Welcome to the SCHOTT Pharma conference regarding Q1 2025. I will now hand over to Tobias.
Thank you very much, Heike. Hello, everyone. Thank you for joining SCHOTT Pharma Earnings Call for the first quarter of the fiscal year 2025. I'm Tobias Erfurth, Head of Investor Relations, and it's my pleasure to host today's call. I'm joined by our CEO, Andreas Reisse, and our CFO, Dr. Almuth Steinkühler. Andreas will kick off today's call by sharing key business and financial highlights. Following this, Almuth will take us through our financials for the first quarter in more detail. Andreas will conclude the presentation before we open the Q&A session. Please go ahead. Disclaimer: Before we begin, I would like to draw your attention to our disclaimer, which we encourage you to read. Additionally, please note that we talk about the fiscal year 2025. We are referring to the period from October 1st to September 30, 2025.
This means that the first quarter relates to the period from October 1st to December 30, 2024. With this, I would now like to hand over to our CEO, Andreas Reisse.
Okay, thanks for the intro, Tobias. A warm welcome to everyone, and thanks for joining our earnings call. Yeah, I'm delighted to provide you with a comprehensive overview on SCHOTT Pharma's most recent business and financial developments. So, following a strong 2024, we are well satisfied with the start into fiscal year 2025. Our first quarter results align well with our expectations and underscore our ongoing commitment to execute our growth strategy. On a reported basis, our revenues remain stable at EUR 230 million, reflecting a 4% increase at constant currencies compared to the previous year's period. Our EBITDA margin of 26.3% at constant currencies showed a continued strong profitability that was in line with our expectations, considering the high comparative base. So, the solid performance in revenues was primarily driven by the strong demand for our high-value solutions, SCHOTT HVS, which contributed to 55% of our total revenues.
This underlines the continued execution of our strategy to increase our HVS revenue share. The successful driver behind our shift to HVS is our growth strategy based on innovation, expansion, and trusted partnerships. I will highlight a few of our innovation and expansion topics shortly, so let me briefly explain what we mean by a trustful partner. At SCHOTT Pharma, we firmLy believe in the power of industry collaboration. We are a trusted partner within our industry, maintaining strong relationships with our customers to jointly develop new solutions that advance the industry.
To underline this with some figures, we have a broad and trusted customer base, including all the top 30 global pharma companies, as well as a total of over 1,800 customers. On average, our customer relationships span more than 10 years.
This partnership approach, combined with the broadest portfolio on the market, puts us in the best position to continue to participate in major industry trends and grow our HVS revenue share. As you can see, we are well on track to achieve our midterm goal of HVS revenues, accounting for more than 60% of our overall revenues. Most of you are already familiar with our HVS solutions, but I'd like to provide a brief reminder.
Our HVS portfolio includes all products that come with enhanced functionality, such as unique coatings or ready-to-use solutions. So, we see significant market demand for these products, which is why we project a compound annual growth rate CAGR of 12%, which outperforms the market. These products address specific customer needs and reduce their costs, allowing us to command higher prices and achieve superior margins.
To put this into perspective, HVS products deliver margins that are 10 percentage points higher than our average, with prices ranging from 5x- 15x higher than those of our standard solutions. To serve the high market demand for HVS, we consequently execute our strategic approach and develop products and solutions that meet our customer needs. So, before we dive into our innovation highlights, I'd like to give a brief overview of existing business segments. Our Drug Delivery Systems segment, short DDS, focuses exclusively on HVS, including glass and polymer prefillable syringes, serving rapidly expanding markets like biologics.
Drug Containment Solutions segment, short DCS, contains core products such as vials, cartridges, and ampoules. And on top, this segment also includes a large amount of HVS products such as ready-to-use and specialty vials and cartridges.
Our recent innovations and product highlights underscore our commitment to addressing market demand and evolving pharma trends, particularly in HVS products across both our segments. As for our prefillable polymer syringes, our available capacities provide us with the opportunity to strengthen our BDM activities as business development activities and explore new markets.
This is exactly what led us to develop the recently launched next-generation SCHOTT TOPPAC infuse polymer syringe system for hospital use. This system addresses critical challenges such as medication waste, inefficient manual processes, and storage constraints. It may sound simple, but in fact, this product can be a game changer in an established market. It's much easier to handle, thereby reducing the risk of manual mistakes. At the same time, it increases the speed of drug administration, provides tamper-evident closure, and NFC ID chip in the label, which enables digitalization.
In short, we are helping to redefine efficiency, stability, and speed in operating rooms to enhance patient safety. So, while these polymer syringes belong to our Drug Delivery Systems segment, we are also seeing significantly increased demand for high-value solutions Drug Containment Solution segment. We are seeing high order intakes and have already closed large new orders. And this is particularly the case for our sterile cartridges, which we manufacture in both small and large volume formats. And these sterile cartridges are essential for safely storing GLP-1 drugs and other highly sensitive biologics, supporting the pharma trend of subcutaneous home care solutions. At the same time, we are seeing high order intakes for our specialty vials, namely our coated vials used to meet the rise of antibody drug conjugates, or ADCs in short. These drugs aim to revolutionize cancer therapies through a specific targeting ability.
During our full-year results call in December, I shared that we are undergoing sampling processes with over 50 companies that are developing ADCs. Though I can share that of the 13 drugs that are on the market, 12 are lyophilized to ensure drug stability, and almost all of these are stored in our coated vials. All these innovations show that our collaborative approach with major pharma companies, combined with our in-depth knowledge of the market, empowers us to develop customized solutions that precisely meet our customer requirements. Let's now turn our attention to our recent expansion projects during the last quarter.
So, to meet the increasing demand for our products and further accelerate our growth, we are continuously expanding our global production footprint. I would like to highlight two expansion projects in particular.
Firstly, our state-of-the-art production facility for prefillable glass syringes in Hungary, which is the second manufacturing hub for glass syringes besides our existing plant in Switzerland. Following the successful inauguration, we have now completed audits from several large key accounts and have successfully qualified multiple products. These are great achievements for our team on site and our entire company.
We expect the results of this to become visible in the second half of the year. The second expansion project I would like to highlight is our best-cost location in Serbia, where we Drug Containment Solutions like ampoules. This site has progressed as planned, and final preparations are ongoing during the year. We are looking forward to starting commercial supply mid of this year. This will be our best-cost location serving Europe.
With that, I hand over to Almuth, who will provide you with an update on our financials for the first quarter.
Thank you, Andreas. And also a warm welcome from my side. We appreciate you taking the time to join us today. I'm pleased to walk you through our financials for the first quarter of fiscal year 2025 in more detail. As Andreas already mentioned, we had a solid start into the fiscal year 2025 as expected. In the first quarter, our revenues were stable at EUR 230 million, reflecting a slight decrease of 1% year-over-year. However, at constant currencies, revenues increased by 4%. Our EBITDA amounted to EUR 58 million, resulting in an EBITDA margin of 25.1%. At constant currencies, we reached a higher EBITDA margin of 26.3%.
I will explain in a second the reasons for the EBITDA decline compared to the high comparative base of the same period last year. Our earnings per share declined by 35% to EUR 0.19, following the EBITDA decline and higher depreciation.
Our capital expenditures totaled EUR 21 million in the first quarter, which is EUR 7 million below last year and 9% of our revenues. However, our CapEx spending is strongly weighted to the second half of the fiscal year. I would now like to provide you with more details on our revenue and EBITDA development for the two segments on the next slide. You can Drug Containment Solutions, short DCS, in the dark blue bar, and Drug Delivery Systems, short DDS, in the light blue bar. Let's take a look at our top-line performance.
On a reported basis, you can see that our group revenues remained stable with a slight decline of 1% to EUR 230 million. However, at constant currency, we record revenue growth of 4%. This development was in line with our expectations and paved the way for our fiscal year 2025 targets.
We see a more substantial increase in revenue growth starting from Q3 2025, based on the additional capacities in glass syringes and sterile cartridges combined with secured contracts. The overall revenue was mostly driven by the DCS segment, with reported revenues of EUR 129 million, reflecting a stable performance year-over-year. However, at constant currencies, DCS revenues demonstrated a strong increase of 10%, mainly enabled by HVS products and ongoing vial ramp-up.
The strong increase offsets the adverse effects. Revenues in the DDS segment amounted to EUR 101 million, translating to a slight decrease of 2% year-on-year, or 4% at constant currencies. We saw a good momentum in glass syringes connected to high-demand trends such as GLP-1, as well as for subcutaneous administration. This almost fully compensated the lower demand for polymer syringes for one application. Now, let's take a closer look at our bottom-line performance.
Our overall EBITDA amounted to EUR 58 million, which resulted in a decline of - 20% and - 13% at constant currencies, respectively. The EBITDA margin decreased from 31.3% in Q1 2024 to 25.1% in Q1 2025. At constant currencies, the EBITDA margin was 26.3%. That is industry-leading. In our view, we achieved a strong EBITDA in Q1, as the mainly only on the year-on-year development is explained by the adverse currency movement. This is mainly due to the hedging and fluctuation in U.S. dollar and Argentine peso. Last year, in Q1 2024, we had a strong tailwind of a high single-digit million euro figure, while in this year's Q1, we had a negative impact of a mid-single-digit million euro. Excluding the high FX impact, we achieved a relatively stable operating performance. This is a strong result given the negative product mix and the ramp-up of production.
The profitability in the DCS segment was positively influenced by the benefits of our efficiency measures implemented already in the last year that are showing ongoing improvements, with further gains expected. This resulted in a DCS EBITDA of EUR 28 million compared to EUR 27 million in the first quarter of the previous year. Consequently, the DCS EBITDA margin increased 1.1 percentage points to 21.9%. This is a very good performance, considering that last year we received government grants, which are not available this quarter. The EBITDA and margin Drug Containment Solutions was primarily driven by a high demand for its HVS portfolio, such as sterile cartridges and coated vials. The DDS segment contributed EUR 34 million to the EBITDA, compared to EUR 40 million in the quarter of the previous year.
This resulted in a margin decrease by 4.6 percentage points year-over-year to 33.7%, mainly due to an adverse product mix effect. As previously mentioned, the decline was in line with our expectations, and its effect outweighed the good momentum in glass syringes connected to the high-demand trends, such as GLP-1. In addition, scale-up cost for capacity expansion in glass syringes impacted the EBITDA performance in DDS. On the next slide, I would like to give you some details on our cash flow and investments. In the first quarter of 2025, our cash flow from operating activities decreased by EUR 42 million- EUR 24 million. This decline was due to the lower EBITDA performance and a temporary increase in working capital. The higher working capital in Q1 was mainly impacted by a decrease in prepayments of EUR 30 million year-on-year.
Our total CapEx was EUR - 21 million compared to EUR 29 million, EUR -29 million in the same quarter of the previous year. These expenditures are primarily related to our expansion projects, with investments seasonally being higher in the latter part of the year. Due to the current investments, the free cash flow came in at EUR 3 million. With this, we continue to fully self-fund our strategic capacity expansions. Looking ahead, I would like to outline our targets for this year as well as for the midterm. We continue to prioritize profitability and sustainable growth for our business. In the first quarter, we experienced some expected setbacks, which offsets the good development in our performance. Q2 will likely be slightly better to Q1, as the same situations continue during the next quarter.
But due to signed contracts and increased capacity starting to generate turnover in Q3, we anticipate a stronger performance in the second half of the year with improved revenue and EBITDA margins. Therefore, we confirm our given full-year targets. We expect organic revenue growth in the high single digits and project an EBITDA margin of approximately the prior year's level, which was 26.9% in the last fiscal year.
We are committed to our midterm outlook, projecting organic revenue growth above 10% CAGR and an EBITDA margin in the low 30%. Beyond our guidance, I would like to comment on other financial figures for the fiscal year 2025. We are optimistic about maintaining our already strong HVS revenue share at approximately 55% and increasing it to over 60% in the midterm. We also expect our CapEx to amount to between EUR 160 million and EUR 190 million.
Let me also make some housekeeping comments. Depreciation is likely to increase compared to last year to a range of 7%-8% of revenues. Finally, we continue to expect a tax rate of around 20%. This concludes our financial updates. I will now hand back to Andreas before we start with the Q&A session.
Thank you. Thank you, Almuth. Before we take your questions, I would like to take a brief look at our priorities for the near future. Following the good start into 2025, we remain committed to our proven growth strategy and are confident that we can seize opportunities for future growth. We continue to witness robust and stable demand dynamics across major pharma trends. With our pure-play focus on injectables and our industry-leading product portfolio, SCHOTT Pharma is ideally positioned to capitalize on these opportunities.
Many of you are already familiar with the mega trends we serve. As I mentioned some earlier or discussed them in our previous calls, today I would like to focus on three of these trends and how we address them with our extensive product portfolio. Looking at GLP-1, the demand for these products has been enormous and continues to grow rapidly.
GLP-1 therapies, primarily focused on diabetes and obesity treatments, have gained new approvals globally and are now entering a significant growth phase. GLP-1 drugs also show potential for treating other conditions in the long run, such as different forms of dementia or Parkinson's disease. We see this trend as a major growth driver and as a company benefiting from the steep ramp-ups taking place in the industry. We support this dynamic market with our portfolio of prefillable glass syringes and cartridges as both non-sterile and ready-to-use cartridges. So, another significant trend is antibody drug conjugates that I touched upon earlier.
Clinical trials have demonstrated the potential for personalized cancer treatments. And to meet the complex requirements of the therapy, we offer coated vials in both sterile and non-sterile formats, ensuring drug stability during lyophilization.
We are optimistic about the increasing demand in this field and are already supplying almost all of the leading ADCs on the market. We are also observing a notable shift from intravenous to subcutaneous administration driven by technologies like Halozyme. And this shift saves both time and cost for the healthcare system. SCHOTT Pharma is ready to meet market demands with its large-volume prefillable glass and polymer syringes, as well as its ready-to-use cartridges. In addition to these trends, we continue to leverage opportunities in mRNA therapies, home care solutions for self-administration of drugs, and the manufacturing shift towards ready-to-use solutions and sustainability initiatives.
And given these robust market trends, we will continue to execute our well-established growth strategy based on trusted partnerships, innovations, and expansion. Therefore, we remain confident in our ability to sustain our growth trajectory both in the short and long term.
So, with that, I will conclude today's presentation. Thank you all for your attention. And before we take your questions, I would like to highlight our upcoming financial events. On May 15th, we will update you on our Q2 and H1 results. And on August 12th, we will report our Q3 results. And now, let me hand back to Tobias for your questions.
Many thanks, Andreas. Many thanks, Almuth. I'm happy to open the Q&A session now. Heike, our operator, will help you and us with the registration for the Q&A. Heike, please go ahead.
Thank you. Ladies and gentlemen, if you would like to ask a question, please press nine and star on your telephone keypad. In case you wish to withdraw your question, press nine and star a second time. One moment, please, until the first question.
Okay. Many thanks. I see the first people online here. UBS, please. Olivier Calvet, first question comes from UBS. Thank you very much.
Yes. Hi. Good morning. Thanks for taking my questions. I would have a couple, maybe first technical one for you, Almuth, on the first quarter. Could you shed some light on the volume developments in DCS in the first quarter? I see the organic number. That's helpful, but just wanted to get a better sense of price versus volume, and especially within DCS core, because I guess bulk is driving pricing up in DCS overall.
The second one would be on the FX impacts. So, both at the sales level in DCS and at the EBITDA at group level, I was just wondering if it would be fair to assume that this is mostly gone from the second quarter. And then more big picture on vials, you've given some color by region in the last couple of calls.
I was just wondering if you could also reiterate or give some information there on especially the EMEA in North America growth rates? And yeah, and final one just on GLP-1. So, firstly, would you have an update on the timing of your U.S. expansion in North Carolina? And secondly, do you include deliveries to compounding pharmacies in your overall GLP-1 sales in cartridges?
Thanks for your question. Let me start with the first two answers, and then I'll hand over to Andreas. If you look at the Q1 development in DCS, you have two aspects. There is a small positive impact coming from price, and the remaining impact is driven by volume. Relating this one then as well to your second question on the FX impact, if you look at the top line, I think we can say that looking Q1 compared to last Q1, we still had a strong impact of FX-related from the Argentine peso included in the DCS top line. But as we said last year, this impact is related more to the calendar year 2024 and should mainly be digested by now. We assume the impact going forward to be negligible.
If we then look at the impact of FX on the overall group level in terms of EBITDA, what we have experienced in Q1 is mainly related as a negative impact on the one hand coming from the hedging of the U.S. dollar, which we have seen from the movement of the, let's say, how the U.S. dollar has been revalued in comparison to the euro in the last three months or the first three months of this year. We have seen this impact.
What we would expect going forward, or at least what we have seen in January, that the impact should be significantly smaller. To keep in mind, when we hedge, we hedge to make sure that we compensate any impact from FX, which we see on the business.
And therefore, we think with our setting, which we have in place, that going forward, on the one hand, we keep our business safe from having an FX impact. On the other hand, as well, from our expectations, how the currencies will develop or what we have seen already in January, these larger impacts have not repeated so far in Q2. You're absolutely right. And with this one, I hand over to Andreas.
Sorry, just if I could just jump in on the first one. So, I mean, basically on my math, you've got -5% reported in the DCS core and +30% more or less in the DCS high value. But in DCS core, if we do, if we adjust for the FX, I'm just trying to get a sense of the volumes that you grew in DCS core. If you could give us a ballpark, if it's low single digit negative, low single digit positive, given that FX impact had a, or let's not call it FX, let's call it hyperinflation impact on the pricing side on core. If that makes sense.
I mean, yeah, what I can share with you that the price impact which we have experienced in DCS in the first quarter was a small single-digit million impact. The rest is related to volume, and I think the very positive impact to keep in mind as well, looking ahead, that we have seen in the first four months of this fiscal year, we have seen a strong order intake, especially in the core vials area, which almost 20% increase in comparison to the period of the previous years, and this makes us very confident for the progress as well in the coming quarters.
Okay. Thanks.
Okay. No, I would to go already over my first question, but it doesn't matter. Yeah. So, I know we are really optimistic about vial volumes because the last month, we really see significant improvement in order intake. Yeah, that we'll not realize immediately, but within the next few months, it will realize. And that is something which is for the first time really so significant. I would say it already is a number. We are more in the range of the high double-digit teens, yeah, at the moment, almost 20%. Yeah, and that is true for all regions, especially EMEA and North America are recovering strongly. Yeah, so which is good.
And that.
And.
Sorry, sorry if I can just jump in. So the high teens, is that also the level you're seeing in EMEA and North America? And is that a number you're saying on volumes? So that's bulk, right?
Yeah. What we have said in the past is that already these regions like South America, Asia, Asia-Pacific, and China, and India, they're already back. Yeah, India, we have also double-digit growth. So, but they are back on normal, I would say, or back on track. Yeah, and the recovery is now coming from North America and EMEA in order intake. Yeah, and that is something we realize then probably in three months, yeah, it's average. Yeah, so positive, not like in the past where we said that especially EMEA is lagging behind.
That is now. It looks like it's getting back. Yeah. Okay. The other one was about the CapEx in the U.S., North Carolina side. That is still the same. We are really looking at the most recent developments, as customer terms, for example, which will be definitely one of the next questions.
But you know that, and that is, of course, something we observe carefully. And on the other hand side, you have now also big subsidies because they expect more problems in the future, probably pandemic problems. We don't know that today, but it's expected. And I think at the moment, they are something like how much is it? EUR 6 billion, which is available for production. So let's see. Perhaps that is also influencing our opinion when we start. But at the moment, we are observing that and waiting a bit. And we don't have the need to make a decision today. We are not under pressure because we have capacities now due to M&A, as you know, in Müllheim. So we are not forced to take an immediate decision. We can wait a few months and keep you posted on it. And then the last one is about compounding.
Of course, it's also some. Everybody knows that the topic compounding of GLP-1 drugs. We are also benefiting from it, not to a large amount, but to some amount, but it's mainly vials and sterile vials. So it's good, but it's not so significant. Of course, we know that's over soon. Yeah.
Thanks.
Okay.
Thanks .
I hope it's answered.
Thanks.
Okay. Thanks very much. Next question comes from Falko Friedrichs from Deutsche Bank. Please go ahead.
Thank you very much. Good morning. My first question on the destocking trends you're seeing in the industry, I think it would be very helpful if you can provide a bit of an update here in terms of where the industry stands and where you stand specifically. Secondly, can you confirm that your remaining big mRNA contract continues to be watertight? That would be helpful. And then thirdly, on the polymer syringes, outside of the mRNA business there, could you tell us who exactly is ordering these syringes today in other indications or other sort of groups? I think that would be very interesting to hear who specifically is going for these syringes today already. Thank you.
Okay. Destocking, Falko, we had these two effects. As we always explain, we have the destocking on the one hand side, and we have the inventory as a safety stock reductions on the other hand side, as a second effect, which we all underestimated a little bit at the beginning. Yeah, I would say it's over. Yeah. Of course, we have to see if these positive trends, which we have seen in the past months, as last four months, we have, of course, you know already January numbers. So it's positive. So I would say there's probably a single customer here and there who's still doing some actions. But in general, I would say bottom is definitely reached, and we will see increased sales within the next months. Yeah. So in all regions. Then can you confirm M&A contract? Yes. The M&A contract is solid.
Also, the question is about Moderna and Pfizer, of course. And as you know, we have good contracts in place, which are safeguarding us in a way. Yeah. And see also the newest numbers, they are fully reflected in our guidance. There's no surprises from that side. It's all good. And about other applications, I can also only remind you what we said about Müllheim, that we did these or we made that decision about Müllheim long before M&A. Yeah. And M&A was a tailwind, additional tailwind, now it's an additional headwind. But all in all, we are serving many applications. I reported about the newest kit. Yeah.
That is definitely here for SCHOTT TOPPAC and infuse for operating environment. That has a very good potential as a new application. But we are serving many others like cosmetics, as well as aesthetics, as well as Botox, for example.
We have lots of mental diseases, which we are serving, like schizophrenia and many other applications. And what we also said and did, of course, is that we accelerated our business development activities last year already. Sorry, not this year, last year, when we saw that there's a declining demand to compensate for the M&A effects. Yeah. So it's all on three several applications which we are serving. Also, I would say good and in line with our expectation, definitely.
Okay. Thank you. And maybe one quick follow-up. How much longer do you think it takes until you have fully offset that one polymer contract that fell away last year? How long does it take to fully offset that with these other applications roughly?
Until the M&A effect is fully compensated? I would say two to three years as we will grow, of course, the next years already. But to fully compensate for the M&A effect, something like two, three years until you have filled up these different applications. My expectation.
Okay. Thanks a lot.
You're welcome.
Next question comes from James Vane-Tempest from Jefferies. Please go ahead.
Hi. Thanks so much for taking my questions. Three, if I may, please. Firstly, just your comments on a stronger second half, and you also talk about a stronger intake in core vials. Can you confirm that at least the orders you're getting are for a much shorter length than what you've had in the past? My understanding is the industry doesn't have a lot of visibility given there's excess capacity in vials. So if that's the case, what gives you the confidence that that will continue in the second half of the year?
My second question is, are you seeing any impact yet from Stevanato having l aunched their Nexa Flex 1 mL polymer syringe? And I'll come back for a follow-up. Thank you.
Okay. I take these two questions as for vials. First of all, it has really a broad customer base behind. Yeah. We have 1,800 customers in total. I don't know precisely how many are buying vials. Let's say 1,200 probably can be. So it's a huge customer base, which is, in the end, very stable.
So, of course, you are completely right with the visibility. The visibility is very much reduced in comparison to COVID times when we had delivery times of a year. Now it's something like, let's say, three months. Yeah. So that is, of course, you have not to order book full today. That is clear, and nobody has it. And it's impossible because just lead times are too short. But what we can measure is, of course, order intake.
And order intake, we have a very good view of how the market and the year is developing. And that is the reason that we are very optimistic that the core vials will recover. We have not planned with super extraordinary numbers, but of course, we have planned with growth. And it looks like that is realizing, which is positive. Yeah. First of all, yeah. And then the second question, I'm not 100% sure if.
I can repeat the second question. Nexa Flex, I think Stevanato has launched a 1 mL polymer syringe. I guess you are very dominant in kind of polymer syringes. I'm just curious if you're seeing any impact from that launch, which I think was towards the back end of last year.
No, there will be no impact. I looked at, there are several competitors already. Yeah. That is not only Stevanato. Becton has a polymer syringe. West has a polymer syringe. Gerresheimer has a polymer syringe. At the end of the day, we are outperforming all these competitors. We are dominating the market with a very high market share. And it's not so easy to beat us, not in cost, therefore not in price, not in quality. Very difficult.
Thanks for clarifying, and then my follow-up question is just on your margin guidance. Around last year of 26.9%, we understand it's in constant currency, but at least kind of looking at the impact in Q1 of a 1.2 impact, are you able to give us a sense if the current rates were to hold for the rest of your fiscal year, what would be the current impact to the guidance which you've given? Thank you.
So if you look at our Q1 performance, well, let's say, first look at the overall year. When we split our year and made our, let's say, statement about what guidance to reach for this fiscal year, we knew that we would have a softer start in the fiscal year with the first two quarters and then show both revenue and margin expansion significantly in the second half of the year, so what we have seen in the first quarter at constant currency is absolutely in line, even slightly better what we initially had forecasted ourselves, and if you look at the FX impact, we believe the impacts which we have experienced in Q1 will not repeat going forward. The one thing on the top line where we said it's related to the Argentine peso, which was related to a decision which is going back to December 2023.
So this one is now digested. And that's something what we see as well if you look at our general figure. And in addition, if you look at our EBITDA impact coming from FX, we have seen as well so far in Q2, let's say, nearly no impact. So no repeat for what we have experienced in Q1 so far. And therefore, we are confident that we will stay at those levels going forward.
Thanks. Just to clarify then, when we think about the full year, we should just have that impact in Q1 with no further expected impact in Q2 to 4Q to kind of imply what that overall FX impact would be for the year. Is that the right way we should interpret that?
True. We only know Q1. We haven't seen this repeated, and we don't forecast any of the impacts.
Thank you.
Next question comes from Ed Hall from Stifel. Please go ahead.
Perfect. Thank you very much. And my first question just beyond the cartridges, the cartridge market and HVS changes that you're seeing there. I think it was my understanding that unlike vials, it's more of a concentrated market. Is it these clients that you're in active discussions with to change products to HVS? And can you just give me a sense of the pricing delta you have between specialty cartridges and regular cartridges today?
That would be my first question. And then just quickly on sort of order intake that you've mentioned there very clearly, but lead times have obviously been suppressed both for yourself and suppliers for quite a while now. So can we see a quicker than usual P&L impact from this volume increase? Thanks.
I have to ask because actually it was not that good. If I got it right, but please correct me. You asked about concentration of customers for the HVS segment in DCS. Is that correct? Or was it in general?
Sorry, just on the cartridge market holistically and sort of the consumers of cartridges in terms of the whole market, it was my understanding that you mentioned the 1,200 customer base for vials. It was my understanding it was a lot more concentrated in cartridges. Is this true? And then obviously, any switch of customers to HVS would cause a larger delta. And then again, just a question on sort of what is the pricing premium of a specialty cartridge versus a regular cartridge?
Okay. As in cartridges, yes, you have a more concentrated market because today, basically two applications. One is diabetes, and the other one is dental. Yeah. So these were in the past the two main applications. Of course, now obesity comes into play. And at the moment, you have these two players which are dominating the market. Yeah. And we are exposed to them. That's absolutely true. Yeah.
And we have closed huge contracts with the two players. And then, of course, we try to be very close to the new entrants. Yeah. But cartridge is more concentrated, completely right. And then the second one was about that was order intake was.
Yeah. So just, yeah, quickly on the pricing delta today for specialty cartridges. And then my second question was just on order intake. Yeah.
Okay. Order intake is enormous. That's what I say. Yeah. It's very huge. Everything is sold, but we produce for special cartridges very positive. And the pricing is in the same range as we indicated on the one slide, 5x- 15x against normal products. But we don't disclose details here, of course.
Okay. Thank you.
Yeah.
Next question comes from Curtis Moiles from BNP Paribas.
Hey, good morning. Thank you for taking my questions. I have a couple, please. The first one, I just kind of wanted to. I think I'm understanding that obviously the second half of the year is going to be much stronger, but I wanted to get a better idea of what you're kind of thinking for Q2. Should we expect a similar run rate to what we saw in Q1 in terms of growth and margins, obviously excluding that FX impact? Or would you expect a little bit of a step up here? And if so, what would kind of the main drivers be for that? And then secondly, I want to touch base on that customer order for polymer prefilled syringes where the volumes were reduced this year. Just to double-check going forward, have you kind of touched base on what the run rate will be for demand there?
Is it going to be kind of similar to what we see this year, or will that kind of eventually come up to a higher level? Thank you.
Thank you, Curtis. So let me start with the first answer, and then I hand over to Andreas. So if we look at our Q1 in comparison to our Q2, we think it would be, let's say, very similar to Q1, slightly better in terms of margin development, but really to be on the safe side. So if you want to be conservative, assuming a performance as in Q1, let's say, excluding any FX impact, it would be realistic to assume that this is a realistic expectation for Q2 in terms of profitability. And in terms of growth, we assume as well that we have a similar growth rate as we have experienced it in Q1.
Okay, then I take the second one about polymer syringes. This year, as you know, we are forecasting a very reduced demand for polymer syringes, and for the next years, we are cautious with the demand. Let's say, yeah, explain it that way. Yeah, then we will see, of course, during the year if they are really successful and how successful they will be, especially with the combi shot and etc., but we are more, let's say, cautious in general, and let's see what's coming next. Yeah.
Okay. Yeah. That's very helpful. And if I could squeeze in one more here, just going back to the destocking or the vial demand overall, I think you've obviously given a lot of promising commentary here, but based on what you're seeing today, would you say you're relatively confident that we should see a normalization in fiscal year 2025? And then for vials, 2026 will be fairly normal at this point?
No, I would say it's normal. Yes, that is my estimation. As in not the first quarter, but in second, probably also not, but then it will definitely go up. And it will normalize. Yeah. Very few exceptions, some customers, but not influencing the overall demand, I would say.
Thank you very much.
You're welcome.
Next question comes from Marianne Bulot from Bank of America. Please go ahead.
Thank you very much and good morning. Two questions for me. The first one on your ramp-up cost. Could you quantify the impact of the ramp-up cost in Q1 and whether that was in line with your expectations? And what impact do you expect for the full year and whether we should see ramp-up costs more front-end loaded? Second question is just quickly on the working capital movement. Could you provide a little bit more detail on why you recorded the lower payments into Q1 and whether it was simply a question of phasing between Q1 and Q2? And how should we think about working capital movements into the rest of the year? Thank you.
Thanks for your question, Marianne.
If we look at the ramp-up cost, so we had a small single-digit million value for ramp-up cost experience in Q1 for this fiscal year, and this was in line with our expectations. For the overall year, we said we assume ramp-up scale of cost to, let's say, similar extent to what we have experienced last year, but with a different phasing. So if you compare Q1 this year with Q1 last year, so we had higher ramp-up costs included in Q1 2025 than we had last year. And in terms of your question on working capital, if you look at our working capital, we include as a position the received prepayments from our customers on our investment as a negative position in the working capital. And that's just timing of the contracts. When exactly do we receive these prepayments?
We had received a larger prepayment in the first quarter of last fiscal year, which we haven't had this fiscal year, but this changes quarter to quarter. That has nothing to do with a pattern. It's more the individual timing of the contracts which we signed.
Okay. Thank you very much.
Thank you very much. The next and last question comes from Jan Nguyen from Citi. Please go ahead.
Okay. Thank you for squeezing me in for the last question. I just have one question, please, on the margin building blocks for the rest of the year. How do you think about the benefits from new volumes coming in the second half? But at the same time, I believe these volumes for DDS will come from glass syringes, so still not HVS. And also for DCS, with the recovery in core vials, how would that partly offset the increased volume in the second half as well? Thank you.
Thanks for your question. So let me start to answer them. I mean, if you look at the building blocks for the margin expansion in the second half of the year, the majority of it is related to additional volumes, as you already mentioned.
And let's say to a smaller extent that there will be less ramp-up or scale-up costs because we are already running the new productions. The biggest driver is the glass syringes, part of DDS being 100% HVS. And this is additional capacity being online generating revenue in Q3. And therefore, we will see there both from the side of having additional volumes and being HVS and therefore having a superior margin in comparison to core, a positive driver on our, let's say, margin overall.
Similar is true for our sterile cartridges, where we said that's another strong growth driver. While we are ramping up the capacities, improving the efficiency of our production, we will be able to deliver more as well with a very attractive margin. In addition to that, one comes as well that we are seeing continuous improvement on core and especially as well on core vials.
As Andreas already mentioned, we have seen this much higher order intake in the last months. And this will, with a few months' delay, basically result to be turnover. So approximately three months later, we will see this impact as well in the revenues. And this will contribute as well on the one hand to the volumes.
And on the other hand as well, the more we produce, the less underutilization costs we have and therefore be as well a positive impact on margin development. Thank you.
We are good on time, better than expected. So we can allow one more here. Falko Friedrichs from Deutsche Bank, please go ahead. Falko, we cannot hear you.
Oh, sorry. Can you hear me now?
Much better. Thanks.
Great. Sorry, I was on mute. Just thank you for taking my quick follow-up. Just one last one on FX for Almuth. Last year, you told us that you found a way to tweak that whole construct in a way that it should minimize these swings, right? These quarterly swings. Now we've had a pretty big swing again in Q1, which, I mean, distracts quite a bit from the otherwise pretty good results you delivered.
Are there ways to further tweak this construct that you have in place there? Or are these swings just something that over the next two to three years, we sort of have to live with that those could just occur on a quarterly basis here and there? Thank you.
I mean, looking at hedging, there are different opinions about to what extent you can hedge, doing no hedging or doing 100% hedging. So we are somewhere in the middle. The biggest impact we have experienced is on the U.S. dollar. And for U.S. dollar, we have a hedging ratio of 30%. And when we look back last year, the hedging quota was much higher, and we have reduced it to avoid having larger swings.
Nevertheless, even having a lower ratio than last year, we still have experienced a swing. So it's an ongoing topic which we look at and where we try to find ways to minimize the impact. But so far, we feel it's best to do a hedging, but to look at the quotas which we have.
But it's ongoing under review, and we are looking whether we find better options to reduce the impact as we do not want to have it. That's absolutely true.
Okay. Thank you.
This concludes our call. Thank you very much for your interest, your questions, and your time today. We look forward to meeting you in person in the upcoming conferences in March or latest on May 15 for our half-year results. Thank you very much. Have a good day and goodbye.