Good afternoon. Nice to see you all again here in Zurich. A warm welcome also to the participants in the webcast. My name is Peter Stierli. I'm the Head of Communications and IR, and with me is, as always, Marcel Imwinkelried, our CEO, and Reto Suter, our CFO. Marcel will first give us a summary of our numbers, then Reto will talk about the financials a bit in more detail, and then Marcel will elaborate more on what's ahead, next for us, in the coming months, this year. At the end, we will have a Q&A session, and for those who dialed in through the webcast, you can ask your questions through the audio or video call. With that, Marcel, I would like to hand over to you.
Thank you very much, Peter. I'm really happy. You know, you know why? It's for me, the first time that I'm presenting the full year results of Siegfried under my full responsibility for the full year. I'm really proud what we have accomplished as a team, and I'm standing as a CEO in front of the entire team of Siegfried, and I'm telling you why. You know, most of you I met 18 months ago in Barcelona, and I was introducing the new strategy, EVOLVE+. Great news, we are making progress. In most of the dimensions, we are ahead of the game, ahead of the plan. I will tell you more in the upcoming minutes. Now, I think let's first look back, what's the result of the full year 2025? It's not functioning. Maybe somebody can help me to... Yes, thanks a lot.
I would like to highlight, first of all, the profitable growth. For us, a big opportunity, and Reto will give you more insights. But when I joined Siegfried five years ago, we were at the 17-ish% of EBITDA. We're coming up step by step, year-over-year, and this is really important that we are coming up to the higher 20s. I'm confident to do so because operational excellence, which we have introduced the last two years, is the trigger that we are achieving such a high number at the core EBITDA margin. I think 23.5% is a very good result. Of course, we need to consider a one-timer of CHF 7.5 billion. Despite this one-timer, we are still above the 23% with 23.5, which is good.
We have strong plan in place also to keep this momentum and further improve our margin. Secondly, we kept and we met our guidance with a growth of 4.3% in local currency versus last year. And last but not least, what's really important, not yet reflected also in the outlook in this presentation, is the new acquisition of Noramco and Extractas, which will contribute significantly in top line and bottom line already this year, but also the next year. This, but this year, it depends when the closing will happen. Outlook. I think here, really important also to show, you know, that drug product, we have created the momentum. We have an outlook for 2026 of high single-digit growth. This is also much more compared to 2025, so we have created the momentum there. In drug substance, low single-digit growth.
This is reflecting a prudent uncertainty or assumption regarding one large product for one company. Now, also to clarify that a little bit, this doesn't mean that this product is, will be gone or is still in. It's one timer because our customer doesn't know yet how the demand will evolve further because it's an in-market product. So this will continue, and also in the future, this will be also an important product for us as well. In a nutshell, then, low single-digit growth for the group, and of course, the Core EBITDA margin, we are confident to be above the 23%. Of course, this is excluding the acquisition. It depends. This can happen end of March, so starting of the second quarter or at the third quarter this year.
As soon as we have the clarity when the closing will happen, we will give the new guidance, will, of course, increasingly increase significantly than the guidance at the top line, and also you can expect something at the bottom line as well. Because as already outlined during the acquisition presentation, there is no dilution coming through due to this acquisition. As already also shared with you, we have a momentum created due to commercial excellence. We have adapted our organization, and we have also defined and implemented the new go-to-market strategy. Good news, and that's also the reason why I'm really confident that we can keep, and that I can confirm, the positive midterm outlook for the next years... due to the effect, I've already shared with many of you also during the conferences, that we were able to win additionally RFPs inflows by 30%.
But really good news, we won in 2025, 30% more projects, new customers in both clusters, in drug substance as well in drug product, versus 2024. Now, I would like to give you a flavor about operational highlights, 2025. As you know, safety is really close to our heart, and we are making progress also year-over-year in this dimension as well. We have reduced the lost time injury frequency rate by 25%, and further implemented the Class A project, which is the prerequisite to make sure that we are becoming a really top-notch supplier for our customers. We have six out of 13 sites already certified, so the last seven sites, and then, of course, the newcomers will also be part of this. Quality.
Quality is the permit to operate in our industry, and especially also, you need to know that the FDA, the US health authorities, are raising the bar. One or the other competitors of us are struggling, but we have not only a great track record, we passed also successfully four FDA audits in the last year, which is prerequisite to win and to get new customers and products. Sustainability highlights, 2025, further progressed. Compared to 2020, we have reduced close to 50% our carbon emission. The same also, for reduction of energy. This was also highlights over the last years. We're continuing to make progress on this as well. To come back to EVOLVE+ strategy, we are investing quite heavily to be prepared for our near-term and mid-term growth. We are making progress.
As you know, in El Masnou, we are working in a niche with the ophthal production. Good news, since two years, the ophthalmic growth is high single digit. If you are comparing that to the last decade, it was at the low single digit, and we are a market-- one of the market leaders for the ophthal business. That's the reason, and the good news, that we can and that we are doing, investing and expanding in our site in El Masnou for sterile ointments and also for drop containers. Also, to capture the new trend in the steriles, which are prefilled syringes and cartridges, we are installing, as we speak, two new lines. One is already installed. The operation is starting the qualification. The second one will come operationally by end of this year. Minden. Minden, the transfers are on the way.
I told you we will get the first revenues in 2025. This happened. Now, the ramp-up is coming through, and we will do the integration middle of the year, as quite a lot of trades are already then in operation at this time. DiNAMIQS, another highlight. Here, we did the integration last September, with in Schlieren, close here to Zurich, for the viral vectors. Good news, we could not include that is, this in this presentation. 36 hours ago, we successfully passed the Swissmedic inspection to get the permit, the certificate, that we can start with the GMP production, which is a great, great achievement. Now, I would like to hand over to Reto. He will give you more insights about the financial numbers.
Thank you very much, Marcel. Good afternoon, everybody. „Grüezi mittenand,“ and thank you for joining us today. 2025 was another year of continued growth, structural margin expansion, and strong cash generation for Siegfried. We delivered really a record profitability, and at the same time, we continued to invest and deploy capital in a meaningful way into capacity expansion, into new technologies, and obviously also into new capabilities. The results that we achieved confirm three very important elements of our business strategy. First, strength from a diversified portfolio across customers as well as products. Secondly, a significant impact from operational efficiency measures and portfolio optimization. And third, a contribution from diligent financial management and also a diligent deployment of fresh capital to new opportunities.
So despite significant currency headwinds, and also, let's say, a challenging macroeconomic environment, we in 2025 delivered the best set of financial numbers in the history of Siegfried. Now, having all said all this, and as we look now into 2026, we apply a very careful approach to guiding. Due to this outstanding confirmation of one single customer for one single product, this diligence and this prudence reflect honesty and also transparency. It's by no means a change in the structural growth trajectory of Siegfried as a company. Now, let's dive into the numbers, starting with sales. We grew by 4.3% in local currencies for the group to CHF 1.33 billion. That growth was equally spread along the two business lines, 4.3% in drug substances, and then 4.3% as well in drug products.
We saw the more pronounced seasonality that we announced a year ago. 53% of revenue was captured in H2, and of course, not a surprise, a very heavy Forex headwind as well, especially in the dollar and of course, also in the euro. The currency split, as you see it, more or less unchanged to the last year. This is transactional analysis, so really contract by contract underlying currency. 50% of what we do is in the euro, 13% in the dollar, the remainder in Swiss francs. Good news here, as in the past, we had no impact on the margin and the bottom line through these volatile currency environments. Then the tariff exposure, as mentioned, also throughout all of last year, minimal. We saw less than CHF 5 million of sales being affected by import duties, tariffs, et cetera.
So optimally set up as well now to go into 2026. Let me spend just a few words here on the reconciliation between the reported numbers under our accounting framework, Swiss GAAP, versus the Core EBITDA. These are the numbers that we in the team use to manage and steer our business. You will see that in 2025, core numbers are below the reported numbers, as it may be the case from time to time. Due to one fact, you know, we have this, pension liability in Germany mainly, which, became smaller during 2025 as interest rates increased. And this CHF 10 million gain, we basically took out, and then we did what we always do, CHF 2.9 million of, running, current net interest.
We basically transferred down to financial expenses, and then we adjusted for CHF 0.8 million of transaction cost. This is cost for a transaction which we where we had a serious look at, but did not ultimately consume it, so. And that's that. Now, I would like to basically bring the 2025 results a bit into a broader context. Driven by organic growth and smart acquisitions, we have expanded the business and grew it profitably quite a bit. So sales grew from 2020 to 2025, from CHF 145 million to CHF 1.33 billion in this year. This is in Swiss francs. That's a CAGR of 9.5%. Would we do it in local currencies? So basically adding the currency headwinds, the absolute currency headwinds to the 2025 numbers, we're at 11.7%.
In total, over this period, we have lost CHF 140 million for currencies. That's around the effect of the acquisition that we had in Spain, so it's significant. From a margin point of view, this didn't impact us. We grew the margin from 17.7% - 23.5%, and this wasn't an easy environment to operate in. So this growth in sales, but also specifically in the margin, we managed despite the few disruption elements now. So we had COVID, which was, of course, also an opportunity for us. We saw inflation, we saw destocking, we saw disruptions in supply chains, we saw currency wall, and obviously also some elements of geopolitics. It's a resilient growth that we have been able to demonstrate, and that we are going to demonstrate also going forward.
Specifically, we have proven the ability to as well replace substantially large components of our revenue streams. I'm referring here to the COVID vaccines, which we had, and then, obviously, which went away, luckily. The margin expansion was structural, and it was driven by basically three things. The one was portfolio optimization, which we started in 2021 on the drug substances side, which we have now expanded to drug products, but where you see the effects in drug products, not yet. Then operational excellence, which added efficiency in a quite a significant scale year on year. Also, this will continue. And then, of course, effects of scale, where we brought on stream idle capacities, which then developed into basically revenues, and also profits. The growth was balanced, you know that, mostly organic, and then the acquisition effect of the acquisition in Spain.
And that's the plan also going forward.... If you go to the margins, now comparing 2024 numbers to 2025 numbers, you see that at each margin level, we reached new record highs. So we translated the growth in Swiss francs of 2.6% to substantially larger expansions across the margin aggregates. So core gross profit was driven mainly by cost discipline, portfolio optimization. Operational excellence increased to CHF 354 million, +7.6%. Core EBITDA, which includes, of course, the drivers for the gross profit margin, plus the operating expenses, which we kept in check, 9.3% higher at CHF 312.3 million. And on it goes.
Obviously, if you have a look at core net profit and core EBIT, this reflects the fact that we have invested into capacities which are, as the case may be, not yet fully ramped up, so that will correct over time. Diversification, it's a crucial key element in our business strategy and our business setup. We are well-diversified relating to customers as well as to products, so we have no dominant customer dominating our revenue base, and the same is true for the products. This is largely the same numbers that I have presented to you a year ago. Customer one, this is Novartis, 13%-17%, largely a diversified portfolio of products. Customer two at 10%, customer three to ten at 31%. With the products, the top product at 6%, product two to ten at 26%.
We continue to generate the vast majority of our revenues in the commercial phase, 96%. So we're not exposed to early-phase financing risks. Important to understand. This gives us the stability in order to continue to grow in a structured way. On profitability, you know, just a few additions to things which I have already mentioned. Operating expenses remain disciplined at now 11.4% of sales, despite some changes in the perimeter. You know, we have added the acceleration hub and, of course, also invested into capabilities, digitalization, et cetera. The other operating income, as mentioned by Marcel, includes a one-off payment, which we don't expect to reoccur next year, CHF 7.5 million, which related to a 2021 incident of fraudulent payments. That's good news. We have all the money back, so we just follow through on these type of things.
Core financial expenses remained under control. We had, throughout the year, a bit higher level of debt, but we kept the financial expenses in check. Effective tax rate still below 20%. We significantly improved the cash flow, the operating cash flow, 35% up year-on-year, driven by a higher profitability and disciplined working on the net working capital. We continued to focus on net working capital. We saw some timing effects of revenue recognition. So by year-end, we had the vast majority of the invoices in December, and of course, that goes against the net working capital freeing up. I will say one word about this when I come to net debt to EBITDA ratio.
Strategic investments at 231, that's tangible plus intangibles, so brick-and-mortar plus IT systems, which will support the future growth that we will see also going forward. On the financing side, we have placed successfully a CHF 300 million bond, and we have introduced a factoring solution, a non-recourse factoring solution, which we used in an amount for CHF 40 million over year-end. Now, why did I do that? Factoring allows me to flatten net working capital consumption throughout the year, and I can do that if I compare the cost of this solution to the other financing instruments at very attractive conditions. So I absolutely needed to do that. The balance sheet now, prior to the acquisition, is solid. At year-end, at 1.5 net debt to Core EBITDA, which allows me to maintain financial flexibility also for the future.
As of yesterday, you know, a few days after the close, net debt to EBITDA is at 1.0, which means that around CHF 150 million of accounts receivable have by now been converted into cash. That gives you a bit of an idea on how net working capital consumption fluctuates throughout the year. This means that even after the funding of the announced acquisition, I will be able to continue to basically have a balance sheet to continue to invest. Now, based on these very strong financial numbers and the commitment of our board of directors to shareholder returns, we have decided to increase the distribution to shareholders. The proposal to the AGM, which will take place on April 16 this year, will include the proposal for par value repayment of CHF 0.4 per share. Now, let me summarize 2025.
We saw continued growth for both businesses. We saw a structural expansion of the margin. We saw a record profitability, strong cash generation, and a strong, now even more flexible, balance sheet. All of the factors which contribute to our structural growth trajectory remain in place. One, the diversification. Two, the contribution from operational excellence and optimization of the portfolio, which we now expand also into drug products. And three, the strong balance sheet and the careful application of new capital to new opportunities. So Siegfried is well positioned to capture all the opportunities which lie ahead of us, and will continue to be the steady compound that we have been in the past. And with that, thank you very much for the attention, and I hand back to Marcel.
Thank you very much, Reto. Now, let's talk about our future, and here I'm really excited. I will give you some insights why I'm doing so. EVOLVE+ strategy, I think already highlighted, it's now really coming through, and it's resulting also in the results which we have presented just now, with operational excellence, which is the key contributor at the end for the EBITDA margin uplift. And secondly, really what we see is the inflow and also the wins, you know, for new products and also projects and customers. Now, I would like to come to another topic and which I was asked several times in the past about M&A. I was always repeating M&A is always on, but really, you need to have the patience to find the right jewel and to get it for an affordable price.
That's something which is the secret of success of Siegfried, what we did, and we will continue. We found such a jewel. It took quite some time to make that happen, and it was obviously also according to our EVOLVE+ strategy, to further growth on the existing core with drug substance, small molecules, and then, of course, due to the current recent situation, which will not disappear in the near future for the U.S. supply points. I'm constantly in touch with our customers, and they're telling me since 12 months, "Marcel, I need to have a second supply point out of U.S. for U.S." It's not predictable for us anymore what will happen. It's independent of the administration in U.S., what will happen. All pharmaceutical companies are preparing this future setup, not only U.S. ones, also the European ones, they're asking for it. They're looking really to expand it.
But what happened over the last 30 years? You know, in U.S., the pharmaceutical companies and also CDMO, they were investing in large molecules, drug substance, followed by sterile, sterile fill and finish locations, supply points in U.S., and also in new modalities like cell and gene. But over the last three decades, drug substance, small molecules, was transferred out of U.S. to China, to India, and also to Europe, and of course, we are participating accordingly. However, the game is changing now. They're looking for it, and it's not a surprise. Read the news and you will find out the big pharmaceutical companies, they are investing or were looking also for acquisitions in U.S. to get a hub, a location to produce drug substance, small molecules.
We did the same, but at the end you need to find something which is really unique, what you can offer compared to the community or also the competitors. And what we found at the end, we found such a jewel. First, you need to know there are less than 15 large-scale CDMO locations available in U.S. We did a lot of due diligence. I was several times in U.S., was watching and look how these sites were recapitalized, but very often, very poor, outdated facilities, and of course, also missing capabilities. When I was the first time in the U.S., I found a strong location in Delaware, and the second one then in Georgia, excuse me.
And, of course, I think the unique opportunity, what, why we got it so affordable at the end, Siegfried was the only company which is able to keep the production supply of this essential controlled substance also in the future. Now, if you are looking at the case, we have, with this acquisition, a very stable market and also portfolio which we are taking over. Strong contribution also at the EBITDA. Protected market, also for the future, because you're not allowed to import from somewhere else to the U.S. for such controlled substances. A moderate growth, but for us, what's really on top of it is really the opportunity to gain exclusive business with this setup. Wilmington, this would be the new site from Noramco, together with the existing Pennsville site, which is just 20 minutes away by car.
They are really, really close to each other, but even more important, also, the product portfolio is overlapping. We are talking here about controlled substance. We know the products, we know the processes from each other because Noramco was also a customer of us and vice versa. Some of the people we even know already also from the past and vice versa, and there is, will be very soon, one approach for both sides. And what we can do is really to optimize this controlled substance portfolio in the Pennsville site, and then we will free up facility number five, where 80 m³ are installed there to go for exclusive business. Athens and Grafton. As you know, one and a half years ago, we have acquired Grafton as acceleration hub to start with early development activities for drug substance, small molecules.
With Athens, also, by the way, like Wilmington, a previous J&J facility, so it was not a surprise to find two sites at the end with strong people, capable people, very well regarding process, which are in place, very well maintained, and also high automation, what we found there. They are also an add-on with Athens compared to Grafton, because Grafton is really strong in phase one and phase two. Athens is even stronger in early phase activities, so it's for us, at the end, an add-on. We have a sweet spot and a big opportunity, and that's why I'm really truly excited about this deal, you know? One is from closing of the day when we have the deal, we have a strong contribution, top line and bottom line, immediately.
However, the exciting case is really then to fill this capacity which we are freeing up in the next two years. And of course, you know, to bring in new customers, new business, it will, it will also take two years. So we will- we'll do that in parallel. So after 2028, on top of the base case, which we have also shared with you, we are looking forward to further increase the top line and also the bottom line. As you can imagine, also, the pricing is very interesting because supply constraint to a push demand, it's a different position which you have. So we will do the ramp up after 2028, and I'm really excited, but I'm not alone. I'm not alone.
Many of our colleagues in our organization were waiting for it, and I would like also now to give some quotes and voices also of my colleagues.
When I first heard about the acquisition, I was really excited. We are already very strong in drug substance and manufacturing network in Europe, and adding the Wilmington site will make us even more stronger. What I truly look forward is welcoming the three sites into the Siegfried family, where we will learn a lot from each other and share the expertise. There is a lot of positive energy across the team, and I truly believe it's a great opportunity for all of us to grow together.
Integrating new sites from an IT perspective is always a challenging and exciting experience, especially when the new sites come with a grown IT infrastructure and application landscape. But this is a well-known challenge for us, as we bring a lot of experience from previous integrations, like the ones that we successfully completed after the acquisition of two sites from Novartis in Spain. We know what it takes to manage complexity and not losing the focus. What motivates my team, and myself especially, is managing these strategic projects and bringing together systems and people in a structured way and building something that even works better than before.
What we saw immediately after the announcement was strong confirmation from the market. Customers are very clear on two things: First, U.S.-based capacity is in high demand, and second, many customers actively looking to establish dual supply points alongside Europe. Already, the day after the acquisition was announced, several large pharmaceutical companies reached out to us to better understand how this additional U.S. capacity can support their supply strategies. That reaction was very much in line with what we expected.
My team has already embarked on a clear mission. We have to free up 80 cubic meters of capacity in Wilmington by transferring products into our existing Siegfried network. From a project management point of view, this is of course, complex, but also very exciting. We have a clear, well-structured plan in place to unlock the capacity as efficiently as possible. Our strong teams and our focus on clear execution gives me a high level of confidence in successful delivery. We are really excited. Now, we are ready. We have the plan in place to make that happen, independent when the closing will, will happen. If you are looking out at the entire network of Siegfried for drug substance, small molecules, we are complete now. This doesn't mean that we are not-... further looking also to expand.
However, if you're looking from early phase, preclinical up to commercial, we are very well positioned. We have all capabilities for all development phases in place. And if you're looking backwards, especially then from phase three, commercial and then out, out of patent, you see that we have seven sites in all three continents: China, Europe, and also U.S., to make that happen. You know, whatever the demand is from the different customers, and the demand is there. So the dual supply points are given for the future, and this is a great achievement for us. Now, I would like to share with you something else about an exciting new molecule mechanism platform. It's called protein degrader . It's a new, new mechanism which is coming through.
Of course, the researchers were working since two decades on that, but now in the upcoming months, you will see the first approval for big products will be coming through. Why is this so exciting for Siegfried? We are perfectly set up exactly for these kind of products. They need drug substance, small molecules, where we have the entire network in place, which I have just shared with you. But secondly, they need and will end up then in tablets or in capsules. So that means for Malta, but especially for Barberà, that's the place to be. So we can really offer for big pharmaceutical companies, but especially also for the small and mid caps, the entire service what they need. Just recently, over the last five weeks, we won three new products and three new customers directly linked with the same mechanism, what I'm sharing here with you.
By the way, it's not the same molecule when I'm talking about these three. We are talking about three different molecules. We're talking about three different customers. One is in phase III, very interesting, so this will become quite soon and will get the approval. The other ones are a little bit earlier, but this will be a changer for the entire industry, a game changer, and also game changer for the company of Siegfried, and we will, we are really full in there. Happy to share with you more, and I'm sure in three years, we will talk about more about these protein degraders. Now, capital allocation, I think we are really disciplined on that.
So if you are able to do an M&A acquisition, and very often in the past, and we did it again, you know, to do acquisition and to buy new asset for half of the price, which is always then helping us at the mid, mid and long term to fill then the sites and also to gain the revenues really profitable. This is still on because I was also asked, what does this mean with this acquisition now of Noramco and also Extractas? And also outlined by Reto, we still have firepower ready to use if we find one other jewel, what I was sharing with you. So this is ongoing, but you need to be patient. Sometimes... It's not predictable at the end. We will see how this will evolve, but it's still on.
Now, we are really set up to outpace the market growth, just also what I was sharing with you. Inflow is great, 3%. This will come through also then midterm-wise as well. And for 2026, it's- it depends, because what I'm guiding you, you know, will change definitely. It's just a question by when. Will it be in the second quarter or will it be in the third quarter? Because with the new acquisition after closing, we will significantly improve our guidance for 2026. So far for drug products, high single-digit growth, so compared to last year, much better, much higher, doubled. Secondly, drug substance, low single-digit due to the missing, pending confirmation for a product which is in-market product, so it's just a fluctuation, but it will also support us in the midterm as well.
That's for sure, and for the group also reflected then in a low single-digit growth. We are confident, and this is really important because the bottom line is absolutely key for me, not just to growth, I want to all proportionally growth in the bottom line. And that's what we have shown up you as well, which is proven, and we will continue on that. And you can expect also then a Core EBITDA margin above 23%. We have a strong plan in place, and we will make it happen. Thanks a lot for your attention, and now happy to go for question and answers.
Thank you, Marcel. We'll now start with the Q&A session. Of course, many questions from the room here, but those who are joining us through the webcast, you would like to ask a question, please do that through the audio or video call, and you will be directed to the operator. Laura?
I'm Laura Pfeiffer from Octavian. Thanks for taking my questions. Maybe first on drug products. Here, you're guiding for an acceleration to high single digit. So to what extent is this growth driven by the large originator contract you have previously announced? I think it was 1 year ago or so. And also, could you provide more detail on the size and ramp-up timeline for this contract? And maybe also, what are the key terms? Is this a multi-year arrangement? And then I think the second one is more on slide 21. You highlighted the protein degraders, but you also show obesity, metabolic as a complex small molecule area. So can you provide us just an idea on your current overall exposure to metabolic GLP-1 programs across your overall business?
So both all clusters, all service offerings, and also what share of revenue this could represent over the next couple of years. Thank you.
Marcel?
Yeah, sure. Thanks a lot. Let's first start with the project, which we have announced one year ago. This is one part, but to be honest, we are growing in most of the really of the different dosage forms in drug product. So we are moving also upwards in Hameln, especially in El Masnou. That's also the reason why I was sharing with you the expansion. This is significantly also coming up now. Also, the new lines which we are investing in there are already more or less fully utilized by the new contracts, which is helping as well. Also, the portfolio in Irvine is developing very nicely.
It's in line what I was highlighting with the growth and also in Barberà and then in Malta, we are also coming up nice, step by step, and I think it's a contribution broadly across all different dosage forms and all different sites, which is great. That's. It's ending up then in this high single digit. More to come, because as I already outlined, with the additional wins of 30% to 2024, you can assume, you know, that further growth will come in the upcoming years. Then ramp up, you know, with this, what I was highlighting with these three new products, which we won over the last four weeks, it's this is really coming through then in 2027. The first one is phase III.
The other two ones, which are early, they're coming through then in 2028 and afterwards, but this will help us, and that's why I'm so confident for the midterm outlook, independent, you know, from the acquisition, that we have really the momentum and the inflow in the pipeline that we will take off. Yes, Protein Degrader, this is something what exactly in line what I was just sharing with these products. More is coming. If you are looking and always, and this gives you also a little bit of flavor. We are not the followers and waiting as like a CMO, that somebody's coming to us and are you ready to send us an offer? We are doing that really proactively.
What kind of technologies, what are the next future or the next trend in, in the industry to capture that and to really also to proactively to approach them and tell them, "Listen, we can provide the full service, what you, what you need." And, that's a different approach compared to the past, and this is helping us now. Now, to the GLP-1 exposure, I think this goes. I think, of course, we were explaining, you know, that the GLP-1 exposure, products, the molecules, they are really complex. But the same protein degraders, which I'm highlighting, are also so complex like this.
I'm really happy, that's the third part of the true story, that we have invested and decided to invest in this spray drying , because the common approach for all of these different molecules, they need to have this spray drying bridging technology in place. And here we are unique that we can offer end-to-end, or I'm preferring to use the word from beginning to the end.
Thank.
Just sorry to clarify, so I'm now a bit confused. So the three new products that you have won over the last five weeks, these were all protein degraders.
Yeah.
or these were all protein degrader s?
Protein degraders, yes.
Okay. But then you did not really answer my question then on the obesity exposure. So do you already have established contracts for whatever drug product, drug substance?
We are not talking about obesity, exposure, you know that, Laura, because if I would share something relate d to that, then it's clear then I would highlight a product or also a company. That's what we are not doing.
Okay. Thank you.
Okay. Sibylle?
Sibylle Bischofberger, Vontobel. I have two questions. First, about the past sales from Wisconsin, and the dynamics should have increased in 2025, and they should more and more support sales growth also in 2026, if you could say something about these two parts of your business. And then secondly, 2026, the outlook about the phasing between first half and second half, and if you could say something about the currency effects, how much they would affect sales on the top line if currencies would stay as they are at the moment. Thank you.
Yes, I will take the first one, and Reto will take the second one. DINAMIQS here, of course, we were really successful. I think I shared that also in the conferences as well. So we won 10 additional customers over the last, in the last year, one in Australia, four in U.S., and the rest in Europe. However, here we are talking about development activities. The growth rate is quite significant, with 30% what we can,plus minus . However, 30% of a very low amount is still not a game changer or will change dramatically. That's the reason. But the prerequisite was exactly what I was highlighting during the presentation. First of all, we need to get the permit, the certificate from the Swissmedic Health Authority to operate and to start then with the GMP production.
As also outlined in the other presentation during the financial part, you know, the money is really in there as soon as we can start with the GMP commercial production. So it's coming, but this setup is all coming through then next year, mainly what we see then step by step coming up then. For this year, it will be not significant growth for us as a company. Wisconsin, also here, I think that's stable. Of course, this is not a game changer related to the top line or bottom line. So here we are looking to develop 10-15 projects on a yearly basis, but this is the funnel, you know, for the pipeline.
So we are getting, of course, this for the service. We get paid and also the margin, but this is not the contributor at the end for our growth top line and bottom line. This is just filling then from now in three to five years, to get one of these products commercial, which ends up then really also visible in the P&L.
Thanks, Marcel. Reto, seasonality and FX impact.
No, absolutely. I think we had this question quite a few times, so let's clarify. Obviously, we do have, again, in 2026, we expect a negative impact on the top line by currencies. Looking at, you know, the first 7 weeks of the year, comparing that to last year, I see a currency headwind of a bit more than 2% for the year. Now, obviously, for the first half, this effect is stronger, as the degradation, degrading of the dollar only started after Liberation Day, sometimes at the beginning of April. So for the first half, it's actually closer to 3%, so I'm at 2.8% for the group. On seasonality, while we are still working on that, the indications are that this is very similar to what we have been observing in 2025.
More like 47-53 instead of 48-52.
Thanks, Reto. The next question is from Charles Weston. Charles, can you hear us?
I can. Can you hear me?
Yes.
Hi, Charles.
Thank you.
Great. Hello. Hi, thanks for taking my questions. Two topics, if I can. First of all, on the product that has meant the sort of lower drug substance guidance. It's quite unusual to see such a sort of a change and volatility like this in a large on-market product. So is there any further color you can provide on this? Is your customer destocking? How confident are you that that customer will come back? And then, because it's so late, ordinarily, contracts would include some sort of compensation payment or take-or-pay payments. So perhaps you can just touch on that for 2026. And then the second question, please, is on the non-recourse debt. Is that off-balance sheet? And you talked about CHF 40 million.
Is it, is it still CHF 40 million, or is it gonna be increasing going forwards? Thank you.
Okay. I will take.
Take the first one.
T he first one, and Reto will take the second one. For the first one, we are pending for the order confirmation. So he has also, he's not sure, you know, how the demand, what he needs, also short to midterm. That's the reason why we are waiting to get the final agreement on that. I think it's. By the way, it's a customer which we are working together since 30 years. So it's not a question if the customer will come back. We have really strong relationship together since 30 years, and I think he has quite or currently some volatility in the market regarding this product, and he needs to figure out what does this mean. So that's also what I was highlighting. This market will remain, and it's a very big market product also in the future as well.
Now, if this not would come through, you know that the demand will be at the lower than expected. Of course, you need to know, and that's a good question, Charles, that contractually we are protected from the margin point of view. So maybe we would get a smaller hit than at the top line, but the bottom line is fully protected.
Yeah. If I may, the second question, basically, the factoring solution. Basically, you sell accounts receivable, you receive cash. This affected the cash position in a positive way by CHF 40 million at year-end. This facility has a total size of 50, so yes, I could go higher, CHF 10 million. And as mentioned, this is not used for window dressing. It's really used to flatten out net working capital consumption throughout the year, which will then automatically mean that I can size the funding contracts accordingly lower. And as this facility, you know, comes in at better condition than, you know, usual funding contract, it's a net gain from a cost of that point of view.
Thanks, sir.
Okay, thank you. So we should just assume a similar rate going forward for that, should we?
Yeah, not more than CHF 50 million, yes.
Okay. Thank you very much.
You're welcome.
Thanks, Charles. Next question, Tania?
Just to follow up on this outstanding product confirmation. So I was surprised by the size, the magnitude of the product volumes that are missing or need to be confirmed. What are the implications if the demand stays lower in 2027? Do you also get a compensation or then it takes a while to ramp up a new product? Would there be a gap there in 2027? And then my second question is on free cash flow. If you could provide some sort of guidance on that with your Project Falcon and then the non-recourse factoring you mentioned. Yeah, when we can basically expect free cash flows to be positive.
Like usual, I take the first one, and I do the second one. First one, so I think for 2027, I think this will come back because it's a one time. They have to look at the stock level and how the latest forecast for there looks like. However, we have always a little bit some fluctuations, you know. Some products are going through the roof, then you need to be flexible and to capture that. Some of them are coming a little bit down. It depends, of course, we have also frozen horizon. That's the reason why we are protected also for this product from the margin point of view.
As I just outlined with the win of this very important protein degrader for Barberà, where we are doing the filling of the capsules, then next year, this can already help to potentially fill if something like this would happen. So I think in a nutshell, this will not change our outlook for 2027. It's a small or a fluctuation. It's of course a bigger product. It's not very small one, but at the outlook also for 2027 and afterwards, this will not change our view.
Yeah, on the second question relating to free cash flow, that's obviously the result of two distinct topics. The one is, you know, how much operating cash flow do you achieve? And then secondly, what do you spend for investments? Now, I address these one by one, and then the combination is the answer. The operating cash flow in 2025 was of course, masked and impacted by a very low revenue recognition. And this has obviously destroyed a lot of the good work that we had done, when we speak about Project Falcon. I was sharing that as of yesterday, net debt to EBITDA is at 1.0, which means that CHF 150 million of accounts receivable have by now converted into cash.
So ceteris paribus, if I will close the books now, my operating cash flow will be about around CHF 120 million higher than the one that I showed to you. So that's really dependent on when you close the book. The second is, of course, we now had two very heavy years of investments. Mid-teens%, this year it was actually 16% more like. This will now return and come back to low teens%, as mentioned, by Marcel. This is, our guidance for 2026 and also for the years to come. So you see both parameters somewhat go into the right direction. I'm not worried around cash conversion, around cash generation, around the quality of the balance sheet and the flexibility that we have to fund, further investments. Not at all.
I think... Oh, sorry.
Oh, you have a follow-up question.
I just wanted to follow up on the replacing with the protein degrader. So you mean the API part of the contract, or because you said you had the drug oral dosage form and also the API, maybe on the timelines of these two when they.
Yeah, we are working on. I want to have everything, you know, from beginning to end. But we are very successful in both drug product. Here, you can maybe imagine that if a big pharmaceutical company has developed such a product, maybe they are producing drug substance by themselves, and then they are looking, you know, for somebody like Siegfried, who is then providing the service for the finished drug product. That's in this case, but in the other cases, you know, here is really drug substance, but we are also in discussion to go then for the drug product as well. And that's exactly in line with the end, beginning to end strategy that we can provide then.
Good. Next question is from Fynn from Deutsche Bank. Fynn, can you hear us?
Yes, I can. Can you hear me?
Yeah.
Yes.
Perfect. Yes, thanks for taking my questions. I also have a follow-up question on the product that's awaiting the confirmation. So you said it's an end-market product. Can you help us maybe with the size of the order that you are awaiting? So essentially asking, what would growth look like with the, with the product coming through? And, could you clarify, is this an all or nothing situation? So do you either get the full amount or, do you maybe only get it partially? And then... Sorry, more on that, do you have any indication on timing of that? So when do you expect to hear back from the customer, and do you have any idea for, for the odds of this actually coming through?
Yeah, happy to answer this question. Sure. I think the magnitude, of course, it's somehow a little bit impacting us. Otherwise, you know, I stand in front of many strong analysts here, and they have their models. Of course, we would guide different or give a different guidance mid-single digit for drug substance. That's also according to the model, also what we had in our mind, and that's why we have taken the conservative approach to this, pending missing confirmation, but we will see how this will evolve. I think for this customer and this product, it's a little bit unique because it's the fluctuation is quite tough. I cannot share with you with.
Mm-hmm.
W hich kind of treatment we are talking here about. Otherwise, it's clear for which product and customer we are talking about? But this will maintain and going on. So of course, this product will be also important for the customer in the near future, in 2027 and afterwards, and also for Siegfried. Yeah.
Okay, thank you. So if I can just follow up on, on timing, do we expect to hear back from you on this specific matter before half year results, or is this an ad hoc event, or how should we think about it?
Yeah, you know, it's. We have strong, strong relationship with these customers. Over three decades, we were growing together significantly. We had a lot of fun, but also you need to work if you have a little bit uncertainty like this in this moment, and we are continuously in touch with them, and he needs to figure out, and we have already next week, the next exchange meeting, and as soon as we know more, then, of course, we will share then also to the external world as well.
Okay, perfect.
Thanks.
Second, sorry. Just one final question on the first Barberà contract that you've told us about already earlier, that is supposed to start ramping in the second half of this year, if I understand correctly. Can you maybe expand a bit on how the preparations are going there, and maybe also what sort of magnitude of revenue we should expect from that in 2026?
This is coming through, so we are starting this commercial production, as also announced that this will happen in 2027, 2026, excuse me, and then afterwards ramp up in 2027 and more. This is exactly according to plan, which is great. We had also a second one there as well, which we don't have so prominently announced, but we are filling now step by step, also Barberà, and with the new news, which I have just shared with this protein degrader , I'm looking forward also really for a bright future in Barberà as well. So this is according to plan.
I think it's important to understand, Marcel has answered that in his first answer to the first question, that the momentum in drug products is much larger than just one product in one site. It affects all of the dosage forms across all the sites and is broadly diversified and does not just rely on one or two contracts. I think that's important.
Yeah.
F or the general understanding it.
Thank you very much.
Thanks, Fynn. Next question from Daniel.
Thanks for waiting.
Thanks.
Thanks.
No, thanks for pitching. Daniel Jelovcan Z KB. So still a bit puzzled about this order confirmation. I mean, it's... I heard that for the first time. And when I look at the exit rate from the second half, the momentum, 6.5%, which per se was a bit disappointing, to be honest. When I extrapolate that to the 2026 growth, 6.5, there's a delta of, let's say, three percentage point versus your guidance now. So we talk about the CHF 40 million product on a yearly base. So it's significant when I look at your diversification. So, and I'm a bit puzzled, how come? I mean, you need the tech transfer and everything. You need the, the approvals from Swissmedic, FDA, EMEA, and that takes 18 months.
So that means that the product is already set up with Siegfried. So is that correct, the assumption? It's only dependent when the customer gives the green light, and then you start, just to be very sure.
Yeah, uh.
Or is it more complex?
I can maybe take the technical elements of that, if I may.
Sure.
No, first, I don't buy into the concept of exit valuation. You know, as much of the growth that we see is one year compared to the other year. As you know, we have long manufacturing cycles, so you can't take the revenue recognized in the second half and say, "That's the growth rate that we can assume then also for the first half of the following year." So that's that. On the calculation of the magnitude, yes, of course. I mean, it was significantly large enough for us to change the guidance. And that gives you a bit of an indication, and your number is not totally wrong. And then, thirdly, your assumption on the product.
Of course, it's an end-market product, which we already, in the last year and the year before, manufactured and which we will continue to manufacture, as Marcel has mentioned, but now, due to demand effects on that specific product for that specific customer in a specific market, there's uncertainty, but we are ready to go as soon as we have the confirmation.
Yep.
So it's an existing product?
Yes.
Yes.
Y ou already do?
Yes.
Yes, since many years. So,
This product is then very successful?
Yes.
Yes.
Obviously.
Obviously, yes.
Okay.
But, maybe our customers are thinking it would be even more successful. That's exactly currently the demand discussion.
Okay. That's good to hear. And then the protein degrader , I mean, I'm not a chemist, so is that something which you can patent? I guess not.
Oh, that.
Production process, and then your competition, let's say, I mean, the Chinese, the WuXi AppTec of the world, they are all over the place. Can they do that as well?
Sure. I think first of all, we cannot do the patent because that's a mechanism of them.
Sure.
To for the research, to find the molecules, you know, and then to appropriate that. So this has nothing directly to do with us, with Siegfried. It's a new mechanism how to treat, because these kind of proteins , you know, in the past, they were really successful always to push back the treatment, you know, of the APIs. That's also why you have then to build up very specific molecule chains. With this new treatment, you can destroy such proteins, and then you can directly treat with the API then the patients, and that's the revolution and the game changer. But this is at the research companies, big pharma, small mid-size pharmaceutical research companies, so we cannot patent.
However, the unique situation or the setup is really what we have. It's drug substance, small molecule. Secondly, due to the fact that it's so complex, you need to have spray drying, but it's for the majority of the small molecules nowadays. And thirdly, these products are ending up as a tablet or as a capsule, and we have for the colleagues, which also have visited 1.5 years ago, Barcelona, Barberà, that's the perfect setup what we can offer to, to this kind of product families, which is Commisruna. That's a unique position.
Competition.
Competition.
Also can certainly do that as well.
Yeah, sure. But I think competition-wise, you don't have a setup like Siegfried, who can do everything, you know, with small drug substance, small molecules. Of course, we have also we have competitors there. With spray drying, also competitors. However, in combination, you know, to have both drug subs plus spray drying, we are quite alone. And if you are talking about then to add tablet, tablets and capsule manufacturing, you can research and ask also ChatGPT, you will not find so many.
Okay, great. And last question, you still have not answered why the second half was to us, to the market, I mean, consensus was higher for sales growth. And you were quite vocal in November and December at various events, and so that's why the market was quite bullish, and now we have this 6.5, which is not bad, but below expectations. So were there some batch delays from December into January, which is quite typical in your industry, or any specific reason? Thanks.
No, nothing specifically. I think we have delivered according to our guidance. I know that the market expectation was a bit higher, but for us it was perfect, and at the end, you know, for us, it's important to come back to look really at the profitable growth and not just at the top line. I think top line-wise, you have expected a little bit more, but I think we were doing much better than at the bottom line. So at the end, for me, it was great.
Okay, Laura, again, yeah.
Thank you. Maybe a question on the EBITDA margin guidance here. You guide for above 23%. So what are the drivers and the headwinds we should consider this year? I mean, will there be kind of a negative impact from if we assume this order is not coming through? So this could be one of the headwinds. Just keen to listen to your thoughts here. And then also, when we use 23.0 as the clean base from 25, is there still the possibility for a 60-100 basis points uplift as you did in the past?
Yeah. I mean, you know, for 2025, we guided ahead of 22%. So we defined somewhat, the floor, and, you know, our concept of guiding has not changed from one year to the other. Then, secondly, on, on the positive side, you know, what will we see, as tailwinds for the guidance? It's of course, commercial excellence efforts, so portfolio optimization, it's continuing, process excellence, it's continuing operational excellence, and it's a bit of scale. That's, that's what we're gonna see on the, tailwind side. On the headwind side, of course, cost of doing business also in 2026 will increase. So we have continued inflation in the US, we have continued inflation in Germany.
Both countries, you know, we will have 700 in the US, we will have a thousand, continue to have 1,000 in Germany. That hurts a bit. So there we will need to become more efficient, increase prices a little bit, and that's what allows us to also, as in the past, increase the margin from 26 compared to 25.
May I add to the first question about this product, will this have also an impact on EBITDA? No. Also, in the worst case, contractually, we are protected for the margin, so this will have any way, no impact at the bottom line, and that's... I'm really convinced that we will be above the 23.
Thank you. Next question, we have online from Ed Hall. Ed, Ed, can you hear us?
Yes, I can. Can you hear me?
Yes, please go ahead.
Perfect. Thank you very much. I think maybe switching gears, I was curious if you could talk about the outlook of multi-client versus exclusive. I think we've seen another year where multi-client has performed into the double digits. I mean, should we think of this as a structural trend? Is there, how much pricing is associated with this growth? That would be my first question.
Did you understand?
I had, I think I just started to understand.
No, the question was on the split between multi-client and exclusive products, if I got that right. Whether there is a, you know, a structural shift or so, something taking place. No, we just also have, you know, quite an attractive set of multi-client products that we manufacture. I think that's the answer. Is this something which is structural? No, I don't think so. I honestly believe that, over time, in the midterm, we will have and see a quicker growth in the exclusive part versus the multi-client part, which will all in all, remain stable. However, you know, from period to period in the short term, there can be a little fluctuations around that, but it's nothing which is structural.
Perfect. And you mentioned pricing in your just last question. And how much is pricing a contributor to growth when we think.
Honestly, we can't hear you. You sound like you spend your time in a wine cellar somewhere. Could you please repeat and maybe move a little closer to the microphone, Ed?
Is that a little bit better?
Yes.
Yep.
Okay, perfect. Yeah, I was just curious about the contribution of pricing to the generics, and compare that to maybe some of the exclusive business.
Honestly, I don't think that there is a pricing difference between exclusive and the generics business. On top of my head, I don't have the numbers with me currently. Pricing impact on the 2025 numbers was not dominant. To be fair, we have in price here and there, but it was mostly efficiency gains and as well, and portfolio management, which helped us to increase the margin.
Okay. And then just one final.
Control it.
Yeah.
Sure.
Good. Is that all, Ed, or do you have a third question?
Sorry, one final question. I was wondering if you could just share the capabilities that you're looking to bring to the market when we think about the BT drugs more holistically.
Sorry, we are really having difficulties to understand you. The capabilities.
Maybe Ed would tell us send an email. I think, yes, please send an email, and then we will, we'll answer to you for sure. Thanks, Ed.
Thanks, Ed. That's funny, no?
Then we have another online question from Christine Rains. Hello, Christine.
Hi, good morning. It's Christine Rains on for Max Smock at William Blair. I just wanted to circle back on the, the one large drug substance contract driving uncertainty in your guide. Curious what's leading to the large range of outcomes and the customer's demand outlook for the already commercial product, in the short term? And, given your very strong RFPs in 2025 in drug substance and assuming likely strong backlog, curious why you cannot slot in some of the project work to offset potentially lower volumes from this one large contract in 2026. It was just a timing and RAM consideration.
We're just trying to get at if the, the contract ends up on the low end of volumes, will you be able to offset the shortfall with current projects in hand for 2027, or will it require significantly more contract wins to offset?
Reto?
Yeah. No, a very good question, and Marcel was indeed referring to some project wins that we had. Now, obviously, if you win a project of an exclusive product, this is, you know, still in the development phases, which means that the equipment that you use is mostly small scale, pilot scale, and not commercial. The same is also true for the revenue expectation. These products, you know, gain size as they enter then commercial manufacturing. So the product and the wins that Marcel was referring to, these are products which are still in clinical phases to entering 3 maybe. So, even if we wanted, we couldn't slot them in the large commercial equipment that we, you know, use to produce this other product in question.
The first question was whether if we would win or, you know, if the customer gets green light for the DS product, would we be closer to the consensus expectation?
Yes, of course. Yeah.
Sure.
Now, immediately.
Got it.
Yeah, this completes the picture, yeah.
That was possible. So the second and final question is on the three-site acquisition, in terms of valuation, I know you've said, impressive under 10 times EBITDA multiple, but wondering if you can give the purchase price and also expected more incremental capacity and revenue add on an annualized basis. Though I realize it's not exactly clear, when the acquisition will close, just if it were to close on January 1.
I take it. Yes, I think I understood it regarding the acquisition. Here, I think,
First of all, the price. We were sharing, you know, the evaluation compared to the EBITDA that we are paying or will pay less than 10, so really an affordable multiple. Now, I think you need also to understand that we have not incorporated any synergies. So that's exactly what I was highlighting during the presentation, to free up this 80 cubic meter capacity for the exclusive business. This would be on top, but this is not included in the price. So for us, that's why I'm so excited. It's one of the top corporate targets for 2026 to make that happen, to free up the capacity and to start then to ramp up in 2028. That's the big opportunity, what we have, and we'll take care to make that happen. Yes.
Okay. Thank you for taking my questions.
Thanks, Christine. Good. There is no more question from the webcast. Is there any other question here from the room? If not, then thank you so much. For those who still have some time, we'd like to invite you for a drink and some snacks here around the corner. It would be great to meet as many as possible. Then, yeah, we're looking forward to see all of you again at the half-year results on August 26th. Thank you so much.
No, hopefully earlier for the closing.
Yes.
The new guidance. Thanks a lot for your attention, huh?
Thanks.