What happened?
Q2 broadly in line on sales with a 4/5% miss on EBITDA-pre/EPS solely driven by Electronics (accounting and writedown charges of EUR50m), more than offsetting strengthening trends at Life Science/Healthcare. Process Solutions the highlight with 11% organic growth, book-to-bill 1, and 10% growth expected for FY25. Guidance has been updated for the SpringWorks acquisition, Surface divestment (net EBITDA impact -EUR100m), FX, and divisional dynamics. Group sales down 3% at the mid-point (now EUR20.5-21.7bn) with EBITDA-pre guidance narrowed to EUR5.9-6.3bn (midpoint in line with consensus). Consensus broadly in line with the new mid-point of the core EPS guidance range. We expect a neutral share price reaction. Bulls will cheer Process Solutions but we note Mavenclad patent risk overhang in Q4. For more details see Incorporating SpringWorks and latest trends and Mavenclad IPR appeal worth flagging.
BNPP Exane View:
Group Q2 organic sales/EBITDA growth +2/5%; Life Science +4/11%, Healthcare +4/20%, Electronics -6/41%. Life Science in line with consensus though outlook improving on robust Process Solutions outlook and SLS ''stabilising''. Healthcare momentum remains robust with top line momentum across the portfolio with the exception of Bavencio/Rebif, and tight RandD spend control in evidence. Electronics being hit by fab capex delays and one offs of EUR50m related to a supplier recall and purchase price accounting. Net debt to EBITDA 1.3x.
Guidance
. Group sales/EBITDA-pre CER growth expectations tweaked to +2-5/+4-8% respectively (+2-6/2-7% previously) with FX outlook deteriorating (-5% to -2% impact, previously -3% to 0%). Electronics sales/EBITDA-pre guidance has been downgraded with lower volumes, inventory adjustments and unfavourable pricing impacts affecting performance YTD. This is broadly offset by underlying upgrades within the LS division and reflection of SpringWorks in the Healthcare division.
- Revised group sales/EBITDA-pre on a...
