Getinge AB (GNGBF) Q2 2025 Earnings Call Highlights: Strong Organic Growth and Margin ...
Order Intake Growth: 4.4% organically.
Recurring Revenue: 65% of total sales.
High Margin Products: Comprise about 2/3 of sales.
Adjusted Gross Profit: SEK4.183 billion.
Gross Margin Increase: Up by 0.8 percentage points.
Adjusted EBITDA: SEK989 million, margin improved by 0.2 percentage points to 12%.
Tariff Costs: Approximately SEK110 million in Q2.
Free Cash Flow: SEK0.5 billion in Q2.
Net Debt: SEK11.7 billion, leverage at 1.7 times adjusted EBITDA.
Cash Position: Approximately SEK1.9 billion at the end of Q2.
2025 Outlook: Organic net sales growth expected to be 2% to 5%.
Warning! GuruFocus has detected 6 Warning Signs with GNGBF.
Release Date: July 18, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Getinge AB (GNGBF) reported a solid quarter with net sales growing by 4.1% organically, driven by positive development across all business areas and regions.
The company achieved a significant increase in sales from recurring revenue, now at 65%, and high-margin products make up about two-thirds of sales.
Adjusted gross and EBITDA margins improved due to acquisitions, healthy price increases, and a positive mix, despite tariffs and currency headwinds.
The financial position remains strong with financial leverage well below 2.5 times EBITDA, even after the acquisition of Paragonix.
Getinge AB (GNGBF) continues to invest in new products and solutions, such as the Servo-c ventilator with neonatal options and the Zen disinfection chemistry portfolio, enhancing its market offerings.
Negative Points
Tariffs and currency fluctuations negatively impacted the EBITDA margin, with tariffs costing approximately SEK110 million in the second quarter.
The Life Science segment experienced softer performance due to high comparative figures from the previous year.
There are ongoing elevated costs related to quality improvements, particularly in the balloon pump and cardiopulmonary categories.
The company faces challenges in maintaining market share in certain categories, such as intra-aortic balloon pumps, due to restrictions on actively selling and marketing these products.
Despite positive trends, the company anticipates more difficult comparisons in the second half of the year, particularly in ventilator sales.
Q & A Highlights
Q: Can you explain the implications of tariffs and FX on your long-term guidance and whether you've found new mitigation strategies? A: Our long-term guidance is based on the current tariff situation. We haven't found new mitigation strategies but are utilizing existing productivity improvements and regional supply chain strategies. The impact of tariffs and FX is significant, but we are managing it within our existing frameworks. - Mattias Perjos, CEO
Q: What are your current assumptions regarding EU tariffs, and how do you expect them to impact your full-year results? A: We currently assume a 10% EU tariff for the full year. If tariffs increase, we would need to recalibrate our calculations. We don't provide specific guidance on future tariffs or FX impacts. - Agneta Palmer, CFO
Q: How is the demand for ventilators expected to evolve, and can you disclose the number of ventilators you anticipate selling this year? A: Ventilator demand remains strong, but we expect more challenging comparisons in the second half of the year. We do not disclose specific sales numbers for ventilators. - Mattias Perjos, CEO
Q: Could you provide more details on the tariff payments and their regional impact? A: Tariff payments began in the second half of April, primarily affecting EU to US flows. We have taken measures to manage our supply chain in response to these tariffs. - Agneta Palmer, CFO
Q: What is driving the positive development of Paragonix, and can you provide any margin details? A: The margin expansion for Paragonix is volume-driven, and it is now accretive to group margins. The growth is supported by a successful product portfolio, including the KidneyVault launch. - Mattias Perjos, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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