Strong organic growth, but lower margins
Vitrolife showed impressive organic growth, as all regions but the Americas performed better than we expected. In EMEA, Technology sales stood out with 25% organic growth. In Japan & Pacific, Consumables (up 27% organically) and Technology (up 46% organically) impressed on the back of new reimbursement in Japan. However, Consumables organic growth in EMEA (+1%) and Americas (-1%) continues to signal a procedure slowdown in the West that will likely continue into ‘23 as consumers grapple with tighter finances. While near-term growth should slow, we are not concerned given that periods of lower growth in cycles have been temporary. Postponed cycles likely build a backlog of customers that will mostly return when they are able to, supporting ~13% organic Consumables growth in '24e. Margins were on the low side, with gross margins in Americas deteriorating a further 2pp q-o-q. This, combined with a 26% q-o-q increase in EMEA sales expenses, contributed to a 6% EBIT miss vs. ABGSCe.
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