Good afternoon and good morning. This is Harald Hasselmann, CEO of Eckert & Ziegler speaking. I welcome everybody participating in today's investors' and earnings call. It's 3:00 P.M. Berlin time, and that was the time for the invitation. I welcome everybody. For those who are familiar with the practice, together with my colleagues here, in particular, Karolin Riehle taking care of the entire organization and also the Q&A session. It's also Julian Schröder with me, responsible for finance and controlling here. That should be the team answering later on the questions you might have had after my presentation. I'm going to share with you for the next 20 minutes, and we will enter to the second part of today's session, which is then taking up your questions.
If you have any questions, it would be good if you then later on raise your electronic hand. That gives us the opportunity and the possibility to see who is in line here coming up with a question. Let me share the screen with you, and I ask everybody to put your microphone on mute. Hopefully, you see here the slide. That is our building. You know that we have this time, we have two disclaimers. This is the normal one, which you are used to. The second one is that by April, in a couple of days, due to the ESEF tagging, the official statements, the financial statements with all the approvals will be published. There is a slight delay in the final stamp. That has basically no effect of today's numbers being presented. The team, Gunnar for operations and medical, Frank Yeager for the isotope business, myself, you know.
This is the slide, you know, and for those who are comparing it with the slide of last time and the previous ones, you see that this slide gets more busier than ever. That is a good signal because, despite all economical challenges which we are facing, radiopharmaceuticals is continuing being an increased business. Also, our list of competitors is increasing. If you have a look here to this slide, in particular, those where we are focusing on lutetium, actinium, and our increasing business of contract manufacturing, all these slides are becoming more crowded. You can follow on our press releases those companies who have been willing in being published on that cooperation in which we have entered together with them for lutetium. You see the latest one was AtomVie, but also Bicycle Therapeutics for actinium has been added, Actinium Pharmaceuticals. Also, the CMO part, you see this Bicycle being added compared to the previous presentation.
Our business concept, business model remains unchanged now for really a long time, for more than 30 years. It is both the industry part and the pharmaceutical part. Pharmaceutical part is up off this slide. The industry part is on the lower line of that slide where you see here. Let me put the laser. Here, that is the industry part, and this one is the pharma part. The latest highlights of Q4 of last year, Julian has picked three events. One was, of course, very important, the production, the initial, the ignition of our actinium production with our partner in Czech Republic. Also, our lutetium product, lutetium-177 with the brand name Teraliga , has been approved by the European Commission.
Followed by individual country-by-country approvals, it can be now sold as a drug in all these countries. We have had the license deal in Q4 for the tech transfer with the Australian company Telix. These are some events. Now looking to the full year's numbers of last year, you see that at least in terms of revenue, it remains a head-to-head race between isotope products, the green one, and the medical business, the pharma business, 50/50. In terms of profitability, which you see here on the right part, the revenue is equal, but the profitability is higher in medical with less staff, less employees. We are generating an EBIT adjusted of EUR 40 million approximately, which you see here, EUR 40 million adjusted and EUR 30 million in the isotope business. Let's look to the numbers with more details.
Revenues increased by 20% from EUR 246 million to almost EUR 300 million in last year. This is an increase of 20%. For those who are following us now for the last year, you have recognized that we changed from net income to EBIT adjusted because this gives you as a potential investor the possibility to compare Apple to Apple. There we see a strong increase in profits by 40% up to EUR 65 million of last year. That is approximately EUR 20 million more. That enables us also to have a margin of more than 20%. We always had 20% at the hurdle, the benchmark we want to at least achieve. Last year was extraordinarily good, and we achieved 22%. Here, the net income is more complicated because it is with and without our continuing operations, i.e., Pentixa and others. That is just for information purpose.
Looking into the two segments, that is, of course, more interesting for those who are interested in the product portfolio of medical, there the revenue increase was almost 30%, 29% to be very precise here, up to EUR 150 million almost. Most of that increase was generated by a strong increase, A, in our gallium generator, but also in engineering. Our Dresden company, ITD, also contributed to an increase in that sales performance. Really an outstanding year in the medical business. That is also then reflected if you look to the gross margin. There we have almost an increase of 60% from EUR 25 million to EUR 40 million. That is the increase in the EBIT adjusted. That is good because that enables also us to generate cash, which we will need for further expansion.
You see the reasons here, what was happening, gross margin, the increase, and that is basically to both the price effect, but also then to the actions which I just mentioned. Net income, I will only report here for those who are interested. Isotope product, the other also a strong increase. Normally we say that the isotope is growing by GDP, global GDP. Here we have had a double digit, also EUR 150 million almost, a strong increase, FX, foreign exchange adjusted by 30%, in particular because oil well logging, our sources, our oil well logging sources were stronger than last year with 71% compared to the previous years. Also in other smaller areas, life cycle management and strong sources as well as SPECT business, that is the technetium generator, a strong increase here in that areas. In terms of profitability, also uptake from EUR 25 million to EUR 31 million.
That is, gross profit was increased due to the stronger sales, but also to the product mix. A strong product mix was supportive for that really extraordinary result for my colleagues in North America. Looking to the bridge from the normal EBIT to the EBIT adjusted, we have more lines here which could be filled up. If you have a look at what really happened, then you see that is the EBIT reported, EUR 35 million. There were some adjustments to be taken, in particular some impairment losses, which we took care of. If they are readjusted, then we come to the EBIT adjusted of EUR 39 million compared to last year in the medical area of EUR 25 million. In the isotope business, I want to point out here the hyperinflation topic, which contributes to an adjustment of EUR 2 million compared to EUR 1 million in last year.
That is the Argentinian hyperinflation, which still causes troubles and is very annoying that we haven't got rid of that yet. I'm confident that that number will be slower in the year 2025 due to the economic recovery process in Argentina. Here you see then the overall adjustments for the entire group, and that is added here, and that leads then from EUR 60 million to EUR 65 million, basically because of the two action items I just mentioned. If we go to a regional split, what's happening here, we have had a double-digit growth in Europe. Europe represents 36%, 1/3 basically of the entire revenue, whereas America, South America, are taking 50% of the entire revenue of Eckert & Ziegler.
Here in particular of the growth momentum of the generator, but also in South America compared to last year, we see a good performance in the sales revenue. Asia growing by 30%. I think if I recall correctly, last time I reported this number, it was also double-digit, but only 12%. It is increasing. It is now 40%. Asia represents really a good piece of the entire pie here, of the entire cake with 40%. That is mainly coming from China. Middle East, still low. It is growing, but it remains a low part. Our radiopharmaceutical business, that is the composition of the various isotopes, Yttrium-90, lutetium, actinium. The gallium generator was also the technetium generator, but also increasingly contributing by CMO activities, contract CMO activities, and also our ITD business, the engineering part. Strong increase from last year, EUR 85 million to EUR 125 million. So 50% increase.
Basically now we can say it's purely organic growth because the acquisition of Tecnon uclear, which you could have seen here, is already two years ago. That's why that growth was purely organic growth. Here you see the quarterly split, in particular to point out that Q4, extraordinary high. That's why all in all 47%, but also due to a very strong quarter in the last year. The balance sheet, how does the balance sheet look like? You might have a look to one item, cash and stocks, important. Then receivable and inventory remains basically unchanged to the last periods. Loan, we have continued to reduce our loan. It's EUR 20 million now.
That will probably go down a little bit further, but there is no need now to cut all the loans away because the interest rates basically which we are paying is in the same range of what we are earning with our cash. It does not make a big difference. If you deduct EUR 20 million from the EUR 120 million, then it is a net cash slightly below EUR 100 million. Overall, a long balance sheet with EUR 440 million. You see the split here. Fixed assets, of course, this is all based due to our investments. Let's have a look to the KPIs, the most important KPIs. I mentioned already EUR 65 million last year EBIT adjusted. Cash flow, strong increase up to EUR 77 million. Cash, I talked loan equity ratio still above 50% and headcount stable with around 1,000 employees worldwide. Now, most important, how does the outlook look like?
Here you go. The guidance for this year will be an increase up to EUR 320 million and EUR 78 million EBIT adjusted. Those who were looking to the numbers which were floating around in autumn of last year, that was basically in the area between here and there. Now we have a super result of 2024, and we are also very confident that in 2025 the growth will continue. That is why as of today, our guidance based on a specific U.S. dollar, Euro exchange rate should at the end of the day come up with EUR 320 million. You see the split, how the profitability, the profits are split at EUR 50 million by medical and EUR 30 million by the isotope. The rest is here the holding with minus EUR 3 million, adding up to the number. This is in a nutshell the as of today's status.
For those who are following up, the next big call will be May the 13th. Hopefully it is not a Friday with the Q1 report. There are lots of conferences organized by various banks, including Hamburg and Frankfurt, but also in New York. For those who are interested in our shareholder meeting on June 18th here in Berlin, you are more than invited. Thanks very much. I stop here now sharing my screen and will then open the floor for all your questions. Hopefully you will shoot into our direction with all good comments and good questions. Happy to take them. As usual, it is Nicolas raising his hands already. Nicolas, here you go.
Hello, thanks for taking my question. Maybe a few from my side. The first one will be on the guidance for 2025. I believe on the slide that you showed, you were not showing breakdown on top line between medical and isotope segment. Could you give us some maybe insight on how we should think about the two to get to the top line growth that you have shown? Also still on guidance, the adjusted EBIT target seems quite high compared to consensus. Could you help us to understand what's the gap that will make you reach this, let's say, 24% adjusted EBIT margin for this year? A final one, just on Q4, what drove this very strong performance? Should we expect maybe some correction or if it was stocking effect, things like that, that could impact 2025? I think I will stop there.
Great. Okay. Yeah, I can give you an idea about all the three topics you were mentioning. And Julian for sure from the financial point of view will also add into my answers. First, the guidance. Yes, right, you are. We are not going up here now by product, by product line or even segments-wise. Now, basically the general story for IP is that we want to grow with GDP, worldwide GDP. If you take the number of last year for IP, multiply it with GDP, you can basically come to a range in which IP should develop. That will be a normalized growth. The remaining part will come from the medical part. The margin of 25%, 24%, yeah, that is ambitious. That also brings here some tears in my eyes because I said 20% is the benchmark we want to achieve.
24% is really something. There is one slide. I don't know whether, let me check that it's good that you bring up here. One second. Here. This is a slide which was published recently. And you see here all the pharma companies, whether the numbers are true or not, no idea. But at least we wanted to check in which range we are playing with 22% of last year. And you see here that is the range of companies we are currently. Now, if you go here up even by 24%, then we really come to in a range of Roche, supposedly one really big pharma player and known for high profits and high profitability. That is an ambitious target. We shouldn't take all these numbers here for granted because I never believe in a statistic which you have fooled by yourself.
It looks quite reasonable and EZAG already is in a very good range. To then continue even in further growth of 2024 is ambitious. We are quite bullish because also, you know, that we have some license deals. One is with QKM and the other is with Telix. There we also generate income and the costs are also within a certain corridor. That is why I'm confident that the range which we are publishing here with the normal corridor plus minus a certain percentage which we are also giving out with the guidance should be achieved. Your last question was Q4 versus Q1. That is a difficult, but also a very important question.
The message which we gave out earlier on is that whatever happened, in particular the cyber attack or other issues with production here facilities will not change the overall good outlook for Eckert & Ziegler for the years to come, in particular for the year 2025. Now, the Q4 was really strong due to some delays in the production of the gallium generator in Q1 and then shipping and sending out and being something on delay. There is some kind of postponement in shipping out the generators in Q1 to Q2. If Q1 numbers are going to be published, then this should be taken into consideration. Overall, the performance will be, as I just mentioned. Okay.
Maybe if I can just have a follow-up question. Just to come back on the EBIT target, so I guess it's the one-off that makes the bump to 2024, or there is also contribution from a better profit mix between medical and IP on top of that?
It's normal then also as in the past. Now we switch from France to Switzerland. And here is the good representative, Jean-Marc.
Yes, now it's good. I still struggle with a couple of things. I mean, medical, the growth has been nearly 30%, right? Then you give us the radiopharma sales, which have gone from EUR 85 million to EUR 125 million. I know that radiopharma, because the Argentinian business is not a top product, but it is accounted for in radiopharma. It is a bit dangerous. It is fair to say that the rest of the medical business has been down quite a bit. Is this correct?
I wouldn't say down. I wouldn't say it did not contribute to that growth momentum proportionally. So lutetium, percentage-wise, the growth of lutetium was super, triple digit. In terms of real money, we are still below our expectation. The growth in actinium, 1,000% probably, but still in low absolute numbers. That has then some dilutive effect of the overall percentage, of course. It depends whether you look to absolute growth or to, I wouldn't say down, but the others didn't contribute like the guidance.
No, but I was referring to radiopharma and then the rest, which is also booked in medical. I mean, the radiopharma growth was huge. I mean, it was 48%. That is very solid. Maybe coming on to that quickly, that is a EUR 40 million, absolute, EUR 40 million more sales in radiopharma than last year. I mean, from EUR 85 million to EUR 125 million, right? That is basically exactly EUR 40 million.
Is this a complaint?
No, no, no . The thing is, you then try to give us the highlights of what has been growing. And then you're talking about, I think the generators were EUR 14 million sales in engineering, EUR 7 million, radiation therapy, EUR 2 million, etc. I mean, if I add all this up, that brings me to around EUR 22 million. Where are the other EUR 20 million? I mean, because these are the biggest products, right? I mean, the generator is by far the biggest product. The engineering services, I would say, are quite considerable. But we're still missing some EUR 20 million in sales growth. I mean, it cannot be lutetium. It cannot be actinium. What is it?
Okay, okay. Yeah. Julian, without getting going too much into the detail, perhaps you want to give some more light to the shadow which Jean-Marc is putting here on my slides.
First of all, hello to everybody. Actually, you named it. There are other isotopes. You say it cannot be coming from those, but it is coming from those. There is coming, we have talked about the license deal with actinium. For sure, this is also related to actinium. It is not a secret. You have another EUR 5 million from actinium, EUR 5 million plus. You talked about the SPECT business. We had a devaluation last year in December, which gave us a little back wind, if you want. This also comes up with around EUR 10 million in comparison to last year. You are completely right in your analysis. Saying this cannot come from those is wrong. It is coming from those.
Okay. Actinium obviously also a big driver here. I understand that. I forgot about that. I mean, it wasn't listed on the chart. This is why I kind of forgot about it.
Yeah, sure.
Why is it not on the chart? Because the business of Eckert & Ziegler is both selling isotopes, but also going into license deals. They have always done license deals. When they are in that part, then we put it there. If they are in the IP part, we have also done license deal there. We would show it at a different place. That is why it is not an extra business unit. It is part of that. Also in 2025, we have done another license deal with the Chinese company QKM. That will then also be presented and shown up there under the radiopharmaceutical.
Okay. If I may, an additional question from my side. I mean, the write-down of this Atom Mines business or so. I understood that this is quite important in your lutetium value chain, but it does not seem to be working, right? This is why you have written it off.
The expectation for atom mines were higher than we currently see the situation. The accounting rules are very strict. We tried to accomplish with these lines. If you do not have proven evidence that 100% it will work, we rather go on the cautious side. That is why we have written it off. The project, it is still continuing. It is still running. At a certain time, the accountants, the auditors want to see yes or no, pregnant or not pregnant. This is the situation. The project continues. Business-wise, that is not an investor's good. Business-wise, we have enough ytterbium on stock to cover all the upcoming needs for the production of lutetium. The in-house production would have had two advantages. A) Potentially slightly cheaper than buying it on the spot market. B) Having an additional source, an internal source, to be more independent from an external supplier. Now, the market is much more relaxed by now. There is enough ytterbium on the market. It's not a shortage there. That's why business-wise, I'm not afraid. The project continues. We took here the opportunity then to say also, okay, now as of today, it has not fulfilled all the milestones. That's why we took he re .
Okay. If I may, a third question. I think it's more for Julian, that one. The reserves that you accumulated this year, I saw quite an increase compared to 2024. I'm talking about the reserves for the build-down of your facilities, etc., and things like this. That was around EUR 12 million last year and has increased to, I think, around EUR 19 million this year. So EUR 7 million more, which even with growing sales, in percentage of sales, it makes actually 1.5 percentage points on EBIT. One could argue that the EBIT should have been much better. Maybe there is a good reason why you are more cautious on reserving. Is this continuing into 2025?
Shall I hold?
Yeah.
There are for sure different reasons for that. It's not just us being cautious. It's external costs that are driving this, first point. It is interest which is driving it. It is new facilities and new production lines that we are starting with. Actually, those three in combination, and for the cost, take one example, the Konrad containers . We get price increases from around 20%, 20%+ last year, this year. Such effects showed levels.
Okay. It will remain at this higher level, we should assume.
Yeah. Yeah. The price increases will continue. That has to be incorporated. That is part of the business. That is why it is also important to have enough cash or asset to reflect that or to mirror these provisions. That is why we are quite confident with this individual balance between accruals on the one side and cash on the other side. It is part of the business. It is good that you ask about it, but it is also very obvious that accruals is as it is.
Okay. Thank you.
Good. Karolin, do you see here more?
No . Oh, yes. One question is coming from Jan Van Tomme. The floor is yours.
I have two questions. On the cyber attack, can you maybe give some more an idea of the size of the disruption? Is everything okay now? Also, what will be the exceptional costs that we will see in the results? That is one question. The second one is on the CapEx plans for this year. What amount can we expect? Where will the CapEx be?
Yeah. Okay. The cyber attack, Jan, is extremely awkward. On February 3rd, when we came here into the office, everything was pulled down and tight. No access, basically, for some days, telephone was not working, air conditioning. Everything really was a mess. If you ask me now, is everything okay, then the question is, it is okay to that extent that we can produce, that we can ship, that we can invoice, that we can communicate. All data for the last 250 years back on track and all servers being completely recovered, that will still need some more time to make sure that my mail from January 1st, 2012 is still visible. We are working on that. All the operational business was basically not interrupted. We could really start after some days where we had chaos here. We could settle all the activities.
We had a super task force, internal people and external people helping us a lot. That is why we made it public, the cyber attack. We made it also aware to everybody that there should not be any business interruption in the midterm. Also financially, that should not bother the overall situation for 2025. Q1, as I mentioned, there will be some delays from this quarter to the next quarter. You will probably send me quite a shitstorm after the Q1. That is, as I explained, the overall cost. We have to see what the costs are. That is, of course, with a new server and with external consultant. That is more than accrues from Hamburg to New Zealand.
I cannot give you the exact number because we are still in discussion with insurances, insurance companies, and our broker to collect all the numbers. That will for sure be published once it is all accrued for. The CapEx for this year will be also in a range of EUR 20 million. We are continuing setting up the facility in Boston together with our joint venture partner in China. The project will continue. Brazil is setting up in São Paulo a facility. Also here in Berlin, our [Gasharai], you know that project. EUR 20 million-30 million is the number we are aiming for to invest in this year. [Olivier de Roger]. Here you go. Hello.
Yes. I just had a question, sort of a follow-up on what we could have asked before. It's not fully clear to me the extent to which IP deals, so sort of one-off profits, although you make them on a regular basis, have contributed to 2024, what you expected in 2025. Is it something that you expect to repeat sort of every year, in which case it's not really a one-off?
Julian, you're ahead of the license deals. You want to comment on that? The only thing, Olivier, I can promise to you is that I cannot promise you that license deal will always last forever because it is a mutual discussion. It is part of the business that we are doing these kinds of deals whenever it makes sense for both parties. The number for 2025, 2026, it is foggy because it is part also of our CMO activities. Companies like Big Pharma are aiming and looking for production deals. Sometimes it is a pure supply contract. Sometimes it is supply plus CMO. Sometimes, like the Telix deals, supply, CMO, and tech transfer composition. That is why it is all part within the radiopharmaceutical business. It is then at the end, the composition. With this teaser, Julian, you have the Fennig and Deutsche Marks about the individual ones.
I have not too much to add. We already mentioned the magnitude of the two license deals. One with Telix is EUR 20 million in total. The other one with QKM in China is EUR 10 million. The first with Telix, five are already being realized. The other 15 are still to come. It is not unrealistic to aim at 10 to the full 15, something in between there for this one and for QKM. This is something which is going to happen this year. As this is still a 40% or 50% company in our hands, we have to eliminate 50% of this. This will, in the end, give us EUR 10 million in cash, but only five in earnings minus cost.
Thank you. I mean, do you like doing those deals, or would you rather only have supply deals and not having to get into that?
In the end, I mean, Harald in the end is in charge. But it's often not the question whether we like it or not, s ure, in the end, over the long run, we would love to sell actinium, actinium, actinium, actinium. Yeah? But if companies we are closely working together with and cooperating with have the goal to set up their own production line and their own work, their own production, it is not for us, it's profitable to be part of it. Yeah? And in the end, have all the other contract that Harald mentioned before it in combination with this license deal. So in the end, yeah, we like it, but this is not going to be our one and only business model.
To compare it with those companies who were so proud of their own portfolio, Kodak film probably is the most prominent one. They always wanted to continue with films, films, films, films, and missed the opportunity in moving into digital cameras. For me, at the end of the day, a good corporation with a customer is the important deal. Whether he wants to have vials of radioisotopes or he wants a tech transfer, I'm open for all the discussions whenever it fits the needs of the individual company. There are some pharma companies who explicitly have a strategy of in-housing all the value chain completely. No question about it. Of course, then I like a deal because that enables me to be part of that one instead of sitting on my bench and waiting for a supply contract, which will never happen. That is why do I like it? I like earning money. And that is why we are here. Nicolas, you started. You get also a second chance.
Yeah. Just a quick follow-up on CapEx. I believe the previous guidance for 2025 was closer to the EUR 40 million range. How come you lowered that number? Is there some delays in facilities again?
Yeah. Currently, we are ramping up the production facility or the output of our actinium corporation in Czech Republic. If that moves as successfully on as it currently does, then the outcome of that production site will be enough to cover the forecast for the next years. That is why as of today, there is not really a need to rush or to hurry up or to push this extraordinary high effort, a second production facility in Germany. We might consider to do it in another continent, but that is a discussion process here in force. For the time being, we are putting a little bit the foot on the brake in here, factor 10 in setting up a site in Germany in addition to our other projects. That is the reason for delaying a little bit.
Again, just to make sure I understand. It is rather that you're surprised by the quantity you could produce in the Czech Republic collaboration rather than seeing, let's say, a slowdown in what will be the demand for actinium in the future?
The overall demand will remain high, but it remains on the outcome of the clinical studies. The output of Czech Republic will be up to 5,000 patient doses. That is by far, far, far more to cover all clinical studies, which are currently under its weight. No product really on the market before that hurdle is going to be exceeded. That is why even if we had 100% market share of all clinical studies, we could supply that. Now, unfortunately or luckily to the pharma, we do not have 100% market share.
Okay. Thanks.
Ladies and gentlemen, I do not see any further question. It is like an auction here to the one, to the three, to the four. Call Julian, Karolin, or me if you have any further questions. Otherwise, I thank you very much for your attention and hope to see you soon again. Have a good day. Bye-bye.