Good afternoon. This is the corporate conference operator. Welcome, and thank you for joining the DiaSorin First Half 2017 Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing Star and Zero on their telephone. At this time, I would like to turn the conference over to Mr. Carlo Rosa, CEO of DiaSorin. Please go ahead, sir.
Yes, thank you, operator. Ladies and gentlemen, good morning or good afternoon, welcome to the Quarter 2 call. I will split my speech in two parts. First, I would like to comment on the recent acquisition of certain assets from Siemens. Then I will get into the Quarter 2 results. Discussing the Siemens acquisition, I think is a typical bolt-on acquisition for DiaSorin. If you remember when we met with series of investors, also a month ago when we presented 3 years' plan and we discussed about M&A strategy, it was very clear to us that it is an opportunity for the company to buy good products, maybe with aging technology, but these products do come with a set of customers that can be converted then to the most updated chemiluminescence technology provided by the LIAISON platform. We did this already twice.
We did it with the Parvovirus line when we bought Biotrin, and we certainly did it with Murex, with hepatitis and HIV. In this case, this asset is extremely strategic for DiaSorin because it provides access to a few hundred customers in Europe. The bulk of the revenues generated with these products are coming from Europe. Europe today is a market that is consolidating. There are less and less customers as a result of the fact that hospitals are getting synergies, combining their labs operations. In certain countries of Europe, like Germany and France, private labs are taking, as has already happened in the U.S., the lion's share of the market. In a market where certainly there is consolidation, accessing to new customers sometimes is complicated. In this case, through this acquisition, we would access the market.
I think it's worth noting that, if you look at this ELISA product that today are carried by Siemens and will be transferred to DiaSorin at closing. We do have available on our existing platform 95% of the product, there is no need to do any product development. All products are available, we would be ready almost immediately to proceed with approaching these customers and provide them with a better solution than what they have today. In this sense, it's a bolt-on acquisition because it fits like a glove our existing business. It is strategic because it's directed toward the European market that for us does represent a little bit less than 50% of our revenues. It is made of products which are all infectious disease products, which as you know, are strategic when it comes to DiaSorin.
Infectious disease products today do represent over 50% of our overall revenues. As far as time is concerned, today we have filed with antitrust, and we expect clearance by the end of August. We expect closing to happen at the beginning of October, actually October 1st. The implementation. Moving forward, there is going to be transfer of customers. Siemens will continue to supply the products to DiaSorin for three years after closing, and that would give us enough time to proceed with approaching customers and directing customers toward our own products. As Mr. Pedron will comment from a profitability point of view, we expect the profitability provided by this business to be in line with the current DiaSorin profitability.
In terms of additional OpEx, we expect to add few headcounts in Europe to support the expansion of the LIAISON install base related to the fact that, again, this will become more an additional accounts for our LIAISON business. Let's go back to our current business and let me comment briefly, Quarter 2. Mr. Pedron will take you through the numbers. Quarter two, as you have seen, has been a very good quarter from a revenue perspective, as well as from a profitability perspective. The company now is, from an EBITDA point of view, is back to 39 and a change % EBITDA margin, which bring us back to where we were when Vitamin D was the lion's share of our revenues. Certainly, the situation is much changed since then.
Vitamin D represents only less than 20% of the total turnover, therefore, the risk exposure today is much less than what it used to be. This level of profitability is related to a series of products, as we have discussed many times, and not just to one product. That makes our portfolio attractive for customers. It is a portfolio that is driving growth in different geographies and guarantees very high margins to the company. If we discuss about different geographies and we start from Europe, as you all know, Europe is a market that overall is consolidating.
If we go to the EDMA statistics at the country level, we see that at best, it's flat, if not declining as a result of price considerations, the fact that in several countries, public tenders today are grouping several hospitals together, therefore the government are trying to obtain savings, increasing volumes. Notwithstanding that, our business is growing 8%, which again is very good. The very good news is also related with Italy because, as you have seen in the last part of 2016, actually, there was a decline in business in Italy related to the application of certain policies by the government directed to decrease testing volume. Today, starting from Q1, as you have seen last time, and now with quarter two, Italy is back in business. It is growing again, over 3% for us.
This is certainly good news because Italy is our third largest market and is a very profitable business for DiaSorin. As far as the other European countries, again, Germany is growing fast as a result of a very successful acceptance, like we say, of our platforms in the main large chains that do dominate the German market. What is very interesting is that in Germany, DiaSorin has always had a disproportionate amount of its business associated with large laboratory chains. The Siemens acquisition would be very interesting because a good chunk of the Siemens business is actually directed toward the hospital market in Germany. We see specifically in that market, the opportunity through this acquisition to move from the private lab chains, which again, we are having lots of success today, also into the hospital market, which is a very sophisticated market.
Usually, we are talking about very large centers, with research and development activities, which have been traditional Siemens accounts for the specialty products, and now will become DiaSorin accounts. Overall, I would say Europe today is doing very well. Strategically with this acquisition, we are providing a further opportunity to grow to the various European countries. Let's move to the U.S. U.S., again, it has been a very good quarter. U.S. is like for like, meaning excluding the molecular business, which today makes the U.S. still not comparable for quarter two. It is growing single digits, which is good because that growth, as you know, is a combination of a decline in franchise for Vitamin D and a very strong growth. We are talking about up 20% growth of the CLIA Vitamin D business in the U.S.
Certainly, supported by the fact that we won a very large contract last year. Now, with the month of July, we are at the final implementation of the contract, which is starting then full steam in quarter three. The result of the U.S. is very reassuring because it is a combination of two good quarters, plus the fact that from the third quarter, we expect an acceleration because of the full implementation of the infectious disease contract. As far as now, if we move to South America. South America is a solid business. It is growing of 12%, mainly driven by the success in Brazil, which is confirming to be in a very good cycle as we speak. We continue to develop business mainly in the big private laboratory chains, as well as some of the reputable public hospital institutions.
I am happy to report that Brazil is also becoming a very good contributor to the company profitability. The mix is right, the customer mix is right, and certainly positioning of the company as a specialty company allows in that difficult market, the company to own a solid spot in this market. Last but not least is Asia-Pacific. Asia-Pacific, good growth, 20% in China, which is the main driver in that area. In the 20%, we see that in quarter one and quarter two compared to last year, we had a softening of some of the volume related to some of the products we sell in the prenatal market. This is because newborns in 2016 were at a record year, 17.8 million newborns in China in 2016. The forecast for 2017 is that it is going to be an average year.
Usually an average year means for China around 16 million newborns, which certainly leaves some gaps vis-a-vis volume for some of the prenatal testing. Notwithstanding that, the company is growing 20%. China continues to be an opportunity for the company. A very solid install base going to China. We are continuing to install roughly 20 systems per month, and we expect to finish up the year with over 240 new systems installed in the country, mainly in class 3, class 2 hospitals. If we look at the product lines, I just would like to comment on Vitamin D, and provide the usual guidance for Vitamin D. Vitamin D in Q1 and Q2 has been good for us.
As you have seen, we are up 1.6% overall versus last year, whereas our typical recommendation about Vitamin D is that is a declining franchise as a combination of price pressure happening in the major markets. I would like to avoid that analysts take a bullish view as far as Vitamin D is concerned. If I don't get desperate when Vitamin D a quarter is down 5%, I'm not getting overexcited if it is up 1.6%. We continue to read the Vitamin D market as usual. It's a market that is heavily depending on volume in certain countries. It can be up one quarter, it can be down another quarter. Overall, as outlined in our plan, we expect this franchise to decline over time. Last but not least, couple of comments on product development.
In the first six months, we launched four new products when it comes to CLIA, and we launched the first three products when it comes to molecular. We were able to get to DiaSorin Molecular and have an impact on the ability of this company to develop products, and develop products on time. As you know, this is key as far as allowing the company to enrich menu and become more competitive for long-term future growth. We believe we are on the right path vis-a-vis that. I will now give the podium to Mr. Pedron, who will take you through the financials, and then we move to Q&A. Thank you.
Thank you, Carlo. Good afternoon, everybody. The next few minutes, I'm going to walk you through our financial performance of DiaSorin during the first half of 2017. We'll also make some remarks on the contribution of the second quarter. Before we start, again, let me please remind you that we began reporting the Focus Diagnostics business since May 2016. The perimeter of consolidation in H1 2017 is different from the one of 2016. The Focus Diagnostics business contribution would be normalized starting from the next quarter-on-quarter, I mean. Said that, as usual, I would like to start with what I believe are the main highlights of the period. We closed half one revenues in line with our full year guidance and with a material increase over 2016.
This has been influenced by the just mentioned different perimeter of consolidation and by the strong performance of the like-for-like business. Indeed, half one revenues growth at constant exchange rate and scope of consolidation is a touch above 7%, and this increase has been fueled by a very strong quarter two. We closed half one EBITDA better than our full year guidance, with a strong growth over the previous year, about 22% or EUR 23 million at constant exchange rate, with an EBITDA margin at 39.5%, better by 110 basis points compared to last year. This increase is the result of the different scope of consolidation, some positive phasing on operating expenses, lower non-recurring expenses, and most important, our capability to confirm a strong profitability of the like-for-like business.
Lastly, DiaSorin keeps confirming its ability to generate a strong free cash flow, EUR 61 million in the period, with a growth of about 13% compared to 2016, which allowed us to close the half year with a positive net financial position of about EUR 90 million, after having paid in May dividends to our shareholders for about EUR 44 million. Let's now go through the main items of the P&L. We said half year 2017 revenues at EUR 319.3 million grew by almost 20% compared to last year, and by 18.3% at constant exchange rate. During the first six months of the year, we had a positive effect tailwind of EUR 4.3 million, mainly driven by the appreciation of the US dollar and Brazilian reais against the euro, just partially offset by the depreciation of the Chinese renminbi and the British pound.
Gross profit at EUR 219 million grew by almost 20% or EUR 36 million compared to last year, closing the first six months of 2017 with a ratio of revenues at 68.7%, which is basically in line with 2016, the difference being negative for 20 basis points and in line with what we have seen in the past few quarters. This is the result on one side of higher sales of specialty products, some positive effects on manufacturing efficiencies, and lower depreciation rate of the revenues, which almost completely offset, on the other side, the price pressure on CLIA me-too products and the slightly dilutive effects of the Focus business. Total operating expenses at EUR 114.6 million or 35.9% of revenues, have increased by 19% compared to last year. Whereas the growth at constant exchange rate was just a touch above 17%.
Let me please remind you that as we saw in the previous quarters, and we will see for the next few ones, about EUR 3.2 million of the reported quarterly OpEx is driven by the depreciation of the intangible assets, mainly know-how and customer list, coming from the Focus business acquisition. Net of this depreciation, H1 reported OpEx would have grown by about 14%, and the ratio on revenues would have been 33.9% against 35.6% of H1 2016. This improvement is the result mainly of operating leverage and some phasing in expenses slipped to the following quarters. H1 other operating expenses at EUR 3.4 million are lower than 2016 by EUR 1.4 million. Please let me remind you that 2016 was affected by some material non-recurring expenses, mostly driven by the costs associated to the Focus business acquisition, which explain most of this difference.
Besides, please note that H1 2017 is already accounting for some of the one-off cost related to the acquisition of the Siemens ELISA business that Carlo just talked about. As a result of what just described, H1 EBIT at EUR 101.2 million or 31.7% of revenues, has increased compared to 2016 by 23% or almost EUR 19 million. The tax rate at 32.3% is 70 basis points better than 2016. This variance is in line with our expectations, and as already said, is mainly driven by the reduction of the Italian corporate income tax rate from 27.5% to 24%, which took place starting from 2017. The net result at EUR 66.4 million or 20.8% of revenues, is higher than the previous year by EUR 12.4 million or almost 23%. Lastly, H1 EBITDA at EUR 126.2 million is better than last year by almost EUR 24 million or 23.4%.
The variance at constant exchange rate is 22.3%, which is better than our full year guidance. EBITDA ratio over revenues of 39.5% is 110 basis points better than last year. This increase has been driven mainly by the following three factors. Our ability to basically preserve our manufacturing margin of offsetting some price pressure suffered on CLIA me-too products, and the slightly lower profitability of the Focus business, with more sales of high-value specialty products on one side, and higher manufacturing efficiencies driven by increasing volumes, operational excellence initiatives, and tight cost control, as discussed during the recent Investor Day. Our constant effort aimed at delivering operational leverage through a careful cost control. Plus, as I said, some favorable phasing of operating expenses. Lastly, some positive effect coming from the other operating expenses line, as we said, mainly the non-recurring expenses for the reasons that we just described.
Let me now move to the net financial position and the free cash flow. DiaSorin closed the period with a positive net financial position of EUR 89.2 million and EUR 129 million in cash. This is the result of what discussed so far and is confirming the ability of the Group to generate a predictable and strong cash flow. During H1, the Group has generated EUR 61 million compared to almost EUR 54 million of 2016.
With an increase of about EUR 7 million or 13%. I believe it is worth mentioning, though, that during Q2, DiaSorin paid about EUR 11 million more taxes than last year, mainly driven by the tax payment phasing mechanism in place in Italy. Lastly, in view of the group operating performance, the management has decided to raise the guidance for 2017 EBITDA growth at constant exchange rate to about 13%. The previous guidance was a growth of about 11%. The guidance for 2017 revenues, which is calling for a growth of 11% at constant exchange rate, is confirmed. Please let me remind you that this updated guidance does not take into account the impact of the Siemens ELISA deal, the closing of which should take place, as we said, beginning of October.
We will review our 2019 guidance to incorporate the Siemens ELISA business acquisition after the closing of this deal. Let me please turn the line to the operator to open the Q&A session. Thank you.
Excuse me. This is the call for conference operator. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press Star and One on their touchtone telephone. To remove yourself from the question queue, please press Star and Two. Please pick up the receiver when asking questions. Anyone who has a question may press Star and One at this time. The first question is from Maja Pataki of Kepler. Please go ahead. Ms. Pataki, your line is open. Please go ahead.
Yes, sorry. Yeah. Hi, good afternoon. I had a couple of questions. I'll stick to three and go back into the line. Apologies if I've missed that, but could you tell us what the organic growth was for the quarter and for H1 for the group? Second of all, if we look at the molecular business, there was a pronounced slowdown compared to Q1, which is probably most likely related to the flu season. Can you help us out a bit how we should think about the remaining two quarters of the Focus Diagnostics business? Should we see Q3 being more or less in line with Q2 and then Q4, see a pickup again as maybe the flu season starts again? Then, the third question would be about the Siemens acquisition. Carlo, how should we think about the next three years?
For the next three years, you're actually distributing the ELISA tests from Siemens to their customers. Can you actually already, during this time, try to convert some of the customers, or is it really a blocking period of three years, and then after that, customers will be ready to use your already existing portfolio? Thanks.
Yes, Maja, I will take the last question. Then Piergiorgio will address the first two. The way you should think about it is very simple. Starting from day one, we do have access to hundreds of accounts in Europe. We need to sort out, certainly, the size of these accounts. Then we have 3 years where we can go approach this account and push conversion of technology from our own technology, from the existing LIAISON ELISA technology to the LIAISON product. There is no blocking period. It is a matter of time at the beginning for us to be introduced to the accounts. The accounts will buy the products from us, so they will become effectively DiaSorin customers from day one. Then again, there is a clock ticking, and during that period of time, we are going to approach and move them to our technology.
I see, honestly, from these two benefits. First one is the fact that, as said before, Europe is becoming a very tough market, and you can see it from the competitor numbers. DiaSorin is an exception because of the kind of products that we make. Certainly, there is a shrinking number of customers in Europe, physically shrinking. Therefore, it is more and more complicated to access a new customer base. Therefore, this acquisition, what is strategic about this is the fact that we get lots of new customers. So we get access to a new customer base. Some of this customer base can be converted one-to-one because we have all the products. From a financial point of view, they will be able, with the existing turnover, to support and excel.
Some of it will require cross-selling, meaning that the customer, in order to have access to the LIAISON, they will have to add on more products. There is going to be the possibility not only to cannibalize but to expand. Last but not least, as you remember, for the smaller accounts, we are in process of developing the LIAISON XS. If you remember in the previous calls, we always stated that the LIAISON XL was never going to be really a platform intended for the European market. It was designed for the physician office labs and smaller hospital labs in the U.S., or to the emerging smaller clinics and hospitals in China.
This acquisition is changing this a little bit because it is adding Europe to the map, because some of the accounts that we will inherit through this acquisition are too small for an XL, but they fit the XS. Therefore, again, it is strategic also in a different setting, where it provides now an opportunity to the DiaSorin XS also in Europe.
Hi, Maja. Your first question regarding the like-for-like growth. What I said is that in half one, it was a touch above 7%, like for like, helped by very strong and healthy Q2 at more than 7.5% like for like. I believe at constant exchange rate. I'm quoting to you numbers at constant exchange rate. Your second question, I believe it was regarding molecular sales. I believe it's not possible still to make a comparison on molecular sales because the Focus business was acquired in May last year. What I can tell you is that molecular products are growing double digits overall year-over-year, which is in line with our expectations.
Thank you very much for that. Just a quick follow-up on molecular. I understand that Focus was just acquired last year. Then again, the previous DiaSorin molecular business was small. It shouldn't really make a difference. I'm just trying to understand if the slowdown is related to the flu season, so we should see the seasonal patterns throughout the year. Whether there was something else in there.
I still don't understand how you can say slowing down.
On Q1. No, just on Q1.
quarter to quarter. Yes.
quarter on quarter. I'm sorry. Not slowing down on last year, just quarter on quarter.
Quarter on quarter is certainly flu. I mean, a good chunk of that business that we bought is flu related. You expect Q1, Q4 to be higher and Q2 and Q3 to be softer. Yes.
Okay, brilliant. Thanks. That's what I was trying to understand. Thank you.
Thank you.
The next question is from Scott Bardo of Berenberg. Please go ahead.
Yeah. Thanks very much for taking my questions. First question or series of questions relate to clarifying the Siemens ELISA acquisition. Apologies for relatively simplistic questions, but I'm sure you'll be able to bridge my understanding. Firstly, question is, how were you able to buy this business for two and a half times EBITDA? Seems a very cash generative, relatively stable business. Is there something structurally wrong with this business? Is it also deteriorating rapidly? Second part, following on from that, Siemens, to my understanding, already has benchtop CLIA-based technology with ADVIA Centaur. Why is it they didn't convert their existing customers and instead selling it to you cheaply? Last, related question. Just to understand actually the structure of their customer relationships, why is it you need to acquire this business to convert these customers to your platform?
Why can't you just do so in free market today without having this business within your current mix? Perhaps if you could just talk a little bit about that and complete my understanding, I'd appreciate. Then I have a follow-on.
Okay, I will take this, Scott. First one, why a small price? I don't think you should ask us. You should ask Siemens. Let me just give you a hint. We have a history of acquisitions where when you and I think the Biotrin one was also paid in line with these numbers, where when you go to a very large conglomerate and you buy a piece of it, which is non-strategic, usually, the conglomerate, the large company is valuing this in terms of decreasing the entropy of the system and providing them with more strategic focus. All these intangible benefits that come through this dismissal. For that reason, the tangible value that they attach to these assets usually is smaller. Again, it's not only Siemens with this. I said, it's Abbott with ELISA.
In a way, also the acquisition of Focus, if you compare to market prices and multiple, has been a very good acquisition. This is part of when we talk about it, about our M&A strategy, we keep saying, guys, we don't go after the traditional assets because it's too simple. When you go after a traditional asset, you have Thermo Fisher and Danaher competing with you are left at square one. These are the kind of very good acquisitions that you can make to create value for your shareholders. Non-strategic asset that can be strategic for you. The second question is why Siemens didn't convert. It's very simple, they don't have that menu.
Siemens went through conversion of part of this business, with the exception of those products which are specialty products that they don't have on their central platform, but they had on the ELISA. Don't forget that this ELISA line is actually a glorious line. It was the Behring line, and us, DiaSorin, Behring, and bioMérieux were the first companies that launched these kind of products in the world 30 years ago. Some of it has been cannibalized, what's remaining are the specialties that we do have on the platform, and Siemens, Roche, both don't have. At that point, if you look at Siemens, they only had two opportunities. One was to, if it is non-strategic, you shut it down, you leave a good customer base with a problem.
The other one is, get a value from these assets, but also get a value for your customers. We have not seen the customer base, I expect that these are Siemens customers. They're not only people buying ELISA, they're people that most likely have lots of products bought from Siemens. Siemens, being a good supplier, for the customer base, had to find a solution that allowed these customers to someone that could continue to supply. Actually, that was a long part of the discussion with Siemens, the fact that they wanted to make sure that we would continue to provide service and support to their loyal customer base. Okay. This is why they didn't convert. Why is it difficult? Why do you need to buy this, and why you cannot go after this? As said, yes, this is a Siemens customer base.
We expect that to go in these labs. There are labs in Germany, in Austria, in Eastern Europe, where there is a Siemens acceptance over the full product line. These were good products in ELISA for these accounts. We were winning some of these accounts, but certainly it would take more time to simply getting the list and go visit, and you are a supplier at this point of theirs with ELISA. You are there with the Siemens blessing because you bought this business from Siemens, and you promised pretty much with the contract that you will continue to supply and service these accounts. It is different than just trying to sort out through statistics where the business is and go after it. I hope that is enough.
Very good. Thank you for clarifying. Just to think about then how we think about the phasing of this sort of transition. Do the revenues for this business decline over the next few years until you effect the conversion, or do you see it sort of stable at this 47 level and growing? Perhaps, just a few comments there. Also, are you done actually with respect to your ELISA asset acquisitions in Europe to support this LIAISON XS endeavor? Thank you.
Okay. First question. ELISA is traditionally a declining business. You should really split, I think when it comes to this business, you see that the European core business that they have is relatively stable because, again, in specialties and there are a few blood banks in Germany that are using some of the ELISA products. That portion of the business is relatively stable. There is a portion of this business that is more related to very large tenders in the so-called export markets, typically Middle East and some other countries. That kind of business is less, let me say, stable because you can get the tender for three years, you can lose the tender for three years.
Overall, we see that this business standalone probably is at historical decline of 3%-5%, again, as a combination of stability in Europe and then up and downs vis-à-vis the international markets.
Thank you.
For any further questions, please press Star and One on your telephone. The next question is from Luigi De Bellis of Equita SIM. Please go ahead.
Yes, good afternoon. Two quick question for me. First one, could you quantify the phasing of OpEx expected in the second half? Secondly, still on Siemens acquisition, I know it is too early, but could you give us a rough indication of conversion rate expected from ELISA to CLIA in the next three years period and the churn rate expected? Thank you.
Look, I will take the second one. I think you will need to wait, because after closing, we are going to revisit the 3 years' plan, and we are going to give an indication of what we expect this business to add to the plan just presented a month ago. I cannot comment on conversion.
Yeah. Hi, Luigi. The question on OpEx, I cannot give you the exact number, but historically what happens is that H2 usually is higher in terms of OpEx compared to H1. On top of that, we also had some, let me say, projects, which were expected to happen in H1, which will actually happen in H2. That's why I was saying in my remarks that we had a positive impact in H1 coming from phasing of OpEx. That's it. I cannot give you our budget number.
If I may make a qualitative comment on the OpEx. Just to explain to you why we expect an increase, I think, Q2, mainly for two reasons. If you remember, we have discussed about initiatives intended to increase efficiency. When it comes to manufacturing, these initiatives are that we will expect to incur some of the cost in Q1, Q2. Some of this cost is moved to Q3, Q4. That's one example. The second one is to do with DiaSorin Molecular, because we, as you know, have changed all management in DiaSorin Molecular, replaced it. We are getting to full staff now. Actually, we hired the general manager, we hired some senior people, and therefore the running rate of cost vis-a-vis Molecular that you've seen in Q1 and Q2 is a little light compared to what you will see in Q3 and Q4.
This is why I think Pier iorgio was hinting the fact that historically, our cost base in the second, third, and fourth quarters is higher than the first two.
Thank you very much. Very clear.
The next question is a follow-up from Scott Bardo of Berenberg. Please go ahead.
Thanks very much for taking my follow-up. Sorry, I'm mindful of the fact we didn't get to, if you like, the second part of the second question, which was, well, there's an expression that good things come in threes. You've done two acquisitions more recently, but this latest one not really materially denting your capital position. Are there more acquisitions to come, do you foresee, or have you enough on your plate now to focus on internally? That's a question for Carlo, please. A second question for Mr. Pedron. I think at the beginning of the year, if I recall correctly, you were somewhat cautious about gross margin pressure or deterioration year-on-year, suggesting you would compensate that with operational leverage. We've seen relatively stable gross margin.
Could you give us an update on where you foresee the gross margin on a full year basis, and whether this is the principal driver of your improved guidance? Thank you.
I will start with the gross margin one, Scott. We don't give guidance on gross margin, we give guidance on EBITDA. It's not that easy to forecast a gross margin reaction when you have so many moving parts. Here we're talking about a difference of one, two million EUR over revenues of EUR 319 million. Said that, the overall trend, which I see, is that again, I believe gross margin will be flattish at best. We lost 20 basis points, which is not much, but still we lost 20 basis points compared to H1. As a result, I said, of several plus and minus, amongst the plus, we have the fact that we have been able to do well on the manufacturing margin because of the fact that we are selling a lot of high specialty products, which delivered to us better margin.
As you heard, we sold more Vitamin D in the first two quarters than what we expected, which is kind of helping the margin. We start seeing kicking in the positive effect of the operational excellence initiatives we discussed about during Investor Day. Also there, it's new projects, it's not very easy to be very accurate on gross margin. I believe you should allow us a little bit of flexibility there. I believe the main message we are trying to deliver is that at the EBITDA level, we are in a very good position to maintain the 38.5%-39% profitability that we basically gave. I believe the other question was on the.
Acquisitions.
Yeah.
Look, as said, we do not participate to traditional acquisitions, let me call it roadshows, because we know that if we go for this kind of assets, competition is fierce, and we are not prepared, as we speak, pay for certain multiples that today market for certain very hot assets is demanding. Also, as I keep saying, we are not forced into an acquisition spree because we have what we need. We have the technologies, we have ideas, we have products, we have people. Our acquisition strategy has always been, let me call it predatory, if I may. Meaning that it may be that for a couple of years, you don't see much, as it happened. It may be that through our channels and alliances, we source assets. Now we found two. I mean, Focus last year, this asset in 2017.
I cannot honestly foresee whether we're going to find one tomorrow or two years from now. You know what we are interested to buy, and you know that there is a very serious commitment by our main shareholder to allow the company to pursue its strategic interest when it comes to strategic assets. It's a waiting fee. It's very complicated to say when it is going to happen again, Scott.
All right. No, thank you. Thank you for your time. Perhaps just very one quick follow-up. Maybe asked in a slightly different way. Does this Siemens acquisition you made provide enough infrastructure or addressable opportunity for a self-supporting, self-sustaining LIAISON XS model in Europe, or do you need to add additional relationships to make that a standalone model in Europe? Thank you.
No, standalone will never be standalone because as said, if you compare Europe to the potential for this platform in other geographies, it's still small. The difference fundamentally is that it used to be, we were not considering Europe at all in our strategy. Whereas today it's back on the map, meaning that, this is why I did comment before, Europe strategically for DiaSorin, is very well-positioned because, short-term, you see that we are enjoying growth. Mid-term, which means for the next 3 years, we now have a business. This acquisition is fundamentally to support our European business, where we get lots of new customers, a good customer base, and now also allows us to put at play the LIAISON XS.
Not to mention the fact that when it comes to Europe, as you know, we also have the full opportunity for molecular because Quest Diagnostics was not playing at all in the European arena. This is why I'm saying Europe strategically is very well set as far as what it needs to continue to contribute in a positive way to the growth of our business.
Thanks very much indeed.
Mr. Rosa, there are no more questions registered at this time.
Thank you, operator. Bye-bye.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.