My name is Barboura Blaha. I am responsible for investor relations, and I will moderate this session. Before we get started, some housekeeping. There will be enough time for questions after the presentation. And if you would like to ask a question, you can either type it into the q and a section on Zoom at any time, or you can also use the raise your hand function during the q and a session.
As always, this call is being recorded, and the recordings will be uploaded on our web page after this call. Couple of words on the agenda. First, Thomas will give an overview of the half year results. Then Alain will do the same from a financial perspective, and Thomas will end the presentation with some remarks on the market development and our business outlook. As mentioned, there will be a q and a session after the presentation, and we estimate that the entire event will take around sixty minutes. And with that, over to you, Thomas.
Thank you, Barbara. Welcome, everybody. As you can imagine, I'm very happy with the results the team achieved. In my dual role as CEO and COO, I'm especially grateful that our operational performance has substantially improved. Obviously, our interventions are working, and we are adjusting to the new realities of the peptide market.
Peter Grock, Baqem's founder and honorary chairman, died on the second June after a short but severe illness. The shares remain with the family. His daughter, Nikol Groc Hoetzer, who serves as vice chairwoman on the board since 2011, continues to serve in this role. Now into the details of the numbers. And I agree with the publications that are out there, we had a good first half year.
In detail, we achieved $313,000,000 sales. That's an increase of 30.2% in Swiss francs. Important at Baqem always, not only growth, but profitable growth. So we achieved the EBITDA of 91,000,000 Swiss francs. That's an increase of 64% and resulted in a EBITDA margin of 29.1.
This is everything. There's no core. This is what we have in Swiss francs, and it's a very nice result that makes us all very happy at Bakken. But it's not only the result, it's also the build for the future that is remarkable. We invested a 129,100,000 in CapEx, and we increased our workforce by 84 colleagues in the team back up to now 2,292.
If you look at the results for the first half year, you see that this year, finally, we have a better first half year. And still, you might have the question, why now two good half years in a row? Why did we substantially improve these results? I would say since summer twenty twenty three, we knew that the change in the peptide market requires an adoption in the way we execute our business. We then set out with determination to define interventions that will make us successful in a routine shift manufacturing.
In addition, we had to adjust how we execute and ultimately accelerate our CapEx projects. Many of these interventions were new and challenging. However, they clearly deliver, and they will help us to achieve our goal of 1,000,000,000 revenue in 2026. And I should say over 1,000,000,000 revenue in Swiss francs in 2026 and an EBIT margin over 30%. So good news and hopeful for the future.
If you look at our product segments product categories, I should say, research chemicals in about stable at 20,800,000, the smallest piece. CMC development, very strong at a 123,700,000 plus 36.9%, and the commercial API at a 168,400,000, a plus of 32.4%. That brings us to those 313,000,000 Swiss francs in the first half year. The reasons for these improvements I mentioned, it's the operational excellence measures we take. We run our shift very nicely.
We have seamless execution, a very good operational half year in 2025. And it's also the network approach. We use all our sites. We make sure that we have similar and standardized processes so we can use capacity in different sites and produce for the same product if the demand is there. In Buebendorf, we had very good execution.
In Vista, we also had good execution. And in addition, we have substantial CapEx projects running there. A great job of the Americans. Also, in Torrance, the pipeline growth, smaller projects, development projects, early phase projects getting executed there. In our Vale site in Vienna, the rebuild is progressing according to plan.
First line is back in service, and we have a consistently high utilization of the capacity that was not affected by the fire. Overall, a great picture and something we look forward to build on going forward. If we look at what is also very important, of course, it is building k. This project is on track. We have a stable scope.
We are within our budget when it comes to cost, and, especially, we have a very good execution in the construction site when it comes to safety. Good safety numbers, good progress. So everybody really looking forward to bring those manufacturing trains into operation. The first trains are commissioned. Technical program production activity production activities are progressing as we talk.
That means overall, our commercial manufacturing plan is as planned, and we are fully aligned with our customer. We still expect GMP production to start in 2025, and this is conditional of the approval by the Swiss authorities of that building. Inspections are planned. We remain confident that this all happens. And this, of course, as everybody knows, is important, especially for the 2026 results where we plan with those additional manufacturing capacity.
Patients are waiting. We need it, and it's built into our guidance for 2026. And with that, I pass it on to Alan, who explains you the numbers in more details.
Yes. Also welcome from my side. Some key figures a little bit lower in the p and l as a first glance when we look at the EBIT where we achieved €66,900,000 which is almost 90% increase compared to the previous year or period. And on the net income, everyone knows about the strong Swiss francs. There, we suffered from about CHF 11,000,000 from a currency effect from a loss from the translation at the balance sheet date.
But if you go further on the EBITDA, you see that all major cost categories contributed to the increase in the margin, which went from the first half year twenty four by 600 bps up to 29.1%. The main drivers here is coming from operations, the COGS part, and we see there, as Thomas mentioned, we have sustained operational efficiencies, and these improvements are becoming increasingly evident across our cost base. And in addition, a favorable product mix also supported this positive margin development. On the marketing and sales part, we kept our expenses under proportional to the top line growth and therefore, also a positive contribution to the margin. R and D, a very important factor for the future and the innovation of Bochem, also benefit contributed to the margin.
We spent about 1.5% of our sales into that area. On the g and a part, also positive, and we will invest there also in the future in strengthening existing teams, but also where needed strategic and selective adding key roles to support the growth of Bachem. As mentioned, there was especially in the second half, there was the currency headwind, especially the strong Swiss francs compared to the US dollar. And if you would report in local currency, we would have achieved a 30.4% margin on EBITDA in twenty twenty five first half. When we look at the cash flow, we're starting with the EBITDA of 91,000,000.
On the positive side, the cash inflow, we see now the collecting of the high accounts receivable by the end of last year, contributing more than CHF 60,000,000, but also the prepayments from customer with a plus of CHF 20,600,000.0. And these prepayments are supporting our CapEx plans, but also our working capital, and it shows also the commitment and the trust from our partners, from our customers in Bachem for future deliveries. On the outflow, there is always a tax point, CHF 7,300,000.0 we spent or we cashed out this year. And also, the change in auto payables, so we also paid invoices during the first half, and there, we see the outflow was CHF 38,800,000.0. On the inventory, we also invested there.
We have higher levels of work in progress, semi finished, but also finished goods, and this is aligned with the future growth and the delivery of goods to our customers. Overall, our operating cash flow resulted in CHF 86,000,000 for the first half. On the CapEx side, we invested CHF 147,000,000 in that area, and this is reflecting our commitment for the future expansion of our capacity. On the financing cash flow, we declared a dividend of million. That was partially paid out, But in addition, 3,000,000 has been retained and converted into a shareholder loan from Ingrafinansage.
In addition, we also drawn down DKK 27,700,000.0 from our existing credit lines with the banks. And overall, this led into a net decrease in cash in the first half of DKK 66,100,000.0. When we look at the balance sheet, as mentioned, Bochem has taken out loans in the recent months. And by the June, our net debt balance to DKK 31,700,000.0. And also the prepayments from customer, we just saw they increased.
There was a net inflow, adds up now to DKK 303,900,000.0 by the June. The balance sheet with DKK 1,900,000,000.0 kept stable and also did equity with DKK 1,400,000,000.0, so a slightly decrease of the equity ratio to 71%. On the CapEx, as mentioned, we have invested or spent €129,100,000 in the first half. This represents 41% of our total sales. 115,000,000 out of these CHF 129,000,000 or have been spent for capacity increase being infrastructure or equipment.
And as this is a very important factor for the future of Bochem increasing the capacity to meet the market's demand. We will also, in the future, invest heavily in those areas in the coming years globally across all sites. And with that, I'm handing back to Thomas for the outlook and the future.
Thank you, Alan. Clearly nice numbers, and I would say the mission is is working, And that's great. But, importantly, it's working in a market that is very interesting, and I think we are all very happy with the positioning of Balacan. So two slides, one on the peptide market, one on the oligonucleotide markets, those markets we are active in. The first one on peptides, if you look at the top left quadrant, you see the pipeline. And the pipeline is increasing in Magenta. Those are the approved drugs, but it's also increasing and even a little bit stronger in early stage projects in phase one and phase two. Just highlighting the importance of peptides.
And if we shift over to the right side of the chart, then we see that it's not only in metabolic disease. It is relatively broad. We have oncology there in number of projects. We have orders that means a hell of a lot of different ones and cardiovascular immunology, you name it. They are all there.
Peptides are very very active molecules in small quantities with little side effect. People are very interested in them. At the same time, we all know the sheer magnitude of the anti obesity market is overwhelming. We are currently about 30 in 2024, and it's predicted to go around 200,000,000,000 going forwards. So this growth of the anti obesity market is what we prepare for, and that's where our investments are going.
That's where our engineering teams are working. That's where our CapEx knowledge brings new facilities and even better equipment going forward. Looking into the oligonucleotide market, we see a similar picture. Top left, you see the pipeline growing. The blue colors again are early stage, and you see a impressive increase of those phase two and phase one projects and at the same time as somewhat slower but still steady increase of approved drugs over the last couple of years.
Also here, many different therapeutic indications. And if you go to the bottom right, a healthy CAGR of more than 30% coming up in our expectation to around 30,000,000,000 in twenty twenty two thousand thirty. So we are very happy with both legs, with the peptide legs, of course, but also with the oligonucleotide leg, and we wanna stay in those two modalities, a really nice positioning of the company where we can bring our strength in synthetic molecule manufacturing to the market and create value for our customers and, of course, most importantly, for patients who are in need of good medicine. So I spoke a little bit about interventions, about things we learned over the couple years, and and we we tried to put that together in this slide. If you look at the past, that was what while Sparken was used for almost fifty years.
We typically have built capacity upfront, then we we got demand to fill up the capacity. This has all changed right now. The demand is almost unconstrained. There's a lot of demand out there in the market, and we are somewhat constrained with capacity. But we are expanding as quickly as we ever can and with very good innovation into new infrastructure, new buildings, into new sites.
That's what we like to do, and it's very fulfilling to see that happen. And so you can go through all of them. I think the magenta here is important too. We had almost no shift work or no shift work back a couple of years. Right now, shift work is, of course, what we need to do, and we learned and execute that much more professionally.
And we will continue to improve on our operations going forward, bringing the new building into operations. We remain very cautious about what are changes that are necessary, but also optimistic that we will achieve those changes and be successful in the new realities of the of this peptide and oligonucleotide manufacturing. With that, we move on to the next slide and a slide to to show you that, clearly, there are many pieces in how you can improve your operation, how you can improve the company to be ready for the future. We mentioned operational excellence where we go very deliberate after improvements, making sure that we have no time where the machines are not running and that we have no mistakes. We were I talked about the network approach where we look up for harmonization and standardization over the the different continents so that we can utilize different capacity for the same molecule.
And, of course, the core of this slide is innovation. We keep pressing and pushing for automation so that we can increase our quality of work and get a lower cost base and also how we can improve process chemistry so that we have less material used and ultimately have greener chemistry that is having a less severe impact on on our environment or a reduced footprint, I would say. We look also at the portfolio. We are selective in what we are choosing to bring into our operations and then make sure that we optimize our resources for the best output that's possible. And then again, as I mentioned, we have new sites.
We have Building K. We work on Sisterfeld. We increase our capacity going forward. And on the next slide, I have some keywords to what's happening in those CapEx projects that are moving along humming along, I should say. On track for building k.
That is great news, and the excitement in Buebendorf is building almost every day. The operations team are are in there. They they're using the first lines. So this is this is moving along, and we're looking for first GMP production there in 2025. That is great news.
In the existing footprint globally, we make smaller additions to reduce bottlenecks. Bottlenecks is always what holds capacity back, so we we we enlarge those equipments, those unit operations so that we have less bottlenecks. In Vienna, we invest mainly for the supply of key precursors. So we have our own starting material manufacturing there. That is also very helpful.
It gives us a certain level of independence. Vista, I mentioned, we have capacity investments for larger projects. And in Torrance, we focus on automation for the small scale early phase manufacturing. Sisterfeld, two very important development. We submitted the site plan, and the first construction application, we expect to submit in 2025.
Great work by the team and important work. The priorities, I think I mentioned almost all of them already, conclude those CapEx projects, continue to expand capacity. That's a key priority for 2025 and ongoing. We wanna have the test batch in Building K. I think we are optimistic that this is gonna happen.
Emphasize on safe and efficient operations. That's important. And especially with the large scale equipment we take into operation, we have seen that we made big steps forward, and we understand how to improve that going forward. And, of course, all pieces need to fall together if you wanna execute. Starting material is a key piece.
We are working on our supply chain so that we have everything in place when we are ready to go. And we are good there, and we're gonna further improve what we are doing with our supply chain, with our partners going forward. And with that, I believe we come to the outlook for the full year. We raised the sales guidance to 13 to 18 growth in local currencies. We keep the profitability guidance in the high twenties.
We keep the 2026 guidance, sales over 1,000,000,000, and profitability over 30%. So that was good news overall, and now we have time for question and answers.
Thank you, Thomas. Thank you, Anna. Let's now move to the q and a session. And, again, if you would like to ask a question, you can either write it into the q and a section in Zoom, or you can use the raise your hand function. If you use the raise your hand function, please make sure to unmute yourself when we invite you to ask the question.
And, also, please state your name and company at the beginning. I see already couple of raised hands. So let's start with Zain. Zain, please unmute yourself.
This is Zane Ebrahim from JPMorgan. Hopefully, you can hear me okay?
Yes.
Awesome. So you raised the 25% guidance. But given the strong first half performance, the midpoint of the raised guide still implies quite a steep slowdown in growth in the second half. So is this reflecting increased caution in the guide due to sort of the geopolitical environment? Or are there any fundamental reasons for the slowdown and also acknowledge the stronger second half base last year.
And tied to that, just a question on FX in terms of the FX impact you're assuming for sales and EBITDA in 2025, given the 4% headwind you saw in the first half and where the Swiss franc is at the moment. And then and last question is just a clarification one. I think you said on the regulatory inspection for Building K that you're expecting Swiss medical inspection later this year. Do you you think you might need FDA inspection as well? And is the Swissmedic inspection already scheduled? Thank you.
Thank you, Sain. I'll I'll start with the third one. Clearly, we expect Swissmedic here. We don't foresee an FDA inspection. There's a mutual recognition agreement between The US and and and Switzerland, so we believe we have the Swissmedic inspection.
There was a second question about whether the timeline of the inspection is already named, defined, and, yes, indeed, that's the case. For growth, we see growth continuing in in the second half, and and you you did the calculation. We we gave you the the timelines. I think that's that's all we can say to that. And the one in the middle of
last The FX. That was for me, I guess. So if we would stay with that actual currency rate, especially the dollar, I would expect for the full year impact of around 25,000,000 Swiss francs. And if you think about that's top line, if you think about what's the impact on the margin, that is about 60% of that will suffer the EBITDA from that headwind.
Very helpful. Thank you.
Thank you, Zain. The next question comes from Charles Pittman King. Charles, can you please unmute yourself?
Guys. Charles Pittman King from Barclays. Firstly, just on the results and the strong operational execution. Was wondering if you could just provide us a little bit more detail on the actual steps you've taken over the past six months, year to deliver on this improvement as you kind of highlighted at the beginning, just what are those steps? How can we if we can now assume most of your facilities are operating at this enhanced level such that changes in batch delivery can have an impact on your financials kind of how can we therefore think about this productivity level going forward?
Is this are you confirming this is sustainable through 2025? And do you think that this is a good bar from which to go into FY 2026? But given you've made these improvements, I assume FY 2026 expansion is coming from the new capacity rather than further improvements in operational execution. So just wondering if kind of the low hanging fruit as such has been achieved there. And then just on the my second question is for debt.
You kind of highlighted that you've taken some debt on for the first time in the first half. And I think you mentioned about some of it being used or transitioned into a loan. But I just wanted to know kind of what what the purpose was for raising this debt and what you've really delivered that to given on an optic basis dividends kind of equal debts and, you know, I just wanna make sure this isn't isn't being used as a kind of payday loan as such. I wouldn't expect that, but I just want to dig a little bit more into your drivers behind the debt raise.
We start with the question about operational excellence. Overall, peptide manufacturing is a complex task. So we we we are never we've been we'll never rest on our low rates. We we continuously improve how we how we execute our operations. And and and you really have to think holistically about what we are doing here.
We are growing into a company that that delivers massively larger quantities of peptides than we did before. In that respect, you can call it low hanging fruits. They they certainly have been harvested, but we continue to improve. And I still would like to say that you should assume that most of the growth comes from additional capacity going forward. But we will continuously improve how we execute our business.
That's in operations, but that's in all other functions too. And then there was a lot about debt so that I probably gonna Yeah.
So, I mean, the debt is the the debt is I mean, also in the past, Ingo Finon, as the main shareholder, always provided a portion of the dividend or kept it in the company as a debt. That's not something new. That was just not the case for the last few year when there was enough cash to support the growth of the company. And we all knew that there will be the point in time where our cash balance cannot support this high CapEx anymore. So we have this debt now, and there are several strong partnerships with banks behind where we have open credit lines that support us financially in the in the future.
So this is something that will go on in in the future. We will need that depth, and that's actually how we finance our growth in that sense.
The yeah.
The next question comes from Charles Weston. Please, Charles, you can unmute yourself.
It's Charles Weston from RBC. Three questions, please. First of all, there has been some speculation in the press and by some investors that first half might have benefited from some pull forward of demand from U. S. Customers trying to get in ahead of any increases in pharmaceutical tariffs.
Can you comment on whether you've seen that, whether the first half benefited from that? And indeed, whether such a pull forward is even possible given the constrained capacity that you have. Second question, please, on portfolio optimization. Appreciate that you're careful in taking on the right product projects. But have you been actively managing older projects that you have already got?
And perhaps managing them out or increasing pricing significantly if they are becoming or if they are less profitable than new opportunities. And then lastly, you show a slide on the oligo market commenting on the potential growth there. Is there any update on Bachem's own activity within oligos? Obviously, there were some delays last year, so a little update there would be helpful. Thanks.
Thanks, Charles. I'll take the front first one first. Front loading, we we especially looked into it once we had the half year results. We we we looked with our obedience sales, and and the answer is really we we don't see any indication that we have substantial front loading in the result. And in addition, I would mention we we we are short on capacity.
If if somebody did front load, we we have other projects to put into those slots. So that that's not something we are we are concerned right now. The the second one was how we manage the portfolio. I think we we always manage the portfolio. We we want to be a long term partner, so we we wanna stick with the projects we have, but we wanna be more selective in in what we can take on right now.
And and and this is not the ideal case for for a CDMO, so we are actually actually working also to increase capacity so that we can really serve everybody out there. So we we believe that's a short term situation. And the third one, I believe, I hope is was for Ellen because I forgot.
It was Oligo update.
Oligo update. No.
That's for you.
I'll take that.
Thank you.
The the situation is there's no update. We we don't report individually on Oligo. What I said is we're very happy how the progress is taking shape there.
Also, the market, we look very carefully, and then we hope that larger indication come to the market, and we are ready to serve those indications too.
Thank you, Thomas. And sorry there's no question for Anna.
You, The next question comes from Laura Feischer. Laura, please unmute.
Hello. Good afternoon, everyone. Maybe first on profitability and your margin guidance. I mean taking your high 20s EBITDA guidance in local currency, this implies the margins somewhere probably in the 20s in the second half, and this compares to 33% that you had last year. So I suppose the planned increase in personnel, you mentioned, is one of the headwinds and also the ramp up costs for Building K, but are there other specific headwinds that we should have to consider, maybe mix or something else?
So I think that's the first question. Then the second one is on your site expansion, Vista, in The U. S. I understand you're increasing your large scale capacity there. And could you please indicate the level of CapEx investments you plan for the next couple of years and also the time lines for bringing this onstream?
And I think in that context, I'm just wondering, given that currently, you have around 20% of sales, I believe that that's small as the number that you produce in The U. S. If you aim to increase that more substantially in the future?
I was hoping Alan starts with the profitability.
With the profitability. No. Yeah. I can do that. Yes.
You're right, Blaura. That's that's the main parts that we see there as not known costs right now. So we are ramping up. We have to hire new people, and it's just an uncertainty behind. When we guided for the full year, I said we hope we are gonna be above 28%.
Now maybe we are targeting the higher level of our guidance, but there's still uncertainty, and that's why why we kept it from the from the range where we have been. And then And then I don't know. Maybe I I can give you some CapEx numbers, and then Thomas can tell you about the time lines. So with The US, we mentioned that we're invest there. It's a huge investment also for The US sites.
In the next five years, we expect to be at the $90,100,000,000 US dollars to invest in the in The US on both sides, mainly in Vista. And now, Thomas, maybe on the time lines.
We we as always, we go as fast as as ever possible. We we see some of the investments coming into operations in in 2026 and and onwards.
Okay. Thanks. And I guess the the 90 to 100,000,000, that's a cumulated number over Yes.
Yeah. That's for five years. Yeah.
Yeah. Four to five years. Okay.
Yes.
Yeah. Thank you.
Okay. Thank you, Laura. The next question comes from Sibyl, Bischofberger. Please unmute yourself.
Thank you very much. I have first a question. What happened? I'm very surprised about the very good result, so congratulations. Has it what happened in June?
Was it the sales generated very late in the semester? Because I had the had the feeling I was in contact with you, and then the the results were much stronger. Is it very, late, happening, these very strong results? Maybe this is the first question.
I see nothing out of the usual for this first half year when it comes to the distribution within the six months.
Okay. And the second thing is that you plan to invest more than EUR 400,000,000 CapEx in 2025. Could you tell us, especially in the second half, I mean, you have to double nearly double CapEx invested in the first half. Where will it mainly be invested? Is it still Bubendorf?
Yeah. It's Bubendorf, and still a substantial part will go into Building K.
K. Thank you very much.
Thank you, Sibyl. And the next question comes from Fin Scherzler. Fin, please unmute yourself.
Everyone. Finch Herzl from Deutsche Bank. Thanks for taking my questions. So the first one is on the test batches that you have started to produce now in Building K. So in terms of timing, when will you know about the quality and heat of these batches?
And do you plan to update the market on that? And connected to that, should we also expect an ad hoc announcement of you when the regulatory inspection goes through? And do you maybe have an indication for us when that would be? Or should we expect to not hear from you on this until the full year results release? And then secondly, on the sislafed expansion, you mentioned that you will already start some of the construction applications there.
Can you maybe update us on the discussions there? So does that mean you have line of sight on securing an anchor customer or that you are very constructive on doing so, or how has this been trending in the in the recent past?
Thank you, Fin. Those are important questions, absolutely. And I think we keep it like we always do. If something is a talk requirement, we we will go out to the market and inform immediately. And if not, we we we bundle that together so to make it easy for all you guys.
So if something substantial happens, we we will let you know. And if not, I think we we just focus on our execution. And for Sislaffelt, maybe that was a diff second question. There we mentioned in the past that we we are looking for a partner. And, if we execute this, we would assume that we have a agreement with a partner going forward.
Okay. Thank you. The next question comes from Estelle Beatriz, Berenberg.
Hello. Can you hear me?
We hear you well.
Oh, yes. Hello. Sorry. So Estelle from Berenberg. First of all, really huge congrats for for the results today.
I just wanted to hear maybe just if you have a bit more color you can give us on the second and the other lines that you have in building k. Any updates on those? Have you started already the commissioning and qualification?
Hello, Estelle. Thank you very much for for your question and and your judgment on the result. Yeah. The the the other lines, they're they're going according to plan. The focus is, of course, on the on the first lines, but it's right.
I mean, the the entire building, we we talk about a 120 infrastructure infrastructure elements or systems that are up and running, and so we are also progressing with the other lines according to plan. And this is really, really good news for for all of us at market.
Okay. Next question comes from Tanya Hanzarik, UBS. Tanya, can you please unmute yourself?
Can you hear me?
Yes.
Okay. Great. Thanks. Also congrats from my side for the good H1 result. I think I just have one more question.
You know, in regards to your 2026 guidance, it's been a few years since you issued this, and the Swiss franc has appreciated, you know, quite a bit versus the dollar. And since your sales guidance is in Swiss francs, does this mean the underlying growth assumptions you have are higher? Can you help us with kind of the gap here?
Thank you, Hans Tanya. Yes. We observed the same with the the the Swiss dollar and the Swiss dollar Swiss francs dollar exchange rate, and we can't change it. And we we still believe that we're gonna be above 1,000,000,000. That's the that's the reality.
Thank you. Next question comes from Konstantin Wichert,
Yes. Can you hear me?
Yes.
Maybe two one a bit more philosophical and one more on the financial side. Thomas, maybe first for you. I think we see a lot of innovations and incremental improvements to optimize raw material and solvent efficiency, and this sometimes seems to be pretty substantial cutting solvent used by, I don't know, 50% or so in some cases. I would be interested to hear more about how these innovations are already included in your multiyear contracts. I mean, you obviously have included your higher process automation and all sorts of improvements that you planned in a long time for building k already.
But to me, it also looks like competitors are really making great progress on the consumables efficiency in general and seems to be a kinda dynamic situation. So do you expect efficiency to be even better than initially planned? And if so, how would that be then split between you and clients? Would you still expect that to transform into lower price prices, sorry, as the whole industry is becoming more efficient? Or is this something where you expect to gain some incremental margin?
And then the second, maybe for Alain, just maybe I'm overlooking something, but if just check the cash flow statement there, I see a d and a of 16,200,000.0, but the gap between EBITDA and EBIT suggests, like, 24,000,000. What what is the what is the other item that is missing in that? Thank you.
Hello, Constantine. Yep.
You start and do the financial after.
Yeah. I thought so.
I give you a lengthy answer. Philosophical question, where where are we going with this industry? I think we have a lot of incremental change, as you said, and and and those are quite substantial, and then we we bake them in as they happen. And and we also try to bring on some somewhat more pronounced significant changes with with new technologies, which is a little bit harder because sometimes you also need to get the regulatory body on on onboard. And first, I'm not always easy.
But we are convinced that our initiative for continuous chromatography is is a very successful one, and and also the tech assisted synthesis is something we believe has has a lot of merits, and we invest in those technologies. And we will see what happens, and we we we make our estimates and build them into our our guidance or outlook. But but, typically, those step innovations, they take longer than than twelve months. With that, on to you, Helen.
The d and a. Yeah. I mean, Konstantin, you're right. It it looks a little bit strange, and that was also we got this question already in the morning. The difference between the 16 and the 24, you find in note nine in the in the half year report.
That's when we did impair the equipment in Vionna in '23, we thought it's it's all damaged, and later we found out it's it's still can be used. It just need to be maintained, repaired, which was also paid by the by the insurance company. But you see the $7.08 $4.08 in the in node nine and with that together because it was it's shown net in the cash flow statement because it was still paid by the by the insurance company. But the real EBIT the real d and a is this 24,000,000, the c and the p and a.
K. Perfect. Thank you so much. And, Thomas, if I if I understood that correctly, so the innovations that you see that maybe some competitors are more actively pushing recently have been in the pipeline for longer, and you would say that there's no pressure on your, let's say, four or five year length contracts that customers will say, hey. You make such great progress on the efficiency.
Maybe we can lower a bit the prices without you harming your margin. So that's just sort of what I'm what I'm thinking about if I hear cuts of 40 to 50% to the solvent.
Now now you made me interested. What what what are the published progress of the competitors we we we don't observe?
I I think I I've seen these, like, what's it called, percolation wash in the SPPS or that, for example.
Yeah. Yeah. Yeah. Yeah. Percolation wash is not something that is unknown to to to Bachem.
I I I would not assume that this we are not capable of doing.
Alright. Thank you.
And, yeah, I think that's that's all I need to say.
K. Thank you, Konstantin. The next question comes from Daniel Lelofchan. Daniel, you can unmute yourself. Daniel?
Otherwise, he also wrote a question into the chat. So Daniel from ZKB is asking, can you elaborate a bit more on the high more than 400,000,000 CapEx for the full year '25? Why is it so high in second half? I thought that Building K is already almost done, at least for the customer a.
I can elaborate on that, and I it's important to know that we we will be in a dual mode in in Building K where we still have a construction site and at the same time, we produce in in in the in the other part of the building. So Building K will continue to be a construction site up until, I assume, roughly 2027, and that's where where substantial money goes from our CapEx. In addition to the debottlenecking in in Buffendorf, some investments in Vienna, and quite substantial investments that Alan mentioned in in The US.
Okay. Thank you, Thomas. And then we have one more raised hand. The name here says, Sahana Sahana. I don't know this participant, but if you would like to ask a question, please unmute yourself.
May have been mine. This is Samuel.
Ah, hi, Sam.
Okay. Now let's assume it's me. So I'll be I shall be for a moment, Sahana, Sahana. Okay. Samuel Isale from Exome Asset, and some of my questions have been anticipated.
I'd like to go back though to the suggestion of more or less unchanged revenue in the second half, simply doing arithmetic and not calculus. And it was kind of glossed over, I think, by Thomas Meyer. But is that arithmetic correct? Our revenue is expected to be about flat in the second half compared to the prior year second half. It's it's suggested by by your numbers.
I I don't think that's the reality. If you if you take our our revised guidance, we we have the potential for growth in the second half.
Okay. Again, the the arithmetic suggests it's kind of flat. The the second question, though, was also anticipated by someone else, and that is you took out some debt. Okay? But the requirements of the capital spending and so on, can they all be covered by debt?
You did have an equity offering a few years ago. Do you anticipate that in the in the sort of near to intermediate term, you're going to come back to the stock market and raise fresh equity capital?
Right now, there is no plans to raise capital in the in the midterm. That's actually what what is the the strategy of the company. We have, as I mentioned, strong partnership with banks. There are different options outside of equity linked instruments, and we are always looking for the best solution for Bochem. And right now, we are going with those credit lines that we have opened with several banks right now.
Thank you, Alain.
And, Sam, maybe to add to the second half growth. So if you take the midpoint of our guidance in local currencies, you see a growth in the second half.
I actually took the high point. And
So I calculated before and yeah. In local currency.
You and I you and I can fight it off fight it out in the telephone later.
Yeah. Thank you, Sam. Next question is coming from Sibyl Bischofberger. Sibyl, please. You can unmute yourself.
Can you hear me now?
Yes.
Yes.
Sorry for that. Alan, just help me to understand.
I'm a little confused about CapEx in the first half. I have two figures here. One is the 129,000,000 and the other one is SEK 147. Could you help me to understand the difference?
$1.29.1 is the balance sheet. So you will receive an invoice. $1.47 is the the pay the cash out. So let's say you get an invoice by the June. It's no cash out, but it's a balance sheet. And then the next month, you have no CapEx, but you have to cash out. Okay. Thank differentiation of the payment terms.
Thank you. Very helpful.
You're welcome.
Thank you, Sibyl. And the second round of questions by Zain.
Thank you for taking my follow-up. We just have one left, which is on the CMC business. And I think you've alluded to it in terms of the strength of the Oligos business. But just to clarify, in terms of the strength in CMC in the first half, was it driven by new projects mainly or some of your existing contracts in peptides and oligos? Just thinking about your Lilly oligonucleotide contracts and the timing of that coming through.
So so just any any thoughts then how we should think about the CMC business going forward maybe for the rest of this year, but also sort of into next year? Thank you.
It it's both. It's both, but many projects are strong that have been here for quite some time.
Okay. Thank Thank you. And one more question from Charles Pittman King.
Hey, guys. Just given we've got the time, quick clarification just on the commentary around Sislerfeld earlier. You highlight that you're looking for a partner currently such that if the site is executed, this implies you have a partner. I just want to confirm what that means in line with your presentation commentary of intent to put in some applications by the end of the year. Does that implicitly mean that you expect to find a partner by the end of the year?
Or does it mean you found one and therefore expect to file by the end of year? Which of those two scenarios should we be interpreting the presentation slide as?
Okay. Those are both hypotheticals, and we will inform you as soon as we have have something tangible.
And maybe to add there, this project is in a size that most likely requires an ad hoc message to the to the outside.
Thank you, Erwin. That's the point.
Thank you.
Thank you, Charles. And so there are no more raised hands, and all the questions have been answered. So before we end this session, I would like to highlight our next event, which is the full year 2025 results presentation on 03/12/2026 and the next AGM on April 29 in 2026. And as always, our mandatory legal disclaimer. And with that, I would like to thank everyone for your time and interest, and have a nice day. Thank you.
Thank you. Bye bye, everyone.