Sartorius Stedim Biotech Stock

Thank you, and hello, and a warm welcome from my side. So today, I'm joined by our CEO, Michael Grosse; by Florian Funck, our CFO; by Rene Faber, Head of our Bioprocessing Division and CEO of Sartorius Stedim Biotech; and also by Alexandra Gatzemeyer, Head of our Lab Products and Services division. As always, we will start with prepared remarks followed by the Q&A session. The call is scheduled to last 1 hour. [Operator Instructions].

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

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

Thank you, Petra, and a very warm welcome from my side as well. When I look back at the first half year, I'd say it's been an encouraging 6 months for Sartorius during which we continued our profitable growth trajectory. We delivered solid top line growth. We've improved profitability, and we've generated strong cash flow.

Before turning to the H1 business performance, let me share one personal observation. Over the past few months, I've spent a lot of time meeting customers around the world. And what struck me was the incredible level of innovation, investment activity and optimism right across the industry. I talked to CEOs, COOs and procurement executives across all regions. My key takeaway is that the demand for high-performance single-use products, reagents and technology to substantially improve productivity and total cost of ownership is bigger than ever before.

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

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

Okay. Now let's move on to the H1 performance set. Group sales revenues on an operational basis increased by 7.7% in H1, supported by healthy underlying demand across both divisions. Recurring business stays the main driver showing an increase of slightly more than 9%, while the equipment business was growing around 2%. This clearly demonstrates that the underlying momentum of the business is indeed intact.

In Bioprocessing Solutions, we delivered 8.3% growth on an operational basis in constant currencies with consumables continuing to be the primary driver. Importantly, equipment stabilized and even returned to slight growth in H1. That's an important milestone because it reinforces our view that the bottom is behind us.

I'm particularly pleased with the performance in the Lab Products & Services, where momentum continued to build following the return to growth in the second half of last year. Sales increased by 5.3% on an operational basis in constant currencies, supported by gradually improving end markets and the contribution of 2.8 percentage points from the MATTEK acquisition last year.

Let's have a quick look at profitability. On group level, higher volumes and operating leverage translated into improved profitability. The underlying EBITDA margin on group level improved to 30.3%, and Florian will go into details a bit later on. Let me briefly talk about the recent developments related to the U.S. tariffs. Before the end of Q2, we received a substantial portion of reimbursements for previously paid U.S. tariffs that had been declared not in line with existing law in February of this year.

While we applied for those refunds, the timing and ultimate outcome have remained uncertain. As we work with our customers in a sense of partnership, we intend to compensate customers for tariff surcharges. Well, that's all good news, but as you can imagine, it does have an effect on the reported revenue growth. However, and this is a really important point, it does not change the underlying economics of our business. Operationally, our business continues to perform well and is absolutely in line with our expectations from the beginning of this year.

Now let's move on. Beyond growth and profitability, we also made good progress on the financial priorities we laid out in the beginning of the year. Cash flow development was particularly strong with free cash flow being significantly up. Our leverage ratio improved further, underscoring our commitment to financial discipline and a strong balance sheet.

Let me spend a minute on what we are currently seeing in our end markets because this is probably one of the questions we got asked most frequently. Overall, I'm really encouraged by what we are seeing. Several areas where demand was muted over the last 2 years have either stabilized or are now recovering. This is visible in the equipment business, which has stabilized and where the order book supports a credible path to slight growth throughout the remainder of this year.

It's also evident in China, where the recovery in bioprocessing continued into the second quarter and where we are also increasingly seeing signs of a turnaround in laboratory instrument demand, supported by ongoing R&D activity. More broadly, biotech funding remains supportive and is increasingly translating into customer spending. While uncertainty in academia has eased and business activity continues to hold up well.

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

Now let me share a few thoughts on innovation. I'm pleased with the progress we've made on our organic growth initiatives, including new product launches. One development I'm particularly excited about is the progress we are making with Pionic. We reached an important milestone with the launch of the 2 final modules, Pionic Quad and Cross, enabling customers to run now a fully integrated continuous downstream process.

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

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

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

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

Now putting these examples all in public, they all show our clear focus on helping customers simplify workflows, generate better data and operate more efficiently. This is exactly the type of innovation we highlighted at our Capital Markets Day and a key pillar of our long-term growth strategy.

With that, I will turn the call over to Florian for financial highlights. Please, Florian.

Thank you, Michael, and a warm welcome also from my side. Over the next couple of minutes, I'm going to take you through the numbers in detail. And of course, tariff-related effects, either in the form of surcharges or customer compensation will play an important role in that. However, putting all the tariff impacts aside, I think there are just 3 points I'd like you to take away from today.

First, the underlying sales development is well on track. In H1, we see healthy consumables growth and the equipment business is gaining traction as expected. Second, our quality of earnings is improving. The underlying EBITDA margin is showing the expected improvements and negative extraordinary effects are heavily reduced by more than 60% versus prior year. Third, our cash performance continues to be very strong. Net operating cash flow increased by more than 25% and free cash flow even by 70% in H1.

Okay. Let's start with top line performance at group level. This is where the U.S. tariff impact is most visible, not only the regular tariffs we are paying and passing on to our U.S. customers, but also and especially the refunds we have received just some days before the end of Q2. As Michael explained, because of the Supreme Court ruling against the U.S. tariff regime put in place last year at Liberation Day, we received refunds from the U.S. Treasury. We recognized the intended customer compensation for tariff surcharges of EUR 26 million in short-term financial liabilities as of June 30.

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

In the first 6 months of 2026, group sales revenue increased by 7.7% on an operational basis in constant currencies. Including the tariff refund related impact, sales revenue increased by 6.2% in constant currencies and by 2.5% on a reported basis. This positive operational development was again driven by a strong consumables performance of above 9%. Furthermore, and as anticipated, the equipment business stabilized and delivered operational growth on group level of around 2%.

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

Let me provide some additional color for the BPS recurring business. First, we delivered slightly more than 9% consumables operational growth in H1, broadly in line with our expectations at the start of the year following the very strong recovery in 2025. Second, looking beyond quarterly fluctuations, our consumables business continues to demonstrate a highly attractive growth profile. Since 2019, consumables revenue continues to grow at a double-digit CAGR, well above market.

Third, growth in the recurring business was influenced by some volatility in advanced modalities caused by delayed orders from 2 customers and project timing effects. But the important thing is underlying demand trends in our core consumables franchise remain very strong across customer groups and geographies, growing at a double-digit rate. This being said, please note that the consumable sales volume in H1 '26 exceeds the peak sales level we saw during the pandemic. This is a pretty remarkable effect, in my perspective.

At the same time, operational equipment revenue delivered the expected stabilization in BPS and even returned to slight growth year-on-year, providing further evidence on the market recovery progressing.

Okay. Let's turn to the sales performance of the Lab Products & Services division. Operational sales revenue increased by 5.3% in constant currency. Considering the tariff refund-related effects, FX adjusted growth reached 4.3% in the first 6 months and 0.9% on a reported basis, reaching EUR 335 million. MATTEK contributed 2.8 percentage points to this performance. The growth was primarily driven by the recurring business, which grew on an operational basis by slightly more than 9%, while instruments business grew slightly, supported by positive momentum in our bioanalytics portfolio.

Now let's talk about our regional performance. Overall, H1 '26 saw broad-based positive development with all regions contributing to growth. Starting with EMEA, sales increased by 7.2% in constant currencies, driven primarily by Bioprocess Solutions and Lab Products & Services returning to slight growth. In the Americas, which was affected by customer compensations for tariff surcharges, sales increased by 5.6% on an operational basis, with both divisions contributing.

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

Asia Pacific delivered a really strong performance with sales increasing by 12.1% in constant currencies. Growth in APAC was supported by both divisions and benefited also from the continued recovery in China, particularly in consumables. We are also seeing improving demand for laboratory instruments linked to ongoing R&D activity in the region. While comparables become more demanding in the second half, we remain confident that Asia Pacific will continue to deliver a very robust performance for the full year.

Let me now turn to profitability. I think this needs a bit more explanation given the offsetting tariff dynamics in H1. Group underlying EBITDA increased by 3.9% to EUR 548 million, with the corresponding margin improving by 50 basis points to 30.3%. Positive volume and economies of scale effects more than offset the adverse impact of an unfavorable product mix as well as the negative margin effects from future growth initiatives in LPS.

Please note, the U.S. tariffs had only a negligible effect on the margin in H1, as we recorded 2 offsetting technical effects. On the one hand, we have a negative dilution effect on the margin by U.S. tariff surcharges. And on the other hand, we have a technical uplift in margin due to the negative sales revenue impact by the recorded customer compensation for tariff surcharges. As said, the net effect of both tariff-related effects on H1 margins is neglectable. Therefore, the margin increases shown here in reported figures are also mirroring the operational margin progress we have made in H1.

Overall, we are pleased with the operational margin expansion in the first half. Similar developments as on group level are also recognized on a divisional level. In Bioprocess Solutions, underlying EBITDA increased to EUR 477 million, while the corresponding margin improved by 70 basis points year-on-year to 32.3%, primarily driven by higher volumes and operating leverage. Net effects from tariff surcharges and customer compensations also had a negligible effect on the H1 margin here. Therefore, the 70 basis points is also to be regarded the operational improvement in margin.

Same applies in Lab Products & Services, where underlying EBITDA amounted to EUR 71 million, while the corresponding margin was 21.2%. As we've already discussed over the course of the year, we are investing in future growth areas, particularly within bioanalytics and advanced research solutions, which weighs on margin development and are already taking into account in our full year expectations for 2026.

Let's move on to have a look at performance below the underlying EBITDA, and both earnings and cash generation developed well in the first 6 months. Underlying net profit increased by 2% to EUR 172 million, primarily reflecting the improvement in operating profit discussed earlier with some dampening effects from slightly higher depreciation and interest expenses as very cheap financing was running out in H2 '25. Underlying EPS increased accordingly to EUR 2.49 per ordinary share and EUR 2.50 per preference share.

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

Turning to cash flow. Operating cash flow increased substantially to EUR 364 million, up almost 26% year-on-year. This development was supported by higher EBITDA, lower tax payments and the refund of U.S. tariffs, more than offsetting the growth-related increase in working capital. As a result, free cash flow increased by more than 70% to EUR 208 million. The CapEx ratio was at 8.9%. This is slightly below the prior year level, whereas in absolute terms, CapEx was on par with the prior year period at EUR 161 million.

I think this reflects our continued disciplined approach in investments while remaining fully consistent with our plans for future growth supporting. We continue to expect a full year CapEx ratio of around 12.5% of sales, driven especially by scheduled payments to be made in H2 for our Songdo project, which is fully in time and scope and budget.

To wrap up the financials, let me briefly turn to our balance sheet. We maintained a strong balance sheet with the equity ratio increasing to 41.6% at the end of June, up from 39.8% at the end of 2025. Net debt amounted to EUR 3.76 billion at the end of the first half. Despite continued investment activity, the acquisition of the outstanding minority interest in CellGenix for EUR 72 million and the dividend payment of approximately EUR 70 million during the period, we remain firmly focused on disciplined capital allocation and deleveraging.

Our bond issuance in May was significantly oversubscribed and allowed us to further optimize our financial profile. As a result, the leverage ratio defined as net debt to underlying EBITDA improved to 3.51x from 3.55x at the year-end 2025. This confirms that we are making steady progress on our deleveraging path. Taken together, these developments underline our commitment to financial discipline and to maintaining a solid investment-grade rating.

With that, I'll hand back to Michael.

Thank you, Florian. Very clear. Now let's have a look at our guidance. Based on the performance in H1 and the continued positive development of the relevant end markets, we confirm our guidance for the full year. While we have increased visibility of our operational business, there are still factors of uncertainty, especially related to the U.S. tariffs.

Let's get the tariff topics out of the way first. We have applied for the refunds for IEEPA tariffs of EUR 40 million to compensate customers for tariff surcharges they paid so far, and have received EUR 26 million of this in H1. So around EUR 14 million are still outstanding. However, the exact amount and the timing, or if any of this will be granted at all remains uncertain. But the more important message is the underlying business performance remains unaffected by these effects and continues to develop positively in line with our initial expectations. Customer demand, business momentum and profitability are unchanged.

Growth in H2 should continue to be supported by our recurring business as well as by the continued stabilization and recovery in equipment and instruments. However, please note that the first -- please note that first, the contribution from MATTEK will roll off from July onwards. Second, while tariff surcharges reported supported growth in H1, lower tariff rates are expected to turn this effect into a headwind in H2, largely offsetting the benefits seen earlier in the year.

To provide a like-for-like comparison for our underlying performance with initial guidance framework, we are introducing an operational view that excludes customer tariff compensation. Potential further changes in U.S. tariffs after July 24, so tomorrow, are likewise not included. On this operational basis, we continue to feel comfortable broadly around the midpoint of our guidance range for group and BPS, and we expect LPS to be in the upper half.

Including customer tariff compensation, we expect reported growth in constant currencies to trend within the lower half of the respective guidance ranges for the group and BPS and broadly around midpoint for LPS. To reflect both views and the tariff uncertainties, we keep our guidance range as is. For the Sartorius Group, we continue to expect constant currency sales revenue growth of around 5% to 9% with MATTEK contributing 30 basis points to group growth. For Bioprocess Solutions, we continue to expect growth of 6% to 10% and for Lab Products & Services, 2% to 6%.

Thereof, roughly 1.5 percentage points comes from the MATTEK acquisition, which closed in July 2025. Based on this, we also confirm our profitability outlook and continue to forecast an underlying EBITDA margin of slightly above 30% for the group, slightly above 32% for Bioprocess Solutions and slightly below 21% for Lab Products & Services. We also continue to expect our CapEx ratio to remain approximately at the prior year level and net debt to underlying EBITDA to be slightly above 3x at year-end.

Foreign exchange headwind should be approximately 2 percentage points on the reported revenue growth for the full year. Please note that besides the headwind in full year, we are expecting a tailwind in Q3 and Q4 to be slightly below 50 basis points each. Overall, our message is straightforward. Our underlying business continues to be strong. Consumables remain strong. The recovery in equipment is progressing as expected and improved visibility reinforces our confidence in the full year outlook.

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

Yes. Thank you very much, Michael, and good morning, good afternoon, everyone. Let me start by saying that I'm very pleased with our performance in H1. The year is unfolding largely as we expected, and we continue to see encouraging developments across many parts of our business. Underlying demand for biologics remains robust. This continues to drive healthy consumables growth, particularly in monoclonal antibody manufacturing, where our core product categories delivered double-digit growth on top of an already very strong prior year comparison.

We are also seeing encouraging signs in newer modalities. Activity in the earlier stages of the pipeline continues to improve, while the later stages, some projects timing effects, particularly in the U.S., temporarily weighed on recurring revenue growth during H1. Let me emphasize again, this does not change our positive view of the underlying market development.

Equipment is developing very much in line with our expectations. After last year's decline, the business has stabilized and returned to growth. We continue to see good momentum in process development, where our customers remain focused on improving productivity and accelerating time lines. I'm particularly pleased and encouraged by the traction we are seeing with Pionic, our intensified downstream platform.

More broadly, customers continue to look for technologies that enable more efficient and flexible manufacturing, and our portfolio is very well positioned to support these needs. Overall, I believe the first half demonstrates both the resilience of our business and the strength of the underlying market. We are seeing healthy customer activity, solid execution across the organization and continued progress in the areas that matter most for our long-term growth.

Let's now turn to our financials. Starting with the top line. As Michael and Florian explained earlier, tariff-related customer compensation created a temporary headwind to reported sales growth in H1, but it had no impact on the underlying development of our business. On an operational basis, sales revenue increased by 8% compared with H1 2025. If we include the impact from tariff-related customer compensation, sales revenue grew by 6.4% in constant currencies and by 2.5% as reported, reaching EUR 1.53 billion.

Our operational recurring business increased slightly more than 9% in H1. Let me remind you what Florian said some minutes ago. First, this is in line with our expectations from the start of the year. Second, looking beyond quarterly fluctuations, our recurring business has grown at a double digit, well above CAGR since 2019. Third, we have seen some volatility in modalities caused by delayed orders due to project timing effects with 2 major customers.

Let me tell you what I see in the cell and gene therapy space. I see healthy activity levels with new molecules entering development pipelines, new companies being funded and increasing number of late-stage programs advancing. Volatility is inherent given this is a young and immature small market where success or failure of individual programs can have a material influence. Let me be very clear here. We remain highly constructive and enthusiastic about the market's long-term potential.

Now let's turn to profitability. Underlying EBITDA improved strongly. In absolute terms, underlying EBITDA increased to EUR 479 million, and the underlying EBITDA margin improved by 40 basis points to 31.4% Margin expansion was primarily driven by higher volumes and resulting operating leverage. I think this demonstrates the scalability of our business model. Also, margin development was influenced by offsetting technical effects related to U.S. tariffs, which had a broadly neutral impact.

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

Looking at the regional performance. All regions contributed positively to business development in the first half. EMEA increased by 7.7% in constant currencies. The Americas on an operational basis expanded by 5.4% in constant currencies. Accounting for impact of the tariff-related compensation to customers, constant currency growth was 0.8% year-over-year. Florian highlighted before for Sartorius AG, the same holds true for Sartorius Stedim. The Americas was the region affected by customer compensation for tariff surcharges as well as by delayed customers' orders in the advanced therapy space, which weighed on H1 performance.

Asia Pacific was very strong with growth of 12.5% in constant currencies, supported the continued recovery in China and ongoing strength in consumables. While comparables become more demanding in the second half, we remain confident that Asia Pacific will continue to deliver a very robust performance for the full year.

Let's move to net profit and cash flow. Both showed solid growth over the first half of the year. Underlying net profit increased by 3% to EUR 235 million, reflecting the improved operating profit we discussed earlier. Underlying EPS increased accordingly to EUR 2.42. Reported net profit increased strongly by almost 18% to EUR 181 million. This development was supported by low extraordinary items compared with the prior year period.

Turning to cash flow. Operating cash flow increased significantly to EUR 341 million, up more than 39% year-on-year. The increase was driven by higher EBITDA, lower tax payments and the refund of U.S. tariff-related surcharges, more than offsetting the gross related increase in the working capital. As a result, free cash flow increased substantially to EUR 199 million, almost doubling compared to the previous prior year period.

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

A quick look at our balance sheet metrics. At the end of H1, we continue to show a very strong equity ratio of 53.6%, reflecting our solid capital structure. Compared with year-end, the increase was primarily driven by the strong earnings performance, more than offsetting the dividend payments in H1. Net debt increased modestly during the second quarter, reflecting annual dividend payment as well as the acquisition of the outstanding minority interest in CellGenix for EUR 72 million.

Nevertheless, our deleveraging trajectory remains firmly intact. As a result of net debt to underlying EBITDA ratio improved further to 2.36x compared to 2.38x at year-end 2025, keeping us firmly on track to achieve our year-end targets. Overall, these developments underline the strong balance sheet position of Sartorius Stedim Biotech and provide a solid foundation to support future growth while maintaining financial flexibility and financial discipline.

Before we move to Q&A, let me comment on our 2026 outlook for Sartorius Stedim Biotech. We are confirming our full year 2026 guidance based on the business performance in [ Jervois ] in H1 and continued positive development of our end markets. As Michael explained, we have increased visibility in our operational business, but there are still some factors of uncertainty, especially related to the U.S. tariffs.

We have applied for refunds for tariffs of EUR 35 million to compensate customers for tariff surcharges they paid so far and have received EUR 22 million of this in H1. Around EUR 13 million are still outstanding. However, the exact amount and timing, or if any, of that will be granted at all remain uncertain. Let me emphasize that the underlying business performance continues to develop positively, in line with our expectation and is not affected by these tariff-related impacts.

The recurring business remains the primary growth driver, while the continued stabilization and recovery of the equipment business is also supportive for growth in H2. However, please bear in mind that tariff surcharges supported growth in H1, lower tariff rates are expected to turn this effect into the headwind in H2, largely offsetting the benefit seen earlier in the year. To provide a like-for-like comparison with the guidance issued beginning of the year, we also introduced an operational view for Sartorius Stedim Biotech, which does not incorporate any potential further changes in U.S. tariffs after July 24, 2026.

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

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

FX headwind should be approximately 2 percentage points on reported revenue growth for the full year. Please note that besides the headwind in full year, we are expecting a tailwind in Q3 and Q4 to be slightly below 50 basis points each. Putting all this together, strong underlying business continues, strong consumables business, equipment recovering as expected based on improved visibility, we are confident in our full year outlook.

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

[Operator Instructions] And today's first question comes from Richard Vosser from JPMorgan.

One question, please. Based on the underlying performance of BPS in the first half and your guidance, it seems we should anticipate a similar underlying performance in the second half. Given this backdrop and the developing order book and customer discussions, I wanted to ask how your confidence level in the 9% to 12% growth outlook for BPS in the coming years is developing.

Thank you for that question. Maybe let me start with what we see as the underlying trends in the bioprocessing and the momentum in the market. We see ongoing solid, really solid growth of demand for commercial drug, drugs driving consumables growth. We see healthy pipeline growth and approval rates. We start to see recovery in advanced modalities, better biotech funding. So all that, I think, as we mentioned in the call, all that supports really our double-digit growth of consumables.

Looking at the 2026 H1, first, we delivered slightly more than 9% consumables operational growth. Looking beyond the fluctuations, we are on the double-digit growth trajectory. Looking at the full year expectation, consumables, we continue to see the double-digit growth on top of strong previous year level. What is a bit diluting is a couple of late-stage advanced therapies customers with timing effect. Looking full year and with lead times for consumables being 1 to 3 months range, there are scenarios possible around high single-digit, low double-digit range for recurring revenues full year.

And the next question comes from Charles Weston from RBC.

Can I just ask a clarification question on Q2? Did the operational growth in Q2 include the tariff surcharge tailwinds? And if so, how much was that, please? But my general question, sorry for squeezing a clarification one in there. Can you give us some color on those delayed programs, please, the rough scale of the headwind, whether this will be a headwind in H2 as well and your confidence in those orders coming back?

Charles, let me take the first part of the question regarding the tariffs. Yes, the operational view is including the general surcharge as a fact of current business life. The positive effect of these surcharges on group growth was 40 basis points.

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

Happy to take the second part, yes, advanced therapy. Yes. Thank you for the question. Maybe starting with the overall advanced therapy market, as I was describing that. First of all, early pipelines, positive recovery we see in the market. We have seen these 2 customers, key customers in their late-stage projects delaying those, which is impacting slightly our overall recurring revenue growth in H1 and will have an impact on the full year as well. Taking that out, nice double-digit growth continues. Overall, we remain very confident and encouraged about the overall market, long-term driver for our business. Yes, we'll see how that unfolds going forward.

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

Yes, we are in close -- of course, in close contact with the customers following how the timing evolves. Yes. So we are thinking -- yes, it's orders expecting coming end of the year. Revenues will most likely be seen in 2027. Some of that may be already this year. Yes, we are confident.

Then the next question comes from Subbu Nambi from Guggenheim.

In your prepared remarks, you acknowledged that there was a delay in revenue and you elaborated a little bit. But a big player, Danaher, indicated they had a similar issue, but you attributed it to advanced modalities and they attributed it to monoclonal antibody customer. Do you believe these are related even though there are different modalities altogether? We are trying to get at the scope of...

I'm sorry, you have been breaking up technically. Could you repeat the question, please? She's off, so we take the next question.

Is this better now?

Yes, let's try.

Perfect. In your prepared remarks, you acknowledged there was a delay in revenue in advanced modalities. But there was a big player, Danaher, who indicated they had a similar issue with 2 customers this week, but that was monoclonal antibody. Do you believe these issues are related even though there are different modalities, we are trying to get to the scope of this issue.

No. Well, I mean, very clearly, we don't see that, Subbu. Again, if we look at our basically classical protein-based portfolio, we don't see that implication at that point in time at all. Then the comment really was isolated, as Rene said, to the 2 customers in the space of advanced therapy. So they're not related.

Perfect. So then what gives you the confidence that this is still coming back? Why couldn't this be a permanent delay?

That's our view talking to customers, understanding what's happening on the time line. It's very much the project timing on their side in the late-stage phases with the drugs. It's so far, nothing about stopping the programs. It's more timing delay. As I said, expect that coming back end of the year, beginning next year.

And the next question comes from James Quigley from Goldman Sachs.

I've got somewhat of a follow-up on the first question from Richard. So what metrics would you point to that help to support your confidence that you're seeing strong underlying demand within BPS consumables that underscore your confidence in double-digit growth continuing that trend that you mentioned since 2019. Is there anything across different customer types, so pharma, biotech, CDMOs or even across modalities, as you sort of highlighted with advanced modalities and monoclonal antibodies. I know you don't give details anymore, but anything you can say in terms of the development of the order book here would also be helpful.

I can take that, James. I mean, first of all, again, I think we see that broad level of growth be supported by large CDMO and by large biopharma customers in basically all late-stage or commercial production. Therefore, the visibility and the outlook as well for the continuation of that journey on the basic classical protein-based therapies and some advanced therapies is there and is visible, and that's the reason why we strongly believe in the continuation of that journey. The specific aspect that Rene has already highlighted on the new modalities is a question of delay and pointed out in that way.

Yes, the visibility, therefore, is there. I think what is there a bit more the question about how far and what is the meaning, let's say, uncertainty that we're having is more on the Q4 perspective. Here, indeed, it's still the question, and that's why we still have as well the guidance range because other than in the capital equipment, where we have clear visibility for the full year in a way, it's more about the timing and realization of revenues. Here, it is indeed just a question of how Q4 will pan out in terms of consumables.

And the next question comes from Odysseas Manesiotis from BNP Paribas.

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

Yes, Odysseas, thank you for that question. Regarding the mix effect, it is not a classical mix effect like recurring versus nonrecurring because we are seeing that the recurring business remains strong. It is rather a mix effect within the different product categories, recurring and nonrecurring. As you know, there are, of course, consumables that are more profitable than others. For example, the topic of the delayed projects in ATS, which come with very high margins is one driver to that negative mix effect that we were talking about.

And the next question comes from Charlie Haywood from Bank of America.

Charlie Haywood, Bank of America. It's again back on the competitor commentary, seeing the delays for a few customers in a specific product. So sort of 2 parts here. One, to the extent you're able to quantify your exposure to chromatography resins or I guess, purification sales as a percent of BPS?

Then secondly, I guess the main unknown here is that this could spread to more customers or to more products. Have you seen any changes, I guess, in the last couple of months or delays in customers based on conversations you've had, I guess, outside of the ATS you've mentioned? Or anything specific in commercial downstream manufacturing that gives any change in confidence in the drivers there for the rest of the year?

Yes. Thank you very much for that question. Our view is that looks like customer-based volatility in the market. We see that as we described for 2 key customers in advanced modalities that happens. Other than that, we don't really see any trending here either across product groups or customer groups.

4

And the next question comes from Falko Friedrichs from Deutsche Bank.

You have been clear that we should assume the midpoint of your BPS guidance for the full year. In terms of the phasing between Q3 and Q4, is it fair to assume that growth should be balanced between the 2 quarters at around that midpoint? Or are there any specific phasing effects that we should consider when modeling the second half?

Yes, Falko, happy to take that question. As you know, we are not in generally providing any quarterly guidance here. I think when we are talking about phasing effects, it's mainly on the technical side, things that we have to take into account. For example, the effects around MATTEK that will roll off as a supporting factor. Also, we have been talking about the tariff surcharges, which have been a tailwind in H1, but which is turning into a headwind into H2, at least as long as tariffs stay on the currently communicated level. But on an operational level, currently, we have no reasons to comment on specific developments in Q3 or Q4 '26.

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

I was trying to get a bit of color on the push and pulls for next year. I mean, apparently, the starting point would be your midterm guide, which calls for 9% to 12% growth. But arguably, there's a kind of triple or 3 support factors. One, the tariff refunds provide a kind of lowered comp. You have also a very low comp on the kind of equipment book. Then thirdly, even the delays may probably support next year. So the question is really, is there any reason to assume not the high end of this 9% to 12% guidance for next year?

Yes. No, I mean, thank you. As you know, we will talk about the year 2027 at the right point in time, and that's not now. So in this regard, we don't want to speculate on some of the clear uncertainties that are still there on the tariff regime and everything. Therefore, we have our midterm guidance. We talk about this year right now and we will talk about 2027 in due time.

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

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

And the next question comes from Harry Gillis from Berenberg.

Your underlying BPS growth accelerated to 8.4% in Q2 from 8.1% in Q1 despite the delays at the 2 advanced modality customers. All your commentary indicates end markets are improving and you still expect equipment growth in H2. So can I just ask why is the guidance for the midpoint of the 6% to 10% range in BPS? And why does this decelerate? Is it simply an even larger impact from these 2 customers in the second half? And then sort of related to that, what are the swing factors that could drive you higher or lower within the range?

I have to chip in once again, the technical effects, Harry, which is on the tariffs. As you know, we have that kind of tailwind in H1 also reflected in the numbers that you were referring to for Q1 and Q2, and this turns into a headwind in H2. So this is just the technical effects that we have to take into account.

And that number was 40 basis points you said.

That's what I said on Q2, right? We are expecting if the tariffs stay on the current level, that they will even out over the year versus prior year. So there will be no growth impulse from the tariff side in a scenario where tariffs stay on the 10% level.

And the next question comes from Charles Pitman-King from Barclays.

Charles Pitman-King from Barclays. I actually just have a question on the tariff dynamics and the strategy that Sartorius is taking. Just can you confirm when the potential for the tariff unwind became part of the Sartorius strategy given it kind of caught a few people off hand, off guard today? Then just more broadly, why does it appear Sartorius is alone in announcing these dynamics in 2Q? Given you are being so transparent, can you confirm whether or not this decision to reverse the payment is helping you differentiate versus peers when you're building your customer relationships?

Yes. Thanks, Charles. I can take that. I mean, first of all, really, I have to say we were caught by surprise. Again, I think as many of our peers in the industry have applied for the refunding when this was publicized. We did indeed as well. Again, we were very uncertain about the outcome of that application and therefore, as well, I mean, it was really rather to the tail end of June when we received that payment, and we then had on that basis to do and reflect that in our accounting.

In this respect, it was not neither part of our guidance and strategy because it was not clear this at all when we did the guidance nor it was clear whether it would happen and to which degree. This is really the situation. That's why we are now dealing with that implication. We, therefore, as well make that division into the guidance on an operational basis and the tariff refund compensation part of it.

To your second part of the question, we really think that it's our understanding of the way of how we want to operate and be seen at our customers in a true partnership. We have been transparent about this. They paid the surcharges. For us, it's really a momentum of trust and partnership that we as well now find the right way of compensating them for these payments.

And then the next question comes from James Vane-Tempest from Jefferies International Limited.

I'm James from Jefferies. Perhaps if I can just ask around the acceleration we've seen in APAC. BPS constant currency growth looks like it was around 16%, 16.5% in 2Q versus around 10.5%. I mean you mentioned China, but can you give some color on South Korea and if you're seeing any customer stocking there?

And maybe if I can just sneak in a follow-up just on gross margins. There was, I think, some expectation this year would see some improvement from the gross margin impact last year, writing off specialized consumable inventories, which I think had around a 200 basis point impact. So are you seeing any benefit of that in the first half?

Yes. I will take the first part of the question on the APAC, particularly China, you asked about that. First of all, yes, we're very pleased to see the momentum in APAC, strong growth, expect that continues in H2 moving forward. China continued recovery also in the Q2. Consumables, key growth driver there. Now stocking, we have seen some pockets of that, not really meaningful for us. Overall, I think it's a healthy growth in the region.

Can I just clarify -- sorry, just to clarify that. So we're seeing some elements of stocking, is that China? I guess the question was sort of South Korea? Or is this just a more regional commentary on a bit of stocking?

More pockets of different customers than concentrated in any region.

It's James. On your gross margin question, we have been talking also at Capital Markets Day about that there were burdening effects coming from the higher inventory. As this is usually effect, these things are washing out over time, not in the single quarters, but rather over a couple of quarters, if not years.

But specifically looking at gross margin and comparing to prior year, I would like to point to the fact that we had a negative margin impact in the year '26 driven by FX effects and that there have been compensating positive FX hedging effects that were not visible in gross margin, but below gross margin so that there is an overall net zero effect visible on the underlying EBITDA margin, but a negative effect visible in the H1 margin.

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

It's about equipment. First, at the Q1 print, you said that you expect H2 equipment growth above H1 growth. Do you reiterate that? And would you confirm that we see now consumable growth pretty strong for a while and technically every month improves visibility also on your order book that the conversion of equipment growth rates towards consumable growth is ongoing? Or do you see any pushbacks which might lead to some bifurcation of growth rates for a longer time?

Yes, thanks, Oliver. First part of the question is really related to the growth in the equipment perspective. Again, just to clarify what we said and what we see, I said that we would be at least flat across the year and starting with the H1, we now reconfirm that indeed, we've seen that slight growth of 2%, around 2% that we highlighted. Then we said not necessarily in growth rate, but we said we talked more about the absolute levels in the second half of the year versus the first half of the year. That indeed is the fact.

Overall, therefore, we are comfortable with the guidance of the growth, as we said earlier, and as well -- live up as well to the expectation that second half of the year will be above first half of the year. Second part was around the -- can you just repeat the -- again, your point on the consumables.

Okay. I wanted to make it short. Structurally, consumables and equipment should grow over the cycle at pretty similar rates. We see now for a while that the consumer demand is very healthy and growing partially already in the double-digit territory. But equipment is still lagging and so the delta between equipment sales and consumable sales has widened more and more. When do you see more of the inflection point that the growth rates convert closer to each other?

That has to do something with the increasing utilization rate, right, that's related to the kind of what you are describing. You are right, we see that continued growth of consumables, which are linked to equipment installed base. Approaching the points, and we see these orders coming also where customers need to add additional equipment to increase capacities. We are in our communication rather now saying we want to see these orders in to then give you more color and outlook on the equipment.

And the next question comes from Thibault Boutherin from Morgan Stanley.

My question is just on bioprocessing in Americas. Even if we exclude the tariff refund impact, H1 was around mid-single digits on easier growth comp in H1 last year, softest region for this first half. H2 is facing tougher comps. Just if you could help us understand the growth trajectory of the BPS business in North America. And related to that, just if you could tell us if you're seeing anything in terms of orders related to the onshoring in the U.S.

I think looking generally at the Americas performance in BPS, we were talking not only about the refund topic, but also about the ATS topic. Just to give you a little bit more feeling, if we are adjusting for the ATS topic, we would see healthy growth rates in North America, even slightly above the European ones. So underlying business is doing well.

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

Yes. Again, I think on the reshoring discussion, we see that indeed, there is -- we see translation now of the talks from last year more into types of projects on the brownfield side. There's reality and realism in this. Again, when we see the related lead times and the time of ordering for our type of equipment with the lead times that we have, we see that the majority of those orders will be rather relevant for us probably in 2027, second half and then realization then of sales of those orders to materialize in 2028 and beyond.

And today's final question comes from Charles Weston from RBC.

A quick follow-up. It was just on Iran. I think you quantified the risk at EUR 10 million for 2026 in Q1, Florian. Just wondering if you have seen that come through or whether there's been any change in that estimate, please?

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

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

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

Ladies and gentlemen welcome to the Sartorius and Sartorius Stedim Biotech Conference Call and Live Webcast on Q1 2026. I'm Moritz, your Chorus Call operator. [Operator Instructions] I would now like to turn the conference over to Petra Muller, Head of Investor Relations of Sartorius. Please go ahead.

Thank you. Hello, and a warm welcome also from my side. I'm joined today by our CEO, Michael Grosse; by Florian Funck, our CFO; Rene Faber, Head of the Bioprocessing Division and CEO of Sartorius Stedim Biotech; and by Alexandra Gatzemeyer, Head of our LPS division.

As always, we will start with prepared remarks followed by the Q&A session. [Operator Instructions]. Please note that management comments during this call will be include forward-looking statements that involve risks and uncertainties. For a discussion of risk factors, I encourage you to review the safe harbor statement contained in today's press release and the presentation.

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

Thank you, Petra, and a very warm welcome from my side as well. We are happy with the start of 2026, which is again sort of a transition year. Before turning to the key messages for the quarter, I would like to briefly reflect on the strategic context following our Capital Markets Day a few weeks ago. At the CMD, we provided an update on our strategy and outlined our new midterm financial targets. Since then, the focus has been and is very clearly shifting to execution.

The real work begins by consistently translating strategy into tangible results and actions, and the work has already started in line with the evolving needs of our customers and the broader biopharma and life science markets. Our shared vision remains unchanged to simplify progress in biopharma and life science research, enabling better health for more people.

With that context in mind, let me now turn to the key messages we would like to share with you today. We are off to a good start in 2026 and are very pleased with our performance in the first quarter of the year. Sales developed well with a continued strong recurring business in both divisions. At the same time, underlying EBITDA developed positively year-on-year and profitability remained resilient.

This once again underlines the strength and resilience of our business model as well as the benefits of our disciplined operational execution. In Bioprocess Solutions, sales increased by around 8%, reflecting robust underlying demand. Consumables momentum remained strong, while equipment was soft as expected, but is anticipated to improve in Q2. Lab Products & Services showed around 5% sales growth, continuing the positive momentum that started in the second half of 2025 already. This development was driven primarily by lab consumables and our bioanalytical portfolio, also including the MATTEK acquisition.

While instruments demand remains cautious overall, we continue to expect at least stable development in 2026. Cash flow development was strong year-on-year. At the same time, we continue to make progress on deleveraging, underlining our clear commitment to financial discipline and a strong balance sheet.

In light of our solid start into the year, we confirm our full year 2026 guidance for the group, and we expect sales revenue growth in constant currencies of around 5% to 9% and an underlying EBITDA margin slightly above 30%. Let me now briefly highlight a few innovations launched in Q1 that demonstrate the strong customer demand for Sartorius solutions across the biologics value chain.

Starting with cell therapy manufacturing. With Eveo, our new cell therapy manufacturing platform, we are addressing one of the key bottlenecks in autologous cell and gene therapy, scalable and reliable manufacturing of highly personalized therapies. Eveo enables fully automated multi-parallel production, allowing customers to run up to 8 patient batches in parallel and achieve up to 4x higher yield compared to conventional approaches.

By automating critical process steps and reducing manual handoff, Eveo also shortens manufacturing cycle times, helping customers move faster from vein to vein and ultimately accelerate time to patient. At the same time, Eveo helps to reduce footprint, capital intensity and over manufacturing complexity, supporting both centralized and decentralized production models.

Turning to cell line development. We introduced 2 complementary innovations aimed at significantly improving speed and efficiency early in the biologics development. The latest generation of our CellCelector platform, the CellCelector CLD for cell line development enables significantly faster and more reliable cell line development by combining automated imaging, monoclonality verification and gentle clone isolation in one single system. This reduces manual efforts and uncertainty early in the development, shortens time lines from months to weeks and strengthens regulatory readiness through integrated documentation and traceability.

In parallel, our genetically engineered [ CHO ] host cell line allows for faster clone development and up to 3x higher productivity, supporting robust and scalable manufacturing as biologics pipelines continue to grow in complexity. These innovations once again highlight how Sartorius systematically removes bottlenecks across the biologics value chain from early development to manufacturing by helping customers shorten time lines, increase yields and improve overall process efficiency and cost structures.

Well, with that, I'll now hand over to Florian to walk you through our Q1 financials in more detail.

Thank you, Michael, and a warm welcome from my side as well. I'm happy to take you through our numbers that reflect a continuation of consistently strong performance from the year 2025 into 2026. Let me begin with top line performance at group level. In the first quarter of 2026, sales revenue increased by 7.5% in constant currencies and 1.8% reported, reaching EUR 899 million.

Looking now at our divisions in more detail. In Bioprocess Solutions, sales increased by 8.1% in constant currencies and 2.4% reported, reaching EUR 735 million. Growth was driven by the high-margin recurring consumables business. Equipment performed in line with expectations with a softer Q1 due to delivery schedules of customers and revenue recognition more loaded towards Q2.

We anticipate stronger Q2 equipment sales and expect BPS equipment to deliver at least prior year levels in H1 in constant currencies, supporting a healthy first half performance. In Lab Products & Services, sales increased by 4.9% in constant currencies, reaching EUR 164 million. MATTEK contributed 2.8 percentage points to LPS growth in constant currencies. And based on reported figures, LPS posted a slight sales decline of minus 0.6%, which is purely FX related.

Growth was driven by a robust contribution from our recurring business, supported by positive momentum in our bioanalytics portfolio. Let me also quickly elaborate on our regional performance. Overall, the first quarter showed healthy growth momentum across all regions, supported by continued strength in consumables.

Starting with EMEA, sales increased by 8.0% in constant currencies in the first quarter. In the Americas, sales grew by 6% in constant currencies, and the growth was solid, particularly considering the stronger comparison base from last year. Asia Pacific delivered the strongest regional performance with sales growth of 8.9% in constant currencies, with China contributing nicely to the region's BPS growth.

Let me now turn to profitability, which deserves a bit more explanation given the offsetting dynamics in the first quarter. The group's underlying EBITDA increased slightly by 1.6% to EUR 267 million in the period from January to March compared to prior year. Positive volume effects and economies of scale were offset by mix effects within BPS consumables and tariff impacts as well as continued investments in future growth initiatives, especially in LPS.

Against this backdrop, the corresponding EBITDA margin remained resilient at 29.7%, almost fully absorbing negative tariff effects of around 40 basis points. Similar developments as on group level were also recognized at divisional level. In Bioprocess Solutions, the underlying EBITDA margin developed positively.

Margin expansion was driven by increased volumes and operating leverage, overcompensating tariffs and some mix effects within consumables. As a result, underlying EBITDA increased to EUR 233 million, and the margin improved by 30 basis points to 31.8% in the quarter. In Lab Products & Services, as already flagged in early February, we are executing a multiyear investment program to scale future growth areas. This is already well reflected in our margin development over the past couple of quarters and is fully in line with our full year 2026 expectations. Consequently, the underlying EBITDA margin was 20.7% unchanged compared to the level in Q4 2025 and also, of course, negatively impacted by tariffs.

Now let us look at performance below underlying EBITDA, where both net profit and free cash flow developed well in the first quarter. The development of underlying net profit is mainly driven by the same effects we discussed at the underlying EBITDA level. On top of that, it is also mirroring higher depreciation caused by our CapEx programs over the past few years as we highlighted at our Capital Markets Day a few weeks ago.

While depreciation effects are recognized immediately with go-live of a building, as usual, the corresponding volume revenue contributions materialize progressively as the additional capacity utilization is ramped up. Furthermore, we saw financing costs slightly increasing as cheap financing from early pandemic times ran out in H2 '25. Reported net profit increased by 16% year-over-year to EUR 56 million, thanks to lower extraordinary items that were last year mainly driven by our S/4HANA changeover, and we talked about this also at Q1 conference call '25.

As you know, these extraordinaries are excluded from our underlying profit KPIs. Turning to cash-related items. Operating cash flow increased strongly to EUR 189 million, up almost 36% year-on-year. This improvement was driven by EUR 20 million higher reported EBITDA and lower tax payments versus high prior year base compensating for the growth-related increase in working capital.

Looking at working capital, I would like to emphasize that the working capital dynamics can mainly be explained by higher accounts receivable at quarter end, reflecting strong sales activity towards the end of the quarter. Customers received shipments and were invoiced late in the quarter, but due to timing effects and the Easter holiday season, many of these invoices had not yet converted into cash by quarter end and therefore, sitting in AR. Based on the higher operating cash flow and relatively constant CapEx spending, also free cash flow increased significantly to EUR 113 million. The CapEx ratio of 8.6% was at prior year level, reflecting continued disciplined investment in support of future growth, but we continue to expect full year CapEx of around 12.5% of sales for the full year period.

To conclude our discussion of the first quarter financials, let me briefly turn to our balance sheet-related key figures. We maintained a solid equity ratio of 39.4% at the end of the first quarter. The slight change compared to year-end reflects the dividends already offset from equity after the AGMs of Sartorius AG and Sartorius Stedim Biotech S.A. in March 2026.

Net debt decreased slightly to EUR 3.727 billion, reflecting continued deleveraging despite ongoing investment activity. At the same time, we continued to actively manage our gross debt profile. This makes the reduction in net debt particularly notable as it was achieved despite the dividend payout to Sartorius AG shareholders for fiscal year 2025 on March 31, underscoring our continued focus on disciplined deleveraging. As a result, the leverage ratio defined as net debt to underlying EBITDA improved slightly to 3.53x, down from 3.55x at year-end 2025.

And this confirms that we are progressing as planned on our deleveraging path. Taken together, these developments underline our continued commitments to financial discipline and to maintaining a strong investment-grade credit profile. And with that, I would like to hand back over to Michael.

Thank you, Florian. Based on the solid performance in the first 3 months of the year and the overall market development, we are confirming our full year 2026 guidance and continue to view 2026 as a transition year toward our midterm ambitions as outlined at our Capital Markets Day in March.

For Sartorius Group, we expect sales revenue growth in constant currencies of around 5% to 9%. For Bioprocess Solutions, we anticipate growth within a range of approximately 6% to 10%, primarily driven by recurring business, while the equipment business is expected to remain at least stable.

In Lab Products & Services, we expect sales growth of around 2% to 6%, reflecting continued strength in the recurring business and the stabilizing instruments environment. At group level, sales growth includes around 1 percentage point contribution from the MATTEK acquisition and the U.S. tariff-related surcharges, while LPS revenue growth includes approximately 1.5 percentage points from MATTEK.

Turning to profitability. We expect the underlying EBITDA margins to be slightly above 30% for the group. For Bioprocessing Solutions, the margin should be slightly above 32%, while in Lab Products & Services, we expect the margin to be slightly below 21%.

The CapEx ratio is expected to remain around prior year levels as we continue to invest selectively and with discipline in our global research and manufacturing footprint. We also expect net debt to underlying EBITDA to decrease to slightly above 3x by year-end, reflecting our continued focus on deleveraging, as Florian said before.

Given the recent volatility in FX rates, we would also like to share some additional color on the expected foreign exchange impact for the second quarter. We currently anticipate a headwind in the region of minus 2.5 percentage points in Q2, respectively, minus 4 percentage points for H1 cumulated, while we continue to expect FX effects for the full year to be around minus 2 percentage points.

We remain mindful of an increasingly complex external environment. Current geopolitical tensions, particularly in the Middle East, are driving increased uncertainty, especially the longer the situation persists. However, we feel comfortable with our guidance as defined in early February and reiterated today.

We expect the second half of the year to be stronger than the first half in absolute numbers. Our confidence is based on the positive underlying development of the biopharma market, a strong order book and our ability to navigate the continued volatility and uncertainty caused by the geopolitical and macroeconomic tensions.

Looking ahead, Sartorius has a clear vision and strategy, and we are firmly committed to executing it with discipline, consistency and a long-term perspective to deliver sustainable value creation. With that, I would now like to hand over to Rene, who will walk you through the financials of Sartorius Stedim Biotech in more detail.

Thank you very much, Michael. Also from my side, welcome, and thank you for joining our Q1 results call today. Sartorius Stedim Biotech delivered a strong start in 2026, supported by our high-margin consumables business as well as continued operating leverage. In the first quarter of 2026, sales revenue increased by 7.9% in constant currencies, reaching EUR 762 million. Growth in reported currencies amounted to 2.3%. Our recurring consumables business was fueled by strong underlying demand. Equipment, as Florian mentioned before, performed in line with our expectations with a softer Q1 due to the delivery schedules of customers and revenue recognition more geared towards Q2.

We anticipate stronger Q2 equipment sales, which should deliver at least prior year levels in H1, supporting a healthy first half performance. Looking at profitability, we observed similar developments to those at Sartorius AG, as Florian elaborated earlier on. While earnings continued to improve in the first quarter, the underlying EBITDA margin remained largely flat.

Positive volume effects and economies of scale were offset by a less favorable product mix within the consumables portfolio and tariff impacts. Additionally, it has to be noted that there was a technical margin drag of 25 basis points due to an increase of the Sartorius brand name fee charge from Sartorius AG to SSB. As a result, underlying EBITDA increased to EUR 233 million, and the margin remained resilient at 30.7% for the quarter. All regions -- looking at the regional performance, all regions contributed to positive business development in the first quarter, supported by continued strength in consumables.

Starting with EMEA, sales increased by 9.1% in constant currencies. In Americas, sales grew by 5.6% in constant currency, reflecting a tougher prior year comparison, but remaining positive overall. Asia Pacific delivered the strongest regional performance with sales growth of 9.4% in constant currencies, with China contributing nicely to the region's growth.

Looking now at net profit and cash flow, profitability and cash generation developed solidly over the year. Starting with earnings before EBITDA, all metrics improved slightly. Underlying net profit increased slightly disproportionately to underlying EBITDA, mirroring higher depreciation caused by our CapEx program over the past few years. Reported net profit improved by 3% to EUR 88 million, thanks to lower extraordinary items, which are excluded from the underlying profitability measures and were therefore, supportive. Turning to cash-related items now. Operating cash flow increased strongly to EUR 193 million, up more than 61% year-on-year, driven by higher EBITDA and lower taxes compensating for the growth-related increase in working capital.

As a result, free cash flow rose significantly to EUR 124 million, supported by the strong operating cash flow and stable CapEx at the prior year levels. Accordingly, the CapEx ratio increased slightly to 9.1%, reflecting continued disciplined investment in support of future growth, but we continue to expect full year CapEx of around 13% of sales for the full year period.

A quick look at our balance sheet metrics. At the end of the first quarter, we continued to show a very strong equity ratio of 50.6%, reflecting our solid capital structure. Compared with year-end, the slight decrease mainly reflects the dividend, which was offset from equity following the AGM end of March. Net debt decreased slightly and the ratio of net debt to underlying EBITDA progressed as planned. The net debt to underlying EBITDA ratio improved further to 2.28x, down from 2.38x at year-end, confirming that we remain well on track on our deleveraging path.

Overall, these developments underline a strong balance sheet position of Sartorius Stedim Biotech and provide a solid foundation to support future growth while maintaining financial flexibility. Before we move into Q&A, let me quickly elaborate on our confirmed outlook for full year 2026. Based on the solid performance in the first 3 months and the year-end overall market development, we are confirming our full year 2026 guidance.

We expect to stay on our profitable growth path and for 2026 sales revenue growth in the range of 6% to 10% in constant currencies, including 1 percentage point contribution from U.S. tariff surcharges. Growth will be mainly driven by recurring business, but again, against higher comps, while the equipment business should remain at least stable.

Based on our order book, we continue to expect a stronger second half compared to the first half at Sartorius Stedim Biotech. This reflects the expected gradual normalization and improvement in the equipment business throughout the year. The underlying EBITDA margin should increase to slightly above 31%.

Our CapEx ratio is expected to stay around previous year level of around 13%, reflecting our ongoing investments into research and resilient production footprint. Our commitment to deleveraging remains unchanged. We anticipate the leverage ratio, the net debt underlying EBITDA to decrease slightly to slightly above 2x at year-end.

Given the volatility we have seen in the currency exchange rate over the past few years -- few months, let me also share some FX assumptions for the Sartorius Stedim Biotech Group. We currently anticipate a headwind of approximately minus 2.5 percentage points in the second quarter, while we continue to expect FX effect for the full year to be around minus 2 percentage points.

Michael highlighted earlier for Sartorius AG and without repeating this in detail, the same considerations also apply to Sartorius Stedim Biotech. We feel comfortable with our guidance and as defined in early February and reiterated today. Our confidence is based on positive underlying development of the biopharma market, our strong order book, our ability to navigate the continued volatility and uncertainty driven by geopolitical and macroeconomics tensions.

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

[Operator Instructions] And the first question comes from Zain Ebrahim from JPMorgan.

I'll stick to one. And my question is on the demand activity you're seeing at the moment in equipment. Can you comment on what the latest is from customers based on your latest conversations with them?

Yes. Thank you for that question. So yes, let me first reiterate what we have just explained how the equipment is developing. So for Q1, we have seen a bit softer development in sales, more or less as expected, and we see the revenue recognitions being moved or was moved more towards the Q2. So what we anticipate to see for the H1 is, first of all, stronger Q2 equipment sales and H1 to be then at least at the level of the prior year.

So overall, I would say equipment develops as we have expected. The positive start in the year coming from a quite strong or relatively strong H2, we have seen already in H2 last year. Q3, Q4, particularly were quite positive quarters in equipment, and we're benefiting from that in the beginning of the year as well. So overall, we are confirming our view on the equipment moving forward. As I said, H1 positive at least at the prior year level and same for the full year. Overall, H2, as we can say today, we would expect based on the discussions we have with customers and the funnel we see, which is positively developing as well for H2, we expect to be stronger than H1 from today's perspective.

And the next question comes from Doug Schenkel from Wolfe Research.

It sounds like you expect bioprocessing equipment growth in Q2, which I think is what you were clarifying in the last question, but I just want to make sure that's right. And I want to also confirm that based on trends in backlog that you're expecting bio equipment growth to continue into the second half? And then I guess the last part to this question would be, are there any areas that you would call out that are notably driving recovery in equipment? And conversely, are there areas that you're still awaiting some recovery?

Yes. So absolutely. Thanks for the question. Confirming, yes, we're expecting Q2 growth in equipment sales, as I mentioned. And also, I think second part of your question was H2 above H1 -- that's our current view indeed. On the -- how we -- where is this happening? How is overall equipment developing looking at different parts of the portfolio or regions.

Honestly, I think it's quite all over the place. We don't see really a special pockets of growth or still muted development. Definitely we have seen a good traction on bioreactors. Now as you remember, we talked about the consumption of bags and consumables, which we see going with the equipment that is still well on track and continues nicely growing. And here and there, we see already new installations happening. I mentioned bioreactors, but it's growing also in downstream with very successful initial placement of our new innovative Pionic platform going supporting process intensification as well, some larger projects in area of peptides in chromatography. So it's kind of across the board.

And the next question comes from Subha Nambi from Guggenheim Securities.

At the Capital Markets Day a few weeks ago, you mentioned that biotech has been improving. The capital markets environment remains strong for biotech. Are you seeing any change in behavior? And is that a potential source of upside relative to your full year target if trends continue?

Yes. I may start just briefly. Yes. So I think if we've -- as indicated there at the Capital Markets Day, I think we've already started really to see signs of -- I mean, yes, the funding environment has improved progressively in the second half of the year. Towards the year-end, we already could see some more activities and interest and lead generations as well from the biotech side.

I think overall, it remains as well -- I mean, if we look now as well as the LPS portfolio remains probably still on a more rather stable and lower levels. At the same time now, as we said, I think as we expect overall order situation opportunity generation for the second half of the year to be a great foundation.

Again, given the lead times for these orders that will be generated as well from that part of the business, again, I think you need to be mindful that earliest realization of those sales will be rather at the very tail end of 2026 and rather create now the potential bench for revenue realization in 2027.

And the next question comes from Charles Pitman King from Barclays.

Can I just -- and I apologize if I missed this clarification, but just coming back to your 2H being greater than 1H on both an equipment specific and a broader BPS dynamic. Can you just confirm that what you're expecting when you say absolute is actually a continued growth in the organic line? Or is this primarily reflecting the removal of the FX headwind?

Like is that what gives you the confidence of absolute being greater in 2H than 1H? I'm just trying to get an idea that the equipment sales are, in fact, expected to improve over the course of this year.

Charles, first, let me talk to the question regarding FX. All that we are talking here, which is sales related is FX corrected. So it's in constant currencies. And what we have been saying is that we are expecting a higher H2 versus H1 in absolute million euro currency adjusted.

And just in terms of the organic growth rate on equipment in the second half sales versus orders?

No, we have said that we are expecting H1 sales currency adjusted to be at least on the level of prior year. And still also for the full year, we have said that we are expecting full year equipment sales to be at least on prior year level.

And the next question comes from Charlie Haywood from Bank of America.

Charlie Haywood, Bank of America. A question on BPS consumables actually and the contribution to the guide. So I think Rene at the full year suggested low teens consumables growth is a reasonable expectation for a normal year. And then you haven't called out many specific headwinds to the consumables side other than acknowledging '25 is a tougher comp.

And then obviously, tariffs is actually a slight tailwind to that. So is it fair to think of all of those factors that consumables growth in the roughly low teens range for this year would be a sensible answer?

Well, let me tackle that, Charlie, and Rene, maybe to comment on that. First of all, please bear in mind, we have said that the year '26 is a transition year. So please do not apply the kind of normal growth rate that we've given in the midterm guidance also as the kind of anchor point for the year '26.

Additionally, on top of that, I think what we also said clearly is that we are expecting clear base effect because of the very high comps. So that growth rate that we've seen in the year '25, where it was in the teen-ish area is not one by one to be expected to continue. It will be still a healthy and strong growth. That is our expectation. But I think it would be wrong now to nail us down on a double-digit consumables growth for the full year.

And the next question would come from Charles Weston from RBC Europe.

In terms of China, you both -- you and Rene both spoke quite constructively at the Capital Markets Day, saying that there's more activity and recovery from China companies looking to expand globally. I think one of your U.S. peers reported double-digit growth in China bioprocessing in Q1 and said it was in recovery mode. So can you just perhaps give us any further color about what you're seeing from that market in Q1 and in Q2 so far, please?

Yes. I can get started. I mean, as outlined, I think overall, we are encouraged to see that there is a growth contribution from China after 2 rather difficult and the reasonably weak years overall. I think I still would like to make the comment upfront that the tendency that we see and a bit the muted demand when it gets to the equipment and instruments business, that remains there.

And hence, with the bigger impact that we have in that business, particularly for the Labs Products & Services division, it is indeed the fact that here, the contribution is lower and it remains rather soft on that side. However, I would say it's great to see the Q1 development there on the BPS consumer business side, where we basically see an overall group level performance of around close to 30% on that basis.

So I mean, on this perspective, we take a look that the growth contribution overall from China is positive on the consumable side, as we mentioned.

And the next question comes from Oliver Metzger from ODDO BHF.

It's about the full year guidance. So Q1 experienced still some headwinds and also had from the Q1 last year, let's say, a higher comparable base for the consumable side. So momentum from the consumables over the next quarters should not meaningfully deteriorate just from the base effect or remain similar. As you said, equipment demand is seem to improve. And also, we observed now a gradual improvement or recovery of LPS. So would you describe Q1 as a trough with regards to growth rates for the current year, if not any unforeseen headwinds pop up?

I would not do that. It is a solid start into the year. It is very much in the midpoint of our guidance. And I think we have, especially when issuing the guidance, have also communicated about the drivers of the guidance, what might lead to the lower end, what might especially lead to the high end. And you know that we said that the lower end would be more the kind of not so much expected scenario and the higher end would require quite healthy dynamics also in the equipment area to take place, whereas the midpoint would see an equipment business rather on prior year level.

I think we have seen now in Q1, a healthy start in the consumables business. We are going to see, at least this is the current point of view that H1 from the equipment side will be at least on prior year level. And with that, I feel very comfortable with the overall guidance and to frame Q1 as a trough, I would be cautious.

The next question comes from Odysseas Manesiotis from BNP Paribas.

I also had a question on phasing throughout the year. Is it fair to assume Q2 could be the strongest growth quarter given the easier comps here? I mean I remember you had some fluid management related U.S. customs delays that made Q2 '25 a bit weaker. Could you confirm whether that's a sensible way to think about it?

Thank you, Odysseas. So if you look at absolute numbers, you've seen that the year -- or that Q2 and the year '25 was somehow standing out. It was above Q1 in absolute terms, and it was above Q3. It's true that the tariffs were ramping up with the implementation of the tariffs middle of April Q2 took some time.

And of course, the tariff effects are more pronounced in H2 '25 and not so much in Q2. Nevertheless, I would say that Q2 is a not too low comp if we look forward into Q2, as I said, was higher in absolute terms than Q1 and Q3.

Then the next question comes from Thibault Boutherin from Morgan Stanley.

I just want to come back on the comments on equipment and I guess, the sustainability that you expect from this. So I guess, first of all, to what extent your conviction of improvement in Q2 is coming from the order book versus just expectations and discussions and sort of what lead time do you have on the order book in equipment giving you that confidence?

And then related to that, are you confident this is the beginning of a recovery cycle that we've been waiting for, for some time? Or could we still be in a period of fluctuations where we could see equipment order and equipment sales being a bit more volatile for the next few quarters?

Yes. Thank you. And let me quickly start on the visibility on equipment for Q2. Making the statements requires support by order book, and this is exactly what we're seeing. So we are feeling quite confident looking at the order book. Of course, there might always be late adjustments from the customers indicating they want to have certain orders in June and then maybe, I don't know what happened at their site requesting something in July, but the general volume is clearly in the order book already for Q2.

Yes, absolutely right, Florian. What I would add to that is that I'm not sure it's like a as we expect at least flat full year sales equipment, I would rather call it still a transition year. We, however, are quite positive with the outlook that orders in the year, full year on equipment will be above the -- in H1, above the H1 last year and also for the full year above 2025.

So yes, as I mentioned before, funnel is there. The discussions we have with customers indicate that positive development, but it's still a positive but transition year regarding that.

And the next question comes from James Vane-Tempest from Jefferies..

I just got a question on underlying profitability, just to understand the construct because if margins are basically flat year-over-year, the other operating income seems to have had a 2.5 percentage benefit because, I guess Q1 last year was minus 12%, and that's moved to plus 10%. And I was just wondering if you can help us understand what's contributing to that level and if that's sustainable.

And so if that actually has had such a big benefit and a swing, it looks as if the underlying margins have gone from over 31% to sort of less than 29%, of which the largest driver seems to be at the gross margin level, which is down 2.7%, I think it is.

So the second part of the question then is, you clearly talked about mix, but can you also help us understand the inventory write-downs, which happened last year and when that's supposed to start to improve over the coming years? And if that math sort of makes sense, what's happening in the underlying profitability?

Yes. Thank you, James, for your question. Let me start with that. So yes, of course, well spotted when we're looking at gross margin. The one really big driver in gross margin is FX. And -- as you know, we have a rolling forward hedging strategy on FX, but the positive hedging effect on FX on that margin are rolling in other income.

So there is a kind of mismatch if you're looking at that. And therefore, it is in a consequence, clear that you observe a healthy other income margin and the pressure on gross margin.

Now regarding inventory, what we have been talking was more kind of general statement to give you a feeling for possible support for further margin increase rather than giving you a concrete number that you can bring on a time line. And please accept my apologies for not going deeper on this for your modeling.

So just so I understand, what you're saying is the swing is just due to that sort of mismatch in FX. So should we really be considering gross margins looking at your gross profit is with an adjustment for what we see in the other operating. Is that correct?

So if we've seen this big swing, is that the sort of the level of anticipation we should have for this year? Because I also noticed that the same number in Q4? Or is the type of thing which should then roll off in the second half of the year?

The reason I'm asking is because it is sort of material to the overall margin overall. So it would just help us sort of build the complete corporate picture.

Yes. James, we are guiding on underlying EBITDA margin, not on gross profit margin. Therefore, we've taken appropriate measures to secure that level of profitability. There is that FX swing. And there is another point that we also communicated in this call here that is around the mix effect that, of course, also had a certain slide drag besides tariffs on the gross profit margin.

So please always bear in mind, Q1 last year was free of any tariffs, Liberation Day tariffs. And please also bear in mind that we have that kind of mix effect within BPS consumables.

The next question comes from Naresh Chouhan from Intron Health.

A couple of bigger picture ones, please. We calculate the underlying demand for mammalian biologics is low double-digit, obviously, which you returned to last quarter. If we -- and I heard your comments just now that we should caution that we may not see that this year. If the underlying demand is low double digits, can you help us understand the delta between your sales growth? Is this a share issue? Is it yields? What's happening? Why are you not growing at the rate of demand?

And then secondly, as yields continue to improve, this is more of a question around equipment. As yields continue to improve, are you seeing customers increasingly shifting to smaller batch bioreactors over the last few -- compared to the last few years? And therefore, could it be that you -- in equipment that your share can improve?

Yes. Thanks for that question. So I agree with what you said on the demand. However, this is something you need to consider over a longer period of time. So looking at a year, there might be fluctuations. But overall, this is what we see and expect. So when we talk about market fundamentals and growth, we see that and expect the biologics demand will grow and continue to grow low double digit is a fair assumption.

At the same time, improvements happen. That has also impact, as you indicated on then what consumables equipment are used. And yes, we have seen, but it's now -- we are more than -- for more than a decade that this yield or efficiency improvements lead to more and more smaller volume processes, more and more single-use adoption.

And if you listen to our Capital Markets Day, this is also the expectation we have and what we do and drive as an innovation industry is further improvement of the efficiency so that even more especially commercial drugs will be manufactured in that smaller more flexible single-use equipment and facilities, which, of course, will positively impact and drive our market position and the growth of the business.

I just ask a follow-up. Should we then assume on the basis of that, that your equipment sales should hold up pretty well, but consumables will grow slower than underlying demand over the kind of short to medium term?

No.

And the next question comes from Falko Friedrichs from Deutsche Bank.

I have one question, please. Is it fair to assume that the group adjusted EBITDA margin in Q2 is likely still below the full year guidance range, just like it was in Q1, given the incremental tariff headwind and more equipment in the mix?

Could be. It depends also on the other components of mix, Falko.

Then the next question comes from [ Theodore Rowbieedel ] from Goldman Sachs.

Can you talk to how you're managing the current geopolitical risks and energy price increases? And what are the key mitigating strategies that you have in place?

Yes. Thank you very much. So when we are talking about the Iran crisis and energy prices, first of all, it has to be noted that Sartorius is not to be considered as a kind of energy-intensive company. If we purely talk about electricity, it is a very low single-digit percentage of cost of goods sold. And in recent years, we have also invested in expanding renewable energy capacity at our sites worldwide to become more independent, of course, over time from fossil-based energy.

We are not using short-term hedging instruments, but what we are using our rolling contracts, longer-term rolling contracts. So even if we see on the spot market hikes in gas or electricity, this should not have any larger impact on our P&L in '26 and in '27.

On the other hand side, there might be indirect or second round effects from rising energy and/or gas prices on cost, for example, higher freight costs or oil-based components in raw materials, so plastic, for example. And this is, of course, somewhat more relevant, and we are watching the supply and the sourcing situation very carefully.

We have a task force on top of that. This might lead already in the year '26 to an increase of our cost base. And on the other hand side, most of our supply contracts are longer term. And even if we have higher price levels, they will also be mitigated by internal moving average prices based on inventory in place.

And furthermore, currently, we have no significant component shortages that have been identified by the task force that I was mentioning. And of course, even if there were some cost effects, and if I had to put a risk number, it would be, I don't know, around about EUR 10 million for the year '26, we would then act and implement countermeasures, including price increases or freight surcharges, and this is all currently evaluated.

And of course, if the conflict is prolonged and we're seeing persistently higher oil prices that, of course, could have an impact on cost in 2027, but this is now too early to tell. But I can tell you that we have overall the instruments in place to fare our way also in an inflatory environment.

And the next question comes from Charles Weston from RBC Europe.

I just had one, please, on the comps. I know the question has been asked before, but you've talked about there being tougher comps in 2026 on the consumables side. But I thought that 2025 was effectively described as a more normal situation in absolute revenue terms. So if there was additional sort of restocking by customers in '25, making the comps tougher, perhaps you could just discuss that. But if not, and it was more normal, then why would 2026 consumable growth be lower because of tough comps?

I'm not sure I really got the question because what we've seen in prior year in consumables was a growth in consumables that was definitely above average market in a still transitioning year. And based on that, I would simply assume that -- or simply say it is not fair to assume that these high kind of growth rates will persist in the year '26 and that we will see base effects. When I was talking about comps, it was based on the question regarding Q2, where I just said that Q2 stood out in absolute volume against Q1 and Q3.

And the next question comes from Delphine Le Louet from Bernstein.

Just to be back into the mix effect and specifically at BPS, Rene, can you clarify a bit more the impact in between the volume and the price, if any, or in between the consumable or the service versus the rest of the line when it comes to the equipment. Can we have a bit more granularity here, please, for us to clearly understand?

Yes. Thank you for the question. So yes, we've seen that in the quarter. We see it more as a quarter effect, nothing to be continued and move forward. It's really a short-term mix shift to a certain part of the portfolio, so nothing structural.

Okay. And there is nothing on the price? Nothing specific, just regular price increase?

No, no, there's nothing to do with the price aside from...

Ladies and gentlemen, this was the last question. I would now like to turn the conference back over to Petra Muller, Head of Investor Relations, for any closing remarks.

Thank you, operator. This concludes today's call. Please reach out to the Investor Relations team in case of any open questions. We thank you for joining today's call. Wish you a pleasant rest of the day and see you next time. Operator, you may now disconnect.

Thank you.

Ladies and gentlemen, the conference has now concluded, and you may disconnect. Thank you for joining, and have a pleasant day. Goodbye.

So good morning, everybody. Welcome to the Sartorius and Sartorius Stedim Capital Markets Day 2025. My name is Petra Muller. I'm the Head of the Investor Relations Department, and welcome you today on our campus in Göttingen. So it's really wonderful to see so many of you have made the effort to come here in person. And of course, we also welcome the participants who joined virtually. So please be aware that the morning session is being recorded visibly and audibly. So in case somebody here in the room has any concerns, please reach out to one of the IR team members now.

So we have an exciting day ahead of us, packed with insights into our strategy, into innovation and how we will drive growth and create sustainable value. We will kick off the day with a group session of the Executive Board, elaborating on our strategy and on the midterm targets. And we then will have also our first spotlight session on artificial intelligence. At around 12, we will -- sorry, at around 12, we will have a lunch break. That is followed by 3 more spotlights on single-use bioprocessing on novel modalities and on advanced cell models. The CMD will be concluded around 2:30.

And now it's time to welcome our CEO, Michael Grosse, on stage to talk about his views on Sartorius after being the CEO for 9 months now. So welcome, Michael. You are CEO since July 2025. You joined from Syntegon, an international market leader in process and packaging solutions, and you bring a lot of extensive experience in various industries with you. So welcome.

Thank you.

So yes, let's start sharing a bit of your insights which you have gained over recent months. So what have you been most impressed by in the company? And what do you think needs most development?

Good question. Thanks, Petra. And again, welcome for this morning. Yes, I would say what stands out for me, and I think it's really something that has been with me now for the last 9 months is people. I have to say the amount of pride to be connected under this fantastic purpose of better health for more people, connected in their mission in order to simplify progress for our customers, for ourselves, for our stakeholders and unified in this level of bringing knowledge, technology, innovation and new ideas to the market. I think that is really something that for me stands out a lot and drives, I think, energy day in and day out. And even if you -- I have met a lot of people, including Annette, Annette is someone who works in the assembly of the lab balances for 30 years. And still, I would say, the level of pride and the level of energy to provide new ideas, share her knowledge with her colleagues, I think that makes us really unique family of people connected under one purpose.

I think the other piece is that we love to find different ways. I think we love to find a new answer to new questions as much as a new answer to existing questions and thereby drive differentiated solutions, differentiated innovation. And I think that's as well unique. That is not a path that we like to follow. We want to basically create that path. At the same time, it is as well true that customers are facing new levels of pressures. There's, of course, demand for -- from the patients in order to speed up development of drugs, make drugs more affordable. There's complexity in regulation. There's pressure and uncertainty in terms of geopolitics and the markets. And all of that is about customers wanting us to be even closer to them. That's a great opportunity for us to step closer to our customers and be there day in, day out as a trusted partner to deliver speed, reliability and quality in order to drive value for them.

Perfect. Thank you. So today, the management will provide a strategy update. So what was the reason to initiate such an update or review?

Yes. You may argue that if we look backwards, I think we had double-digit growth for many years, margin expansion. So we've built a fantastic company with a great foundation and a great position in the market. At the same time, I mean, just recognize since we made the invitation for this event, a new round of tariffs, a conflict that became a war, rising prices on oil and energy and raw materials. The world is changing. It's changing faster and faster. Uncertainty is there. Technology is evolving at an unprecedented speed and will impact our industry in a never been experienced way as ever before. And all of that makes us driving a reflection about not only where we come from, but as well what choices we will have to make, where we want and need to allocate capital and resources to create value, more value and stay close to our customers in line with our commitment to simplify progress and help our customers on that journey.

So yes, I mean, you referred to the past and that we have showed sustainable growth. And of course, one might argue that Sartorius is back on track from a financial perspective. There's no need to change anything in an attractive market like we are in. So what's your take on that?

Yes. You may say that there's good reasons for us to be proud and complacent with good results. But the opposite is true. Good results motivate us, inspire us to deliver even better results. So it is now important that we have our strong quarters that give us headroom to further invest in digitalization, simplification, customer-centric innovation. And it's important that we stay ahead of that curve. We anticipate the needs. And I think shaping our future, making deliberate and conscious choices where the difference can be and where we improve the value, that is all about what we do right now.

So building on that, one last question for now, and then we are heading on. So how would you describe your guidance philosophy? I think that's something which really people are interested here in the room.

Yes. Thanks for that question. Let me take it. Well, it is all about our promise, simplifying progress. That's a commitment we make for our customers. That's a commitment we make to us, and that's a commitment we make to the capital market. Progress really means for us driving above-market growth, above-market profitable growth. At the same time, simplifying for us means to make that very predictable to really deliver on what we commit quarter-by-quarter, year-on-year. That means that we cannot and will not guide over aggressively nor we will be over conservatively. So anticipating the level of certainty or uncertainty in the market and at the same time, provide clarity in terms of the visibility and find a corridor that balances this off to simplify progress for you in the capital market.

Thank you. So thanks for this first insight. And now before we really move on into the presentation, let's have a sneak preview into the future of bioprocessing.

[Presentation]

So wow, that's really a powerful film. And I think it is a strong reminder of the potential that lies ahead of us. And now our Board will present you why we think this is the case and what we will discuss today.

So please welcome back Michael on stage together with the other Board members. So it's Alexandra Gatzemeyer, the Head of our LPS division, joined the Board in May 2023. She's a long-time Sartorian, holding with a background in chemistry and pharmacology and hold various management positions in the company before joining the Board. Then it's Rene Faber, the Head of the BPS division and the CEO of Sartorius Stedim Biotech, who has been on the Board since 2019. And he has a background in chemistry and also as Alexandra, long-time Sartorian and also holds various management positions. And last but not least, Florian Funck, our CFO, who joined Sartorius in April 2024 after working for the Haniel Group here in Germany for more than 20 years, also amongst others, as CFO, and he holds a degree in business admin.

So the floor is yours. We are looking forward to your presentation.

Thank you, Petra. Yes, I felt as well what a movie. I really think a very powerful statement, how we depict the vision of the future of the biopharma industry. Let me start by saying preparing event like this is great fun, but it's great work as well. So at this stage, I really want to give you a big hand to all the teams that have been working day in, day out, night in, night out in order to prepare the event, be in front of the scene, behind the scene, communications technical part, engineers, scientists, all of that, please give them a big applause.

So secondly, it is truly exciting. I really think for us as a Board, I think we have been working very hard over the last couple of months in order to try to see, look at the market, look at tons of data to drive the choices to create more value. And I really think, I would say we're all quite energized in order to share this. It's as well an opportunity to step back, look backwards and say, where do we come from? What was our path to success? What position do we have today? Understand what's happening around us in the market, adopt our choices, our strategy, our allocation of resources and capital to where it most value in the future and where attractive opportunities are.

It is about giving you tangible evidence details and touch and feel for some of the choices we have been making for some of the innovative areas for some of the new products that we are working on, giving the context for those who as well joined the site to here, so to truly put clarity, context and tangibility to our strategy and our path forward.

We will discuss more about our ambitions and goals. This morning, you have been seeing the published media release, including our midterm guidance. We think that these goals have been putting out there are definitely ambitious, definitely exciting. At the same time, we feel they are reachable, and we want to prove to you that we have, I think, a great and strong plan how to get there. Ultimately, it is all about continuing our path, delivering profitable above-market growth with the year 2026 at another transitional period in order to get back to our traditional growth levels.

So with this, let's get start to talk a little bit about what are we actually building on. And I think one of the most fundamental pieces of guidance to everything that we do day in and day out is our ambitions to shape the future grounded in our purpose. And again, I think that statement of better health for more people is truly what connects us to our customers and what connects our customers to society and to patients.

Secondly, it's very clear that there are patients, there are destinies out there of people that suffer from serious illnesses. And I think it is very clear that everything that anyone around this industry can do to accelerate drug development, discovery processes to bring life-saving, life-changing therapies to our patients and to society is worth any effort. At the same time, it is clear that affordability matters. So to help our biopharma customers in order to drive efficiency in manufacturing of these biologics is essential as well for the success of the industry.

Last but not least, simplifying progress is our commitment and thing that you will observe in anything that we do. It guides the way how we make decisions. It guides the way how we develop work processes and workflows, and it should be something that is very visible in everything that you will watch today as well.

Now we are today one of the only sized pure players in the market of biopharma. And honestly, we enjoy that. We like to be a pure play, and we like to remain a pure play with a level of a sizable and end-to-end portfolio. At the same time, we know that earning the position of a trusted partner from an end-to-end perspective requires you to be excellent in everything that you do in every single unit operation, you need to prove the value and you need to have superior innovation and capabilities.

We feel that this combination of portfolio breadth, depth in the application knowledge, depth in the science is a prerequisite for us in order to have the scale that we've reached and to be a unique and differentiated partner in our industry.

Our technologies are not only there in order to make the difference in a like-for-like comparison, but they're as well there in order to start for the customers, get embedded into their workflows, get validated and help our customers to live on a level of trusted partnership and products along their workflows.

Now this paired up with our regulatory competence, our capabilities, our distribution around the globe and our proximity to our customers with our technical competence, our commercial scale and capabilities makes us the unique partner we are worldwide.

With this, I would like to hand over to Florian to give us a bit of a view about our financial track record and our footprint.

Yes. Thank you, Michael. But of course, everything that I'm showing now is very well connected or the kind of result of what Michael was talking about. It is simply showing the effects of that pure-play position that we are enjoying. You can see it on the right-hand side, for example, looking how our sales vis-a-vis life science customers have evolved over the last 10 years, now standing at more than 80%. And you can also see it looking at the top line growth development, a 10-year CAGR of 12% and also looking at the profitability where we have been enjoying an increase of our operating margin of around 600 basis points in 10 years, so meaning on average, 60 basis points additionally. And this is a trajectory that is working in a 10-year perspective looking back. It is working roughly in a 5-year perspective looking back, and we are very confident that this will also work out looking 5 to 10 years ahead. There are so many important and structural drivers that we have built our strategy on that we want to go on this path of over market growth and a nice increase, step increase in profitability.

Now this complete development, if we go to the next chart, thank you, is very much founded in the network that we've built. Of course, our origins lie somewhere here in Göttingen in Europe, but the company has evolved over the last decades being a real global player. This network that we have built out is the basis for our reach into the global markets, being able to have a resilient footprint, being able to serve the different regional markets, being able to being close to our customers. And you're seeing on the right-hand side, for example, the very well-balanced sales mix that we are enjoying.

And as you know, there are several plants that are of specific importance to our business, namely Puerto Rico that is supplying consumables to the North American and South American markets. But also Songdo is going to play a very important role going forward in Korea, a plant that is just in construction now, and we are bringing it online then in beginning 2027. Also, of course, you know Göttingen and Aubagne. But you also know that we have been investing heavily into all of these plants that I've mentioned. And we are, therefore, ready and positioned for everything that is coming up. The platform is waiting to be leveraged, and we are looking very much forward to that.

And with that, Michael, back to you.

Thank you, Florian, for that journey. And again, I think the true essence of what brought us that financial success is basically on that slide because it is all about innovation leadership. And again, we have 3 pillars to drive innovation. One is based on acquisition of technology. We don't buy revenue. We buy technology. We complement our capabilities and our technologies with selective targeted choices around our strategy and with outstanding level of capabilities that we find in the market. And we've done that in the past, and we'll continue to do that in the future. At the same time, we are building our innovation pipeline on our own development as well as on partnerships. And we'll give you a few examples throughout the day as well in the spotlight sessions.

Now let's take a look on the left-hand side about the way of how we really have strengthened our portfolio in the past years. I want to start really with our focus on the drug development and discovery processes. Again, looking back more than 150 years, the whole company started more from the research and academia perspective with our balances portfolio and it's been there, and it's been there still today as the workhorse in many of the laboratories across the world. We wanted to create more focus around this, particularly with a focus on the biopharma industry, biotechs, academia, biopharma, CDMOs in order to help them as well in the early part of their work and their early workflow.

So this is our recent acquisitions all in bioanalytics, which is really all fueled by the vision and clarity to fundamentally accelerate drug development and get better choices and faster choices of the most winning candidates and provide them and our customers really with a sense and with a whole set of reagents, consumables, instruments and more and more importantly, data analytics and artificial intelligence.

ACM advanced cell models or new approach methodologies is another addition to that journey, and we will talk more about this in a spotlight session later on today. We're coming from an incredible leadership position in the market on the upstream bioprocessing manufacturing ability, of course, with our strong portfolio on bioreactors with the acquisition that we did on single-use technologies in the sterile bags and fluid management technologies, paired up, of course, with where we came from on consumables on single-use with separation technology. So it was very clear that an acquisition and an addition in chromatography makes perfect sense. And of course, we are building on that capability to be able that we have been bringing this to life, but as well now build and be the pioneer on continuous manufacturing and process intensification, particularly strengthening the position downstream in the whole industry.

Last but not least, the one thing is to then be really a true end-to-end portfolio supplier with the focus areas that we just highlighted. And the other one is to make sure that we as well very well prepared and positioned for whatever the pipeline brings to life. And it's been very clear since many years that the area of advanced therapies, cell gene therapies, nucleic acids is the area in which a lot of movement, a lot of R&D work have been happening. So it's very, very clear that we want to be as well in a leadership position once these drugs will find their way into approval and find finally their ways to the patients for life-changing therapies.

Own development is and will always play a key role in our core technologies. But as well, we are going and venturing as well to be pioneers in a few areas. And again, building on that last area of advanced therapies, you've seen the press release about Eveo, our answer to the challenges pioneering the space of cell and gene therapies, in cell therapy area. And I think it's really a great spotlight that you will see later. I think a fantastic piece of innovative work that will make a big difference in the market in terms of manufacturing cost, footprint, clean room capacity requirements.

Cooperation, I think that sounds like a boring topic. I think it's one of the most exciting and I think as well most fruitful ways to innovate, knowing always that there is great brains outside the company. And here, I think probably the big highlight of our collaboration and innovation in the recent past is the work with Sanofi on Pionic, the platform that, in my mind and in our minds, will change the industry's life and realities, moving the borders of what's possible in terms of yield, efficiency, cost reduction and speed in manufacturing. This is really our answer to a big need in the entire industry.

Last but not least, I think it is worthwhile to mention as well our collaboration with NVIDIA, with other institute universities in the area of artificial intelligence and data analytics, I think another spotlight that I'm sure you would look forward to.

So I think the whole idea of covering that whole space here from early molecule development all the way to upstream, downstream commercial production is giving clarity to the customer that we are the pure player, and we have an end-to-end offering. But to deserve that trusted partnership, as I said earlier, you need to be outstanding in each single unit, in each single part of the operations and the workflows that are here. And the ability to be there early enough, understanding what's in the pipeline, making your brand, your products relevant, providing instruments, consumables, reagents, and over the time, particularly then as well in cell line development, process development to help our customers to develop those processes together with us with our leading gold standards in process development.

And last but not least, to really see there, get spec-ed in deeply into the workflows and get validated processes to become really the partner then for the trials and for the commercial manufacturing. This is a sticky business model built on deep technology, built on deep application knowledge and built on a winning portfolio.

So with this, I think we should lead a little bit through from start to finish. And of course, we start with the molecule development portfolio and what we do in early phase. Alexandra, over to you.

Thank you, Michael. And of course, if you -- as you said, we have very strong foundation and technologies. But how we would like to think about our portfolio, our offer into this market, it's not about technologies, but it's all about understanding the industry, understanding the market need, understanding the customer need. And we have the ambition to accelerate trial development.

But what exactly it means? It means that now all the biopharma, there is much more competition. There's high requirements to be faster, to be more cost effective in the drug development. It's high pressure on automation of the workflows. It's high pressure to get additional insights to better understand how the drug is affecting the health organism, how the drugs really cure diseases. It's also a lot of pressure to make sure that we can make decisions earlier in the process of molecular and drug development and don't have this very expensive failure later in the stage when the candidates going into clinical trials because then a lot of money and a lot of time already spent probably on the wrong candidates.

So if you think about this industry needs, about R&D needs and our wish to accelerate drug development, then we have a portfolio to address this. And if you think about portfolio in the bioanalytics segment, it's -- yes, it's 4 distinct technologies we're offering from live cell imaging to high-throughput screening, automated single cell peaking and cloning systems. But at the same time, all these instruments, Incucyte, Octet, CellCelector, iQue, they all can be connected in a workflow. And I can give you the example of cell line development.

Cell line development starting from when you need to grow the clones. And CellCelector can work with one plate with 72,000 single clones at a time and then pick exactly what you need, grow it. And it's very accepted by the industry. It's accepted by regulatory because we can prove that we really choose the right clone. And then it goes into iQue where can we characterize this clone, which will choose and understand whether it's rightly producing us the molecules we are looking for. So this portfolio of bioanalytic instruments also Incucyte. This is definitely the instrument of choice if you think about life cell imaging.

And what is the beauty of this instrument. This is an instrument you put in the incubator, you put their plates and let your cell line growth. You don't need to take it out to do image control across the days or weeks of cell line growing. But scientists like it not for that. The beauty of it, you have a software, which is very easy to use. So we address the need of users to support them in the right decision-making in a fast decision-making. And Michael was saying we have a collaboration with NVIDIA, and this is the instrument where we collaborate with NVIDIA very strongly. We have AI-powered modules on the Incucyte to support scientists to make decisions very early on a cell health. You don't need to wait long to decide whether your cell line will grow or it will be dying.

So this is examples in addition also, we're now going into advanced cell models even further. We just launched last year Incucyte with first confocal microscope inside. This allow us to do 3D images of the organoids of the 3D objects. And the video which we show you in the very beginning, you saw this strange shape picture. This is actually true image we took by Incucyte of the organoid. This is what we can give now scientists to support their R&D and really accelerate drug development. Think about lab essential portfolio. This is very standard instruments. You can think about balances, pipettes, lab water, a lot of consumables, but it's absolutely necessary products in each of the lab in biopharma.

You need to make sure you have connectivity of the data for all the products, for all the instruments we use, and we can provide it. You need to make sure you can do properly sample preparations before your reagents, before your samples goes into bioanalytic instruments, and this is what we can do. So we see this offering. We see this portfolio of lab products as very combined, very good universe, very good workflows to support the scientists. And then, of course, after molecular development, after drug development, cell line development, it all goes into bioprocessing.

Yes. And if it's about failing fast in developing a drug, right, from 10,000 candidates, you don't want to move ahead with a drug, which is going to fail in your Phase III clinical phase. In bioprocessing is about move fast, right? Once you identify as a customer, the right drug candidate to move forward, the race really starts to develop the scalable manufacturing process, develop a very efficient manufacturing process, manufacture materials for clinical trials, scale up that process. Race starts to make decisions where to invest, right? Is that candidate going to be a blockbuster or rather small indication? What is the right CapEx investment decision? Are we going to invest in large-scale stainless steel facility, knowing that on average, drugs are delayed coming to the market by 2 years. In a scenario of a stainless steel facility, it costs customer [ EUR 150 million ] that a delay in efficiency. So bioprocessing is really about efficiency, speed in process development and efficiency in manufacturing.

And that's the mission we have is to help customers to move fast and make these drugs in a most efficient way. And it's, in principle, a simple guidance for everybody in the company, especially our R&D teams when working with customers to follow these principles of speed in process development, doing that by automating the workflows of customers. An example is our market-leading cell culture robotic system called Ambr, where instead of a process development, cell culture development facility of a size like this room we are all in, you reduce that to a machine, which is the size of the podium here with much less direct labor, much more data created. So that's how we think. That's how we work, and this is how we provide value in process development.

In manufacturing, it's about yields, monoclonal antibodies in the history, if you look at the last 2, 3 decades, there has been a 15-fold improvement of the efficiency on how you make monoclonal antibodies. Is it efficient? It's okay today, but it will -- I think, will -- you can do it much and we can do it much better moving forward.

What you see on that chart is a sample of a portfolio, which we have built over decades following these principles, picking technologies, which made us the leader in single-use manufacturing, particularly in upstream, made us now a real challenger in downstream technologies. And with the capabilities we now also have in digital solutions, AI kind of type of process monitoring, orchestration of processes. I think it brought us in a position that we are about to unlock additional really significant value by combining the capabilities we have, combining the single technologies we have into really the most efficient manufacturing lines for the most attractive modalities. More about that in a minute.

Thank you, Rene. How does that sound, guys? So we now move -- I mean, we look at the whole space now from molecule development all the way to upstream, downstream commercial manufacturing. And the next question is, of course, what about the business model? And I truly believe that I think the way of how we steer, evolve our business and business model with an 80% level of recurring revenues really gives us predictability, high cash-rich and margin-rich business with a clear stable foundation. And it is there to not only have been guiding our principle and guiding as well our success in the past, it is there as well to stay and be something that we want to continue to strengthen.

This starts, of course, with a very strong top of the mark and again, like-for-like choose of the best breed consumable reagent portfolio that we have been building massively over the last 10 years through acquisitions and through further development and improvement and optimization. Then adding software. And I think it's something that I want to dwell a little bit on because we will talk about this later as well as part of one of our spotlight sessions. But for sure, so in my mind, in a way, there is another consumable that is a great value to our customers, which we think we need to take a leading position in, which is insights.

Insights generated based on data, insights generated by the instruments that Alexandra has been talking about in the early discovery phase, the ability to extract data, organize this, analyze this, drive the right choices and decisions to speed up development, drive the process development, as Rene mentioned, and then use these models not only to basically design your experiments, but equally use these models, capabilities and softwares in order to create models that guide the manufacturing process, not only by, let's say, optimizing single-use operations and unit operations, but equally orchestrating the entire manufacturing process upstream and downstream and not only orchestrating, but equally looking forward to a vision in which autonomous manufacturing based on the optimization of these parameters and models that bring that steering back into each and every of the unit and into the brain of the process is really the future that we're working with.

Now I think having said that, it's important to add service here as well because that's the way how we constantly on a daily basis, interact with our customers. This is our ability to provide technical insights close to them, but it's the idea of servicing the customer along their whole lifetime and journey. It's speed and delivery, it's quality, it's exchange, it's providing capacity, tests, whatever there is, including, of course, then maintenance and services in a technical way.

Now this is an area that will be with us for the future as well. And this moves me to the next slide because the, of course, relevant question now is how do you make this stick? How do we make this business model sustainable? And this is definitely one of my favorite charts. You've seen some of this, and I think I just want to make clear that you may have seen slightly different data. What we've done here is we expanded that model. We previously only looked in the bioprocessing space.

Now as you've sense, we really look at the whole universe of an end-to-end process, want to look at this in a more integrative way and thereby really including molecule development, cell line and process development, clinical trials and commercial production. Clearly, the majority of our revenues are and will remain to be produced in commercial production. That's the end goal.

But of course, I mean, if we see as well the relevance that we have in each and every part of the process because that's the way how we drive our sales process, and that is how we increase the stickiness with our customers. Starting in the early phase to seed the business, be there with our brands, convincing instruments that help the researchers in the labs in order to find the right candidates, save money, save time, save cost, then really to win the spec when starting up with bigger volumes along the clinical trials, get validated into the processes, get the regulatory approval and move into commercial production, where it's all about scaling up. So it's really a seed train that we have really in the same way of the work as we do on biologics is this is the way how we're seeding our business with our customers.

So with this, I think now we have taken a look backwards where we come from, what our leading position is today, what is it built on. So now it's time in order to look a little bit more into the market and understand the market fundamentals. We've done a lot of work looking into millions of data points, analyzing the perspective, looking into what changed. At the same time, there's a few structural fundamentals that are alive, that are intact and that will, for the next decades, guide our business and our business growth.

Starting off, of course, with simply the demand. Demand is driven by consumers. It's built by a growth of the consumer base, it's driven by the higher level of age in this consumer base and therefore, the need and the demand for life-changing, life-saving therapies all around this. And I think that demographic, of course, is definitely on our way. The pharma market as well has a solid growth of around 5% year-on-year, the broader pharma market. And of course, it is exciting that we've really clearly chosen to be in the most attractive part of that market in the biologics, where we've seen the journey of biologics taking share from small molecules over the last 10, 15 years and will continue to do so. Our projection is that by 2030, 57% of that entire pharma market will be delivered and driven by biologics.

Last but not least, it's as well clear that there is a massive pipeline out there. We'll take a look at this in a minute, at the same time as well, simply as well, the number of drugs and approvals has been increasing and in fact, doubled in the last 5 years compared to the previous 5 years.

So all of this really plays into our cards. And now let's take a closer look into how modalities and how the biologics market has developed in the past and how we see it developing in the future.

Now it's been clear that we continue to talk about around a 10% CAGR growth of that end market. This is, again, revenues of drugs in the market. And the majority of this is and will remain driven by the classical antibodies, monoclonal antibodies as much as other biologics. Other biologics, well, peptides, GLP-1s, you all know, vaccines, blood plasma and the likes, recombinant proteins. And then as you can see from that basis, you see as well the -- although from a small basis, the level of growth that we will see in advanced therapies, biosimilars and next-gen antibodies. So we're talking about ADCs, multi-specific bispecifics and the likes, advanced therapies, cell gene therapies, nucleic acids. This is where a lot of growth will come from in the end market. And despite all of the discussions about setbacks and volatility that is there, this is -- it will happen. It will happen. There is no doubt about this.

So from the 26,000 molecules that right now are in research and in the development pipeline, almost 50%, around 50% are driven by next-gen antibodies and advanced therapies. So a great foundation for our future success.

Yes. Michael was talking about the market of biopharma. This is the market of our customers. But of course, the question is, what does it mean bringing it back to our level of market? So how is our total addressable market, our TAM developing? And from all the research that we've done, this is what we have come up with.

So we are seeing that the market for our Bioprocess Solutions divisions is strongly growing 8% to 10% going forward and that the Lab Products & Services market is growing at a slower pace, 4% to 6%. In a blended view, this brings the market then to a growth going forward midterm of 7% to 9%. And of course, there are a lot of opportunities, also some challenges, and we might discuss how these challenges are looking like. But some clear takeaways behind the numbers.

First of all, what's driving our market? Of course, volumes produced from our customers, clearly. And more volumes mean more equipment need. It means more consumable need. So this is, of course, a strong foundational pillar of our growth in our market. But there is a second important driver that also became clear. And this is the kind of diversity in modalities and also the complexity that this brings that's always good for an innovation-driven company like Sartorius, helping our customers to navigate and find the best way to get the best yields in different modalities. So volume and diversity of modalities really will be driving our business going forward.

And of course, if we're looking at these markets, our customers are facing challenges because there's a lot of pressure on health care systems and on drug pricing. And you might say, okay, they will turn around and give us price pressure. First of all, this has been a game that has been going on for a long time, and you see that our margins are not sensitive to price pressure in a way. So there are ways in the system how we can work with price pressures. But what is also clear is that there is an imperative to get cost down on the customer side. And the only way to do it, really if you want to improve is to take the next level in the usage of technology. Once again, that is exactly what is driving our business as innovation and technology leader.

And on the challenging side, we all are experiencing that the world is getting somehow more turbulent. There are more geopolitical dynamics and policy shifts that we are seeing. And this is a fact. Volatility is going up. And I think we simply have to acknowledge that. We must come away from, oh my goodness, what's happening post-pandemic, and then, oh my goodness, what's happening with supply chain constraints? What is happening with energy prices, what is happening with tariffs up and down, left and right. We have to acknowledge that there will be a lot more volatility and our reaction must be to build our flexibility muscle to be able to adapt to all these challenges. And I think we are on a good track to building that muscle. And this is also for us an imperative if we want to move into that successful future that I was describing.

Now this was high level, but I have 2 colleagues, Alexandra and Rene, that will take that one level further down.

Yes. Now I start with bioprocessing. Now we are looking now into the future, right? Before we do it, let me take you back on the journey of what single-use technologies or manufacturing evolution has been in our industry. You will remember, it was 2007 when Sartorius acquired at the time, the pioneer in single-use technologies, Stedim. At the time, the industry was about to adopt the single-use bags in established facilities, typically large stainless steel facilities for flexibility, for benefit of less cleaning, less energy use, less contaminations because of the cleanings.

It was the time when Sartorius was taking the customers and the regulators, hence and now moving, explaining how you do, how you change from a stainless steel vessel to a bag, what it means for extractables and leachables, we set the industry standards for regulators, for customers, how you deal with these new challenges and new aspects of biomanufacturing. And it became really a standard in every typical stainless steel large-scale facility. They all are equipped with the single-use flexible technologies in the steps where it makes sense. At that time, nobody was talking about single-use manufacturing. It was a flexibility of certain single-use technologies at that time. It started to change when first single-use bioreactors came to the market.

At that time, Sartorius started a service offering called integrated solutions, again, taking customers and regulators together and explaining how you design a single-use facility, right? This was completely new for the industry, how you size the equipment, how you define what consumables you will need, how you put it in place, how you set up the supply chain and so on. And that type of single-use manufacturing evolved over years and became a standard mostly in a smaller scale, clinical manufacturing in the industry. And you see it on the left side, the penetration rate in this type of setup is -- became high. So 85%. It is an industry standard today and will remain industry standard moving forward.

And then, of course, some customers started to make decision and implement and establish single-use manufacturing then in commercial production to supply commercial drugs to the market. There, the penetration rate is low today. Our estimate is less -- much less than 20%. And we believe this is the area which offers really an upside growth potential moving forward. Michael talked about the pipelines, which are very strong and important indicator for us to look into the future. What are customers developing today? What are they working on today? What is coming in 5 to 10 years to the manufacturing where our technologies will play a role.

And on the right side here, you see that more than half of the 26,000 molecules and drugs in development are molecules which are either highly potent ADCs, bispecific, trispecific antibodies or molecules or drugs which will be made at lower volumes in commercial manufacturing, cell and gene therapies, for example. So with the improvement of single-use processing, the process intensification is something you will hear today afternoon in our spotlight session with the team. This further evolution and development and innovation in single-use manufacturing will open a new and additional growth, above-market growth potential for Sartorius to penetrate commercial manufacturing with the single-use technologies.

Moving to R&D. We see that R&D also evolving. There is several structural shifts and changes in the value pools, and I would like to address 2 today. These changes moving into AI and automation and advanced cell models, they are very much driven because biopharma R&D, as I said, would like to accelerate the speed and make better decisions. Thinking about automation and AI on the left-hand side of your chart, what we see -- the customers, they would like to see more sophisticated instruments, which provide more data. At the same time, they want to combine simpler processes, bench processes into automated workflow. So there is a different levels of complexity we can see in R&D labs -- and we do not think that it will be one or another model will change the life in the R&D lab. It rather will be decision on based which process we are talking about, which instruments we are thinking, is it very often used in a lab or rather specific, then a different level of automation and AI will be used.

And what we see currently that the more AI comes into biopharma R&D, the more new questions is actually happening and the more questions scientists asking. So to say that everything will now happen in-silico using AI it's not because it's still more answers around biology would need to get. We need to do more experiments. We need to understand better diseases, drug actions on these diseases before we really can move in a full AI. But what is definitely happening, scientists would like to see processes connected between different instruments to have this cloud of the data lakes to really make the proper decisions of the combinations of the data from the different instruments. And also what we are working on, and you will hear more in our spotlight session today.

On the right-hand side, advanced cell models, and we will talk today a lot about this. Of course, it's very much driven by regulatory. They would like to remove animal testing and have all the drug tested in the lab. But what it else providing to the scientist you can do really repeatable, reproducible, scalable experiments. It's not only about experiments to understand the diseases, but it's also to testing your drug candidates. This is about toxicology. This is about efficacy, and it's a huge market. And now this is not very new thing for the scientists.

But if you talk to industries, if you talk to academia, who use this, it's actually rather difficult to work on it. It's a lot of manual work still in our lab to produce organoids at scale. It's a lot of training need to happen for the people who do this. So really, the need is there to have fully combined platform where you would have instruments to analyze all the outputs. You would have reliable models, which are stable over time, which is reproducible, which you can scale across the geographies you have different locations that you have reliable consumables and reagents and of course, then software to analyze.

So there is a need for this mini universe to replace animal testing, but it's only possible when all the things combined together. We see this market as very attractive. We see it's growing double digit. And if we look only about toxicology testing, not thinking about other areas, we could see that it would grow until 2030 to EUR 200 million to EUR 250 million. And with this, thinking about our strong positions in R&D and bioprocessing, Michael, back to you.

Thank you. Now this is all about moving on really from where we come from, from the market perspective and our area of focus now in terms of the chapter of how we shape our future. Let me start really with the fundamentals of our strategy. So we've grouped our strategy into 3 buckets of strategic levers, starting, of course, from the most important area that has driven our past success and will determine our future success equally is our portfolio. And here, it's all about 2 big areas in order to drive innovation through partnerships, through own development as much as through M&A and focusing on our core capabilities while searching and leveraging on new growth vectors and opportunities that are in the market.

Secondly, customer experience. That is something that we really feel we can equally make a difference and take a leadership position of really making sure that our customers experience the interaction with Sartorius as a pleasant, simple ways of interacting, getting delivery, getting speed, getting quality, seeing their needs reflected, their problems being solved in a unique and outstanding way and setting the benchmark in the industry for that. And last but not least, it's all built on operational performance and excellence in everything that we do.

So we have been guiding the market for very good reasons on very few financial KPIs. And of course, on top of our ambition level will remain our financial ambitions in order to drive profitable growth above the market. enhance our cash generation and reduce leverage. That is the journey as we move forward. But I want to be equally clear for the other 2 blocks, we, as well enlarge our set of KPIs and our ambitions in terms of the experiences we want to drive for our customers, measuring reliability, measuring quality, driving operational excellence and productivity across the board. So we'll strengthen our commitment, and we will measure and follow through our improvements in all of these areas.

All of this is driven by key enablers. And I think the one that I cannot lay out and emphasize more is people. I think in the end, everything goes down to excellent leadership and excellent capabilities and great attitude to collaborate and to bring value across the company and to our customers. This is something that really is driven by not only the quality of the people, but as well the culture and the level of engagement that we're able to bring. And here, clarity on where the direction of the company is, really emphasizing and socialize our strategy, get everyone on the page on the same board and therefore, drive clarity, focus, transparency and energy on the way there will give speed in the execution of our strategy and performance all along.

Empowerment, I feel is another area that we feel is important if you want to drive speed. And I think Rene said as well before, in biomanufacturing, everything is about speed. in drug development is everything about speed and as well in front of the customers, everything about speed. So our own speed needs to as well really be in line with what we want to achieve in the market. So we want to demonstrate to our customers that we as well drive speed in our own execution. And therefore, empowerment and accountability and clarity in terms of shared goals and commitments is fundamental to our success.

Last but not least, I think it's for the good reason as well a centerpiece of our future success. We very much believe and invest heavily in AI, in data analytics, in automation, across our own way of working and across our portfolio and across the workflows with our customers. This is definitely a big shift and change as we move into a different future.

So starting from on the portfolio side. And as I mentioned here, I think we want to make a very clear distinction of growing the core is very much on our current strongest capabilities, our existing portfolio, deepening our capabilities, improving our products, finding new ways of optimize where we think we find a new answer to an existing problem, and really challenge wherever there is a contender and things we are safe, we're going to be really behind our competitors in order to make sure that we find new answers to problems of customers where they feel they are stuck. So we want to take another level there, very much around driving our business model, very much focusing on recurring revenues in this area.

Expanding into future business is all about making selective choices of growth opportunities that we see as we move into the future. So it's very much about clarity in terms of which technologies, which emerging things are there that could be attractive areas to allocate selective amount of capital and resources to make a difference. And we do a lot of wise choices here, and it will be part of our spotlight sessions all along. All of this is, of course, as we say, we leverage much more AI, data analytics and automation in order to drive speed in execution, but as well make a difference to where value is being created.

So I think with this, I would like to give a few examples now through Rene, starting now on in each of the pillars. So growing the core is a mission-critical element. So Rene, just give us a bit of a perspective on examples on how we do this.

Absolutely. So of course, thinking midterm, 5 years or so, it's a core, the business, which will drive the growth and which will drive the above-market growth. And we picked here 3 areas to briefly talk about. First, process intensification. Again, back to what I said about evolution of single-use manufacturing, process intensification being enabler of penetration and use of single-use manufacturing in commercial production is one of the core areas of our innovation moving forward. And I think what we are doing here is really changing, shifting the gears from competing on the performance of single product or single unit operations to offering customers the best-in-class, the most efficient manufacturing line for commercial supply of their drugs. And that's a very ambitious objective.

Michael talked at the beginning, we are not a company which follows. We are a company which leads. So again, we will take our customers. We will take and do take regulators together on that journey, explain, help to adopt that innovation, and you will see today afternoon the benefits, and what we see, the challenges we also see still the -- still work to be done, but I think also will hear and see from the team why we are so bullish and optimistic about that we are doing the right thing, providing the right value to customer in that space.

Of course, they are core single-use technologies, which we don't want to forget. We still make more than half of our revenues in classical stainless steel facilities today. They will be there. They will grow. We want to make sure that we address customers' needs there as well, protect our business. Example of a regulatory potential ban coming on PFAS containing materials. There are legacy filters still used in the industry broadly, which are PFAS-based. We have an alternative. We work now with customers, helping them to switch to the newest, more sustainable version of these products. We will move more and more to the critical -- and grow in critical applications, critical applications closer to the final product.

A good example of that is freezing, freeze and thaw technologies where we leave the market already today, single-use bag where you put your drug substance, freeze it, ship it from a CDMO back to the originator or from drug substance facility to the final filling drug product facility. So there is a multiplicator in adopting that platform because it's used at the drug substance side where you make the drug and ship it to the drug product side where you need to thaw the product and formulate for final filling.

Alexandra talked a lot already about bioanalytics. It's something we know the logic and the capabilities we have in automating the workflows of customers who are working around the bioanalytics. And also -- we see now more and more need to bring bioanalytics into bioprocessing. So in the future, you will see us utilizing the core bioanalytical technology, which we use in the instrument in drug discovery. We take that technology, we make it a bioprocessing sensor or headline analytical device to have, again, customers run smoothly manufacturing process.

But now I'm already starting to talk about more emerging part, which Alexandra will talk about.

Thank you, Rene. Yes, as Michael said and Rene, we have very good growth opportunities for current business, but we want to look beyond. We want to look beyond 2030 and what else we can bring to the market. We are pioneer in a lot of things. And these 3 pillars, what you see on the chart, we truly believe we can be pioneer, we can be the lead in these 3 areas we choose to invest extra.

Advanced therapy solutions, it's not only about critical reagents. And yes, we know the market of the new modalities over the last past years was fluctuating, was maybe not very stable, very much driven by different funding activities and finding unstability, but at the same time, we truly believe that this is the right way to go. We see that pipeline are growing. We see that customers invest in the new developments. We see that manufacturing looking for the new ways how to produce these drugs. And I hope you saw yesterday, we published the announcement of our new platform, Eveo, which exactly plays into this truly pioneering innovating automated systems for advanced therapy.

Thinking about advanced cell models, I was just talking about what is the need there for the customers, what they are looking for. What will help industry to move from animal testing into the lab. And again, we truly believe we have a very strong position here. We have the instrumentation. We have 3D Incucyte, which can produce 3D images for better analytics. We have acquired MatTek last year. The leader in micro tissue technologies. We have all the reagents, again, we can use from advanced therapy solutions, and we know everything about plastic consumables. And on top, we have a proper software and AI capabilities. So you think about we can truly support customers with one offering to be the most successful in this.

And then PAT and AC/QC, as Rene was saying, we have a lot of different technologies in our hands in the lab. We have Octet with BLI technologies for protein analytics. We have iQue with high throughput screening. We have certain technologies in BPS in bioprocessing area, which if we bring closer to the bioprocessing in at line, in line, we can support bioprocess, we can support production with faster batches release with better understanding of the quality, with better parameter setting to increase the yield and increase efficiency of the production.

So we have 3 very strong positions where we absolutely believe we can excel based on the technologies we have, based on ambitions we have and the best of the customer understanding and their processes. But if you think about innovations, if you think about growth ambitions, as Michael was saying, it's not enough. We need to be sure we can execute. And thinking about customer experience, Sartorius, and long the company, as Petra was saying, Sartorius always has philosophy, we are not the supplier to our customers. We are a partner. We would like to listen what they need. We would like to understand and we would like to react on that.

And if we listen to the industry, there was a lot of fluctuation, COVID time, after COVID time, but what exactly customer wants from us. They want very simple things, reliable supply, and it's not only about shorter lead time, but it's reliable, that it's right products in the right geographies, and we can offer it because we have such a big area, a lot of different production sites across the globe. So we can utilize this to provide the right products in the right place. That's about simplifying a way how to work with us.

Yes, we bring AI into the lab. We support R&D, but this is what also customers want when they interact with us. They want simpler interactions, easy ways to connect, better transparency, faster time to reaction, better support, better technical and application support, and we have all the scientists in-house, and we can provide it. So we set up different initiatives to address these points to make sure we are simplifying progress. We are simple to work with customers. We are transparent, and we really hear their voice and can address it through all the areas within the organization.

And with this, back to operational excellence.

Thank you. Yes. This will conclude our Shaping the future chapter with the last of the 3 pillars, which is all about operational performance and excellence, all about more cost-efficient, digitalized and lean organization. We're going to bring this together in a showcase that we call Factory of the Future, where we bring the latest level of thinking, technology and capabilities on artificial intelligence, on automation, on tools, on lean way of working together in order to showcase what efficient and lean manufacturing can look like. At the same time, it is critical for us all the time to look at our entire network of capabilities and capacity and competencies and make sure that we are continuously building a resilient setup that delivers in line as well with the new global order, I may say and call it.

Simplifying operations, that's all about the bread and butter business of driving productivity is very much about the idea of being a lean organization, driving lean methodologies, optimize the way of working, avoiding duplications, drive value stream mapping. So all the tools that advanced manufacturing has to offer and will drive deployment across our manufacturing network. Last but not least, we will focus well a lot on sourcing, our ability in order to partner with our suppliers, leveraging and build partnership programs to drive cost, quality and availability. And all of that, again, supported and enabled by AI, digital capabilities that are the foundation for our operational excellence journey.

So with this, we are opening into another chapter because now, of course, we want to bring this all together in terms of our numbers and our financial ambitions because you've seen where we come from and what position we have. You look at the market data and the way how we define our target addressable market in light of this and showing our strategy and our path to our success.

Now let's talk about our numbers and our journey on top and bottom line. Again, the year 2025 was a year that has shown strong results overall, on the back really of, I would say, the vanishing phase of the post-corona and post-pandemic destocking. At the same time, we are and we still are in a transitional phase where despite that strong result in 2025, even the year 2026, and that you already know from the guidance that we have published this morning is not yet really fully in line with our midterm guidance, given as well the current situation primarily on the market side and the demand for equipment and the hesitation on CapEx investments.

Now as we move from '26 forward and into the midterm, it's very clear that our confidence on the further improvement of top and bottom line capabilities is built on 3 developments in the market. One is truly that we've seen the stabilization of the equipment business. We have a lot of discussion with customers. There is a strong sentiment. We've seen glimpses, I would say, of the recovering market. And it's more the question, when exactly in the year we are seeing a larger tilting point? But our conviction is that 2026 is a transitional year into 2027, where we really feel we should be back into our normalized performance level and as well see something really in line with our midterm guidance.

China, slight improvements, again, not yet, let's say, a reason to celebrate. But definitely, I think will be another year where we see less headwinds if we compare that with the years '24 and '25. Again, more sentiments as well towards not only the local market, but as well the Chinese customers who want to expand their capabilities and will work more with Sartorius, particularly driven our global regulatory competence and capabilities, our footprint across the globe in order to drive expansion of drugs and the pipeline that has been built and developed in China and from China and across the globe.

Last but not least, the biotech sector, which was a bit of a concern in terms of the funding and the investments that went into that sector, particularly in the first half of 2025. I think we see more recently a little bit more of a, I would say, more positive sentiment in that market and with these customers. So hence, we really feel that we are on great track on deliver the top line growth that we have been foreseeing at the same time as well, delivering the margin expansion as we indicated, not only for 2026, but as well beyond.

So external environment, see some slight improvements. At the same time, we remain very disciplined on our execution. You've seen the weapons and the tools that we built up on innovation, on new products, on improvements of existing products, on our ability in order to serve our customers even better. So therefore, it is all about now driving further into a future and into the midterm.

So this is what we have been published this morning. This is a risky question I will ask now, but I do it anyway. So anyone in here that really felt this is not in line at all with your expectations? You see is always smart to ask the negative questions, but thank you for that confirmation. That's good to hear.

Again, I think really based on those structural growth factors that we've seen in the market and the clear position that we have in the high-growth areas, we really feel rather optimistic that we are delivering this above-market growth per annum on the basis of all the great stuff and reasons that you hopefully have seen so far and that you will continue to see in the spotlight sessions later on.

So starting off really with the Bioprocessing Solutions, Florian has explained a bit how we came to the conclusion of our addressable market size. And again, it's versus that market growth, we are seeing that our leadership in single-use solutions, process intensification, our advanced therapy solutions portfolio, this will drive an above-market growth of around 100 to 200 basis points.

On the lab side, again, great innovations, great acquisitions, great focus now on the drug development pipeline as well, of course, still fueled as well by our abilities and opportunities that we see not only in the bioanalytics and ACM portfolio, but as well by our core business around lab essentials. But again, with these differentiated offerings, we will drive an above-market growth of around 100 basis points, leading to 9% to 12% of growth in Bioprocessing and 5% to 7% of growth in Lab Products and Services. That means for the group overall, with the focus on these areas in these 2 divisions, we see overall an above-market growth of 100 to 200 basis points, leading to an 8% to 11% growth, all, of course, in organic revenues expressed given the fact that we are where we are.

So on the underlying EBITDA margin expansion, again, we see, of course, the further impact that we get to our operational leverage fueled by that growth. And therefore, the range, of course, is depending a little bit as well a bit on what we see on the volume side. We have, of course, impact by product mix. And last but not least, we have a lot of focus, as you've seen, on operational excellence, driving our journey as well towards lowering and reducing complexity and cost in the company. Now let's give a bit more flavor to the cost positions and our plans around driving cost.

So Florian, why don't you enlighten us on these topics?

Happy to take that. And finally, a chart with decimals that I can talk about. And to some of you, this chart might look familiar because a similar chart we have also been showing you 2 years ago in our Capital Markets Day. And it is somehow taking a look back where are we coming from, and it's also then giving the perspective going forward. Of course, looking forward, and you have seen our margin ambition, not only for '26, but also for the midterm, it is a clear, steady growth and profitability that we are heading towards. And one important driver, of course, of that is fixed cost degression resulting in operational leverage.

But before I go deeper through the different lines and how they will develop in our view going forward, let me take one look back, especially on the gross margin line or on the cost of sales position because we get oftentimes questions, especially comparing our gross margins that we report today versus the pre-pandemic times 2019. And the question goes like, look, guys, since 2019, we have seen that your gross margins are -- and the numbers are coming depending on if you're looking at on SAG level or on SSB level, I don't know, around about 600 basis points worse. Why is that? And is it simply a question of time until you fully reswing?

And the answer is, wait a minute, because we are comparing somehow apples and oranges if we're looking at external margin. And it's not our fault, I'm sorry. It is simply regulatory around accounting because one important factor that is dragging our margin down in external reporting is additional amortization coming from M&A. And this additional amortization accounts for 260 to 280 basis points 2019 versus 2025. And this is why on this chart here, this effect is taken out. And you see there is still a 200 basis points margin differential to 2019. And the question stays, is it simply a question of time until we reach these levels of 2019? My clear answer, yes. And there is even more potential.

And why are we still behind? I think one important point is the additional investments that we have done and the additional capacity that we've built is somehow also having a kind of mirroring picture in the margin. This is one part. The good message is the platform is there for growth. A second point is that we are still working somehow through inventories as in the pandemic, certain inventory has built up in very specific product niches. We are, of course, trying also to sell this inventory. But at a certain point in time, shelf life expires, and we have certain drags that we are seeing also on gross margin because of a gradual and over time cleanup of inventory. Is this a long-term thing staying in? No, definitely not. These dragging factors definitely will go away.

And then there is a third thing because I was talking a lot about technical stuff here. There is a third thing that is really us working on the cost per unit. We are investing heavily in AI, that makes it easier to steer the processes to really get simplicity in things. We are heavily investing also into automation. And if you are imagining, and we will hear about that later, how our production process in bags, for example, has looked like 5 or 10 years ago and how this might look like 5 years ahead. And already today, we have certain lighthouses for this, you see and know that there is another game in terms of productivity and cost efficiency coming up on that.

So we are quite sure that the gross margin will be going forward, a clear driver of our EBITDA margin accretion. Then going over the other lines, sales and distribution. When we are talking about our customers, I think it's not like a gazillion of new customers popping up every year. It is more of penetrating the portfolio that we're having. And the more you penetrate and the closer you are to the customer, of course, the more efficiency you can also get from sales and a lot of sales -- sales is permanent communication. And also here, there's a lot of complexity created where technology can help us to cut through this complexity and make things easier using, for example, agentic AI also in customer communications.

For R&D, we have leveraged the R&D platform. The R&D cost rate has gone down compared to 2019. And we have deliberately taken the decision not to trim on R&D. I think you've heard a lot about our technological and innovative leadership that we are striving for. And therefore, these are the investments that we want to make. These are a clear commitment into this leading position. So we are not on a cash-out journey. We are really all in to be the innovation leader.

Yes, I don't have to talk about overhead. This is a given, I would say, that we really have to also leverage technologies here, make processes simpler, bundle certain activities that should always cater for additional margin potential. So this is overall why we are really thinking that this 50 to 75 basis points on group level are well achievable. And now let's go for a second deeper down to net profit. And if you -- no, I'm sorry, if we are thinking about the top line growth and the EBITDA margin improvement that we are presenting here. And asking what will then fall down to EPS? You already see that there is potential for nice double-digit EPS accretion over time. But it's even getting better. Why? Because, for example, I was talking about amortization, which is clearly part of EPS. This amortization stays flat. And on a higher basis, you have more degression on the amortization.

A second important cost component is interest. I will be talking in the next minutes also about our deleveraging ambitions. Clearly, interest will go down in absolute terms. So this is another tool to charge EPS accretion going forward. So this is then the beauty of the overall business model that works on every level of the P&L down to EPS.

Talking about efficiency and giving you a little bit more flavor on why we are that confident on the efficiency. I would like to mention 2 topics. One topic is lean and CI. The other topic is everything around our growth platforms that we have installed. Many of you might remember the year 2024 when we said, okay, we need to do an efficiency program, Fit for Future to really rightsize the organization back after that huge kind of peak in business that was created over the pandemic. And we said, okay, we want to take EUR 100 million out of the P&L. You have also seen that we have well delivered on that. But in the same instance, we have taken the decision for ourselves that this must not be a onetime rightsizing exercise, but rather that we are really starting with a kind of mindset shift to make this a continuous exercise that we are operating on.

And this mindset shift is also connected to a very simple word called stretch. And stretch means that we are starting into a year, giving us a cost reduction stretch target, where we do not exactly know at the beginning of the year where we will get the efficiencies and the cost savings from. The only thing that we know is that there is a lot of potential that we can get. And this kind of logic worked in the year 2024. It worked in the year 2025. It will work in 2026, visible already, and it will also work midterm going forward. This is a really solid base, a repeatable base that we will be working on in a CI and lean thinking.

And then there is the powerful digital tools. And I cannot really give enough praise for my predecessors taking these decisions of building these digital platforms, building the digital platforms in SAP, building it in Salesforce, building it in Workday and also on other levels of our value chain. This is such a powerful muscle and platform that has built. And you know how much billions of development these software providers are investing in these platforms for only one reason, creating value for us as the users. And we have these integrated platforms. It is not like a mosaic of thousands things in SAP, more than 80% of the business on one installation, and this is really powerful as the basis.

And the kind of 3 topics that I was talking about are really the possibility to get efficiency in the system. And they are then complemented by the topic of operational leverage and fixed cost degression. So we have many cylinders to fire on, on that journey to make the 50 to 75 basis points happen.

Now CapEx investments, always also another topic. So that chart shows it on the left, EUR 2.6 billion, we have invested from 2020 to '25. And this is a lot of money that we have invested. But I think we have well invested that money, and you have to take into account that in that time frame, we have simply doubled our business, doubled our business, EUR 1.8 billion more sales. And the good news is that these investments were not done to simply cater for doubling the business, but these investments are putting us today in a position that we really have room to grow in the midterm and that this is somehow the basis and the platform we can then build the volume growth on.

Now besides simple capacity addition from this EUR 2.6 billion, there are always 4 kind of motives or targets that we are following up. First of all, it's about global resilience or you might also call it regional diversification, which makes the network more profound and reliable. It's, of course, also to have redundant capacity not being dependent on one single location for key products that we're offering to our customers. It is also opening the way to introduce new technology. So operational excellence in practice to make these step changes to experiment in one location that then is setting the standard that we will transfer later on also to the other ones.

And another point that is also a very important one, proximity to the customer. Proximity to the customer is here very important. And I think Songdo is a perfect example for that. I don't know, has anybody been, of you to the Incheon area at Samsung Biologics, for example, or Celltrion? Anybody seen that? Okay. Next time, we should send somehow a Google Earth picture of that area because what you're seeing is Samsung and Celltrion bringing on huge new factories for biologics. And then there is one construction site right in the middle of this area, and this is us.

And this is, for us, an important cornerstone for our Asian Pacific strategy. We see Songdo as the future hub. And you can see here also what kind of products we are planning to produce there. These products will not be there from day 1 physically produced. We are always following a kind of step-by-step approach and the product lines that the customers have the highest need for in local production because of flexibility, for example, will be there first, but the others coming then online step by step. But even though not all of our assortment is there physically in production, the important thing is that we have the logistics and the warehousing for our complete assortment there on the ground. So this proximity and availability is there then for the core of our products, and this is the important step forward to begin.

Yes, CapEx of the past, we have been talking through. Question is, how is CapEx of the future looking like? I would describe it in a way that Songdo is the last really big building block of that next level capacity building that we've done in the last year. The factory is coming online or the building is coming online end of '26, beginning of '27. And after that, we are expecting a normalization of our CapEx rate back to, I would call it, historical standards. And these historical standards are around about -- or have been in the past around about 9% of turnover. And you know how this is comprised, maintenance CapEx, 3%; growth CapEx, 3%; and 2% R&D. And this is, in a way, the targets where we want to be in 2028 again. And where we will see the year 2027 as a kind of transition year between the year '26 and going forward. So we are coming back from this elevated CapEx level to a 9%.

And then I had some chats yesterday evening, and I got also the question of, well, when I look at competition, their CapEx rate is lower as of turnover. And my simple answer is, yes, that's true. But please keep in mind 2 factors. Factor number one, we are growing faster. Factor number two, especially when you're looking at U.S. peers, they have R&D not sitting on the balance sheet as we are accounting for under IFRS. So also here, some structural changes to be taken into account.

Now CapEx is an important part of free cash flow. And if we simply build the different blocks of free cash flow generation together, I would like to stress that from everything that we are doing, there can only be one result, which is a very strong cash generation going forward. So we are seeing underlying EBITDA margin increase. We are seeing further lean thinking in our operations that will result in an underproportional growth of net working capital vis-a-vis sales growth. And I have been talking about a reduced CapEx ratio. So we have all the ingredients that really show the potential of Sartorius of being a free cash flow machine going forward.

And then there's oftentimes the question on capital deployment. And you have seen, looking here at the chart, there has been a phase in the past where we have done a lot of M&A because we have identified certain key strategic areas that we want to invest in. We have mentioned them. It's bioanalytics, it's downstream, it's ATS, but these gaps are filled now. So there are no bigger white spots on our radar screen as we are looking at as of today. So M&A might be possible going forward. And we've done M&A also in the last year with MatTek, but this is more as a kind of add-on or to fill certain technological gaps on a lower level.

Also, clearly, we want to further go on, on our organic deleveraging part. And this stays a priority. And therefore, I can assure you that we will be disciplined when it comes to CapEx spending, supporting what I was just talking before, going back to single-digit numbers again, and we stay committed to our investment-grade rating. When it comes to dividend, I think it is fair to assume that we stay broadly in line with the payout ratio of underlying EPS that we have also seen in the last years.

Financing structure. You know that we are also diversified in this field. We are diversified in instruments, with the bonds being the kind of anchor instruments we are applying since 2023, but also looking at the maturity profile, it is well staggered. Average cost of debt, reasonable at 4%. And you also know that the first maturity of a bond is coming up this year. And I can tell you, and the colleagues from certain banks are here, we are well prepared to go down this path.

Generally, liquidity is important, not only from a structural perspective here, but also in a short-term perspective. And you should be aware of the fact that we have a syndicated revolving credit facility of EUR 800 million. And as a kind of safety net, we are also enjoying EUR 1.2 billion of treasury shares that we have on balance that give us full flexibility in any direction going forward.

Michael, I'm done with the financial part. Now it's your part.

Thank you, Florian. So now you hope -- I fully enjoyed as well the -- what did you say, the digital numbers, and also with something after the commerce. So that's a level of precision that our finance people, of course, enjoy and like. So hopefully, you can share a little bit the enthusiasm and the confidence that we have as we move into our midterm and we've form in our future and ahead from where we are, building really on a fundamental strong foundation that we've been building up over the past. I know it's a lot that you had to digest now in that session, and I think we are soon now opening the Q&A.

But I want to leave you -- if you forget everything that you heard, still I want to make sure that you leave here not with a clear understanding about the proven strength that really continue to matter. And I truly say that I think one of the most fundamental building blocks and capabilities is and will remain our innovation leadership, very much centered around single-use technologies, very much centered now around as well our pioneering efforts in order to bring single-use technologies onto the next generation and the next level.

And as Rene said, we are only at the start or maybe midterm with the penetration journey, particularly now seeing the opportunities fueled by our better positions, our strong capabilities, innovations in order to drive penetration, not only on the clinical phase side, but equally on the commercial side. So -- and again, the pipeline plays into our favor, with the majority of those drugs really requiring or being very beneficial with single-use technology. This is all based as well on a sticky business model with a high share of recurring revenues that will drive and remain with us as we are continuing to put a lot of focus on seeding and winning this back as commercial priorities.

At the same time, for the future, we as well make strategic focus, disciplined execution to drive future growth and returns. It's very much about the areas of future investments that we have been highlighting and will be part of the spotlight that you will see further on. So really laser-sharp targeted choices where innovation technology will matter in order to look for attractive growth and as well make really conscious choices for capital allocation to accelerate value. At the same time, our journey, in order to go into best-in-class customer experience will strengthen that level of trust that we've built up over many decades now with our customers and will make us next to being an innovation leader, a leader in the interaction with our customers on speed, on reliability, on quality and performance.

Along with that, our operational performance and focus now as well on the bottom line on driving the CapEx normalization, executing with care and discipline, improving cash generation, returns, deleveraging and EPS expansion and growth. Last but not least, really, we remain really focused on delivering above-market growth in the midterm based on those market fundamentals that we've seen along with the continuous margin expansion.

So now I want to give you a very clear indication about the upside of being through all of that, and it should gauge maybe your appetite for questions because there's a coffee break, which is planned for 11:20, I think, yes. So let's see it, in give and take. But again, I think this is now the moment where I think we're going to open the floor and hand over to Petra for facilitating the Q&A. Thank you very much.

Thank you, Michael. Yes. So thank you very much for that interesting presentation. So we are now ready for the Q&A. Hands are already up, perfect. So there will be mics coming so that you can ask a question. [Operator Instructions]

So now we are ready to go for the first question, and the mics are coming. So let's start with here on the left-hand side, Odysseas.

Odysseas from BNP Paribas. First, I had a question on the phasing of the midterm guide. So should we view 2027 as a year that you can perform within these targets? And would it make sense to think that you're more likely to do better in the early part of the midterm given that you have quite a big plant in South Korea coming online, but also with a bit of a reshoring kicker?

And secondly, one for Florian. So you did mention that cleaning out your pandemic-built inventories is part of the gross margin expansion story. If I do the math, your inventory write-downs have increased for about 3 percentage points since 2019, which, by 2030, takes almost the entirety of the margin expansion you're implying with your targets. So I wanted to ask, are you being conservative on the margin side? Is there any reason why inventory write-downs should be staying structurally higher than what they were in 2019? Or are there any offsets on the cost side that might offset that margin gain from inventory write-downs?

Thanks for the question. So I'll start with the first part, really very much about the midterm guidance phasing, particularly with focus on '27. Of course, today, we will not guide for 2027. However, of course, our belief now and our hope for sure is, at this time, not having the full visibility of what 2027 really will look like. At the same time, it is the year in which we really hope that there was a more normalized market than what we've seen in this transition years '25 and '26. And therefore, we very clearly have the ambition in order to make sure that the midterm corridor that we indicated will be delivered in 2027.

Now I think you are right in the sense, and it depends a little bit, yes, we have things that will impact our overall financial performance, given as well the conclusion of our high CapEx project that we're having. From an overall perspective, on the growth level, I would say the only question on where in that corridor we will be in 2027 will be very much as well from the current perspective be depending on lead times and order intake on the instrument side, on the equipment side, and then understanding if revenue realization will start 1st of January or maybe a bit later given the lead time impact of that. But that is, by and large, how we look at 2027 from today's perspective.

Florian, over to you on the second part.

Yes, on the second part, Odysseas, the kind of inventory impact that we are seeing is a kind of sneaking out of the elevated levels in -- or surplus levels and inventories that we have built via the pandemic. You have been referring to numbers that built a ratio of reserves to balance sheet date.

And inventory valuation is a very analytical thing. It is not like in banking where you're building reserves on your credit portfolio, it is simply accounting for what you are seeing in the kind of how inventories are turning, right? So what I can say is, first of all, the kind of distraction that we're seeing in margin coming from that washout of the excess inventory, they will go down over time.

Now how will the overall reserve develop? This is also a question on how much really fast-moving inventories do we have. And what is the kind of composition of our inventory. We have been talking about effects in getting novel modalities in being more specified. This might come also with holding inventories for specific users. So I'm not here to promise you that the overall reserve that we are building is going down. I was more talking about the effects washing out in the P&L going forward.

Next one then, please. In the line, we got...

Ricki Levitus from Subbu Nambi's team at Guggenheim.

So as we think about Europe, China and reshoring in the U.S., could you please walk us through what the midterm guidance is assuming for bioprocessing segment growth across these different geographic regions? And are there any meaningful differences that we should think about in the core drivers of the bioprocessing growth in those different markets?

Could you talk, Rene or...

Could you please repeat the...

So we had 2, reshoring U.S. and...

Just as we think about the different markets, thinking about Europe, China, U.S. reshoring, how are you thinking about the bioprocessing growth? And then is there different drivers in those different markets?

Yes. I can start with talking about different dynamics we see moving forward in the regions. We believe that U.S. is and will stay the fastest-growing market. Reshoring or onshoring in the U.S. will help there, but it's not probably the main growth driver. It's the innovation, it's the customers moving drugs through the pipelines, providing this continued flow of new drug approvals.

So U.S. first. Then second, Asia. Asia, we see especially strong in and benefiting from the strength of CDMOs. In Asia, we talked about Korea. We see a lot happening in India as well. We see a lot happening in biosimilars in Asia. So we believe the second will be the Asia. And then Europe, China, right, Europe may be number three, and China depends. China depends on how the innovation environment can be leveraged locally in China. We see customers in China being very innovative out-licensing drugs to global pharma companies. So depending on how China market, which is a huge market, let's not forget that will -- how the environment will evolve, that can be a get ahead of Europe or even U.S., we will see.

Maybe this one, to complement and add on, I think this is easy to forget. But I think we look at the region of Europe, of course, as well in combination with the Middle East, Greater Middle East and Africa. And I think that is as well where I think coming more from my previous job, we've seen a lot of greenfield investments coming into liquid fill and finish in Greater Middle East. And I think despite the fact that it's not yet really a great market, but I think there's well maybe an opportunity in order to enlarge as well customer work and investments that will happen as well in the Middle East. So despite the fact of the current conflict. But still, I think in the long run, Middle East and Africa may as well be a stronger contribution of growth as compared to the past.

James Quigley from Goldman Sachs. I have 2 questions, please. First one is sort of a bit of a follow-on from the last one in terms of market share. So your guidance as you're growing ahead of the market. So which areas are you going to be taking market share in? So is it a case of geographical share that will be driving it? Or is it more product by product within -- or area by area within LPS and BPS that will drive that share assumptions?

And then second question is on customer alignment. So how closely aligned are you now with customers so that you have better visibility over demand? We're obviously in a very different periods where we were going into and coming out of the pandemic. But what gives you confidence over systems and controls to estimate customer demand reliably going forward?

I can get started with that on the share drivers. I think -- yes, I don't think necessarily that our dimension is to look at geographies as such when it gets to driving growth. And it's very much -- on the one hand side, it's the customer dimension that matters, and it's the product technology dimension that matters for us.

So if we look a little bit into the customer dimension. Of course, we see that we have a relevance to customer groups where we see that we have potential. Again, with our products and technology to increase and have a higher share of their wallet. I think that's something that we, of course, continue to see, particularly, of course, in the area of the large CDMOs and the large pharma customers, where I think there is a great level of foundation that we build on.

But at the same time, I think if we look at the level of interest that we see as [ multi-wide ] expansions and through our pioneering work on bioanalytics, as much as equally, of course, and even more so in process intensification and single-use technologies, I would say this is where the big driver of the market share that we see here has there to come.

Single-use technology, by and large, particular, I would say, areas in which we are probably the strongest lead in a very specific technology or product vertical and indeed, penetration of single-use technology, including the second generation, will be the main drivers for that change in market share.

Anything to add there from you guys?

Maybe to add, I mentioned in the beginning, when you're talking about where we are in the portfolio, we are challenger in downstream. Historically, you can say it was rather a weak spot for Sartorius gap in downstream equipment. And you will see today afternoon where we are today, what challenge means for us, running a different race again.

And so that's definitely one area where we will see market share gains. And I mentioned also critical applications going stronger in -- to hit towards the end of the process or closer to the drug product across the portfolio, there's a number of opportunities for us to build further in that space.

Charles Pitman-King from Barclays. Two questions from me. Just firstly, on single use, again, Slide 17 kind of points to this 5% market growth for broader pharma. And historically, you've mentioned the 15% CAGR for single-use technologies. So I was wondering if you just confirm that, that mid-teens target remains in place? And then just in terms of the single-use share of being 85% in clinical stage, whether or not you think that's a good target for commercial or whether or not different volume requirements suggest that, that will cap slightly lower?

And then just secondly, on LPS margin targets of 21% to 22% implied by '28 versus the prior around 28%. Just wondering what the kind of most significant driver of that reduction is and whether or not you continue to see strong market growth expectations going to 5% to 7% top line growth versus more conservative peers.

So on the single-use growth projections, yes, historically, 15%. I would say, you see or we see product groups where it's well above 15%. To give you an example, if you look at the filtration portfolio, right? You have filters used in stainless steel facilities. That's probably high single-digit growth. You have filters, capsules with tubings and assemblies, that's well above 15% growth. And that shows you where the single-use penetration that it happens, that is ongoing. And that's in that area of single-use manufacturing, the growth rates are higher.

Of course, there is more established portfolio also used in stainless steel facilities 2D, 3D bags which is probably not that mid-teens anymore. But again, we will add or in certain areas, even replace certain more standardized or less growing products with additional single-use assemblies. Again, we'll talk about that afternoon. Highly differentiated, high-value products for customers in downstream mostly, as I said. So I think in the area of single-use technologies, our ambition is to push to the mid-teens will be mixed in the portfolio.

And the penetration in commercial, yes, 85%. Look, I think long term, yes, indeed. It will be driven by the mix of the modalities. Today's mix is very supporting this penetration. But at the same time, we have to be also realistic is a slowly moving industry. There is an installed base. There is an infrastructure which customers will continue to use. But moving forward, we will see customers gradually switch and move and make the decisions in investments in favor of the latest innovative, the most cost efficient, right? We're talking about a single-use manufacturing being more cost efficient than large-scale facility. That's our ambition. And it's not a 10%, but it's a factor or it's significant reductions where we are going. And the journey, we will see how it -- where we get with in commercial.

Charles, to your question, there was a second part of the question regarding LPS margins. That's true?

Yes.

Okay. So why have we reset our margin targets for LPS? Why are we differentiating when it comes to margin accretion, BPS versus LPS?

Let me mention 3 points. Point number one, of course, we have seen that the LPS markets are not as strongly growing as the BPS market. So the operational leverage, of course, is lower in these markets. Secondly, if we are also looking into the kind of peer universe when it comes to these kind of analytical instruments, margins tend to be on the lower [ twin ] side. When we take as a kind of external reference point, but even more importantly is the third point, which is our deliberate decision to invest into this business via the P&L.

And here are the 2 main building blocks, the kind of AI implementation and automation that we need to bring to the instruments on the one hand side. And on the second hand side, the whole field of advanced cell modeling with the MatTek acquisition where we will also be clearly investing in the midterm into building this business. And you've seen, this is a business of EUR 250-plus million in a couple of years, and we definitely want to have a lion's share of that market.

So as we have many hands up, maybe it's Richard, and then it's Oliver and then it's Charles, okay.

Richard Vosser from JPMorgan.

You talked about some of the equipment loosely in terms embedded in the guidance. Perhaps you could give us a little bit more color on the assumptions for equipment over time through the guidance and the feedback you're getting right now from customers. Just a bit more color there would be great.

And just on the margins as well, second question, just trajectory of the margin expansion. I think you suggested a gradual improvement as similarly every year. It's certainly been expressed as that, but just thoughts on the trajectory would be great.

Thanks for that question, Richard. First of all, equipment. We are currently at an 80-20 mix, which is completely fine. You also know that we have been coming historically from a more 75% to 25% mix. And I would assume that with all the things going on in equipment that somewhere in this corridor, we will move over the midterm. And I hope this is fair enough to give you a feeling about what is happening. Don't ask me about timing. There might be a movement coming up into the area of equipment in the next 1 or 2 years. Let's see how this is playing out.

Margin?

Margin, yes, margin. Also here, we have deliberately set this kind of corridor, which we feel comfortable with that somehow also corresponds with the corridor that we have given on the top line. I don't think that it makes huge sense to really tell you something that you should model, I think when you take all the things up that you have heard today, you will model it in the right way, I'm quite sure.

Yes, why don't you tell us.

Then next one is Oliver, please.

It's Oliver Metzger from ODDO BHF.

So first question is on China. So if you look on China about the drug development, it seems that the majority of drug development happens in China. Simultaneously, your expectations towards China are still reluctant. So can you help us to understand the growth gap? Is it still the case that there is more local competition in China, and therefore, do you need some need to invest more in China?

Second question about CapEx. You made some comments about the overall level. If I look about your regional footprint, it looks pretty diversified around the globe. Do you think that the current regional setup is sufficient? Or does it just mean that going forward, of a lower CapEx amount, more is allocated internationally?

Could you repeat the last point, what you're driving it?

Do you see -- regarding the CapEx spending, more CapEx outside into new regions or just strengthening the existing setup?

Okay. I'll get started a bit with the questions here. So China, again, I think as we try to allude to, there's multi dimensions to look at China. So I think we make a very clear distinction between China as an end market for the final drugs and biologics. And then, of course, China as the powerhouse of R&D and pipeline development for drugs in the local, but equally for the international markets, particularly in the U.S. and Europe.

So we are quite, I would say -- oh, let's say it this way. We are quite confident about the role that we play now of the expansion of China into the globe in order to work with multinational companies to partner up with the leading players on the CDMO side or the biopharma side overall in order to export drugs and licensees and leverage other markets.

That journey and also from China into the world, I think we are well positioned to be part of that journey, and we will benefit from that. And I think that's the journey that as well the Chinese players primarily would like to have leveraging of the competence capacity, regulatory insights, application knowledge as much as the, I would say, global technical footprint and commercial footprint that we are offering.

Now China is a market, as Rene said, it's a huge market on its own rights. At the same time, I think we've seen now as well in the [ postemic ] phasing as much as through the policies, we see, of course, a clear preference on local players being part of the auctions for our state-owned enterprises. And of course, this has been driven, I think, releveling, I would say, of the market shares, benefiting local players.

It's encouraging to us to see a few signs of encouragement on the one hand side, as we've seen in the later part of the last year, that we are part of that journey of the big pipeline work that happens locally with investments into bioanalyticals and, let's say, instruments, reagents across the research and development and molecule design workflows. And at the same time, I think we have done our work as well in order to move a bit closer to qualify for the new dynamics as well even for the local market.

We don't see ourselves and having an ambition to play in the bottom end of that market for all the good reasons. But at the same time, we see ourselves being more and more capable to deliver and moving up in terms of speed and competitiveness to be able to play in the upper end of that local market. And that together gives us a bit of the flavor that, yes, we are cautious about our, let's say, growth expectations in the market, but we have enough reason now to see after the really stronger headwinds we have been facing in '24 and '25, that we see less of these headwinds in '26 and even hopefully less so in '27.

Yes. When it comes to CapEx, fully right, Oliver, to say that we have diversified the CapEx spend around the globe. But as you have seen, when we're talking around the globe, there is -- we are already around the globe. And we also feel that we have, with that kind of setting, a quite good proximity also to the customers.

Now if add-on CapEx comes, I would say that it is most likely that this will also be at locations where we are currently. Because simply, you can use in infrastructure. And this is also the kind of growth pattern that we have applied in the past, expanding here in Göttingen, expanding in Aubagne, expanding in Puerto Rico. And now there is that not kind of new [ lack ] that we are standing on in Asia Pacific with Songdo. So these are the kind of columns that we are building the thing on.

So next one is Charles.

Charles Weston from RBC.

The first is on margin again, please. You talked about operational excellence, you talked about operating leverage, you haven't talked much about mix. Both within consumables, perhaps moving up to sort of higher tech consumables, but also that equipment versus consumables mix, because if that does come back, that would be a diluting impact on gross margin, presumably. So can you just give us a bit of color about, I guess, why you're not bothered about that, given what you talked about in the guidance?

And secondly, just on the equipment side and equipment orders. You started talking more positively at the back end of last year, Rene, about equipment orders. You carried on talking about it positively yesterday. So could you perhaps give a bit of color as to where we are back to normality in terms of the orders? Because obviously, there's a big lead time to come to sales?

Starting with the mix question. We have been talking now on the first level, equipment business versus consumables business. And I think I was describing somehow the corridor that we had to navigate in 75, 80 around this. Currently, we are more on the upper side.

Of course, the business model itself is built in a way where we say we want to increase the installed base and then there is consumables business coming on top of that, which is generally a good thing, and that structurally implements a certain aspect of the consumables part can get structurally bigger when you are leveraging on the installed base. And this is well possible.

And as you know, the consumables business comes within that. Therefore, mix is a component that can drive positively, if you are then looking back after some time. But on the other hand side, we are having that maybe equipment wave, we have been talking about a lot coming up, increasing our installed base. And this is why we are saying, let's take that a little bit out of the equation for the midterm to balance a little bit these 2 aspects. But I can tell you, of course, that when we are looking commercially at things, we are definitely trying to increase the share of high-margin, higher-margin consumables.

On equipment, I continue to talk positively. Charles, we discussed it yesterday during the dinner, yes. Yet, I would stick to the guidance we gave for this year. We said we don't expect further decline, so minimum flat expectation plus potentially moderate growth in equipment. We see indeed orders coming, we see first wins and orders coming related to onshoring, nothing yet relevant for -- in terms of size to make the revenues in 2026. We see orders coming for equipment to be delivered in 2027 already. So it's there, it's moving, still early in the year to refine our expectation for '26.

Okay. Thank you. As we are running out of Q&A time here, I think we briefly check on the chat, if we have some questions from people who join virtually because the people here in the room, of course, can also have questions later during the spotlight sessions. Please, [ Mirko ].

Yes. Definitely some questions coming in here in the chat as well. I think we already covered some of them, but some are open, I would say, maybe 2 for you, Florian. More on the short-term developments, if I may. And maybe we can combine them. So one person is asking for Q1 specifically, yes and -- yes, and how top line and profitability is developing, everything as expected is the question, I guess.

And another investor asked about peer commentary. They indicated a weaker Q1 with some positive phasing over the year. So would we expect a similar trend for us?

Thank you, [ Mirko ]. So thank you to the person that asked the question. Yes, first of all, not a lot to add to what we've said in our full year '25 call beginning of February. We have entered the year on the back of a quite healthy order book, and Q1 develops very much in line with our expectations on the top line and on the bottom line.

When we have that topic of weaker Q1, I would say, the quarter is still running, but I would expect growth dynamics in Q1 to be similar to the growth dynamics that we've seen in Q4, which I would not call weak or weaker. And of course, maybe in the dynamics, it is for me more likely than not that we will see a stronger H2 versus H1.

There is one technical point that I also want to make. You remember we were talking about FX rates. And we're giving kind of scenarios based on U.S. dollar. U.S. dollar is not the only currency that is important for us. And if we are simply looking at the whole basket of currencies, we have seen a lot more volatility. And what we can confirm is that from today's perspective, the full year impact of FX will be around minus 2%. That's also what we've said in the call, but we have seen more volatility in Q1.

So I would really expect that Q1 will be heavily loaded with FX headwinds. We were talking in the U.S. dollar scenario of minus 4. We are now expecting more rate that might be close to 6% on FX with some important currencies like the Korean won or the Indian rupee really moving against us. And this will then fade out. Q2 might then be already at minus 2 and the H2 might even have a slightly positive effect. So just for the people that will redo the kind of modeling.

Profitability-wise, feeling very comfortable with our guidance. We have 2 effects that we have to keep in mind. Positively, of course, definitely the operational leverage and the volume growth that we are seeing, but there are 2 technical topics that play into the [ real ] game. One is FX and the other negative topic is tariff because last year, Q1, no tariffs have been there. That was all pre-Liberation Day.

So we are expecting that the group might be benefiting in Q1 and that the positive effects outweigh the negatives, whereas for LPS, it is more pronounced on the negative side, also added by the topic that I was mentioning on investing into building these kind of businesses of the future.

Thank you very much, Florian. So I mean as we are already a bit above the time, we will stop the Q&A session now, and we invite you for a short coffee break. Well, we wish all the virtual participants a nice day or evening as we will end the live stream now. Okay. See you back in a couple of minutes here then. Thank you.

Thank you so much.

Thank you.

Thank you.

Thank you.

Welcome to the presentation of Sartorius and Sartorius Stedim Biotech on the Preliminary Results 2025. Please note that the call is being recorded and streamed on Sartorius' website. Your participation in this implies your consent with this. A replay will be available shortly after the call.

I would now like to turn the conference over to Petra Müller, Head of Investor Relations of Sartorius.

Thank you, operator. Hello, and a warm welcome from my side. I'm joined today by our CEO, Michael Grosse; by Florian Funck, our CFO; by René Fáber, Head of our Bioprocessing Division and CEO of Sartorius Stedim Biotech; and by Alexandra Gatzemeyer, Head of our Lab Products & Services division. As always, we will start with prepared remarks followed by the Q&A session.

As the call is scheduled to 1 hour, please limit your question to 1 so that as many participants as possible can take part.

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

With that, I'm pleased to hand over to Michael Grosse, CEO of Sartorius. Michael, please go ahead.

Thank you very much, Petra, and a warm welcome also from my side, and thank you all for joining us today for our preliminary full year 2025 results. Before we begin, I would like to sincerely thank all of our colleagues across Sartorius for their commitment and dedication over the past year. Their passion, professionalism and strong focus on execution are clearly reflected in our results we are presenting today.

I would also like to personally thank everyone who has made it such a smooth and rewarding experience for me to step into my role as a CEO, and particular thanks as well to my colleagues here, Alexandra, René and Florian from the executive team. It has been really a great journey up to now, fantastic work on the strategy and great things to come. And I don't want to miss out as well on saying thank you to the team here from Investor Relations, Communications and Finance because I think the workload over the last couple of weeks and days have been tremendous in order to get us all prepared and get our reporting in place. Thank you all for that.

Now let me briefly summarize key messages that we would like to share with you today. First of all, 2025 was characterized by return to normal demand behavior for consumables and continued cautious investment activities by our core customers. Combined with an active operational management in a still challenging environment, we delivered improved operational and financial performance.

Okay. All right, supported by the improvement -- improving demand trends, mainly on the consumable side and the operating leverage inherent in our model, Sartorius achieved considerable profitable growth. For the full year, we delivered results slightly ahead of our upgraded full year 2025 sales guidance. Profitability landed in the upper half of our initial guidance from April and exceeded our October EBITDA target, with a margin of 29.7%. This performance reflects growing volumes, operating leverage and strong execution.

Now growth was once again driven by our recurring business across both divisions. In Bioprocess Solutions, strong double-digit growth in recurring revenue more than offset continued softness in equipment, which, however, stabilized over the year. In Lab Products & Services, performance improved gradually as expected. Growth in H2 was driven by recurring business, while instruments showed positive momentum also supported by product launches in bioanalytics. Our operating performance allowed us to further reduce our leverage ratio, underscoring our commitment to financial discipline and a strong balance sheet.

Overall, in 2025, we laid a solid foundation for the year 2026. For the group, we expected sales growth of around 5% to 9% with an underlying EBITDA margin slightly above 30%.

Let me now turn to actions we are taking to enable future growth. Let's talk about innovation and partnerships. We have made tangible progress in 2 key areas: innovation and the expansion of our resilient global R&D and production capacity. We launched several new solutions across both divisions. In Bioprocessing, we made progress in more sustainable product design with the launch of Sartopore Evo, a PFAS-free filtration solution, which addresses growing regulatory and customer expectations around the elimination of persistent substances while maintaining the high performance and reliability our customers require. We also launched the Sartocon cassettes, further strengthening our offering for efficient and scalable downstream processing, particularly for viral vector purification.

Now on the equipment side, we introduced the Pionic Continuous bioprocessing platform developed with Sanofi, which faces high customer interest. This platform supports the industry's transition from traditional batch production to continuous processes, enabling faster, more efficient and more sustainable manufacturing workflows. And our teams advance our bioanalytical portfolio, including the only live-cell imaging system with confocal microscopy inside an incubator, a really important step forward for the work with complex 3D cell model.

We further strengthened this area also through the acquisition of MATTEK, expanding our portfolio of advanced 3D cell models that more closely mimic human tissue, deliver more predictive and reproducible results and help reduce the need for animal testing. And we entered into a partnership with Nanotein Technologies, enhancing our capabilities in cell expansion and activation to support next-generation biologics.

In parallel, we continue to invest in a resilient global manufacturing footprint. We completed the expansion of [ Aubagne ] and progressed with the expansion in Germany, as well as with the construction of our greenfield site in Songdo, South Korea, ensuring scalability, supply reliability and proximity to our customers. Taken together, these actions strengthen our ability to support customers as markets normalize and position for Sartorius for sustainable innovation-led growth over the coming years.

With this, let's take a closer look into our numbers. Florian?

Yes. Thank you, Michael, and a warm welcome also from my side to everybody out there. I'm happy to take you through our numbers that's reflected, in my perspective, a consistently strong performance in the year 2025. So let's start with top line performance. Our sales revenue increased by 7.6% in constant currencies and 4.7% in reported currencies, reaching slightly more than EUR 3.5 billion. This positive development was driven by mid-teens growth in our recurring business in 2025, which represents, by far, the largest part of our business, as you know.

Our nonrecurring business remains soft on a full year basis, but clearly stabilized in H2 and was above H1 in absolute numbers as respective. The difference between constant currency and reported growth was primarily driven by U.S. dollar weakness, which represents a headwind of almost 300 basis points to reported sales growth in fiscal year 2025. Our full year performance was also influenced by U.S. tariffs. The successful implementation of tariff surcharges contributed approximately 1 percentage point to sales revenue growth.

Order intake developed strongly, growing faster than sales. And as a result, our 12-month rolling book-to-bill ratio remained consistently above 1 throughout the year '25, although as expected and also communicated in our last quarterly call, it declined slightly sequentially in Q4 due to a very strong prior year comparison.

In absolute terms, order intake in Q4 was roughly on par with the exceptional strong Q4 2024. You remember that above EUR 1 billion figure that we posted there. And that was the quarter with the highest absolute order intake in 2025. And therefore, we entered 2026 on the back of a strong order book.

Looking at our divisions in more detail. Bioprocess Solutions delivered another strong quarter, bringing full year sales revenue growth to 9.5% in constant currency. Growth was driven by mid-teens growth in consumables throughout the year, while equipment remained soft, as Michael already mentioned, but was clearly stabilizing with H2 '25 sales being double-digit percentage above H1 '25 sales.

Lab Products & Services delivered a resilient performance in a challenging market environment. Sales were essentially flat at 0.2% in constant currencies plus, supported by solid momentum in consumer goods and services. The acquisition of MATTEK contributed slightly more than 1 percentage point to growth. Instrument sales were impacted by constrained CapEx spending in life science research and market. However, we are seeing encouraging signs of stabilization supported by positive momentum in bioanalytics in the second half, driven in part also by the launch of several updated instruments in that market space.

Let me also quickly elaborate on our regional performance. EMEA sales performance remained robust with growth of almost 6% in 2025. As a reminder, the recovery in EMEA started earlier than in other regions and therefore, faces higher base effects compared to the Americas or APAC. The Americas outperformed, growing by 8.9%, like APAC, which also grew by 8.9%. In APAC, China continued to stabilize with early signs of improvement. Excluding China, the APAC region delivered low double-digit growth in the year 2025.

Let's now turn to our profitability. In addition to robust growth momentum, we achieved a strong improvement in profitability over the past 12 months. Underlying EBITDA increased overproportionately by 11.2% to EUR 1.052 billion, with the margin expanding by 170 basis points to 29.7%. This margin improvement was driven by positive volume and product mix effect as well as economies of scale, further underpinned by cost discipline, more than offsetting FX and tariff-related headwinds of around 1 percentage point.

Looking at the divisional profit distribution, profitability in our BPS division developed strongly. Underlying EBITDA increased by 15.2% to EUR 907 million, and the margin improved by 240 basis points to 31.7% based on the effect just mentioned also for the group.

In LPS, margin declined year-on-year to 21.5%, roughly 50-50, reflecting an unfavorable product mix on the one hand side as well as FX and tariff-related impact on the other hand side.

Now let's take a look at the performance below underlying EBITDA, where both net profit and cash flow developed well. The strong increase in underlying EBITDA of 11% translated into overproportionate growth and underlying net profit of 18% and reported net profit of 84%. As a result, underlying EPS also grew at a very strong 18%.

Turning to cash-related items. Operating cash flow amounted to EUR 837 million, below the exceptionally strong prior year level of EUR 976 million, which was positively impacted by significant one-off inventory reduction measures in the year 2024. While business volume improved strongly in 2025, working capital remained largely unchanged. Going forward, we remain committed to keeping net working capital growth below our sales growth.

Free cash flow amounted to EUR 390 million, reflecting the development of our operating cash flow. In addition, free cash flow is also reflecting the slightly increased CapEx spending from EUR 410 million to EUR 441 million. Accordingly, the CapEx ratio was 12.5%, which is exactly in line with our guidance throughout the year.

To conclude our section on 2025 financials, let us now look at the development of the balance sheet-related key figures. We see a strong equity ratio of 39.8%. The increase versus year-end '24 is mainly due to some repayments on financial instruments using our strong cash position and therefore tightening the balance sheet total.

Net debt remained largely unchanged, while gross debt has been reduced by EUR 277 million and despite payout of the acquisition of MATTEK in summer 2025 of EUR 70 million. The leverage ratio, defined as net debt to underlying EBITDA, improved as expected from 3.96x to 3.55x in 2025, despite the acquisition of MATTEK, which added approximately 0.1 turns to the ratio. So we are well underway on our planned deleveraging path. And as you can see in the title, we stay committed to our investment-grade rating.

With that, I would like to hand back over to Michael.

Thank you, Florian. So overall, we are very pleased with the strong performance Sartorius delivered in 2025, supported by improving demand trends, mainly on the consumable side. In addition, the results demonstrate the resilience of our business model and confirm the attractive long-term opportunities in the biopharma and life science markets. We will remain focused on disciplined execution, targeted investments in innovation and capacity and operational excellence. Looking at 2026, it is clear that our industry is back on track, but has not yet fully reached its long-term growth level, especially in terms of demand for equipment and instruments.

Since the year is still young, we have deliberately set a broad guidance range to account for continued high macroeconomics and industry-specific volatility. The lower end of the range reflects the cautious scenario in which market conditions weaken. However, we currently expect market dynamics to continue normalizing and positive trends to continue.

For 2026, we expect to continue our profitable growth trajectory with a continued positive development in the Bioprocess Solutions division and a recovery in the Lab Products & Services division. For the group, we expect sales growth in constant currencies of around 5% to 9%, including a positive effect from the market acquisition and U.S. tariff-related surcharges totaling approximately 1 percentage point. And for the underlying EBITDA margin, we expect an increase to slightly above 30% in which a technical margin dilution of around 50 basis points from tariff surcharges is already reflected.

In Bioprocess Solutions, we anticipate sales growth of around 6% to 10%, mainly driven by the recurring business, while we expect equipment business to remain at least stable. The underlying EBITDA margin should be slightly above 32%.

In Lab Products & Services, sales growth is expected at around 2% to 6%, including a growth contribution of 1.5 percentage points for MATTEK. This reflects the continued growth recurring business and an at least stable instrument business. We expect underlying EBITDA margin to be slightly below 21%, mainly influenced by deliberate investments in advanced cell models with additional headwinds from unfavorable mix, ForEx, and the dilutive effect of the existing tariffs.

CapEx ratio should be around the prior year level as we will continue to invest selectively and with discipline in expanding our global research and manufacturing footprint. Net debt to underlying EBITDA should decrease to slightly above 3x at year-end. As usual, we will provide some additional information for modeling purpose. As you can see, with the Euro-U.S. rate of 1.2, there, we would be a headwind of around 2 percentage points on the reported versus constant currency growth in full year 2026. In Q1, the headwinds would be around 4 percentage points at Euro-U.S. rate of 1.2.

Taken together, we are confident that Sartorius is well positioned to benefit from continued recovery.

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

Thank you very much, Michael. Also from my side, welcome, and thank you for joining us on the call today. In 2025, Sartorius Stedim Biotech achieved considerable profitable growth driven by improving demand, particularly for consumables and operating leverage. This allowed us not only to achieve our updated October 2025 guidance, but also to exceed our top line expectations.

Overall, we are very pleased with the results and would like to sincerely thank our all colleagues across the Sartorius Stedim Biotech for their commitment, dedication and really hard work in making 2025 a success.

Looking at the numbers. Sales for the Sartorius Stedim Biotech Group increased by 9.6% in constant currencies, reaching nearly EUR 3 billion. Growth in reported currencies was 6.7%, primarily due to the weaker U.S. dollar, which represented a headwind of almost 300 basis points. The successful implementation of tariff surcharges contributed approximately 1% of sales revenue.

Our high-margin recurring consumables business remained very strong, delivering mid-teens growth more than offsetting the soft but increasingly stabilizing equipment business. Order intake grew faster than sales, keeping our 12-month rolling book-to-bill ratio consistently above 1, while the ratio declined slightly sequentially in Q4, as Florian explained, due to a very strong prior year comparison. Q4 order intake was roughly on par with the exception of Q4 2024, making it the highest absolute order intake quarter in 2025. We therefore entered 2026 with a strong order book.

Underlying EBITDA increased by 17% to EUR 914 million, driven by volume, product mix and economies of scale. Consequently, the underlying EBITDA margin improved significantly to 30.8%, an increase of 2.8 percentage points compared to the previous year.

Looking at the top line performance from a regional perspective, EMEA made a solid momentum, delivering 7.3% growth. This robust performance came despite a higher comparison base resulting from an earlier recovery cycle. The Americas grew by almost 12% followed by Asia Pacific growing almost 11%. In APAC, China stabilized and was only slightly dilutive to the overall growth. Excluding China, the growth the region delivered was in the low double-digit range for 2025. I'm also quite pleased with the more recent development in China beyond stabilization as the year progress, we are now seeing really early signs of recovery.

Looking at the net profit and cash flow, underlying EBITDA growth of the strong 17% translated into an overproportional increase in underlying net profit of 26.7% to EUR 428 million and reported net profit of nearly 52% to EUR 266 million. Underlying EPS rose by 26% to EUR 4.4.

Operating cash flow remained solid at EUR 692 million, although below the high level recorded in the prior year, which was positively influenced by the pulling of inventory that Florian already touched upon. Free cash flow stood at EUR 295 million, and the CapEx as a percentage of sales came in at 13.3%.

A quick look at our balance sheet metrics. Our equity ratio improved to 51.7% in the end of 2025 with the increase being driven by some repayment of financial liabilities and therefore, tightening the balance sheet total. Net debt decreased by EUR 18 million versus year-end 2024 and gross debt reduction. Deleveraging is progressing as planned with the net debt to underlying EBITDA ratio improving to 2.38 by the end of 2025. So we are very well on track on our deleveraging path.

Now before we move into the Q&A, let me also quickly elaborate on our full year guidance for the Sartorius Stedim Biotech Group. As mentioned earlier, we are very pleased with the strong performance of Sartorius Stedim Biotech has delivered across all key financial dimensions. The 2025 results demonstrate the resilience of our business model and confirm the attractive long-term opportunity in biopharma market. We will remain focused on disciplined execution, targeted investments and innovation and capacity and operational excellence.

Looking in 2026, same is true for Sartorius Stedim Biotech and for Sartorius AG when it comes to the overall environment and industry trends. Therefore, we also have deliberately set a broad guidance range with the lower end of the range reflecting a cautious scenario in which market conditions weaken. However, we currently expect market dynamics to continue normalizing and positive trends to continue.

We expect to stay on our profitable growth path and for 2026 sales revenue growth in the range of around 6% to 10% in constant currencies, including a 1 percentage point contribution from the U.S. tariff surcharges. Growth will be mainly driven by the recurring business, but against high costs, while the equipment business should remain at least stable.

The underlying EBITDA margin should increase to slightly above 31%, in which a technical margin dilution of around 50 basis points from tariff surcharges is reflected. Our CapEx ratio is expected to stay around previous year level at around 13%, reflecting our ongoing investments into research and resilient production footprint.

Our commitment to deleveraging remains unchanged. We anticipate the leverage ratio, the net debt to underlying EBITDA to decrease to slightly above 2 at year-end. Our modeling assumptions, Michael already explained, expected headwind from FX on Sartorius AG level, same is true for Sartorius Stedim Biotech.

With this, I will hand over to the operator to begin our Q&A session.

[Operator Instructions] The first question comes from Subbu Nambi from Guggenheim.

What does your guidance assume in terms of U.S. onshoring build-outs in 2026? What could drive upside to these expectations?

Yes. So I'll take that. Subbu, thanks for the question. I mean, right now, as we've been seeing that there is a lot of plans, some of them really committed, some of them still a bit on the horizon. As we see as well the lead times for order particularly on the equipment on a larger system side for greenfield or for larger expansions, we think that the impact from large -- from relevant reshoring activities will most likely not contribute with revenue in 2026. So we've not baked anything of that in our current expectation and assumptions. This would rather be for the year 2027 and beyond where this may have a larger impact. However, we are very closely connected, of course, with all our customers, supporting them on their plans, discussing opportunities as we move forward. It goes up from this, of course, very short near-term activities on brownfields and expansions of existing capacity.

Perfect. And a quick follow-up. How did equipment orders for BPS and LPS, respectively, trend for the quarter for Q4? And are you starting to see any early signs of recovery? You spoke about comparison and orders, but I was just trying to figure out what about equipment orders separately for LPS and BPS.

Thank you for the question. Although we are not giving further information on that very detailed level. But what I can tell you is, on the one hand side, we have been talking about H2 sales being much stronger than H1 sales. And the same holds true when we look at order intake where the order intake in H2 was also well within double digits above H1, which, of course, then speaks to the quality of the order book and therefore, our cautiously optimistic outlook then also into '26.

Next question comes from Richard Vosser from JPMorgan.

One question, please. So you talked about market conditions not fully back to normal for equipment. So just a little bit of elaboration on changes of customer sentiment here. You've talked a little bit just now about equipment orders suggesting improvement. So just thinking about, first, your confidence in the stabilization of equipment revenues, what's underpinning that in '26? But also, when do you think equipment could move more back to normal levels? We've seen that happen for consumables in '25. What's your thinking there?

Yes. Thank you for the question. I'll take it. Let me first get back to 2025. You will remember when we talked about stabilization of equipment like in Q3, we said for H2 '25, we expect to be in revenues for -- with equipment at least on the levels of H1, maybe slightly above. And you could hear from Florian that H2 came out as stronger, so confirmed the stabilization stronger compared to the H1. So I think that's a clear kind of confirmation of our view and expectations and visibility and the discussions with our customers that the equipment is stabilizing. And now looking, of course, into the 2026, we continue to see the positive discussions and have positive discussions with customers. They are tangible projects, sizable projects on the horizon. The order book is healthy as we mentioned in the -- a few minutes ago.

So as Florian [indiscernible], cautiously optimistic looking into the 2026. We believe that the portfolio we have is well positioned to help customers quickly adjust their capacity, single-use technologies are designed to make -- to do -- to provide flexibility. So yes, we're very encouraged about the current -- the sentiment as well as the -- our position and discussions we had with our clients.

I would like to expand even that from Rene's perspective, I think the similar situation is true as well for LPS division on the basis of equally, I would say, strong development interest levels in needs and opportunities, particularly on the biolytical instrument side, as well a trend that we see in the second half of the year, particularly in Q4, coming and resulting into a good level of contribution in both sales and order intake.

And again, so same sentiment for us. But again, I think it will take, for sure, the full quarter Q1 for us to have simply better visibility, better understanding the continuation of the order intake trade in order to have a better view whether this requires further refinement of our perspective for the full year at that point in time.

The next question comes from Doug [indiscernible] from Schenkel.

It's Douglas Schenkel from Wolfe. I'm going to try to do 3 really quickly. One, I just want to confirm, based on your responses to the earlier questions that your 2026 guidance does not currently assume an improvement in bioprocessing equipment demand. So that's the first one.

The second, can you please bridge to your margin guidance for the year? Specifically, what would be helpful is, what's the impact of foreign exchange, tariffs and operating efficiencies as you incorporate those into your guidance?

And then third, [Technical Difficulty] many companies in your peer group have taken a more conservative approach to guidance than had been the norm given market challenges over the past several years and given ongoing policy uncertainty.

With that in mind and also recognizing that this is issuance as CEO, how would you describe your initial guidance philosophy?

So maybe I start to give a little bit more perspective on the margin guidance here. So what we know as of now, of course, is roughly the impact of the tariff on the year 2026, which is to be around 50 basis points. What we do not know is the full FX impact. The weaker the U.S. dollar the higher this impact might be, although we think we are in a good position to a certain extent also to compensate certain headwinds on the FX side in the margin.

The, let's say, broad improvement in margin that we are seeing, if we are taking out tariff and FX impact, is definitely a 3-digit basis point number, so above 100 basis points and should be driven to a majority from ongoing operational leverage that we've seen.

Yes. Maybe to add to Florian's point there just because you may have really in mind as well our fantastic margin contribution that we delivered in 2025. And of course, there are other effects that I think are relevant in my mind to keep in mind there. Of course, on the operating leverage, since we are now already throughout the last year on a different level, the effect of this is, of course, diminishing to a point. Keep as well in mind that when it gets to our activities that we launched in the year even before on our cost reduction programs that the main effect there as well was visible, particularly in 2024 and 2025, still continues in 2026, but less so. So with this and as well a bit of the question mark, how much of the equipment will be there in the year 2026. If that is a higher degree of recovery, of course, the margin mix, the mix effect that we have seen in 2025 was probably as well a bit more favorable compared to 2024 than it may be in 2026 compared to 2025.

Then you talked as well a bit about the guidance philosophy. Yes, I think we try to express that in our wording already. On the one hand side, it's early in the year. We felt like, okay, we're feeling confident enough in order to quantify our guidance. But given the fact that it's early in the year, given the still the level of uncertainty that we have there in terms of macroeconomical and geopolitical aspects, as you mentioned, I think we want to as well, therefore, be prepared for this and the lack of full visibility for the full year on the basis of order intake and the book and the market trends, we felt the philosophy is indeed that we have decided for a wide range with the 4 percentage points we have there. We don't feel that we are neither over aggressive nor over conservative with what we put out there. However, we feel that we will not celebrate if we achieve only a 6% growth for 2026. That's equally clear. At the same time, the level where we will land on versus the mid or even beyond the midpoint is so much dependent now on what will happen. So I think we will be in a better position after the first quarter to give more clarity as the year progresses. And that is why I think the philosophy remains, I would say, remains balanced, remains balanced.

The next question comes from Harry Sephton from UBS.

[Technical Difficulty] consumables. So we're seeing a more comfortable high single-digit to low double-digit growth across the big players in the industry on the consumable side. Based on your guidance, that you're expecting to be more in line with market growth. So what do you see in terms of potential upside or downside risk to market share in the near term on the consumable side?

Yes, I take it. So a question on consumables. As you will know, the consumables is very much -- the majority represents the majority of our revenues for the -- I'm talking for the Bioprocess division. You will know that most of that recurring revenues, consumables revenues are linked to commercial manufacturing and consumption of our customers of the products in making commercial drugs, adding late-stage clinical material production, it comes to around 80% of the consumables revenue are linked to that late-stage plus commercial manufacturing. So -- and that's more or less kind of also gives you an idea about what dictates the growth of consumables. Looking forward, it's very much about the volumes, manufacturing volumes of our customers. We can do little about that, of course. But then once new drugs are being approved or enter these late-stage clinical phases, yes, that drives additional volumes for these consumables. So looking forward, I think we have been working consistently over the years with the teams in all regions to make sure we are early with customers and place these consumables spec in, validate when the decisions are made and validations are done and also working hardly with customers to convert wherever possible in an ongoing and existing processes towards our products. The highlight of that was, of course, during the pandemic where mainly due to our ability to supply and the customers, we gained market shares and kept or we were able also to protect roughly 1/3 of this gain moving forward. So we are, I think, on a very healthy and successful track record to drive that above market -- above drug volume growth of our consumable revenues. Of course, as we mentioned in presenting our 2025 results, we have seen a strong mid-teens growth of our consumables in 2025. So comps are higher now looking in 2026, but we are very confident that these fundamentals and the volumes driving the growth of consumables are there are intact and are positive about the outlook in '26 and beyond.

The next question comes from James Quigley from Goldman Sachs.

I've got one on China, please. So you said in the slide and in the comments that China is starting to show some encouraging signs of growth. I think some of your peers at a recent conference still sounded a bit muted on China growth. So what are you seeing here in the region that's driving those encouraging comments from you across the BPS and the LPS divisions?

So I mean I can get started a little bit. I mean, highlighting perspective again, I think China has really a few years back that I think we've seen a really difficult market environment with as well, very strong level of guided preference with regard to local players and for local production. We feel now that a little bit this notion of rebaselining the market has come to an end. We feel now that we are able to, right now, keep market shares in China and benefit from probably the still modest level of the growth that the China market demonstrates.

At the same time, there's, of course, a lot of innovation activities that we are part of and want to equally, I think, being asked by customers to be part of the rollout of out-licensing and bringing some of their pipeline development into other regions and markets.

Our expectation for the market, however, overall is still a rather flattish or rather very modest level of degree of growth expectation given as well the prior year performance that we've seen. So we don't see and we don't expect naturally a big turnaround of that momentum. It's still probably there to come later. At the same time, there's a big overhang and a high capacity buildup on the equipment side. So particularly on the equipment side, we feel as well that China will, in the year 2026, be a rather muted market. But on consumables, we think will be part of the game. And yes, as we said, we are -- we have modest expectations here on the market.

The next question comes from Charles Pitman-King from Barclays.

A quick question, please, on just the guidance again. Just trying to relate the kind of 2 separate statements of the low end of your guidance range, reflecting kind of deteriorating market outlook. But also your commentary around the strong order book and equipment being at least stable. Can you confirm, therefore, that the low end of your guidance range reflects equipment being stable, supported by your existing backlog and other market deteriorations impacting consumables?

And then just a quick clarification on margins. Just wondering why you're only providing a kind of bottom end of that range. And is it the implication that at the top end of the range, you have rising equipment, which will offset the margin such that your only confident to provide at the bottom end of the range? I'm just trying to -- yes, just thinking about how you're setting this out.

So first part, yes, I mean...

Charles, you broke up a little here technically. That's why we are a little puzzled. Could you repeat the first part of the question?

Sorry. My question relates to trying to triangulate the 2 guidance commentary, one being that your sales could be at the low end of the range upon worsening market conditions, but did you separately expect equipment to be at least stable? I'm just wanting to confirm that your order book means that you have this confidence in your equipment being at least stable, and that in the scenario where you hit the low end of the range, that's driven by consumable deterioration more so than any downside to your equipment outlook?

Okay. So I mean, yes, I mean, again, I think on the lower end of our guidance as we try to express, we see some level of, I would say, market situation overall. So we would see that there is no impact, no positive contribution there from the equipment and possibly as well a slight deterioration even on the consumable side. We see the total mix. It depends on how you see the 2 elements of that coming together.

But as we say, I mean, if we see the momentum that we've seen right now based on, as you said, the order intake generated in equipment, and at least, stable situation plus the continuation of the current trajectory of the consumables that would be slightly above the bottom part of the guidance. So we would assume some level of deterioration of that condition. Then I think the other question was on the margin.

Yes. While we have not given a range for the margin, we have said that we want to reach slightly above. So this is in a way open to one side. Now let's assume we would be on the lower end of our guidance range. The 5% for the group, we would definitely aim to see margin improvement against prior year, but we might not fully reach that. So the margin corridor that we are indicating to was slightly above -- the 30% was more towards the midpoint of the guidance. If we then come to the upper part of the guidance corridor on top line, of course, there's way more potential on the back of more operational leverage.

The next question comes from Charlie Haywood from Bank of America.

Charlie Haywood, Bank of America. I have 2. So first one in '26, is it fair to expect typical seasonality on the bioprocessing side? So I think you've previously commented to 4Q, 1Q, 2Q, 3Q. Or given equipment phasing and what looks like a strong fourth quarter for those orders and a 6- to 12-month order book, might that distort to possibly fueling a stronger second half?

And then the second question is just a bit more on midterm. Now that you spent a bit of time in the business. You previously sort of commented to Merck's 9% to 10% market outlook not far from your thinking. I guess how are you currently seeing the bioprocess midterm market growth in the end markets there?

Thanks for the question. So I think we can maybe kick off a little bit on the basis. I think, as you know, we don't really break down and guide on the basis of quarterly perspective. So I think in this case, we would like to leave a little bit the breadth of the way of how we look at the year to come in more the total perspective. So we will not provide any specifics as we see the quarters moving forward.

Again, I think it is probably more in the nature of the business. If you think about -- and it's probably a similar pattern that we've seen during the last year, given the lead times of equipment orders, particularly we now see that, okay, we generated the order intake in the second half of the year, Q4. So things now with the lead time, 6 to 12 months on the Bioprocess side, of course, then we would expect sales realization in all these orders to rather hit the second half of the year than the first half of the year. So that's natural by the lead time of those orders.

Yes. Then in terms of the market. Yes, I think we hold to that. I mean we basically took a look at the market. We'll get back a little bit more interesting insight on the market analysis that we've done for the capital market that we will provide and bring up in March. However, as we said, we think that the assumption there for the market to be around a 9% growth, I think, is something that's very much in line with our views and with our analysis. Again, depending a little bit also on the specific market segment and then the exposure to the market segments. But that corridor is well in line with our analysis that we've done. And that is well what we believe that in our minds, we will measure us against from a mid- and long-term perspective.

The next question comes from James Vane-Tempest from Jefferies.

Just on LPS, actually. You mentioned in the presentation that the rolling book-to-bill is now more than 1, but now you specifically stated in both divisions. So I was just kind of curious whether the LPS book-to-bill turned in Q4 to be above 1? And if so, where you're seeing accelerating orders from either certain customer or product groups?

And then related to LPS, I mean the guidance that you've given is marked the fourth year of margin decline in a row. I know we're going to hit more in March. But conceptually, how realistic is it from here to get back to levels seen a few years ago? And what would it take to get there?

Okay. So the first part of the question was about the book-to-bill. Sorry, do you want to take that?

Exactly. James, as you know, we would not like to go specifically into that. But let me put it that way. We were quite pleased with what we have seen than in Q4. Let us leave it on that level.

And then one was related to profitability.

LPS margins, yes, in terms of the fourth year of decline and just thinking about what it would take to get back to where it was?

Yes. I think this is a question that we should discuss more in detail around the Capital Markets Day, if you don't mind.

Okay. No, that's fine. One quick follow-up, if I can. And that is just about the business flow within BPS. Historically, you've kind of alluded to consumables equipment normalized being 75%, 25% approximately. And I know at 9 months, I think you sort of said it was around 85%, 15%. So just as an approximation, I was just kind of curious where that sort of number for the full year.

Okay. Just maybe a short point of clarification. So I think, let's say, the numbers you're referring to on the 75%-25% would be on the group level. If we look at BPS, I think we see the rough proportion over the last half year, we've more talk about 80%-20% on that ratio. And again, I think, yes, that is where we see the current state. We don't necessarily believe as well, given the discussion earlier that, that will be as well roughly the level that we will see as we continue into the year 2026 now.

The next question comes from Charles Weston from RBC Europe.

You've talked about Europe being ahead or EMEA being ahead in terms of the recovery curve. Does that also mean it's ahead in terms of the equipment order recovery curve? So have you got sort of proof of those orders turning into -- that interest turning into orders and revenue in Europe?

And just a clarification question. You said you have good discussions with your customers to understand their CapEx plans. Can you give us any insight into whether the big investments that they're making is more about them shifting CapEx from other parts of the world into the U.S. or whether they are genuinely adding additional capacity into the U.S. over and above what they would be normally planning?

No, thanks for the question. On EMEA, I think the situation is not that we see any difference here. Yes, the recovery overall happened earlier there, but we cannot now say that we have data that suggests on the equipment recovery that EMEA is ahead of the other regions. So that's not really the case.

Yes, and the discussions we have with customers on the equipment, they are mostly not today related to the onshoring or reshoring in terms of tangible projects, investments, either replacing old instruments or adding capacities.

The discussions are with -- around onshoring, it's more about understanding really what is relevant of the -- what has been published from the headlines from our customers, what is of relevance for us, of course, you will see a lot of R&D investment being included in these headlines. You will see also investment in classical pharma facilities, final field drug product facility, so all less relevant for us. So trying to understand what's really in for Sartorius, and then also trying to understand really what the timing will be and when the discussions about the equipment, the providers will start. So this is more about where the onshoring discussions are today. So the very tangible projects are still less related to that topic.

Next question comes from Odysseas Manesiotis from BNP Paribas.

First, to better understand the growth deceleration in Q4. I have EMEA around 4% CER for Stedim. Could you give us a feeling of how that's different between equipment and consumables or just whether that's the growth we should be expecting for the region as the new normal?

And secondly, in order to have a better feeling of the conservative business embedded in your guide, is it fair to say that your book-to-bill for the entirety of the year was pretty much close to your pre-pandemic average of around 1.05?

And last quick one, biotech funding has been -- has been quite strong. What's the usual lag that you see between a biotech funding recovery and a pickup in your order intake?

So let me maybe start with the growth regarding BPS recurring versus nonrecurring in H2 because I think really looking only at 1 quarter doesn't make sense in looking at the matter, it's already really short term. But just to give you a feeling, the growth that we've seen in the nonrecurring business was very similar to the growth that we've seen also in the consumable business in H2. So this is also a reason besides the effects that we've seen in the order intake while we are taking that confident stance towards 2026.

When it comes to book-to-bill, we are not communicating on the level of book-to-bill. Sorry.

[Operator Instructions] The next question comes from Thibault Boutherin from Morgan Stanley.

Just to come back -- can you hear me?

Yes. It's okay.

Just to come back on the topic of onshoring and the last CapEx plan that has been announced. There is a question that comes back often from investors, which is, is there a risk that because we see CapEx being skewed towards the U.S. in the next few years to see an imbalance between you and your competitors? So I think the idea from some investors is maybe U.S. peers would be better positioned to benefit from CapEx being skewed to the U.S. So just wanted to know if you could comment on your competitivity in the U.S., the market share relative to other regions and give an answer of how a shift of investments to the U.S. in terms of equipment and CapEx for biopharma would impact you?

Yes. So I'll take that question. Look, the -- in our industry, and I think it's been always the case, still is the case. The main decision criteria is the technology and the performance. Their customers don't make really compromises when it comes to how they equip their facilities, if it's for preclinical small scale manufacturing or even commercial. So I think there we -- and this is where we really see ourselves being ahead with a lot of focus on innovation.

So I think for us, the positioning to benefit and participate in the potential onshoring wave is very strong. We have a facility to assemble equipment in the U.S., in the Boston area, in Marlboro, as well to be close to customers in case of the factor acceptance that and so on for more complex equipment. So I think, yes, we are ready to take all the opportunities, the feedback from customers is strong, so positive about the outlook here.

Next question comes from Oliver Metzger from ODDO BHF.

It's one more structural question on equipment. So we know from the past, normally, equipment and consumables should grow at a similar rate over the cycle. So we now see consumable demand healthy for a while, while equipment is at least lagging behind. Can you comment about the reasons for this reluctancy? Is it more like still an overhang from, let's say, the time during the pandemic or post the pandemic? Or could it be that there is a more structural change as higher quality consumables might have increased the efficiency of the tighter of a production process and therefore, some structural lower or slower demand for equipment might be the case for a quite longer period of time before we see more expansion or new manufacturing facilities? So that's, to say, upgrades and lower expansion.

Yes. Thank you for the question. I try to kind of give you more color to think about why this reluctancy to invest, you addressed or you asked how much of that is coming with kind of a post-pandemic would call macroeconomic cash-driven impact or development. I think that's very much more on that side, plus the overcapacities, which have been built during the pandemic in some areas versus how you call it kind of a structural change in a way that by technologies improving, it would require less of this equipment.

Actually here, over years and decades, we have seen exactly the opposite. The better the technology gets, the more of it will be used, especially in single-use manufacturing, the [ cake ] of what you can address with single use increases or grows, the better the technology, the higher the titers, the better the yields are. So I think that's very much a positive ongoing trend with this improvement.

So again, back to your question, I think it's very much on the cash post-pandemic macroeconomic impacts rather than any different structural technology-related.

The next question comes from Falko Friedrichs from Deutsche Bank.

My question is on the LPS margin. When do you expect these investments in Advanced Cell Models to begin contributing positively to the margin of the segment again? And then just a very quick housekeeping one. Is a 27% tax rate a fair assumption again for the Sartorius Group in 2026?

Yes. Let me start with the housekeeping question. We currently think that the 27% is still okay for the year '26. And on the margin, as I said, it's connected a lot, of course, to our engagement in Advanced Cell Models, which is an emerging business, but should not be impacting on a sales side very soon, but rather we are building up for the more long-term perspective, more to elaborate on at our Capital Markets Day.

Next question comes from Harry Gillis from Berenberg.

I have one clarification regarding an earlier question on guidance. I'm sorry, I didn't quite catch that. Does the 6% guidance at the low end of your for BPS growth, does that assume a further decline in equipment sales, sorry? Or does your expectation for at least stable equipment hold here and it's deterioration in growth in consumables?

And secondly, could I just ask you. Do you expect your CapEx ratio to remain stable at around 12.5% into '26? How should we think about that over the midterm as some of your larger projects start to roll off?

Should I start with the last question on the CapEx rate. So of course, you are asking more the midterm perspective, but I think we have always quite consistently communicated that we are -- we should see from the year '27 onwards, an overall reduction in our CapEx ratio. '26 is, therefore, the last year, where especially also driven by our expansion projects in Korea. We are seeing elevated levels of our CapEx ratio to then come down afterwards, more on the Capital Markets Day.

Then again, on the guidance, just to repeat, we said at least flat, so we are not considering any decrease in equipment revenues for 2026 in our guidance.

Next question comes from Shubhangi Gupta from HSBC.

So just a clarification for your guidance or the upper end of your sales growth, does it assume recovery in equipment sales? And if yes, what is the time line? And how should we think about the phasing of growth in 2026, given H2 have tough comps, especially from strong growth in consumables?

Yes. Again, so now the question is about the upper range of the guidance. Here, as we said, of course, in that case, we would expect the contribution of both consumables, continued healthy growth as knowing and considering the higher comps coming from this -- from 2025 as well as at least a moderate growth in equipment revenues. So that's kind of our current thinking. And again, very positive what we have seen so far, the order book, the trends we see. So quite confident we are heading there. But as Michael said in the introduction, still early in the year and more to come with our Q1 results.

Yes. Give us a bit more time on that, please. So on that. However, I think just to add on, I mean, as we said at the other stage, given a bit as well if we think that one of the contributing or deciding factors towards the upper end, it will indeed be a more strong recovery and growth contribution as well from the equipment instrument side. Again, on the lead times that are there, of course, assumption is probably fair to say that this is something that happens rather later in the year than earlier. So it's something that we would expect to rather beyond Q1 to happen, if it happens in the degree that we may hope for, but we don't know.

And just a quick follow-up, can you comment...

I'm sorry, Shubhangi, but we have 3 more people in the queue. I'm sorry, we have to head on because we are over time already. Sorry about that. Happy to take your question afterwards.

The next question comes from Anna Snopkowski from KeyBanc.

This is Anna on for Paul Knight. I just was wondering, you mentioned on your last call, you were having some early conversations with small CDMO customers. How has this progressed in the quarter? And are those early conversations around equipment broad-based or concentrated in any customer group or certain types of equipment like those that help your customers reduce costs?

Yes. Thank you for the question. So yes, absolutely, that was a kind of an ongoing development we have seen in 2025. Towards the second half, we've seen the smaller CDMOs also becoming more and more active. We've seen them, their pipelines filling, their projects coming and discussion started, and it's both really about -- its equipment and consumables. So preparing for delivering on the project, it's all about getting ready to make the batches, preparing to get an order in consumables to be -- to have them on -- to build inventories as well as where needed, add equipment to prepare the capacity as well. So that's been the development we've seen with them, and it didn't change so far. So also kind of contributes to our positive outlook.

The next question comes from Naresh Chouhan from Intron Health.

Just on BPS. When you talk about double-digit consumable growth, can I confirm that this is more like low teens if we exclude China, just to give us a sense of where underlying demand is in Western market and the kind of state of the Western market recovery?

Yes. So consumables kind of, yes, low teens is a fair assumption in a positive outlook, right? And yes, that's how we are looking forward, not only '26 but ahead as well. Yes, so you're right.

The last question comes from Delphine Le Louet from Bernstein.

Yes. I'm sorry because I really don't understand the guidance regarding LPS when it comes to the margin. And so I know when you're trying to push back about the CMD and probably you're right, but that makes me think, is there anything and especially when we look at the Q4, where we had the margin gain versus the Q3, is there anything more structural that you're planning? And this is a new way where probably we should think about the division in the future, meaning a complete reorg internally of the LPS division that could justify not having any execution gain coming over the sales growth even at the midpoint of 4%, which is quite nice for that division, by the way. So any more clarity on that? How should we think about that margin in the context of back to growth and a scenario, which is not that bad at the end?

So Delphine, maybe I'll start, and then Michael, especially to add on, on that. But first of all, we definitely think that the LPS business is a 20% plus margin business going forward. On the other hand side, on the current position that we are at, at a margin of 21.5%, knowing that the tariff impact overall in the group is roughly 50 basis points in 2026, knowing that there are unknown on the FX side and knowing that we are ramping up our investment through the P&L into ACM, we thought it is appropriate to guide then for the year '26 with a slightly below 21%.

Yes. And over and above what Florian said, of course, we want to give you an incentive to join the Capital Markets Day here, very clearly, any strategic type of consideration about how we see the business, the divisions as we move forward. You're welcome in March to our Capital Markets Day.

There are no more questions from the phone. I would now like to turn the conference back over to Petra Muller, Head of Investor Relations.

Yes. Thank you very much, Valentina. This concludes today's call. Please reach out to the Investor Relations team in case of any open questions. We thank you for joining us and wish you a pleasant rest of the day. Take care and see you next time. Thank you. Goodbye.

Thank you. Bye-bye, all. Many thanks.

You may now disconnect.

Welcome to the presentation of Sartorius and Sartorius Stedim Biotech's 9 Months 2025 Results. Please note that the call is being recorded and streamed on Sartorius website. Your participation in this implies your consent with this. A replay will be available shortly after the call.

I would now like to turn the conference over to Petra Muller, Head of Investor Relations of Sartorius.

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

As always, we will start with prepared remarks, followed by a Q&A session. As the call is scheduled for 1 hour, please limit your questions to 2 so that as many participants as possible can take part.

Please note that management's comments during this call will include forward-looking statements that involve risks and uncertainties for a discussion of the risk factors. I encourage you to review the safe harbor statement contained in our today's documents. All of these are relating to our 9-month figures, and the reporting are available on the website.

And with that, I'm pleased to hand over to Michael Grosse, CEO of Sartorius. Michael, the floor is yours.

Thank you so much, Petra, and good afternoon, everyone. A very warm welcome also from my side, and thank you for joining us today. As usual, we will walk you through our operational and financial performance year-to-date, discuss our updated outlook and for the remainder of the year.

Before we drive into the details, let me share a few remarks on my first 3 months as the CEO of Sartorius AG. Over the past weeks and months, I focused truly on listening and learning, connecting with colleagues and customers, partners around the world to understand their perspectives, expectations and ideas. These conversations have further strengthened my conviction that Sartorius is indeed a company with a tremendous strength. Outstanding team, deeply respected position in our industry and significant opportunities for the future. It's been an overwhelming start I have to say in the best possible sense. I want to thank all of my colleagues for their warm welcome, their commitment and their enthusiasm they bring to their work every day.

Further, we will continue to evolve our strategy in line with where our customers and the broader biopharma and life science markets are heading. Our shared vision remains unchanged. The simplified progress in biopharma and life science research, enabling better health for more people. This brings me to the key messages that we would like to share with you today.

First, we are pleased, and we really mean it by that, not necessarily only about the results, but as well the fact that during this year, 2025, we have been able to say what we do and do what we say. So we are pleased with our results for the first 9 months and the progress achieved across the group. Sales grew by 7.5% in constant currencies. Even more encouraging is a significant expansion of our underlying EBITDA margin by 2 percentage points to 29.7%. And this despite FX headwinds that played an even larger role in Q3. This clearly demonstrates the positive effect of the growing volumes and the operating leverage in our business model as well as our strong operational performance we have been working on for the last month.

The main growth driver was once again the continued strong demand in our consumer business across both divisions. The 12-month rolling book-to-bill ratio was clearly above 1 and continued to improve sequentially. So we have now seen 9 consecutive quarters of improvement in this ratio.

For the Bioprocess Solutions division, we delivered double-digit growth in the recurring business, which more than offset the softness in the equipment business, which remains subdued, but is stabilizing.

In Lab Products & Services, performance improved gradually as expected, with slight growth in Q3, driven by recurring business. While instruments demand remains subdued overall, it is more stable, similar to the trend observed in BPS. This development is equally supported by some recent positive momentum in our bioanalytics portfolio, partly driven as well by new product launches, including the updated IncuCyte version, which is featured on the cover page of this presentation.

The leverage ratio was further reduced, underlining our commitment to financial discipline and a stronger balance sheet. Reflecting our confidence in our markets, we specified our full year 2025 guidance for both divisions and the group now including the effects from tariffs and the MatTek acquisition in summer. For the group, we expect sales revenue to increase by around 7%. The underlying EBITDA margin is expected at slightly above 29.5%. Overall, Sartorius continues to execute well in line with our commitments and plans, combining innovation leadership with operational excellence and performance.

Before handing over to Florian, I would like to make one comment on the 12-month rolling book-to-bill ratio, as many investors have asked how we are thinking about future disclosure of these metrics. We have always commented that this ratio was never intended to serve as a new KPI, replacing order intake, which we stopped reporting at the beginning of this year. We rather viewed it as a helpful metric during the normalization phase.

To stay consistent throughout the fiscal year, we will provide a comment again when releasing our full year 2025 numbers. However, with destocking now being largely completed, we have decided to phase regular communication on these metrics out. Business performance is best reflected in sales, the KPI we guide on and which is more appropriate for assessing our consumables-dominated business model. Therefore, as of 2026, we will focus on sales revenue as our primary performance indicator and complement this with directional comments on the demand environment.

With that, let me hand over to Florian, who will take you through the financials in more detail. Florian, over to you.

Thanks, Michael, and a very warm welcome also from my side. Happy to take you through our set of numbers, which reflect a continuation of the business dynamics that we've seen for quite some time now.

Let me start with sales revenue, which is up 7.5% in constant currencies and 5.5% in reported currencies to EUR 2.6 billion. This positive development is driven by a mid- to high teens growth in our recurring business over the quarters, which, as you know, is the dominant part of the portfolio. The nonrecurring business was soft in the 9-month period, but it is stabilizing.

Regarding the differential between constant currency and reported growth, it's clear that the FX situation has changed over the previous quarters, whereas in Q1, we had some FX tailwinds, the weakening of the U.S. dollar in Q2 and more so in Q3 generated headwinds of around 200 basis points to our 9 months reported performance. With FX rates staying on today's level, the negative FX headwind for the full financial year '25 should be around 300 basis points, important to take into account when coming to your assumptions looking forward.

9 months was also influenced by U.S. tariffs. As you know, we have successfully implemented tariff surcharges, which added EUR 19 million, which is slightly below 1 percentage point to our sales revenue, leading to a slight technical margin dilution of around 20 basis points. To be clear, the mentioned margin dilution is purely a mechanical effect caused by tariff surcharges as part of sales. These surcharges increased sales, the denominator and margin calculations without the corresponding increase in the numerator, the EBITDA.

For Q3 specifically, the uplift in sales revenue due to charges was approximately EUR 14 million, resulting in a technical margin dilution of around 50 basis points on group level. Order intake in the first 9 months developed strongly and in line with expectations. Orders grew faster than sales, both over the 9-month period and during Q3. As a result, our 12-month rolling book-to-bill was clearly above 1 and continued to improve sequentially.

Please note that the further -- that with further sequential order intake growth in Q4, it is fair to assume that momentum in the rolling 12 months book-to-bill is starting to slow amid high prior year comparable effects. So technically, if Q4 B2B will be below the very high prior year comp figure of 1.16, the LTM B2B will slightly decrease from that current level.

The positive topline development is also reflected in underlying EBITDA and margin. Underlying EBITDA grew over proportionately by 12.8% to EUR 774 million, and the margin decreased by 200 basis points to -- increased by 200 basis points to 29.7%. This margin expansion was driven by positive volume and product mix effects and economies of scale, offsetting FX headwinds of almost 1 percentage point. Underlying EPS also grew nicely by around 17%.

Now looking at the regions. We are pleased that all regions contributed to this positive development. Within APAC, China has stabilized and was only slightly dilutive to overall growth. Growth in the region, excluding China, reached mid-teens year-to-date. EMEA remained robust with more than 6% growth year-to-date. As you may remember, the recovery in EMEA began earlier than in other regions and is, therefore, facing higher baseline effects compared with the Americas and Asia Pacific.

For Bioprocess Solutions, growth was strong across all regions. Lab Products & Services showed gradual improvement with a return to growth in Americas and APAC. EMEA remained relatively soft, also reflecting higher prior year baseline effects.

Let us now turn to our 2 segments, beginning with BPS. BPS delivered another strong quarter. Sales revenue in 9 months is up almost 10% in constant currencies year-to-date. Growth was driven by high-teens growth in consumables, while equipment, as Michael mentioned, was soft, but is stabilizing. Underlying EBITDA increased by 17.3% to EUR 667 million with the margin improving by 260 basis points to 31.5%, supported by sales mix, scale and efficiency gains.

Let's move to LPS, which delivered a resilient performance in a challenging market environment. Sales declined by modest 1.3% in constant currencies year-to-date, supported by good momentum in consumables and services. The acquisition of MatTek added almost 1 percentage point to this development. The instrument business was impacted by constrained CapEx spending in life science research and markets, though we are seeing some encouraging signs of stabilization, also supported by positive momentum in bioanalytics in Q3, to which the launch of several updated instruments positively contributed.

In Q3, sales were up 4.4% year-over-year, FX adjusted, including a nonorganic contribution of around 2.5 percentage points from MatTek. The margin for the 9 months period came in at 21.7%, somewhat below prior year due to lower volumes, but especially unfavorable product mix and FX effects.

Looking now at the performance below underlying EBITDA, both net profit and cash flow developed well. Underlying EBITDA, as already said, a growth of EUR 88 million or 12.8% translated into overproportional growth in underlying net profit of plus 17% and reported net profit plus 66%. Operating cash flow came in solidly at EUR 511 million, below the exceptionally strong prior year figure of EUR 613 million. Please bear in mind that in 2024, we were pulling the inventory and accounts receivable levels heavily, and you can only do that once.

Furthermore, we want to ensure delivery reliability of our customers alongside the overall growth in business. We remain committed to keeping net working capital growth below sales growth this year and also going forward. With CapEx slightly below the prior year level year-to-date and investing cash flow of minus EUR 311 million, free cash flow came in at EUR 200 million. As highlighted during our previous call, there is some CapEx seasonality with H2 overall showing higher CapEx than H1. The CapEx ratio as a percentage of sales increased to 11.7% for the 9 months period of 2025, but we continue to expect full-year CapEx of around 12.5% of sales.

Turning to our balance sheet-related key figures, we see a strong equity ratio of 39.7%. This increase versus year-end '24 is mainly due to some repayments on financing instruments using our very strong cash position, and therefore, tightening the balance sheet total. Net debt increased in connection with financing of the MatTek acquisition and the dividend payouts in Q2. But the leverage ratio defined as net debt to underlying EBITDA improved from 4.0x to 3.7x in 9 months after we have seen 3.8x in H1 despite the acquisition of MatTek, which added approximately 0.1 turns to that ratio. So we are well underway on our planned deleveraging path. And as you can see in the title, we stay committed to our investment-grade rating.

And with that, I would like to hand back over to Michael.

Excellent, Florian. Thank you so much. So let's look now to the full year 2025 guidance. Based on the continued strong consumable demand and our solid operational performance year-to-date, we are specifying our full year 2025 guidance in the following way. For the group, we now expect sales growth in constant currencies of around 7%. For Bioprocess Solutions, we anticipate around 9% growth. For Lab Products & Services, we see sales roughly flat versus the prior year period. Driven by strong performance and efficiency gains, we forecast the underlying EBITDA margin slightly above 29.5% for the group. For BPS, we expect margins to come in slightly above 31.5%. For LPS, we now anticipate a margin of around 21.5%.

On cash-related items, our guidance remains unchanged. CapEx ratio will be around 12.5%, as we advance the expansion of our global production network and other strategic capacity investments. We also continue to expect net debt versus underlying EBITDA ratio to decrease to approximately 3.5x at the year-end, as Florian already highlighted.

The nonorganic contribution from the MatTek acquisition of a good 1 percentage point for LPS translating to around 0.3 percentage points for the group. The tariff-related impact of 1 percentage point additional topline growth, leading to a technical dilution and the underlying EBITDA margin of around 30 basis points for the full year 2025. Our goal remains to continue strengthening our position in the market. And with our strategic direction, robust innovation pipeline and strong consumer-customer partnership, we are well positioned to deliver on our ambition.

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

Thank you very much, Michael. Also from my side, welcome, and thank you for joining us on the call today. Let me quickly walk you through the 9 months 2025 results for Sartorius Stedim Biotech. We're very pleased with our operational and financial performance after 9 months. Our high margin recurring business with consumables remained very strong, delivering high teens growth and more than compensated for the soft, but stabilizing equipment business.

Sales for Sartorius Stedim Biotech Group increased by more than 10% in constant currencies, reaching nearly EUR 2.2 billion. Growth in reported currency was 8.2%, primarily due to the weaker U.S. dollar. The 9-month results were also influenced by U.S. tariffs. Florian elaborated a bit on that already. As you know, we have successfully implemented tariff surcharges, which added around EUR 17 million, a bit less than 1% to sales revenue, leading to a technical margin dilution that -- then at around 20 basis points.

The 12-month rolling book-to-bill ratio was clearly above 1 and continued to improve sequentially. Underlying EBITDA increased overproportionately to revenue, rising by 21% to EUR 683 million. This strong result was driven by volume mix, product mix and economies of scale that offset the derivative fixed FX impact of almost 1 percentage point. As a result, the underlying EBITDA margin improved to -- significantly to 31.1%, an improvement of 3.3 percentage points compared to a year ago. Underlying EPS rose by 33.3% to EUR 3.28.

Now looking at the regions. All 3 regions showed significant growth for Sartorius Stedim Biotech. The Americas delivered the strongest year-over-year performance, up by 11.8% in the first 9 months of 2025. Asia Pacific accelerated robustly, posting 11.2% growth for the period. Within Asia Pacific, China has continued to stabilize and was only slightly dilutive to regional growth. Excluding China, the region would have grown by approximately mid-teens year-to-date. EMEA maintained a solid momentum, delivering 8.4% growth year-to-date. This robust performance came despite a higher comparison base resulting from an earlier recovery cycle in that region, as we discussed previously.

Looking at the net profit and cash flow, underlying EBITDA growth of the strong 21% translated into an overproportional increase in underlying net profit of 34.3% to EUR 320 million and the reported net profit of 68.5% to EUR 218 million. Operating cash flow remained solid at EUR 446 million, although below the high level recorded in the prior year, which was positively influenced by the inventory and accounts receivables measures that Florian already touched upon. Free cash flow was EUR 167 million. CapEx as a percentage of sales increased, as expected, sequentially to 12.6%.

A quick look at our balance sheet metrics. Our equity ratio improved to 51.7% at the end of September with the increase being driven by some repayment of financial liabilities, and therefore, tightening the balance sheet total. Net debt increased slightly versus year-end 2024 due to the dividend payout in Q2. Deleveraging is progressing as planned with the net debt to underlying EBITDA ratio improving to approximately 2.5 now by the end of the first 9 months. So we are well on track on our deleveraging path.

Before we move to Q&A, let me quickly elaborate on the updated full year 2025 guidance. Based on our strong operational and year-end -- year-to-date performance and the continued robust demand for consumables, we are upgrading our full year 2025 guidance for Sartorius Stedim Biotech. We now expect sales revenue growth at -- of around 9% in constant currencies. The underlying EBITDA margin is now expected at around 31%, which is at the top end of the previous guidance. Our CapEx ratio remains unchanged at around 13%, reflecting the ongoing investments into capacity expansion and innovation.

We also still anticipate leverage. The net debt to underlying EBITDA ratio to be at approximately 2.5, down from 2.8 in the prior year. Please note that our guidance now also includes the tariff impact. Tariff surcharges are expected to contribute around 1% to sales revenue, leading to a technical margin dilution of around 30 basis points by the end of the year.

With this, I will hand over to the operator to begin our Q&A session. Thank you.

[Operator Instructions] The first question comes from the line of Odysseas Manesiotis from BNP Paribas.

First of all, I mean, your peer -- your close peer, America, this morning noted an expectation for 9% to 10% by processing market growth over the midterm. So I first wanted to ask, does it sound like a reasonable range to you? And do you feel the market could get there as soon as 2026? And then I have a follow-up.

Yes. First of all, thanks for your question. As you know, we are not yet at a point where we have been walking through our perspectives with regard our strategy, our midterm and our 2026 budget as such. However, let's say, I mean, I would say the estimation in terms of where roughly the goalpost might be doesn't sound completely off from our perspective.

That's clear. And secondly, looking at your 12-month book-to-bill rolling, I appreciate the little here. And yes, I agree, Michael, that given that we're back, it might make more sense to phase out by Q4. But for now, is it fair to say that you're essentially back at the pre-pandemic average of around 1.08 for Bioprocessing as of this quarter?

As we say, I mean, we are not really at the point that we think that it's good for us to put too much attention and detail on that. We felt that -- we indicated with the message that we are clearly above 1, indicating that we see that positive momentum in terms of what we are receiving in terms of order and what we are getting out in sales realization. This -- while the trend as such continues, we have been, however, if we look backwards, longer term, we have been as well on higher rates, as we have seen during this year. So this is probably as much as clarity that I think we can give at this point.

The next question comes from the line of Zain Ebrahim from JPMorgan.

Zain Ebrahim, JPMorgan. I'll stick to 2 as well. Just -- my first question is just a follow-up on the previous one in terms of demand trends going forward and how you're thinking about the demand trends both for consumables and equipment going forward. It sounds like consumables continues to be strong, but equipment is also showing signs of stabilization. So that's my first question.

And then my second question is just on bioprocessing market share. Are you seeing any changes at the moment that you'd highlight?

Okay. Sorry, the second question I may have missed. Can you repeat the second question? The first question is a bit on how we see the demand development with regard to instruments and equipment.

Yes, that's right on the first question. The second question was just on market share for BPS.

Market share BPS.

Okay. On the first question, yes, I think we wish we could tell you much clearer to when exactly the market will turn back to how it used to look like on the equipment and instruments side. As we say, we see a stabilization of the trend, and we had some -- I would say, still too early to call it a trend, but we've seen, of course, the encouraging development that we've seen in the third quarter as well on the instrument side with the higher demand and some relevant level of order intake.

Again, we remain positive that the market will and should progressively and gradually improve on that matter. But I really don't think that we have enough substance and data points to really say that it will and that we know exactly when it will, so we as well expect that this is more to be a gradual process rather than a turnaround that happens overnight or that happens on the 31st of December this year to be clear.

I take the question on the market shares, BPS. So I'm sure you guys know that in our industry, you don't see a quick shift in market shares anyway due to the stickiness of the business. We're rather looking at 3, 5 years CAGR just compared to the peers to judge how we are doing. And I think, yes, it's a strong performance when you do that, gaining continuously increasingly the market shares for our business. So I think we are looking at the current year development. The discussions with customers continue on that trajectory and positive about our ability to win projects, our ability to convert competitive products with better performing innovative technologies we are bringing to the market. So I think continuing on the track -- strong track record of market share gains.

We now have a question from the line of Charles Pitman-King from Barclays.

Charles Pitman-King from Barclays. Firstly, just noting the kind of rising comp headwind you're highlighting for 4Q on the book-to-bill and given we're now about 6 of the way into 4Q, I'm just wondering if you are expecting a sequential decline in that book-to-bill going to the end of the year or whether or not we could actually start seeing some budget flush benefit following the likely recent improvements in pharma customer budget clarity? Just any thoughts there.

And then a second one, just if you could provide any kind of latest developments in your customer activity across the early stage and particularly large pharma activity in early stage given peers are pointing to a resurgence in biotech funding and early-stage activity of these pharma companies? Just a couple of comments there.

Thanks for the question. The first part was on the book-to-bill. I think I feel like Florian answered the question in that sense that -- and I may just have a different twist to it, but it's saying the same thing. So I mean, again, we've seen that gradual improvement now all along the last and probably quite some quarters now.

If we look at Q4, again, in my book and in my perception, Q4 2024 was an exceptional quarter, an exceptionally strong quarter. So in case we are able to further improve the book-to-bill in Q4 on that basis rolling 12 months, we will definitely open another bottle. I would rather call it a miracle, let's say it this play. So yes, we expect that there could be a slowdown on the basis of the comparable base in the last year. But again, still strong enough that we are positive about, of course, the total quarter in terms of its sales development.

And then the second part, I think, is that -- Rene, will you take that?

Yes, I'll take that one. So I understood the question around the development and the early-stage biotechs. So yes, we see some overall, let's say, positive sentiment when talking to small biotech customers. Overall, some fundings happening, money flowing, progressing with the pipelines, molecules in the development. So that always kind of -- we see there is a positive signal, yet we don't see any material demand increase coming from that, but we expect that it is going to positively impact the development in the next quarters as well.

I think also worth to mention that when talking about smaller customers in the CDMO space that's also our customer segment, which recovers later compared to large-scale CDMOs. And we see also here already positive discussions around pipeline -- project pipeline at the CDMOs filling up preparing for additional campaigns and so on. So overall, I'd say, positive signals to drive -- to contribute to the growth looking forward.

Next question comes from the line of Charlie Haywood from Bank of America.

Charlie Haywood, Bank of America. I have 2, please. The first one on BPS Consumables, obviously continues to be very strong. Just wondering, as you look to your order book, are there any pockets you'd flag either by geography or customer type, which you think are yet to return to what you'd see as a normalized growth levels?

And then the second one is just on the BPS margin. Obviously, year-on-year, this year, you've seen a roughly about 250 bps step up, but it's obviously been relatively flat on a quarterly basis, as we've gone through the year. How should we think about the moving parts on that into next year to drive your sort of guided midterm margin expansion?

I take the first part of the question. So on the recovery of consumables, we don't really see there different dynamics, pockets of inventory or the order book building dynamics. As we commented, the growth is very much visible across all the regions. We have seen that recovery now across the portfolio of consumables. Also there, we don't see big differences. There was a bit later phasing of the recovery of a product, which had a longer shelf life, like filters, for example, but they are now very much on the track. Maybe the only kind of different dynamics with these smaller customers, as I commented just a minute ago, that they are coming a bit later overall. And yes, so that's quite a broad -- broadly visible recovery in terms of consumables.

And regarding margin, so you're right that the Q3 margin is slightly below the margins that we've shown in Q1 and in Q2. This is due to several factors. Factor number one, the absolute volume that we have been selling in Q3 was lower than in Q1 and Q2. So there is less volume or operational leverage.

Secondly, there is the topic of tariffs, where we've clearly said that tariffs have the strongest impact in Q3, nothing in Q1 and only very small in Q2, but Q3 is definitely hit by the technical tariff dilution.

And thirdly, there's the FX impact that we're having from the weakening of the dollars, where some parts of the products that we're selling in the U.S. don't have a U.S. dollar cost base, but have a euro cost base, which, of course, is then also giving some stress to the margin. That is the point for Q3. But let me also clearly state that we are expecting definitely a margin -- a healthy margin improvement back in Q4, which will bring then the overall annual margin to slightly above 31.5%, as we have indicated for BPS.

And also, I think what is clear on the back of a growth scenario that we are, in general, seeing for the year 2026 for BPS and alongside also our statements in the midterm guidance, we are, of course, expecting further operational leverage going forward in that division.

We now have a question from the line of James Quigley from Goldman Sachs.

The first one is for Rene. Rene, if we think back to June, when we were in Miami at our conference, you were talking about how there's lots of capacity for growth in the consumables business because there is underutilized capacity that you can see at your customers. So as you look forward into 2026, how is that capacity utilization looking at your customers? And therefore, your capacity for continued growth in the consumables part of the business.

Secondly, probably another one for Rene as well. There's been a lot of announcements of U.S. investment by your pharma customers and lots of the pharma companies. Majority of it is likely to be R&D investment, but there will be some CapEx investment there as well. What visibility does that give you on the potential recovery in equipment, particularly when thinking about how that CapEx might be spread between brownfield sites, greenfield sites, bolt-on expansions and things like that. So any color you can give us on how the visibility has improved for equipment, that would be awesome.

Thank you very much for the question. So let's start with the first one. On the utilization rates of single-use equipment, what we've been talking about is when we've seen this weakness in the CapEx equipment orders, one indicator we are watching and monitoring is how is the installed base of the equipment being utilized at customers to understand the activity level and how -- what's going on and how -- yes, how are customers using the equipment they have.

And what we have seen is continued and strong growth of the consumables, which customers use with the installed equipment, which is telling us -- and we continue to see that. So we don't see a change in that growing trajectory. And this is -- what is telling us is that increasingly, the equipment is being used, so the activity is there and the customers at some point will hit the capacity limit and utilize fully equipment and bring -- and get a new one. So -- and that supports kind of the -- our overall kind of optimistic outlook that, as we said, it's for us a question of rather than when the recovery comes and not if the recovery comes.

So -- and secondly, it shows that, yes, it's -- the utilization is growing, and I commented on the smaller CDMOs, where they are getting projects now into the facilities. And in some cases, they need to add equipment. We have seen that in the past couple of quarters. So that's happening, and that makes us really positive. And that's also related to kind of the -- your second question around the potentially moving or investing overproportionately in the U.S. due to the tariffs. We've seen a lot of headlines around that. So kind of you can say all in principle positive. We need to then see what is really additions.

And instead of movement of -- transfers of capacities for us it's important, then it's really an additional demand-driven additions, which then -- where we then will see the increase in consumables consumption. We expect that we will see some increased investments in the U.S., will take some time depending on the type of the facilities. Customers are going to build greenfield, large scale takes several years until equipment becomes a topic and will be ordered and delivered. It goes faster with single-use facilities, maybe 1 to 2 years, and then, you are in the -- with the equipment projects.

So overall, I would say it's a -- at some point, we expect that it's going to be reflected in the equipment orders. But as Michael said, we need to see that first coming. And then, as the volatility of the equipment business anyway is higher, and I've said this several times, we want to see several quarters robust development to talk about trends.

Can I ask a very quick follow-up on the first question on consumables? Do you have any metrics that you could share with us in terms of where utilization was at the end of last year, where it is today? And any outlook on how that could fill up going forward in terms of when customers in general might hit that ceiling?

Yes. Yes. Of course, as I said, we're tracking that, but it's nothing we communicate and collaborate as a KPI here. We're tracking that, and it's a positive trend in increasing utilization.

The next question comes from the line of Doug Schenkel from Wolfe Research.

This is Doug Schenkel from Wolfe Research. Two topics I would like to discuss. The first is 2026, and then, the second is the LRP. So on 2026, the sell side is currently forecasting around 11% year-over-year organic revenue growth for the bioprocessing segment. In my opinion, you would need to see an improvement in capital equipment demand to hit that estimate. Am I thinking about this correctly? I ask because while you have talked about some improvement in capital equipment demand on this call, which is encouraging, I would think that at this point, given it is an early stage of improvement, that you would want -- at least from a street management perspective, you would want us to wait to factor in signs of a recovery in instrument demand a little bit longer until you see more evidence of this sustainably improving. So that's the first topic.

The second question is a lot shorter. Michael, when we met in Europe about a month ago, there were a number of questions focused on when you might update the LRP, when you might be far enough along in assessing the business to basically update the long-term targets. So the question would be, is that something that we can, at this point, expect early next year?

Thank you, Doug. It's a pleasure. Thanks for the 2 questions. The answer to the first question is yes. And the answer to the second question is yes as well. No, so I mean, yes, as we've discussed, I think in my mind, and I think Rene as well built a little bit on this, it's clear that the days on the full-year growth spectrum we're having really has been starting on, of course, different comparable base in 2024.

Again, if we see some level of continuation on the momentum of the consumer businesses as well Florian -- Rene and Florian have been pointing out, we think that gives a solid base for the year to come. But I think we need to be cautious in order to -- let's say, to believe that the trees will reach the stars on the basis that we would rather see it happening on the equipment instrument side before we are talking about a trend, and we don't like to build plans on hopes. We would like to build them on enough solid robust data to get a stronger conviction there, still hoping for the gradual improvement.

Then, indeed, we are planning a Capital Markets Day in somewhere -- of course, in the beginning or in the first quarter of 2026. And that will be the point in time where you will get, hopefully, a lot of answers to a lot of the questions.

We now have a question from the line of Subbu Nambi from Guggenheim Securities.

You touched on this a little bit on several questions. But thinking about bioprocessing market as a whole, without accounting for CapEx, how did the growth rate in production volumes perform in line with your expectations? Was it above? Was it below? And then how does that outcome influence your thinking as we look forward to 2026 or the midterm?

And then my follow-up question was APAC was strong for BPS this quarter. Could you provide on how sales trended in China for the quarter? And what's your expectation for the rest of the year?

Yes. So the first question, production volumes, so there is no -- this data is not easily kind of available consolidated for our industry, but there are clear indicators, which is a consumables growth. And as our split of the revenues of consumables is around 60% in commercial, and if you add the late-stage clinical trials, Phase II, Phase III, maybe then total 80% is kind of volume-driven growth. And we talked about that we have seen very strong and consistent recovery and growth in this consumables. So there is a consumption, there is production activities going on, and it's growing.

And to your second question, the China, when I was commenting about the region's development and in orders and this strong consumables trajectory that we see across all regions, this includes also China. So in -- also in China, we see meanwhile a recovery, and yes, double-digit growth of consumables. On equipment, it's weak, maybe even weaker than the other regions, not surprisingly, not a surprise for us, as we've seen a bit higher overcapacities built during the pandemic in China. So that's kind of visible now also in equipment, but the consumables also a positive to see that we are getting back, and we see the recovery as well in that region.

The next question comes from the line of Charles Weston from RBC Europe Ltd.

My first question is on the Lab business. Last quarter, you said that you expected a strong Q4 in Lab. It perhaps sounds like you're not viewing organic growth quite as strongly now. So perhaps you could explain if your view has changed there?

And then secondly, if you do see an improvement in equipment and that Q3 is the start of a trend rather than a one-off, what does that mean for margin next year given that it has a lower overall margin, but presumably, you get some operating leverage through that equipment line as well.

Let me start with looking at LPS and Q4, and then also, maybe a little bit looking ahead on the margin commentary. And Alexandra to build up on that then afterwards. So first of all, we have expected, and we also talked about that in the last call that we are projecting a stronger H2 development versus H1 LPS. And this is exactly what we are now seeing already in Q2, where, as we have said, we've seen an increase in business of 4.4%.

And even if you take out the MatTek acquisition, 2.5 percentage points, you're ending up with an organic growth of slightly more than or slightly less than 2%. So this is exactly moving into that direction. And what we have also -- what we've also seen is -- or foreseen that Q4 should be the strongest quarter in the year for the LPS business, it's also historically, oftentimes has been the strongest quarter as there are end-of-year budget decisions made on CapEx.

Alexandra, do you want to add on that?

Yes, Florian. Thank you. What Florian just mentioned this, Q4 for LPS division, is historically, if you look in the last 10 years, you would see a strongest quarter, driven by exactly effects on the CapEx. And also in Q3, we saw some budgets being released around academia, around NIH. And yes, there may be not a new program started, but definitely continuations on programs, which already run in -- around development programs at our customer site in biopharma. Biotech, we see more maybe interest around CapEx and definitely continuations on consumables. So that gives us the signs that Q4 should be rather strong as we just talked about that.

Yes. And on your margin commentary, this is completely technically right, of course, what you've said. If we were in a situation where the equipment business would gain momentum and see an inflection point, there might be mix effects on margin. But honestly, I'm not expecting these effects to be that substantial that we would not see this kind of margin expansion overgrowth stemming from operational leverage overall in the group.

We now have a question from the line of Matthew Weston from UBS.

Two questions for me, please, if I can. A number of large pharma clients have said that they accelerated batches and manufacturing output ahead of the implementation of U.S. tariffs during 2025. Do you recognize that trend? Or are you still confident that the strong growth seen in the 9 months to date is real and we won't see tougher comps when it comes to the first half of 2026?

And then a second question on China for Rene. I'm just very interested as to whether now having seen a period of time since domestic bioprocess companies were taking share in China, what's the midterm experience? Are you seeing customers come back to Western companies as quality becomes a challenge? Or does the market remain the status quo?

All right. Thank you for the questions. So maybe starting with the second, as I said, we see a good recovery in consumables in China. You're right, during the pandemic, which was kind of assurance of supply-driven shift in market shares and gains of the local suppliers that happened. And what we see today, indeed, there are cases where we see customers coming back to us for -- and mostly customers, if you -- if we analyze the patterns, it seems like customers -- Chinese customers who are looking into bringing drugs out of China, partner with Western pharma companies. So those are more likely to come back and look into the quality and the innovation part. Yes, but being completely transparent and fair, I think the local players have the right to exist and participate in that market moving forward.

And yes, to your first question on the large pharma companies kind of producing ahead of tariffs, look we have -- we looked into that. We've seen that in a few cases, but it's to our -- to what we know, what we talk to customers, what we hear, that didn't have a material impact on the growth trajectory we have seen for -- in the 2025 so far. So that also means that we do not expect that it's going to play -- influence in some way the outlook for 2026.

[Operator Instructions] The next question comes from the line of Oliver Metzger from ODDO BHF.

One, about some market fundamentals. So help us with the sort of frequently some growth expectations across modalities. Now, some time has passed. We hear some negative news, for example, for mRNA. So it seems that some of these novel modalities of the growth prospect has changed given your exposure...

Sorry, sorry, Oliver, can you hear us? It's incredibly hard to hear you. Is there anything you can change with your position maybe to a microphone or so? We really couldn't acoustically get your question.

I removed -- can you hear me better now?

Yes, that is much better. Thank you.

Yes, it was my headset. Sorry for that, being on Merck CMD. So back to my question. So some quarters ago, you have reported growth expectations across modalities and also for the whole novel modalities. Over the last weeks or months, we had, for example, some more negative views from the mRNA side. Do you see any change in the dynamics of modalities which impact your business? Let's say, the most prominent is selling gene therapy, so any change in fundamentals from that perspective?

Thanks for that question. So when talking about new modalities, I think, first of all, it's a -- in terms of volumes and the impact on our business, it's a small segment today or early segment yet, and this is how we look into the future trends and investments where you need to do them. You need to look at what customers are working on in their pipelines today, which will drive the volumes in the future. And that's -- on that part, it's clearly visible that around 1/3 of the drugs and modalities customers are developing today are these early advanced therapies, cell therapies, gene therapies, gene modified cell therapies. You mentioned RNA. So that's in the bucket of advanced therapies. So that's happening.

It's also important to understand that in the -- how the business works and how the mechanics are of bringing materials and specifying materials early in the development to be and to enjoy then the volumes and recurring consumables revenues later, you need to be there early. So it's -- I think this is the time where players need to act and be there.

Yes, on the trends, to your question, it's a bumpy road, which we will see moving forward, not surprising. We have seen a number of positive developments as well as we have seen some more disappointing developments. But this is, I think, in the nature of this rather early type of, yes, developments and modalities in early stages. For us, it's a -- our view is this is as a combined advanced therapy modalities. They will play a role in the future. We, I think, made a steps and investments to position ourselves and build a relevant position in that space. And now, it's about helping customers really to make these manufacturing processes more efficient. So innovation is a big topic -- innovation in manufacturing is a big topic, and we see ourselves extremely well positioned with the tools, capabilities we have to help them on that journey.

We now have a question from the line of Thibault Boutherin from Morgan Stanley.

My question is just on the gross outlook for LPS beyond '25. So for this year, you readjusted your expectations due to demand softness. Do you see a structural change in the underlying demand in the market sort of impacting your assessment for the longer-term outlook? In the past, it's a business that was characterized as being sort of mid-single to high single-digit type of growth. Is that still realistic? And I appreciate that equipment is a big swinging factor. But just trying to understand if the underlying market dynamics are structurally softer beyond the gap in equipment demand.

Okay. I can start maybe with that. Thanks for the question, Thibault. So one perspective in this is, of course, that if we look a little bit in the dimension of what's been happening in the LPS business throughout the year 2025, how we started and where we stand right now, we've seen, as we say, some level of gradual improvement. I think what is with us and what we think will flow through as well into the future is the -- is still the underlying demand, and we should not forget there is still relevant, not maybe as relevant as in BPS, but there's a relevant part of consumables and recurrent business in LPS. So this part, I think, has been growing and developing nicely. And again, we don't have a reason to believe that this will change in the following quarter.

Again, the equipment we've discussed, and we see here moderate changes. We don't want to build, let's say, a perspective too strong on thinking that there is a systematic or a fundamental with the structural change in that business as we go along. We are very well positioned with the innovations that we put through, as we said, and we've seen the improvement in the bioanalytical division or portfolio part being really on a good track here. So I think other than the year 2025, which was, I would say, a rather big reset vis-a-vis the previous year, in a comparison, I think we will have probably a better starting point for the year to come. But again, here as well, we don't necessarily feel that this is such a -- there would be a breakthrough in this. But again, from a positioning perspective, from an innovation perspective, from an overall sentiment, I think we all feel as well that it's not a question of if, but when.

But maybe there's anything else that needs to be added to this.

I think, Michael, you mentioned everything. Definitely, we have a mixed portfolio. We have analytic instruments. We have classical lab equipment and consumables. And also, through our division, we serve different customer segments, where we see different dynamics on applied markets versus life science. And applied, they didn't grow much during COVID, but they also didn't decline strongly after COVID years. And there, we probably would expect a bit stronger performance going forward. But anyway, in life science markets as bioprocess, we will follow up with improvement. So this is, I think, how we look going forward. But looking into percentages, to give it now, I would believe it's a bit too early to say.

Next question comes from the line of Oliver Reinberg from Kepler Cheuvreux.

I was just about -- talking about the U.S. competitive landscape. I mean, there's obviously a lot of noise. I was just wondering if you've seen any kind of market changes we should be aware of that are not immediately obvious? And more specifically, given your share of products for the U.S. that are done in the U.S. is slightly lower towards what you see at peers. Have you had any kind of clients that voice concerns on the kind of high share of sourcing from Europe? And have you seen any kind of shift of market shares in clients, which -- where you're not the only validated supplier?

Thank you very much. Yes. So I would say actually, not really. When looking at the -- as you asked regarding the U.S. regions, I think it's quite stable. We don't see any shift in market shares in the way how we have implemented the surcharges and the transparency of the process data towards our customers as well. It's been well perceived by the clients. Of course, nobody likes that, but there is a constructive dialogue going on how to make sure that we stay competitive moving ahead. So it's rather a collaborative approach with customers who want to and prefer to stay with Sartorius.

We have, as we commented in the past, the possibilities in increasing the share of products made in the U.S. for the U.S. Some of that we have done already in the cases where we have seen the need for that. There's some room for more, and we would do that. So it's not that much pressure we would see from that direction.

But is it a discussion topic with clients that you're having a large share from Europe?

I mean, yes, maybe. I mean, it is a discussion with clients about how we make sure that we stay competitive with our product. But kind of discussion, you -- it's continued in ongoing discussion, and no tariff-related shifts. We didn't see that.

Yes. I just want to reiterate, really, the discussions with our customers are really on the merits and the value of our products. And we need to ensure, of course, that we remain competitive. As Rene said, I think we've taken our steps in order to gradually improve our production and our utilization and as well, therefore, our share of products coming from the U.S. for the U.S. And we will continue to look at that. But for sure, we'll remain and make sure that our products remain competitive for customers in any of our regions.

We now have a question from the line of Harry Gillis from Berenberg.

I just have a couple of follow-up ones actually on BPS equipment sales and the U.S. investment announces made by several of your large pharma customers. Just have you seen any anecdotal evidence of customers delaying any ex U.S. projects or future plans as they assess their sort of global manufacturing footprint with potential shift towards the U.S.?

And again, on BPS equipment, can you comment or provide any guide roughly on what proportion of that is manufactured locally or in Puerto Rico? I know you gave details on the broader group portfolio earlier this year, but on BPS equipment, specifically, is it sort of in line with the broader portfolio that's local or differs dramatically in either way?

Yes. So on the first question, the U.S. investments, and if there are delays in -- related to that, maybe evaluations of where to invest and how much to invest, I would say, of course, we have seen delays overall in investments, right, the CapEx and shifting decision-making. It's hard to say how much of that is related to the discussions around the broader manufacturing network strategy, if you like. I think these are the topics where when we talk to customers, everybody has -- builds their multiple-year network strategy, and it's -- you don't change it so quickly, and you think about twice when changing such a big strategic direction of how you build your network. So it might contribute to the delays we have seen in making decisions to invest. Yes, but hard to quantify that.

On your second question, the equipment capabilities in U.S., we don't make equipment in Yauco. We do that in Marlboro, close to Boston. We have facility for equipment assembly. And yes, so we're ready to serve customers in U.S. with the bioprocessing systems made there.

The next question comes from the line of Ed Hall from Stifel.

Just a quick one. I was wondering if you could quantify the magnitude of bioanalytics growth and its contribution to the overall LPS growth.

We are generally not commenting on that level. Let me despite that, make a comment. And I think it was also clear in our statements, we have been pleased to see here that development in Q3 on bioanalytics performance.

We now have a question from the line of Delphine Le Louet from Bernstein.

Congratulations. I just want a bit of a clarification regarding LPS margin and to get a better understanding of what you've been putting in place to assume probably a greater resilience of the LPS margin. And how should we think about the development ex volume in the coming quarter?

I think we were talking about the LPS margin development and that we've seen here some pressure on the LPS margin coming from FX effects coming from volume and mix effects. And going forward, definitely with FX staying that -- on that level, there will not be additional downward pressure. On the other hand side, alongside of a growth scenario going forward, there should be operational leverage that then should really help to stabilize the LPS margin or even improve the LPS margin going forward.

If there are no more questions, I would like to turn the conference back to Petra Muller, Head of Investor Relations.

Thank you, Mathilde. This concludes our today's call. In case of any open questions, please reach out to the Investor Relations team. We are always happy to help. We thank you for joining us today, and wish you a pleasant rest of the day. Goodbye.

Thank you. Bye-bye.

Bye-bye.

You may now disconnect.