talk about that, particularly those elements where you are trying to get your hands around is actually something which is still under discussion. So definitely, it requires a lot of development work.

The tail end manufacturing is very lucrative. It's one of the bigger ones. It's most likely one of the biggest programs, which has been outsourced over the past years. So we are very proud to get in touch with this partner. But I think it's important to understand that this is just the initiation. This is everything else, but in a status where we can disclose details about duration of development work, when this extension will go to the market and how big the manufacturing volume might be.

So I think it is important to -- for us, it was important to show internally and externally that the momentum comes back on the one hand side, but definitely with the activities ongoing, the big chunk of manufacturing will only be 3, 4, 5 years downstream.

And next question comes from Oliver Reinberg from Kepler Cheuvreux.

Three questions also from my side. First, I just wanted to come back also to Jan's question on Q4. I mean you need basically EUR 20 million incremental sales. So can you just unpack that a bit in terms of providing some kind of color how much of that is development, how much is equipment just to get a better feeling for that? And along these kind of lines, when you have this kind of volatility now in terms of consumables, in terms of timing disruptions from tariffs, I mean is it not also a risk factor when there's now the kind of Supreme Court challenging the kind of whole tariff setup that people just say like we're going to pause and see if there will be chances to order excluding any kind of tariffs? That would be question number one, please.

Tanja, can you answer the first part, like breakdown of revenues expected for Q4 because I don't have it in front of me.

So -- yes, sure. The biggest chunk comes from the systems actually followed with the development service, yes. So those are the two main pillars for the increase in Q4.

And Oliver, obviously, we were trying to kind of look into the relevant -- risk exposure of the relevant positions. So actually, when we updated the guidance certainly -- this was only after when we looked several times and went through each business, each program, each contributor and we're actually trying to find out if there is any residual risk, and that was actually already factored in. So I think the answer should be no.

With those supply chain interruptions, as mentioned before, we cannot say it's all over, but those elements, which are affected in the meantime, we have access to those products, respectively, they are in transfer. Obviously, it needs some time to get them through the supply chain and to get them in. So there is a likelihood that we can slightly recover.

Please don't expect that to happen and please don't factor it in, leave it as we gave the guidance. However, I think the message should be that this was a temporary interruption and that we have sorted out the issue. And kindly allow me to remind you that this actually happened entirely unexpected. So obviously, we saw with the discussion about rare earth that some of our products are affected and we found alternative sources of workarounds.

This very magnet we are now talking about is actually a magnet where the specification actually don't foresee the usage of rare earth in the magnet. They got -- contamination got in. And the contamination is exactly of the threshold when the export rules are kicking in for rare earth. So the contamination is 0.1%. And that actually led to the fact that we couldn't get those magnets out of China. That was really kind of a surprise to us. We reacted immediately.

So people from procurement, our Head of Procurement was actually in China during that time, and a big thank you to her. She sorted that out very nicely. And I think we are back on track. However, things like that can always come up, and I think these kind of issues are here to stay for the next couple of years. We have to deal with them. We have to factor those things in when talking about supply chains and lead times and guidance.

So certainly, we have to learn from that, but particularly talking about Q4, Oliver, even with the Supreme Court activities regarding tariffs, we -- those things which have to be supplied by the end of the year, we already have our hands on or they are in Europe and our suppliers have their hands on. So I don't expect anything from this side.

Okay. Understood. And second question, obviously, there's a lot of weakness in the industry from China. Can you just remind us what exposure you have to China? I mean I guess it's all indirectly, but how much is that? And do you see that the demand for the systems that are being used in China is also further incrementally deteriorating?

I think it's extremely complicated to describe that. I think if you talk to our customers, they are definitely trying to maneuver around statements regarding China. Our exposure, so first of all, we don't have any material substantial customer in China. We have a couple of important customers in Asia, but definitely our top 10 customers are sitting either in Europe or the United States.

Then we can see literally only two behavior pattern within our customers. Some of them are actively trying to reduce their exposure in China. Some of them are actually trying to see this as a chance and are trying to certainly on an as high as possible risk-free approach to take advantage of that there is demand for certain products of our customers, and we are supporting exactly that. So if they need products made in China, we definitely help them to manufacture, in our case, assemble those products in China. So do assembly, final assembly and final testing according to Chinese rules in order to support their activities. However, we are trying to reduce our exposure. So top line exposure is neglectable.

Looking into our customers, we see a couple of our customers, which entertain nice sales in China. I think with this indirect exposure, we are south of 5% of revenues. When I say indirect, we are selling to our customers and our customers are selling products into China. There are limitations. So if, say, Chinese suppliers -- sorry, Chinese customers want to include our customers into tenders, that's a huge effort for them. That's why that doesn't happen that often anymore. So there are secondary markets, which are served by some of our customers. That's why their exposure is fairly minor.

We have to see that particularly with our Hematology business, we are seeing strong competition out of China, particularly in those areas where commodities are concerned, systems of lower complexities are concerned, definitely, the competition out of China is getting stronger and stronger, particularly when pricing plays a material role. However, that actually shows how important our strategy, and execution in our strategy is that, as mentioned before, we definitely want to develop and supply spearhead technologies, not spearhead, spearhead. This has to be handled by the research organization. But as soon as this initial dust settles, we want to be there. We want to be the immediate follow. We have nice technologies.

These days, we have huge investments into things which are concerning workflow, things which are concerning safety and security in providing the results, development in IoT, cybersecurity. So everything which concerns haptics, ease of use, safety of the instrument. This is where investments in the Western world and in Europe are actually taking place. And here, we feel it's excellently positioned.

Super. And last question, if I may, just on the molecular diagnostic market. I mean what kind of signs of recovery do you see? And can you just remind us where are you in terms of equipment sales compared to, let's say, the kind of pre-pandemic baseline?

Yes, Oliver. Let me answer the second question first. We have -- we are in a very special situation. The main contributor to our molecular franchise are mainly three instruments. With DiaSorin, we are in a generation change. With BD, we are in a ramp-up situation. And only with Hologic, we have something where we really have comparable pre-COVID data.

And I think I'm not telling you any secret here because the data points are disclosed that Hologic is about on a run rate, which represents between 1/2 and 2/3 depends on the relevant instrument between half and 2/3 of pre-COVID level, but picking up, and that's a nice thing.

What we definitely see as a behavior pattern across all our customers is that they are trying to [ prelaunch ] the product life cycle. And I don't -- do not necessarily mean that we develop an instrument in year 1 through 5 and then launch it and then we sell it from year 5 through year 20. What I mean is that when an instrument gets sold to the end customer or placed in an end customer lab, and it runs there for 4 years, 5 years, 6 years and so on, there is a moment in time where the instrument gets worn down and typically gets replaced.

And during the last 2 years, we definitely saw that our customers were trying to [ prelaunch ] those life cycles in the laboratory with the relevant instrument to the extent possible. But as mentioned, this is a means to an end. You can only do that so and so long, and we definitely see that these discussions, which are actually reflecting the fact that typically an instrument of a certain age causes higher service costs and that probably the amortization of a newly placed instrument is actually positively offsetting the service costs.

So I think that the decision-making processes and the ongoing discussions are actually showing that our customers are at this point where they say, okay, we take this instrument out and we place a new one and that's exactly when the growth comes back. So I'm actually particularly within some customers expecting even a catch-up effect here.

[Operator Instructions] The next question comes from Michael Heider from Berenberg Bank.

I have a couple of questions, less detailed questions here. So when I start with the sales development in your Systems business in the third quarter. You actually said -- I mean there obviously were supply issues, and I believe that was on the immunoassay side. I think you have said that. And yet your sales were flat versus previous year. So is my assumption correct that this shortfall then was made up by the molecular systems side? Or is there something else that has been growing?

Affirmative, molecular and to a certain degree, immunohematology as well. So affirmative.

Okay. And then on the margin side, yes, we have seen a lower margin in the third quarter versus the previous year due to a negative mix and also due to the negative mix in the instruments business, but also due to the lower share of consumable sales. Yet again, here, your quarter-on-quarter margin has improved. And I would assume now because you're only talking about the Lower Consumer business now in the third quarter that the mix overall in the second quarter must have been better, the product mix, yet your margin is higher in the third quarter. So is this all a result of your cost-saving measures? Or what is the story behind that here?

Yes, efficiency measures are coming in nicely. So certainly, this is a lot about product mix and scalability. And Michael allow me to say that the forecasting our Consumables and particularly Maintenance parts and Spare parts business is way more complicated than complicating Instrumentation business. So certainly, on the instrumentation and high-volume consumables, certainly, we have established forecast systems, and we should know where we end up over the next 3 months, 6 months, 9 months.

On the consumables and maintenance part side, that's a little bit different. What we definitely saw with tariffs kicking in that there was a change in behavior pattern of our customers. Actually, we had a deep analysis about the behavior and some of the business was actually already pulled in, in the first 6 months, which led to fairly well-established results then.

We actually -- at this moment in time, we typically got the last orders of the year, particularly for consumables and spare parts, and that was actually weaker than we forecasted initially. It's factored in our amended guidance, but it was weaker than expected. So not only that the business is more short term and therefore, doesn't allow for high predictabilities and high transparency, even the change in behavior patterns came on top here.

So deriving something from the past doesn't make too much sense. Like margin drivers in Q3, definitely slight recovery in the Molecular business, some development programs ongoing. So it's actually across the border. And certainly, in some areas, the better economies of scale are helping us very much as well, and so we have performed price increases. We are trying to apply discipline in terms of procurement activities. So all-in-all, I think things are lining up nicely. However, we are not really satisfied.

I think as soon as scalability and the right product mix comes back, we can easily get closer to our historical margin. However, I want to make sure that even when I say that I believe the market comes back and the momentum comes back, that all sounds very bullish. I want to make sure that you understand that particularly timing is super unpredictable.

So I think that if we finalize our budget cycle and if we are coming out with our new guidance that we will already show this slightly positive momentum, but definitely, 2026 will not be this year of the great relief. What I wanted to get across is that I think there is a chain of things, which have to happen. So the positive mood of our customers, the return of the number of their sales when they get new tests on the instruments when they are actually continue to grow. I think in immunoassay, they grew all the time. But in molecular growth comes back, in sample prep growth comes back, in proteomics growth comes back. So all-in-all, a super nice lineup here.

However, this has to go through this pipelines of development activities, market launch, regulatory will take some time. I wanted to get across that we believe that we are through the worst. That's the thing we want to get across.

Okay. And then another question on the supply issue. Do you think that there will be a structural change to your supply situation? I mean are you considering maybe in more times to have a dual supply or supply that is more diversified? And this then, in turn, will maybe result in a more costly supply side for you? Or what is the reaction to the situation? And also in that context, how did your customer react to this? I mean are they obviously not thinking about cancellations, you're expecting to just deliver the instruments then a little bit later. But I mean, what was the reaction on that side?

Yes, Michael, thanks for bringing it up. Actually, a complex question requiring a complex answer. So first of all -- and please allow me to get to that point first. So definitely, whenever possible, we already have dual sources for suppliers. But there are certain things where either economically dual sourcing makes no sense at all or where it actually provides risk.

So that certainly, there are some key suppliers which have their own IP, which would mean trying to find a second source would actually mean that most likely the source material would not be compatible, which means you would have to branch from day 1, which is extremely risky from a regulatory perspective and should be avoided from our customers.

So I think, obviously, trying to derisk supply chain is one of the core challenges, which means when, where and how to source. So definitely -- and that's something we are trying to get our customers on board is that in some areas, we can only address that properly by going into high inventory levels by highly risky and single source parts. We already reacted over the past 15 years towards that, that we are trying to particularly develop the complex materials ourselves, so which means that we can easily move manufacturing from A to B to C if we don't get our hands on things and that we control those suppliers at the very tail end, which have their own IP. However, there will be materials, just think about microcontrollers.

You cannot just walk away from a microcontroller supply and you see the issues [ VW ] has these days. I think this is certainly something no one actually expected. But I think we will have to accept that we are living in a world that supply chain interruptions like this can happen that in a globalized world where raw materials are sent 10x back and forth between Asia and only -- if one step gets interrupted, the entire supply chain gets interrupted. I think this is something -- these are problems which came to stay and probably in a deglobalized world, they will still stay for longer than everyone expects.

And the result of that, like particularly sourcing more locally and manufacturing local-for-local will definitely have an impact on pricing. So I think this is an assessment each of our customers have to take either to accept that they will have to live with supply chain interruptions on the one hand side or something we can handle for them, but they definitely will find its input to the price tag attached to the instruments and attached to spare parts. However, I think we are not the only one facing that problem. I think this will actually pop through the surface in a couple of industries over the next years. I hope that helps.

Okay. And then last question here really on your inventory situation and operating cash flow for the full year. What do you think you can achieve in the full year on the operating cash flow side?

And a detailed question here on the inventory because you mentioned that you have higher inventories in one particular area where it requires an upturn in the end demand -- end market demand. Are we talking about molecular here? Or is this something else?

It's allocated in our Molecular business, right? And it's particularly affected by the lower-than-expected or flatter than expected ramp-up curve. Definitely, that is our biggest [indiscernible] as mentioned, and we stick to that guidance at the very beginning of the year said that we will most likely manage to reduce our inventories by the end of the year in the area of EUR 5 million to EUR 10 million. And I think we are on a good track here. And that actually leads to the equivalent cash release coming from inventory levels.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Jan Keppeler for any closing remarks.

Thank you all. That concludes the conference call. Thank you, and goodbye.

Ladies and gentlemen, welcome to the H1 2025 Financial Results Conference Call and Live Webcast. I'm Moritz, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Jan Keppeler. Please go ahead, sir.

Thank you, Moritz, and also a warm welcome from my side to everyone joining us today to our H1 2025 earnings call. With me today are Marcus Wolfinger, CEO of Stratec as well as Oliver Albrecht, our CFO at Interim, who will guide you through the presentation and thereafter, we'll be happy to take your questions. This presentation is being webcast live, and you can download the corresponding slides either directly from the webcast or from our website. And lastly, I want to draw your attention to our safe harbor statement, which we have on Page 2 of this presentation. And now I'm happy to hand over to Marcus.

Yes. Thanks, Jan, and good afternoon in Europe and good morning in the United States. Welcome to our H1 presentation. As always, this presentation is split into, let's say, 4 major segments. First of all, I would like to give you an overview of what happened and particularly highlights. Then Oliver will walk you through the financials, then he'll get back to me, and I'll walk you through the outlook. And at the end, we'll have a Q&A session.

So I think it is important to understand that H1 was exactly as planned with one exception, which is obviously FX, and I'll dive into this and Oliver as well. So we returned to sales growth, thanks to the high Development Activities. And certainly, we saw stabilization with our Analyzer Systems. I think still, we see some volatilities here and there. However, particularly in instrumentation, the overall situation stabilized. And when we returned from one of the most important congresses in this industry, the ADLM in end of July in the United States, I think we definitely felt the spirit and the change of mood there and actually the appetite of driving innovation forward and investing money not only into developing new tests, but developing the infrastructure was clearly transparent at that show.

That's why we came back with, let me say, a better mood in terms of resource allocation, particularly in Development as, let's say, our Analyzer System business as well as our Spares and Maintenance Parts business was good since the beginning of the year or actually, this includes Q4 of 2024 as well.

Still, we see some volatilities here and there. And in certain areas of our business, we still have to drive within eyesight, which is for an organization which was used to growth for almost a decade a stressful situation in a stressful setup. At this moment in time, we are suffering a little bit with consumables, but we are expecting to get back to the historical rates towards the end of the year. We have progressed in the development of partnerships and definitely see this upturn in our deal pipeline, particularly in terms of System Development. It's worth mentioning that things are still fairly fragmented, which means at this moment in time, our partners are a little bit -- are still a little bit shying away from investing money into really substantial big developments of the big next-generation things and are trying to, first of all, keep their analyzer systems and infrastructure young by investments into new software versions, facelifts, upgrades and so on.

And I know I'm always using this lousy example of a car. What we definitely see in terms of age of the installed base is that same thing happens that if people are in an economically less robust situation and they typically replace their car after 100,000 miles that they now start to replace their cars only after 150,000 miles, which means they keep the instruments in the field as long as feasible and are investing more into Maintenance and not into these new Analyzer Systems, and that's exactly what we see these days. This is means to an end. We see this end coming up, and we see particularly those customers with high COVID exposure and then going over the cliff after COVID-19 that they start seeing recovery in the field.

The volume of tests is going up and up, not only in those areas which were not affected, neither positively nor negatively during COVID, but those ones which were positively affected and placed a lot of analyzer systems during COVID. And then thereafter, sold less analyzer systems that we see that they are emptying their warehouses. We see that new orders are coming in. I'll dive into details when we break down revenue streams. In the course of the presentation, we will give you some supplementary information.

I think, again, it is important to understand that we had this stable gross margin. So we were fairly proud that although we still see increasing input prices that we could keep traction in terms of output prices to a certain degree, we have a program ongoing in order to continue to improve on the one hand side, our cost situation; on the other hand side, our gross margin situation. So the delta we see really bottom line EBIT is almost exclusively caused by FX. If we would exclude the FX situation we had in H1, our EBITDA margin and our EBIT margin would be 200 basis points higher, and that actually shows the operational development of the company in the first 6 months. We can confirm our full year outlook, the developments in H1 were in line with intra-year expectations. And that gets me to the point where I would like to hand over to Oliver leading you through the financials.

Yes. Thanks, Marcus. Good afternoon, ladies and gentlemen. And let's start with a quick view on our major KPIs on Page 5. Sales increased in the first 6 months by 5.2% to EUR 118.6 million. This increase was mainly driven by a strong first quarter and a strong sales contribution from our Development business. In the second quarter, the sales figure decreased slightly by 1% year-on-year to EUR 58.2 million. And as Marcus already mentioned, however, we see a clear upturn in the deal pipeline in the area of System Development.

And despite a stable gross margin, our adjusted EBIT margin decreased in the first 6 months by 160 basis points, to 7.2%. And regarding the second quarter, the margin decrease was even higher with 640 basis points year-on-year. Marcus mentioned already, this margin decline is primarily attributable to impairment of financial assets in the amount of EUR 400,000 and the negative effect from currency translations in the second quarter, mainly with a net effect of EUR 1.7 million. And yes, without these effects, our margin would be at 8.9%. So I will come back to this later on in my presentation when we talk about our P&L in more detail.

On the next page, please, on 6, I would like briefly to comment on the adjustments to EBIT. By looking on the left-hand side, I would like to explain the effects from the adjustments from PPA amortization and some other one-off effects on our EBIT figure. Unadjusted EBIT amounted to EUR 5.3 million and adjusted EBIT was EUR 8.5 million. So in total, we adjusted EUR 3.2 million. EUR 1.6 million was for PPA amortization and the other onetime expenses include consulting fees for M&A and strategy advisory and some additional accruals for audit costs, but also for reorganization measures in the finance department to solve capacity constraints and some severance payments.

So these provisions for the audit and reorganization of the finance department are also in connection with the change of auditor and the adjustment of the accounting method as explained in our annual report. Let's move on to the next page, please.

Talking about sales development in the first 6 months of 2025. As said, our sales increased by 5.8%. This is based on constant currency calculation. The first 6 months show a resilient growth with Service Parts and Consumables and increased recognition of Development and Service sales. The ramp-up curve for newly launched product is still subdued. And we see a low, but stabilizing demand for MDx systems after pandemic-related decrease.

On the next page, I would like to show you a breakdown of our sales by division. Looking on the chart on the left-hand side, you see revenue from system sales decreased slightly by 2.4% to EUR 34.9 million. This is a share of 29.5% of total sales. The revenue from Service Parts and Consumables increased by 2.8% to EUR 53.7 million. This is now the biggest part of total sales with a share of 45.3%. And sales from Development and Services increased by 20% to EUR 28.8 million and accounts now for 24.2% of total sales.

Maybe Marcus, you would like to comment more on this Development?

Yes, I think here, the 6 months charts are a little bit misleading. And the plots are -- will certainly not be in line with what we'll see at the end of the year. I think it's obvious that at this point, and Oliver elaborated on that already that at this moment in time, particularly Service Parts and Consumables are higher than after the 6-month period in 2024. Same applies for Development and Services, and we are shorter in Analyzer Systems.

On a full year basis, this picture will definitely change. So at this moment in time, revenues with Service Parts and Consumables are very heavy loaded by, particularly Service Parts and Maintenance Parts and less by Consumables. This is about to change. Same thing applies for Development Activities. So I think at the end of 2025, Development and Services will fall shorter than actually in 2025. And for Analyzer Systems, we'll definitely see higher growth rates as compared to 2024. So what I want to get across is that at this moment in time, it looks like growth is driven by the Service Parts, Consumables and Development.

However, on a full year basis, it will definitely be driven by Analyzer System. And I think that's important to understand that this is going to happen in the second half of the year. A lot of the activities, which will lead to sales, particularly like prework for manufacturing has been done already in the first 6 months. We have additional order, particularly and if you might please bear with me, we talked about that at the end of last year that things were pushed out into 2025 that some of those things will now become effective. And that's why we are expecting on the one hand side, a reduction of the inventory levels because things are inventory at this point. And secondly, that Analyzer System sales is going to accelerate materially. Oliver?

Okay. Let's move on to the next page, where I would like to comment on our adjusted EBIT and EBIT margins. As you can see here on the left-hand side, the chart here, our EBIT decreased by 14% to EUR 8.5 million and adjusted EBIT margin decreased by 160 basis points to 7.2% year-on-year. This is attributable to a sharp decline in margin in the second quarter, where we achieved only 5.4% after 8.9% in the first quarter.

If you look on the -- if you look at the table at the bottom right, you can see how costs have changed year-on-year. R&D and sales-related expenses are slightly better year-on-year. G&A expenses increased by EUR 1.7 million, but these expenses include one-off expenses in the amount of EUR 1.6 million, as I already mentioned, for consulting fees, some auditor fees and severance payments.

A major negative impact, as I said, on profitability comes from the currency translation effects arose in the second quarter. These are booked under other operating expenses and the net FX effect in the first 6 months amounted to EUR 1.7 million. Year-on-year, the change of the net balance of other income and expenses is even higher with EUR 2.3 million, if you look here on the table. That's one of the main effects on our EBIT margin decline.

In addition, we booked -- maybe another word regarding our FX effects. I think that's also mentioned. If you look into the future, and if you look on the development of the U.S. dollar exchange rate, so just to give you a certain flavor here, regarding our budget, we calculated this exchange rate of [ EUR 1.11 to U.S. dollar ]. And now the current exchange rate is around USD 1.16 to USD 1.17. And we expect that the U.S. currency exchange rate will be by the year-end between USD 1.15 and USD 1.20. And we have calculated this based on our expected U.S. dollar sales. So we expect or we see a certain risk if the dollar is going in the direction of USD 1.18, so we see here maybe another effect of USD 1 million, but this is in regards to sales to lower sales and then with a related margin effect. So that's maybe regarding the FX, what we expect here.

Then in addition to this FX impact, in addition, we booked a EUR 400,000 flat rate allowance for overdue receivables. This is for receivables, which are overdue for more than 90 days. And in general, we do not have any problems with bad debt. And so we see here not an increased risk in this area. That's just for cautious reasons here, and that's some of the requirements from IFRS, where we have to show this now on a singular basis.

The margin decline in the second quarter should not be viewed as an ongoing trend. Our gross margin was stable despite a low sales volume in the second quarter. And for the second half of the year and especially in the fourth quarter, we expect much higher revenues from System sales, but also from Service Parts and Consumables and Development business, which should have a positive impact on economies of scale and will lead to a significant EBIT and EBIT margin improvement in the remaining 6 months of 2025. And as Marcus mentioned at the beginning, based on these expectations, we confirm our full year sales and margin guidance.

Let's move on now to the cash flow development on Page 10. Our operating cash flow amounted to minus EUR 5.8 million. The main factors influencing this weak cash flow situation were, on the one side, lower net income of EUR 1.4 million, high tax payments for the Stratec Germany company in the total amount of EUR 6.9 million. These are mainly tax arrears for the period 2018 to 2022. And in consequences, we had also now higher tax prepayments for 2025.

We also see here a net increase of inventories by EUR 3.3 million, and we see a decrease in trade payables in the amount of EUR 3.7 million. Our DPO is currently at 60 days. And regarding the increase in inventories, we can -- you can see in the balance sheet here an increase from EUR 122 million to EUR 125 million. This initially appears to indicate a further growth. But if we look on the raw material and the raw materials are the biggest part in our inventories, they remained virtually unchanged. And I have to say that inventories of work in progress and finished goods rose slightly. We expect a significant increase in System deliveries in the third and fourth quarter.

And just to give you a rough idea, we expect sales from Systems, this will increase roughly from EUR 35 million to EUR 57 million in the second half of the year. And in order to meet this higher demand, we have to stock some material in new parts. And therefore, despite measures that we have taken in our purchasing department, for example, we have significantly reduced our commitments from framework agreements concluded in previous year, inventories did not decline overall by the end of June.

However, with higher shipments, we expect noticeable improvement by the end of the year with corresponding positive effect on operating cash flow. Due to the negative operating cash flow, the free cash flow swapped into a negative figure of EUR 14.7 million as well. Our financial indebtedness calculated on net debt to adjusted EBITDA deteriorated from 1.8x to 2.3x. So we have enough headroom to be compliant with our financial covenants.

And another remark here, we are currently in the process to refinance our bridge loan and part of our bank loans by a new syndicated loan in the amount of EUR 125 million with a term of 5 years plus 2 years of extensions. We expect the signing and closing of this transaction by end of August.

With that said, I would like now to return to Marcus, who will comment on our outlook and on our guidance. Thanks a lot.

Thanks, Oliver. So again, Oliver already mentioned that we want to confirm our financial guidance. So Oliver mentioned and I mentioned before that we still see some volatilities and lumpiness here and there. However, we factored in enough leeway and wiggle room to deal with those factors even, like as Oliver mentioned, if FX continues to move in the wrong direction, so the max risk exposure top line with a dollar exchange rate of 1.18, which is, I think, at this moment in time, consensus by certain banks, where we will be at year-end. This means an additional applied pressure top line of about EUR 1 million, like I said, already factored in, and there is some leeway here and there.

So confirming guidance, so consolidated sales for 2025, we expect growth low to medium, high single-digit percentage range on a constant currency basis. Current forecasts are looking very well, orders in the books. So -- and actually things in production. We actually see some upside here and there, are discussing with a number of customers if they -- what happens if they increase their forecast between now and end of year, whether or not we are able to supply. And I think, again, it's worth mentioning that the times are over where a supplier network -- a worldwide supplier network with all those headwinds facing here and there is able to increase manufacturing materially within weeks or months. So that's why at this moment in time, we are planning manufacturing based on actually mentioned demands or actually given in forecast, which are typically customer contract, independent forecasts are given covering 4 quarters. So typically on a rolling basis, so we are covering at least a year in terms of forecast.

Adjusted EBIT margin forecasted to be in the area of 10% to 12%. So obviously, we had this discussion about what happens with FX applying pressure in the first 6 months. As mentioned now a couple of times, we would be further up by about 200 basis points if this wouldn't have happened. So is this -- does this mean that our guidance tends to the lower end? So the answer is no. Like I mentioned already, we already factored in certain wiggle room when we have given this guidance at the time, particularly considering things like tariffs and customer behavior and shipping times and weaknesses of certain markets, uncertainties in China and so on. So we were really trying to err on the safe side.

Investments in tangible and intangibles combined in the area of 8% to 10% of sales. Last year, super cautious, only 7.1%. I think this year, there is a certain catch-up effect that will probably get between this forecasted 8% to 10% probably based upon incoming orders and particularly new development activities, which, like I said before, have been brought in over the past 3 months and other very promising upcoming, so probably requiring further investments, which will get us into this 8% to 10% ratio.

Certainly talking about our focus for the remainder of the year and beyond. So definitely, maintaining cost discipline is a very important thing for us. We want to keep things under control. So we -- over the past 2 years, we have initiated 2 independent earnings improvement programs. We were very cautious with trying to keep motivation up on the one hand side, but on the other hand side, applying a high degree of discipline, not that we certainly wanted to avoid the drainage of know-how and talent, which I think worked out very well. However, we'll continue to keep an eye on that. In certain areas, we are expecting a certain catch-up effect because, like I said, for an organization, which was used to growth for almost 2 decades and now going like over the past 2 years sideways now expecting growth to come back. This is a situation we had to learn and live with. And I think this worked out very well, but please bear with me, we will certainly maintain a high degree of cost discipline.

Executing a deal pipeline, I think it is worth mentioning again that things got very fragmented over the past 2 years. So the really big teams were lacking -- really big deals were lacking. However, we see that our customers are now discussing new bigger things. We keep our product portfolio young with the help of our customers. They are financing their relevant products to keep them young. We have nice promising things ongoing. So we are very positive that we can execute on this deal pipeline.

With those deals we have executed over the past years, which are now leaving the deal pipeline and will leave the development pipeline over the next 2 to 3 years, we will definitely support our operational growth. However, we need to fill up the development pipeline, and that's actually an ongoing process with very promising activities there as well. Then certainly, within our strategic development, we have identified areas of growth where we are investing as in the past, our own money, in order to be able to maintain our business model where our customers are stepping in at a certain point, and we are not developing their product, but are using our technologies in order to develop specific products for our customers using our background technology, which helps us in order to be responsible for supply, long-term services, product life cycle management and consumable and spare parts supply over the entire product life cycle. So definitely a very important part of our business model.

Those areas are amongst others, and we obviously only mentioned those areas which are well known and where we have already a certain footprint, like high-sensitive immunoassays, certainly advanced imaging where we have invested a tremendous amount of money over the past years and certainly, particularly as far as liquid handling activities are concerned in cell and gene therapy.

Then certainly, with the acquisition of Natech and with the activities we already had in our Smart Consumables business, we are now able to show the full value chain, helping our customers to leverage the relevant business models of Natech-Stratec Consumables and Stratec Instruments in order to move further away from supplying our customers with the relevant parts like instruments or consumables and stepping closer to actually a full system supplier, being responsible for literally everything except the biochemistry coming from our customers over the entire product life cycle.

We have a very well-filled pipeline as far as M&A is concerned, very binary. But I think if you believe in consolidation and we believe in consolidation, this is the time to act. Over the past 10 years, we saw definitely elevated prices and the quality was not as expected what we saw now. The times are there that the quality of potential targets is increasing and prices are getting more and more reasonable. So this is the time to act, and that's why we keep our eyes open.

Then certainly, we definitely need to improve our cash flow dynamics. Oliver mentioned our activities here and there, definitely, and we discussed that at length over the past 12 months to improve our inventory efficiency. And again, please bear with me, particularly for those Analyzer Systems and Consumables, which are turning and which are generating our cash flows and revenues. Inventory management is already optimized. And when we are sitting on inventory levels or elevated inventory levels, this particularly affects those Analyzer Systems, which are unfortunately not turning. But as the product life cycle of those analyzers are 10, 15 years and particularly for those ones not turning at this moment in time, they are still at a very early stage of the product life cycle.

This is not a waste. We are just sitting on inventory levels. Our customers are financing that or we are applying material and substantial pressure on our customers to finance that. So we hope we can work that down. And as Oliver mentioned, and I think we still stick to that figure. We are expecting a cash release coming from inventory of north of EUR 10 million on a full year basis. This gets me to the end of the outlook and the focus. And I would like to hand back to Moritz, who will explain us how to do Q&A.

[Operator Instructions]

And the first question comes from Jan Koch from Deutsche Bank.

I have 3, if I may, and I would like to ask them one by one. The first question is on your Analyzer System business. You mentioned an increasing momentum in this business in the second half of the year. Can you provide more details on this? Specifically, which application areas are driving this growth?

Yes, Jan, thanks for the question. And I think it's a smart move to handle those questions step by step. So what's happening here? So definitely, what we see is that particularly in areas like I would say, at this moment in time, higher throughput analyzers. So driving the trend of centralization is definitely what we see, particularly in areas like immunoassays, particularly in immunohematology, a little bit less in molecular, but return and again, allow me to kind of mention that we are in a special situation, which is not just related to the, let me say, the tail end of COVID and oversaturation and working down the inventory levels and capacities built during COVID-19 at the end customer side.

So you probably remember that we are in a generation change for a molecular instrument for one of our most important customers. It's a smaller instrument, a benchtop analyzer system where we are about to change generation, which is going from version 1 into version 2, requiring additional approval schemes. And we are in this transition phase. So this is not just let me say, overcapacities in the field, it's as always that if you announce a new analyzer system that the demand of the old one shrinks, nobody wants to buy something, which will be outdated soon. That's why we still see a kind of hesitant behavior of end customer, end customer for the Panther franchise still with a high dominancy in the United States and high exposure in the United States with still high degrees of saturation in the centralized lab. We are going sideways.

As far as the TMA solution, if we're looking into the Panther point -- sorry, PCR solution, we still see increasing demand, which is actually nice to see that demands are really coming back. All our other molecular analyzer systems always showed good traction. So we definitely cannot complain here, and that's why we see momentum coming back. Hematology is one of the weak spots at this moment in time. We see a lot of -- particularly in commoditized areas, we see a lot of competitive pressure, particularly as far as pricing is concerned. And we don't have -- in certain areas, we don't see any technological advantages on our end. That's why we are investing a tremendous amount of money here as well to keep our, let me say, the level of innovation up, and we'll see what's going on there.

Like I said, very good tailwinds in immunohematology. Return of demand in molecular, good traction as far as our Advanced Sample Prep business is going. In other areas, like particularly in the Smart Consumables section, we see that demand is still very volatile. We hope that we will see a recovery towards the end of the year and beginning next year. And hematology is really suffering from competitive setup, particularly coming with instruments, like I said, in the commoditized areas coming from Asia. Next question.

Great. Then second question is you mentioned that some of the recent product launches are less dynamic than expected. Is this a structural issue or just a timing issue? Or to phrase it differently, do you still believe that these launches could be a meaningful contributor down the road?

Jan, if you allow me, I would like to kind of make a little bit of bigger circle just to make sure that everyone understands the question. So during COVID-19 and thereafter, I think it was very obvious that the analyzer systems with huge additional demand driven by COVID-19. So I'm mainly referring to molecular instruments, particularly PCR-based instruments. I think it was obvious that this will lead to a certain saturation and that saturation will lead -- in the years to follow COVID-19 will lead to a kind of lower demand for these very analyzer system.

But we were trying to explain to the financial market that particularly during COVID-19 and right thereafter, we have launched a number of instruments and that we, at that time, believed that the launches were able to actually offset the declining demand from these instruments with high COVID-19 exposure and therefore, oversaturation and therefore, lower sales following COVID-19. This unfortunately didn't happen in the expected manner. We named 3 different analyzer systems, which were affected by that, but they had all different stories.

So I think in immunoassays, I think the market after COVID-19 was driven by a high degree of centralization and less -- lower instruments. That's why the pickup here was lower. But I think with this next wave in immunoassay systems and decentralization in Europe and the United States and still higher demand in testing volumes, we expect that this midsized analyzer systems will pick up materially. Our customer is bringing menu on that analyzer system. So we have no doubt that this will pick up. Then we have a DPCR instrument still suffering. The customer isn't bringing menu on that analyzer system. So here, we expect a certain pickup.

I wouldn't say that this is structural. This is very much driven by the individual focus of the relevant customer and by the relevant situation of our customer. And when I say situation, it means the menu available on the analyzer systems, the markets our customers are trying to tackle here, so differentiating Asia, the United States and Europe. Again, Oliver mentioned, we still see, as referred to the initial business cases we had with those instruments and the contracts we have with our customers, particularly talking minimum business guarantees, we see at this moment in time in all 3 areas, lower-than-expected upturn curves. However, in the communications we have with our customer, we are expecting that with a certain deferred consideration that we will get to the point we expect it to be already 2 years ago.

So yes and no, Jan, this is partly customer independent, partly structural. But like I said, this business didn't vanish. It's just pushed out. I hope that helps.

Yes, it does. And then finally, on your margin guidance. We have seen over the last few years that orders or the realization of developments that were postponed by a few quarters. How do you view the risk that this happens again this year in view of the required implied acceleration in...

Yes. I think that's actually already factored in. So we learned from the mistakes of the past. So obviously, we were -- and all who are following us for a long period of time that we were always trying to kind of decouple activities to a certain degree to make sure that our years are not always as back-end loaded as they used to be in the past. However, again, in 2025, the year will be back-end loaded. However, we factored that in. That's why at this moment in time, if we are looking into the KPIs, if we are looking into the inventory levels, if we are looking into how we put our analyze systems into manufacturing, the demands of the customers, the communication we have with the customers, how they are planning to take those instruments showing that this guidance is actually in line with the way how we are supplying our customers with instruments, consumables, software upgrades and so on. So we don't expect any disruptions here.

Then the next question comes from Michael Heider from Berenberg.

I would also like to go one by one here. The first one is on U.S. tariffs, relatively unexpectedly for me and also for the Swiss country, the U.S. has imposed high import taxes on Switzerland, 39%, I believe. Can you give us an update on your production share in Switzerland? And what do you expect whether these high -- now much higher tax tariffs will have an impact on demand or maybe even on your competitive position?

Yes, Michael, thanks very much. Thanks for bringing that topic up. It was like a 30-second question, which requires probably a 10-minute answer. So I'll try to make it brief. First of all, I think it is important to understand where Stratec is standing in their value proposition towards the end customers. So if we see a typical setup where we are providing analyzer systems and plastic consumables to our customers, which are the life science research companies or the diagnostics companies of the world, and they are selling their products and services with their biochemistry to the end customers, which, let's say, is a laboratory to make things easy.

Then our value proposition is only 10% for the Analyzer System and 90% of that value proposition towards the end customer is coming from our customers. And those customers are typically, particularly in the United States and in China and in Europe are manufacturing locally, which means if what we provide sees a perceived price increase by, it doesn't matter, 30%, 40%, then we make that 10% to 14%, adding the 90% coming from our customer, which makes the price increase from, say -- or the price or the perceived value from EUR 100 to EUR 104. So I think I did the right math, and I hope you understand what I mean.

So long story short, I think short term, this is not meaningful. But I can confirm that literally each and every of our customers with U.S. sales exposure is bringing up the discussion about localizing manufacturing. What do we do about tariffs? How can we handle that? So we literally have, say, different discussions in different depth levels with literally each and every of our customers. I'm not super worried about, say, short and midterm structural changes or behavioral changes of our customer. I'm more worried about that a U.S. customer says, "Why do I continue to work with a European company even if the quality and the pricing scheme fits and we are a perfect partner if we see volatilities in the tariffs here?"

We have to definitely make sure that our customer perceives our services, particularly in the United States as being brought from the United States. That's why we are undertaking activities in order to do more in the United States, which is definitely important for our customer. This is, like I said, less a transactional thing, but more a perceived thing. So we are working on that. At this moment in time, particularly on the instrumentation side and on the spare parts side, we are generating between 40% and 50% of our revenues in Switzerland.

However, we have the means to split up things that -- let me give you like an oversimplified example, that we are shipping analyzer systems, which are going to the United States from our German manufacturing site and try to serve the rest of the regions of the world out of Switzerland. So we have certain levers. But like I said, this is an ongoing discussion. It's not an easy one. It's painful and requires a lot of transactional activities in order to be on the safe side and to make sure that, let me say, the customer doesn't perceive this as a further burden. I hope that helps.

Okay. Then on -- again, on the H2 development that you're expecting, did I understand Oliver right that you're expecting EUR 57 million sales in the second half in systems?

Yes. So like I said, I would not confirm. Oliver said definitely the EUR 57 million, and we are expecting that to happen. On the other side, there are things -- it very much depends on the perspective of analyzer systems, what's factored in. We have, let me say, different metrics on that. However, in the comparison we have on the slides, which are in front of you, the EUR 57 million can be confirmed. Could even be higher. We have certain tenders of certain customers, which are not yet fully confirmed. On the other side, we -- particularly if we bring in additional business for those tenders, we still have limitations to be able to supply. However, looking into our financial forecast, the EUR 57 million are factored in at this moment in time.

And then the operating cash flow was highly impacted by this tax payment, as you have elaborated. Related to this, so what is your best guess for your tax rate going forward?

At this moment in time, so I think we can sustain our existing tax rate. So definitely, we'll move away from historically low tax rates in the area of south of 20%. But I think -- and I mentioned that discussion. So obviously, the earnings generated in certain areas, which have lower tax rates in the group are particularly affected by tariffs at this moment in time, which means so doing more manufacturing outside those low tax areas, means certainly covering the revenue side of things, but not the tax side of things.

So at this moment in time, I definitely want to shy away from giving you a robust indication. But as I've mentioned, we are in a phase where we have to act very agile, and we are intending to do that. Looking into the forecast, I could certainly give you that tax rate, and I actually have it in front of me. But at this moment in time, this is definitely too volatile and too lumpy that I would like to make that point and later on discuss the post-tax KPIs as compared to our indications given at this moment in time.

Okay. But I mean you said that you want to maintain it, you maintain it on the level of last full year or on H1?

The tax rate will be between roughly 20% to 23%. And as I said, this is -- this was tax arrears coming from a mutual agreement with the fiscal authorities between Germany and Switzerland. And here, we had to -- and we have finalized the negotiations and discussions with the tax authorities. And thereof, we had to pay here local and corporate tax in the amount of EUR 3.2 million regarding this mutual agreement, and we had also then to increase our prepayments for '25. This has now had an impact on the cash flow situation. And as you can see from the balance sheet, we have reduced also our tax liabilities on the balance sheet.

So Michael, was this more a cash flow question or more tax rate question?

Maybe regarding the profitability or the net income -- impact on net income was my understanding.

And the next question comes from Oliver Reinberg from Kepler Cheuvreux.

Marcus, the first one will be on currencies, just getting back on that. If I understood you correct, you talked about EUR 1.7 million headwind in the first half and potentially another EUR 1 million in the second half. I just want to clarify, is this just the impact on the other operating income line, which I guess is down to the revaluation effect at the end of the day. But I guess on top, you simply have the impact from the mismatch that you have meaningfully higher sales than cost exposure. So first question would be just can you clarify, is it just like balance sheet positions? And what would be the kind of all-in impact on the margin from currencies for the full year, and that would be helpful.

Oliver, more a question for you.

Yes, yes. Okay. Regarding this EUR 1.7 million, this is the net effect from translation -- from currency translation. This means evaluation of cash positions in the balance sheet, evaluation of intercompany loans, evaluation of accounts receivables, accounts payables. And here, we had a negative impact, which is more or less the other expenses shown in the P&L. And then we had to counterbalance this by operating -- other operating income. This is not only FX gains or gains from this currency translation there. We had also some effect from release of accruals, but the net impact on the currency was EUR 1.7 million, and this is all regarding the balance sheet items.

Regarding the sensibility of our sales regarding fluctuations in the currency exchange rates, I said that we have calculated, of course, our guidance and our sales forecast based on an exchange rate of USD 1.11. And now the U.S. dollar is much weaker with about USD 1.16. And we have done also some forward agreements to secure exchange rates. They have a positive market value at the moment. And yes, we think that if the dollar continues to be weak and will be at USD 1.18 by year-end, then that might be a risk of USD 1 million coming or a burden regarding lower sales and therefore, a little bit lower EBIT margins coming from the lower revenues.

But just to clarify, that includes the impact from the mismatch between sales and costs that you have in U.S. dollar?

Excuse me, could you please repeat the question because I had to...

Yes, so can you hear me? Oliver, can you hear me?

I'm sorry, we might have lost the speaker line. Please hang in. I will dial the speaker line and join him again.

Oliver, I'm still in the line. So I think we postpone. So...

Then, I think the question on you, Marcus.

Yes, no. Just fire.

The question is simply like the EUR 1.7 million plus the EUR 1 million, does this include or exclude the impact from the mismatch from sales and cost in U.S. dollar?

Oliver just stepped into my office, so he can answer himself.

Yes, I have to apologize for this. Okay. So maybe you can see also the -- what I said is these are translation -- currency translation effects on balance sheet items, EUR 1.7 million. And of course, in addition, you can see the impact if you look on the sales growth on constant currency levels and the difference here is growth rate 5.8% to 5.2%. So this is the impact from a lower U.S. dollar in the first half of the year.

Yes. But what is still not sure to me whether the -- I mean, if we leave all balance sheet items aside, as the dollar devaluates on 40% of the sales and you just have, let's say, 20% of cost in U.S. dollar, you have an impact on your profitability. Is that already included in the EUR 1.7 million plus EUR 1 million or not?

Yes. I understand, yes.

This was included.

Yes, yes.

Okay. Perfect. Sorry. And then just the other follow-up would be on tariffs. So in the past, my understanding was that your prices are basically designed on an ex-factory price. So Marcus, what you just talked about like you're shifting around the deliveries. I mean, the increase -- the impact of the tariffs, is that paid by yourself now and you're raising prices?

No, no, no. Sorry, that was probably a little bit misleading. So obviously, I was trying to explain things from our customers' perspective and end customer perspective. We definitely invoice ex work, which means we invoice as soon as literally and oversimplifying if something leaves our factories. And like I said, this applies for 90% of all our shipments. In some cases, we have other regulations. But in no case, we are actually in charge for the tariffs, which means our customers are exporting themselves, and that's why tariffs are applied on them.

Perfect. That's helpful. And the last question, if I may, just because you were a bit more vocal than M&A. I mean, it was an ongoing topic, I think, for a bit of time now. Are these all smaller deals? Or are there also potential deals in the pipeline that would potentially require the help of equity?

Oliver, we discussed that a lot. M&A is binary. It's a yes or no thing, very digital. So we have -- and I can -- and allow me to reiterate myself to a certain degree and then put a little bit more meat around the bones. We have an active process. We -- in some cases, we were very close and it didn't work out due to a variety of factors at the end. We -- at the end of last year, we had a target which was actually a company which was to a certain degree on a smaller scale comparable to what actually Stratec mothership does with a little bit less exposure to own IP.

In other cases, we are looking into early-stage activities. In other cases, we are looking to increase our footprint on U.S. soil. So it very much depends. We are going in different directions. Direction one is trying to find the Stratec 2. Other direction is innovation. We talked about cell and gene therapy. So obviously, we are looking -- lacking certain technologies. So M&A may mean in-licensing or finding targets which particularly address those technological demands. And so certainly, we are going into different direction as far as Consumables and Smart Consumables are concerned in instrumentation.

So it's -- obviously, to a certain degree, we keep our eyes open. And from that perspective, it is, to a certain degree, opportunistic. However, we have identified focus areas. We have identified, let me say, ticket sizes and that's what we actually do. But full bandwidth, let me put it that way.

[Operator Instructions]

And the next question comes from Alexander Galitsa from Hauck&Aufhauser.

Just one thing I want to clarify on the tariff, if I understood correctly. So basically, is that across all your customers, this arrangement that the customer is responsible for the export of analyzer, which practically completely eliminates your direct exposure to tariffs. Could you just confirm that?

Alex, I can confirm your statement, but that doesn't make the problem vanish. As a matter of fact, if -- let me say, if a customer is -- we have a contract with our customer that the transfer price of a certain good is EUR 100. Then we invoice EUR 100, but the customer needs to bring it to, let me say, the destination, the final destination. Certainly, intercompany transfer pricing of the customer applies then because we are typically shipping to centralized warehouses, which are sitting somewhere. In some cases, we still have them in Europe or on the British Island and so on. And then tariffs are applying as soon as those things are getting imported into the United States, and this is what is the responsibility of our customer.

So let me say, we are not affected by the fact that we are shipping something, but it increases the price for our customer. And if we think about a reagent rental model where a customer of ours, although we sell the product, so we have it from our books, we send the invoice. The customer gets the title, the customer keeps the product like an analyzer system on his own books, and does a reagent rental agreement with a client. He puts the equation into an excel sheet of how many diagnostic tests are sold. And if the instrument price goes up, the equation, in some cases, may longer fit and would have fitted if we wouldn't see tariffs.

So that's definitely something which penalizes everybody in that value stream, probably us with a lower demand. We don't see that at this point. Probably our customer have to pay the tariffs and factor it in into the reagent rental model and the end customer with increased prices and therefore, the payers that they have to pay higher prices. So at the end, it's a penalization for literally everybody in the value chain. At this moment in time, we are not affected at all. We are just affected by structural behavior of certain customers, like I said, probably changing in focus of areas where the utilization of an instrument goes up and therefore, placing less instruments. Or in other cases, where probably for the next-generation instrument, the customer thinks about probably a closer cooperation with U.S. providers rather than European providers.

But that's actually something where we keep working on. And definitely, and I mentioned that already a couple of times, not only since tariffs are applied, that we need to increase our exposure in the United States in terms of sourcing, in terms of manufacturing and in terms of supply towards our customers. That's an important step for the next 10 years.

Understood. Just one follow-up on that topic. This situation, do you see it already trickling down into the, I guess, competitive bidding process when you talk to your customers that they might be preferring to work with suppliers that do have a stronger presence in terms of manufacturing locally? Or how do those discussions go?

Not at all at this moment in time, Alex, but we are certainly worried about that coming up. That's definitely an important point. So -- but like I said, you don't have to be worried about that. This is one of the actual focus areas we are working on. Don't be worried about that.

Okay. And then maybe a few topics, just more high level to understand the broader dynamics. In terms of analyzers, maybe -- and you did mention or gave some color in the presentation around that, but just wondering whether there is more you can add on the high level. Would you say we are sort of at the end of the bottoming out cycle, if not maybe already past it in analyzers and you should start seeing sustainably more growth coming through in the next quarters and not only the H2 uptick that you envision, but also beyond that? That's the first question.

And then the second one is sort of the dynamics within individual franchises. H1 revenues were practically flat at EUR 35 million. Now you expect a substantial uptick. But just to get a sense what sort of growth rate dispersion between those sort of individual franchises? Is that -- do you continue to lose revenue in molecular, so the molecular diagnostics are still normalizing? Or do you see it already at the sort of floor and now about to take off or maybe slightly starting recovering? Any sort of color within sort of more granularity within the mix? What are the revenue growth rates you're achieving with analyzers ex molecular diagnostics and what molecular diagnostics are doing?

No. Alex, excellent question, and thank you for that. But it -- actually the answer requires a deep dive. Let me try to lean back and try to get you an overview without making the deep dive in each and every section and every franchise. So at this moment in time, obviously, if we look into testing volumes, and I'm merely referring to the diagnostics space. However, please bear we see similar dynamics in Life Sciences.

Definitely, the entire industry at the tail end and particularly thereafter COVID-19 moved into more a paralysis mode, being very cautious and trying to keep up the, let me say, the legacy product portfolio young, applying grandfathering rules and so on, which means at this moment in time, we definitely see an elevated position in terms of spare part supplies because let me get you that again, stupid lousy example of the cars that you are doing more changing the brakes if the car gets older. That's what -- and we are doing the very same thing, So which means in the field, our customers are keeping their portfolio young by doing maintenance and service works rather than selling new analyzer systems, even if selling new analyzer systems from a service cost perspective would make economical sense.

I think this is structural behavior and just psychology at this moment in time and probably availability of financial resources as well. This doesn't apply for us -- apply for our customers. So let me say, with a higher degree of normalization of that our customers are getting into a bigger -- a better mood, are getting more appetite to invest more into their own future, by new markets, new placements, even going into accounts where the economical sense is not present from the get-go, will rather happen downstream. If this gets back, we'll definitely see again elevated analyzer system sales and a lower contribution in-percent coming from spares and maintenance parts. That's a given fact.

I think at this moment in time, particularly -- and I'm not talking consumables, I'm only talking maintenance parts and spares, which are, at this moment in time, artificially elevated coming from that structural behavior. We'll return back to more normalized. But, however, this is overlapped by a number of generation changes we have at this moment in time. So particularly our best sold immunoassay product will see a generation shift in the next 4 years with market launch pretty soon. But then applying that new instrument sales in certain markets is through all of our customers. So that transition will continue to be 4 years endeavor, which is going to happen. So this will actually positively overlap demand coming from that structural change I've mentioned before.

On the other side, we definitely see that -- and that was -- I don't want to say one of the low-hanging fruits, but that was way easier than to apply cost increases on analyzer systems and applying price increases on spare and maintenance part supply is that our customers really have their development budgets, and we can take advantage of this high development budget, which is helping us to roll certain costs like maintenance cost, next-generation software developments or new process modules within the analyzer systems to keep those products young and still keep regulatory approval up. The budget here is there and that you see that in elevated contribution of revenues coming from the actual development revenues.

I think this is more sustainable than the in percent elevated contribution coming from spares and maintenance parts. I know this was a 30,000-foot perspective, but I hope it helps you to assess the situation. I think, again, it's worth mentioning that instrumentation and therefore, from our customers' perspective, CapEx comes at the tail end of investment cycles. We already saw volume coming back into the businesses of our customers in the fourth quarter of 2024. And that's why we believe being at that tail end of investment cycle that analyzer system sales will pick up over the next, say, 6 quarters. Hope that helps.

Understood. Yes. And the last one for me is around Service Parts and Consumables. H1, there was only a slight growth in revenue. You mentioned that you're still suffering in Consumables, but expect it to get back towards historical rates soon. Just if you could maybe separate those 2 services, Service Parts and Consumables, how those individual verticals are performing?

Yes, Alex, when describing the dynamics in this business, I was actually differentiating. We are not reporting those, let me say, within the franchise of Consumables, Service Parts and Maintenance Parts. We are not reporting those isolatedly. What I wanted to make sure is that you understand is that at this moment in time, the growth is driven by Service Parts and Maintenance Parts, less by Consumables. In the future, it will be driven by Consumables. And I think that's the message we want to get across.

Could you just explain why Consumables, what's happening in Consumables? Why are they -- why are you suffering in this area?

At this moment, probably important to understand that when we are talking about Consumables, we are always talking of what we call Smart Consumables. At this moment in time, we saw that some of our customers have taken back their forecast. And again, it is important that I don't want to get you details about our customers and customer behavior. I cannot. This is the role of our customers. We have CDAs and NDAs, so we cannot share data, which may lead you to the point that you can isolate isolated customers.

However, we were talking about that we are suffering with, overall in the group with lower-than-expected ramp-up curves for new analyzer systems and part of what we expected to happen in our Consumables business is definitely a derivative of one of the businesses, which at this moment sees a lower-than-expected ramp-up curve. We can offset that in the Instrumentation business with higher demand in other areas and New Instruments. Certainly, with the development cycle in Smart Consumables and the investments taking place here, you definitely see that directly, and that's what we actually described here. I hope that helps.

So it seems there are no further questions at this time. So I would like to turn the conference back over to Jan Keppeler for any closing remarks.

Yes. Thank you, Moritz. This concludes our today's call. In the case you have any further questions, please do not hesitate to contact us or anyone else from the Investor Relations team. Thank you again for joining, and goodbye.