Earnings call transcript: Clariane SE’s Q2 2025 reveals stock dip amid financial challenges

Clariane SE, a leading European platform in non-acute care, reported its Q2 2025 earnings, highlighting a revenue of €2.7 billion, marking a 4.8% organic growth. The company faced a net loss of €47 million pre-IFRS 16, and its stock price fell by 13.56%, closing at €5.09. According to InvestingPro data, the company maintains a solid gross profit margin of 32% and has demonstrated strong revenue growth with a 5-year CAGR of 8%. The market reaction reflects investor concerns over lower-than-expected earnings and ongoing pricing challenges in the French specialty care segment.

Key Takeaways

• Clariane SE’s organic revenue grew by 4.8% to €2.7 billion.
• The company reported a net loss of €47 million pre-IFRS 16.
• Stock price dropped 13.56% following earnings announcement.
• Completed €1 billion asset disposal program ahead of schedule.
• Ongoing challenges in French specialty care pricing.

Company Performance

Clariane SE’s performance in Q2 2025 was marked by solid organic revenue growth across all business lines and geographies. Despite this, the company faced a decrease in EBITDA by 4.1% to €263 million and a net loss of €47 million pre-IFRS 16. The reduction in net financial debt by €212 million to €3.6 billion was a positive outcome, reflecting successful financial restructuring efforts.

Financial Highlights

• Revenue: €2.7 billion, up 4.8% organically year-over-year
• EBITDA pre-IFRS 16: €263 million, down 4.1%
• Net result group share pre-IFRS 16: Loss of €47 million
• Net financial debt pre-IFRS 16: Decreased by €212 million to €3.6 billion

Market Reaction

Following the earnings announcement, Clariane SE’s stock price fell by 13.56%, closing at €5.09. Despite the recent decline, InvestingPro analysis indicates the stock is currently undervalued, with impressive year-to-date returns of 144%. The stock has shown remarkable resilience, posting a 180% return over the past year despite current challenges in specialty care pricing in France. InvestingPro subscribers have access to 8 additional key insights about Clariane’s valuation and growth prospects.

Outlook & Guidance

Clariane SE expects organic sales growth of around 5% for 2025 and targets EBITDA growth of 6-9%. The company aims to reduce its core leverage to below 5.5 times and improve margins by 100-150 basis points by 2026. InvestingPro data supports this outlook, with analysts forecasting positive earnings of €0.34 per share for 2025. The company’s financial health score of 2.96 (rated as "GOOD") suggests its strategic focus on financial stability and operational efficiency is well-founded. Discover comprehensive analysis and detailed metrics in the Pro Research Report, available exclusively to InvestingPro subscribers.

Executive Commentary

CEO Sophie Boisard highlighted the company’s efforts in strengthening its financial structure, stating, "We have successfully completed our plan to strengthen the financial structure of the company, six months ahead of schedule." Boisard also emphasized the company’s commitment to providing comprehensive non-acute care solutions, saying, "Our platform covers the full spectrum of non-acute care solutions."

Risks and Challenges

• Pricing challenges in the French specialty care segment.
• Macroeconomic pressures affecting consumer spending.
• Potential regulatory changes impacting operational costs.
• Competition from other non-acute care providers in Europe.
• Dependence on successful implementation of digital tools and AI for efficiency gains.

Q&A

During the earnings call, analysts focused on the pricing challenges in the French specialty care segment and the company’s efforts to improve case mix management. Executives also addressed questions about the asset disposal proceeds and the remaining transactions, providing clarity on cost-saving measures and operational efficiency plans.

Full transcript - Clariane SE (CLARI) Q2 2025:

Laura, Conference Operator: Ladies and gentlemen, you’re currently on hold for Clarion Half Year Results 2025. At this time, we’re assembling today’s audience and plan to begin shortly. We appreciate your patience, and please remain on the line. Thank you. The

Sophie Boisard, Chief Executive Officer, Clariant Group: call

Laura, Conference Operator: recorded. And for the duration of the call, your lines will be on listen only mode. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register Today, we have Sophie Bresser, CEO and Gregory Lovicky, CFO of our presenters. I will now hand you over to your host, Sophie Blisser, to begin today’s conference.

Thank you.

Sophie Boisard, Chief Executive Officer, Clariant Group: Thank you, Laura. Ladies and gentlemen, dear investors and financial partners, good afternoon, and welcome to the Clariant Group twenty five Half Year Results Presentation. I’m Sophie Boisard, Chief Executive Officer of the Clariant Group along with Gregori Lovicky, the Group’s Chief Financial Officer. During today’s call, we will present Clariant results for the 2025, comment the most recent development in terms of refinancing, outlining both a high level of liquidity and extended corporate debt maturities. We will also return to 25% guidance, plus 6% to plus 9% growth in EBITDA, which is confirmed.

Let me begin with the key highlights of this 2025. As you see on the slide, we have now successfully completed our plan to strengthen the financial structure of the company, and we did so six months ahead of schedule. This was achieved in challenging market condition and represents a major turning point for the group as we look back on the situation in November 2023. The full €1,000,000,000 asset disposal program was completed. Our pragmatic approach adopted enabled us to attain strong valuation multiples.

Our refinancing operation were completed successfully as evidenced by the recent €400,000,000 five year bond issue closed one month ago in June. Our liquidity was significantly reinforced, enabling the full repayment of the EUR $491,000,000 drawdown of the RCF today. The second highlight of the first half is actually the solid organic revenue growth development across all business line and geography and stable EBITDA, EBITDA pre IFRS 16 decreased slightly minus 4.1% on a pro form a basis due to the temporary impact of the new tariff framework in specialty care in France. This is a well known issue across the sector related to the delays and mistakes that have marked the entry into force of the new regulation, especially for newly opened facility, which represent for Clarion in France around 20% of the operated network. We have been taking collective measures based on an active and database case mix management that will start to pay off in the 2025.

On the long run, we are very confident that this new regulation will be beneficial to our specialty care activity in France. On this basis and looking ahead, we confirm our 2025 guidance. The second half of the year will benefit from several drivers in terms of margin. First, in Elderly Care, continued growth in volume combined with a full year impact of tariff increase in Germany, which will mainly take place in the second half for 70% of the facility. Second, in specialty care, the benefits of the active case mix management that we have put in place and further development in volume in outpatient activity.

We will also benefit from our continued focus on productivity and staff efficiency in all segments. And we will also reap the benefit of additional cost saving measures following the completion of our disposal plan on the overhead. Last but not least, we expect also to see the benefit of continued discipline and selectivity with respect to development CapEx. Let me now walk you through the key financial indicators of this first half. Our revenue reached around EUR 2,700,000,000.0, up 4.8% organically, with solid contribution from all region and activity.

This confirms the resilience of our business model, diversified and well balanced. EBITDAR came in at EUR $446,000,000 EUR $546,000,000, up 0.8% pro form a, excluding the contribution from real estate development. EBITDA pre IFRS 16 and excluding real estate development again, stood at EUR $263,000,000, down 4.1% year on year. This is actually a resilient performance considering the temporary impact of the tariff reform in France I already alluded to. Our net result group share pre IFRS 16 was a loss of EUR 47,000,000 to be compared with a loss of EUR 28,000,000 in the same period last year.

This is mainly due to the cost and noncash accounting items associated with the group portfolio streamlining and disposal program. It should be noted that no capital gain related to the 25 disposals have been booked yet. This will be done in H2 and should represent over EUR 200,000,000 of capital gain net. When it comes to balance sheet and cash, we maintain our deleveraging trajectory. Net financial debt pre IFRS 16 and IAS 17 decreased by EUR $212,000,000 to EUR 3,600,000,000.0 at the June.

At the closing was not completed at June 30, this is excluding the net proceeds of petty fees disposal, taking this into account since we have closed the transaction yesterday, all core leverage should have improved to 5.6 times on a pro form a basis. Finally, our real estate portfolio value is stable at EUR 2,600,000,000.0 with an LTV of 57%, down from sixty three percent one year ago, further evidence of continued financial discipline. Let’s now come on Slide seven to our extra financial performance. I would like to briefly highlight some key milestones achieved on the first half. On the human resources front, we were once again certified top employee Europe 25.

We are actually the only care company to receive this recognition. We have also signed a major European agreement on occupation occupational health and safety together with our employee representative from the European Council and EU and also National Trade Unions. This agreement represents a key milestone on our road map toward ’26 with a very clear and shared focus from all parties on reducing workplace accidents, frequency, and reducing absenteeism. It include a full set of commitments and KPI tracked over four years. Finally, on the HR front, at the June 30, we had 5,843 employees enrolled on a qualifying path, confirming the relevance of bringing to together all training programs under the umbrella of our client university.

This give us confidence in achieving the full year target of about of above 7,000 client employees engaged in such a training program, which is actually a keen enabler for talent development, career development, and also meeting the care staff scarcity over the various markets. On the environmental side, we took a key step forward by signing our first green energy forward purchase agreement with Ignis. This contract will will come in to force in August 26, supports our target to cut emissions from energy use and refrigerants by 46% by 02/1931, in line with our SBTi trajectory. And finally, we published for the first time our medical innovation and research policy. This policy is deeply rooted in our commitment to consideration for patient with the rollout of our positive care approach and deeply rooted in international quality standards such as ISO 9,001 for all our activities.

It also reflects our ambition and commitment for innovation, medical innovation, supporting the integration of scientific advance into care practices, and our contribution for broader medical research in geriatrics. These ESG milestones are fully aligned with our mission and long term value creation strategy. Let me now have a look back to our plan to strengthen our financial structure. This slide here summarize what we have delivered as part of this plan, which is now completed six months ahead of schedule. The plan that we launched at the ’23 was designed to accelerate the leveraging with tool flexibility and secure Aclarian access to long term financing.

And all the four pillars are now secured. First, we closed two real estate equity partnership in December 23, generating €230,000,000. Second, we secured €200 million in real estate debt also in December 23. Third, in July 24, one year ago, we successfully completed €329 million share capital increase, including preferential rights offering. And finally, in June 25, we reached our €1,000,000,000 disposal target, which includes the sale of our home care network petifi.

Altogether, these four pillars have proven instrumental in supporting the deleveraging of the group as well as normalizing access to financing. This foundation now allows us to look ahead with clarity and renewed confidence. Let’s have a focus on petitia disposal. The transaction was finalized on July 30 and is based so today so yesterday, sorry, actually, and is based on the €345,000,000 in enterprise value. Petit fees contributed €56 €56,000,000 into our ’24 revenue and employed around 370 people across this network of nearly 300 agencies throughout France.

We acquired Petivis originally in 2018, and it has grown substantially under our ownership, expanding from 58 to 292 agencies and becoming in France a reference in personalized in home care for elderly people. This is definitely not the end of the story as Clarion and Petitifs will enter into a countrywide service partnership to enable cross and treatable care plans for patient and the caregivers from petitions to client nursing home or clinics and from client clinics and nursing homes to petitions agencies. The final transaction and the condition of the transaction confirm the strength of our strategy, the quality of our portfolio, our ability to execute, to generate value, and to execute with discipline and value focus. It also allow us now to shift fully to delivering the next phase of our operational performance improvement. I would like to take a few seconds to look back on how we executed the disposal plan, which was a challenging one given the overall market condition.

First of all, some figures. In total, around 60% of our EUR 1,000,000,000 disposal plan was delivered through the sale of operating companies. 54% of the proceeds came from French assets, both operations and real estate. And more important ever is the outcome was the way we conducted the process. Actually, the key success were that we maintain full control over timing and terms at no point where we perceived as for seller.

We systematically build incredible alternatives, giving us leverage at every stage. We also demonstrated strict strategic discipline, including walking away from deals that didn’t meet our criteria as was the case for Belgium and The Netherlands that had been considered for a disposal option. And we created structured competition even in situation involving natural buyers to secure the best possible value for the company and the shareholders. These principles reassured investors and creditors, they confirmed the clarity of our strategy, which is focused on six core countries, financially disciplined, and concentrated on core nonacute care activities. We were able to achieve high valuation around 14 times EBITDA, which clearly illustrates the attractiveness of high quality, well managed assets in our sector.

On the next slide, you see now the profile of clients after completion of our disposal plan. We present a refocused, balanced, and more readable profile. As you see, our activity is now concentrated in six countries and structured around three segments, long term care, specialty care, community care, so all nonacute care. And this new profile gives us both scale, clarity, and optionality in order to manage both the regulation and development opportunities in all those geographies. In the data below on this slide, you see here reflected our pro form a disposal figures, post disposal, which I hope will ensure greater comparability and visibility for all the investors going forward.

You see on the central, on the green part, the key metric for valuation purpose, both in terms of pro form a revenue 24 estimated €4,100,000,000 revenue, and pro form a 24 EBITDA estimated, which is actually $5.05 €5,555,000,000. And this is the basis for the guidance and for our development looking forward. Let me now have a look at the financial structure post plan, post disposal. As you see here reflected, we have significantly reduced our leverage, holdco leverage over the past eighteen months. As of June 25, our holdco leverage, which is now the key indicator on which we are guiding, stands at 5.6x on a pro form a basis, down from 6.2x at the 2023.

This reflects the combined positive impact of operating cash flow generation and the full execution of our disposal program under the condition set out previously. As a reminder, this level is calculated using the new whole co definition used in our amended financing agreement, including both corporate and real estate debt. The steady deleveraging trajectory puts us on track to meet our objective of a Holco leverage ratio below 5.5 times by year end. Now let’s move on to the financing side. The successful execution of our plan has enabled us to normalize our access to long term financing.

This slide, along with the following two slides, illustrate key refinancing milestones secured by Clariant over the first half of this year 2025. First step, in February, we completed the amend and extend of our syndicated credit facility with a final maturity extended under some condition to May 2029. At the same time, we also secured a new €150,000,000 global real estate credit line with the same maturity 2029. As you see on the next slide, we have we have completed this this negotiation with our bank with the return to the debt market under very favorable condition. In June, we successfully placed €400,000,000 unsecured bond maturing in June 2030 with an annual coupon of 5.875%.

This bond contributed to a further extension of our average debt maturity profile. The offering attracted significant interest from Tier one institutional investors, both French and international. The order book exceeded EUR 1,200,000,000.0, implying an oversubscription rate of more than 3x. Its purpose is to rebuild financial headroom and further reinforce clients’ liquidity profile. The transaction, together with the extension of our bank facilities, complete a successful refinancing cycle in H1 that position us well for the future.

As a summary of the previous slides and before Gregory will comment on our half results, let me conclude this first section with a new review of the pro form a debt maturity profile, including repayment in full of the RCF drawdown effective today, cash in of petitions net disposal proceed effective yesterday. It shows that halfway into the 2326 midterm plan, Clariant has been successful in addressing short term debt maturities with no significant maturities to come before ’28, as you see here on the chart. This quick analysis should also take into account the reinforced liquidity situation of the company with close to EUR 1,000,000,000 at end July twenty five, including the RCF, which remains available following the repayment of the drawdown. I now would like to hand over to Gregory for the analysis and the presentation of our income statement. Gregory, the floor is yours.

Gregory Lovicky, Chief Financial Officer, Clariant Group: Thank you, Sophie. Let me begin with a look at the group’s revenue performance in the first half. As Sophie pointed out, we delivered organic growth of plus 4.8%, plus 1.3 volume contribution, and plus 3.5% price effect with the last contributions from all segments and geography. By activity on the left, long term care, our largest segment group was 5.4% organically driven by both volume and price effects. Specialty care saw an organic increase of plus 1.6% driven only by volume effects while pricing was flat in France for the first semester.

Community care continued to show strong momentum, posting a plus 8.3% organic growth primarily in France. On a geographic basis to the right, Germany led the way with a plus 8.1% organic growth, followed by Benelux at plus 7.5%, and Spain at plus 3.8%. France, despite being impacted by the SMA platform, impacting pricing mechanism proposed that you care, still delivered a plus 2.8 organic growth coming from long term care. Italy also remained positive at plus 2.5%. This result highlights the resilience of our portfolio as well as the benefits of our geographical and segment diversification.

Now if we break down the evolution from H1 twenty four to H1 twenty five, you can see the key factors behind our revenue growth. From the pro form a base of a €2,600,000,000, revenue increased to €2,650,000,000 supported by several drivers. First, volume contribute plus €34,000,000 or plus 1.3%, mainly from occupancy rate increases in long term care and expansion in community care. The price and care mix effect added €89,000,000 of 3.5%, reflecting tariff adjustment in Germany and France in the first effect of the more positive case mix in France that started in the second quarter. Offsetting this were a negative parameter effect of €103,000,000 or minus 4% due to completed disposal and site closure across several serografties.

The sale of petitions was closed July, and and its disposal effects are not included in this table. And all the effects of €33,000,000 linked mainly to the reform in specialty care in France and the wind down of our real estate promotion activity. Altogether, this illustrates strong underlying dynamics more than compensating for planned parameter reductions and providing a solid base for h two growth. Turning now to occupancy rates, we continue to see a positive trajectory in our long term care activity despite more challenging start of the year. The average occupancy rate in h one twenty twenty five reached 90.5%, which is one point higher than in h one twenty twenty four.

This is a clear sign of ongoing recovery and solid demand. June has rate occupancy have risen to 90.7% and preliminary data for July points to further improvement, which raised above 91% at July. This sustained momentum confirms that we still have growth potential in debt with our existing capacities and provide a strong base for continued performance in the second half. Now let’s look at EBITDA margin performance by geography. At group level, our EBITDA margin came in at 20.6 compared to 21.2% in h one twenty twenty four, the decline of 62 basis points when excluding real estate development activity.

This variation is attributable to France where margins fell by over 300 basis points due to, first, the impact of the tariff reform in specialty care and the ramp up in Asia V accelerated on the back of numerous openings in 2024 and early twenty five. Outside of France, all of the geographies posted clear and encouraging improvements like Germany, helped by 144 basis points confirming the recovery in pricing and productivity, yet still more to come in the 2025. These effects were identified as a key driver supporting the twenty twenty three, twenty twenty six guidance. And this show as well the group’s ability to recover margin performance as transformation efforts take full effect. Turning now to EBITDA.

EBITDA for the first half reached €263,000,000, down from €274,000,000 pro form a in the ’24, a decrease of 4.1%. Starting from the published figures of €219,000,000 in h one twenty twenty four, we deduct €11,000,000 related to the disposal plan and €5,000,000 from the hand of real estate development to arrive at the pro form a base of 274,000,000. From there, several components contributed to the evolution. Volume impact was slightly negative, minus €5,000,000 mainly due to the IGB will ramp up in France. All of the countries posted positive effects.

The price effect, which had this €89,000,000, was supported by strong type adjustment, notably in Germany and to a to a certain extent in Benelux, Italy, and France that will progressively improve their price cost of the ratio over the year and especially in the second semester. This was temporarily offset by cost inflation of €100,000,000 mainly in France and Germany. Too many effects to be highlighted. First, the front loaded salary adjustment in Germany that will be more than covered by ongoing tariff increase in the second semester, and the policy adjustment of the organization, especially care activities in France in the back of the SMR form. Other effects, including M and A activity in Spain and site closure across several countries contributed plus €5,000,000.

Overall, the EBITDA margin pre IFRS 16 and excluding real estate development stood at 9.9% compared to 10.7% in the ’24. Let’s now look at the cash flow statement for the first half. Operating cash flow reached €133,000,000 compared to the €169,000,000 in h one twenty twenty four. This decrease primarily reflects the lower EBITDA and the phasing of financial charges and taxes, which totaled €110,000,000 over the period. This is one of the things that adjusted for payment delay due to the late publication of the 2025 escalator in France, operating cash flow would have remained stable year on year.

As a result, pre op cash flow stood at €23,000,000 Development CapEx was reduced to €48,000,000 and financial investment amounted to €23,000,000 bringing total investment cash outflow to €71,000,000, a significant reduction versus last year, showing the strong discipline in CapEx allocation. Coupon payments amounted to €35,000,000. Net free cash flow after these items was negative €48,000,000. Consequently, net debt increased by €101,000,000 including the s 17. When we exclude the s 17, the increase was 114,000,000.

Also, the full impact of the disposal plan, particularly the strategic transaction, will only be reflected in the second half of the year. Turning now to our real estate portfolio, excluding perimeter effects, the gross asset value is almost stable. As of June 30, the gross asset value of our real estate stood at €2,600,000,000, down €54,000,000 compared to a year earlier. But since this evolution is primarily due to the €72,000,000 parameter impact, mainly from disposals in France, market parameter has a very limited impact. The positive indexation effect of €55,000,000 on one side was offset by a cap rate increase effect negative of €76,000,000.

Cap rates stood at 6.4% at the June and changed from December, further evidencing market stabilization. We also continue to invest in maintenance and upgrades with €30,000,000 in CapEx over the period. In summary, at constant perimeter, the portfolio remains stable and continues to support our financial sector. I will now hand it back to Sophie to conclude on our Refocus operational strategy and outlook for the current fiscal year and the twenty twenty three, twenty twenty six period.

Sophie Boisard, Chief Executive Officer, Clariant Group: Thank you very much, Gregory. Let now we take a step back and place our transformation road map in the broader context of the European care service market. We know, I think, as well as I do the fundamentals, but they remain striking. If you just look at the figures by 2040, the population age 75 and over is expected to grow by more than 40% with the full first step in 02/1930. At the same time, more than 80% of people 60 already live with at least one noncommunicable disease.

That means that they need a certain volume of nonacute care to support them at home. These demographic and epidemiological trends will continue to feel growing demand for care and definitely need for further social and care infrastructure. In this context, private investment will remain essential to meeting future needs, and Clarion is uniquely positioned to help address this challenge thanks to its diversified and balanced platform, experienced teams, and focused mission. In this environment, as you see on slide number 28, Clariant today stands out as the true European leading platform in nonacute care. We operate across six major countries with a multi local footprint that enable us to serve over 800 local communities and reach a catchment area of more than 30,000,000 people aged 75 and over.

Our platform covers the full spectrum of nonacute care solutions. Long term care, of course, with medicalized nursing home across all our geography, specialty care, including both mental health and post acute care facilities supported by strong clinical expertise and growing outpatient capacities. Last but not least, we have also a strong community care, so small units, which includes shared housing and in home support model, particularly strong in France and in The Netherlands and gaining traction in our other markets. This integrated and balanced model give us the agility to respond to country specific needs while benefiting from shared standards, expertise, and innovation across the group. It also positions us at the heart of the care ecosystem in each country as trusted partners to families, professionals, regulatory health authorities, as well as governments.

As we move into the second half of the year, our priority is clearly to continue improving our operating performance and margin. And for that, we actually rely on three main levers. The first one is very obviously volume improvement. We are continuing to optimize our existing capacity, particularly in the nursing homes or elderly care segment, where a two point increase in occupancy rate can activate approximately 1,000, additional beds, especially in the largest network, Germany and France. We are also accelerating the development of outpatient activity in all our specialty care clinics, which meet both patient expectation and system need and which are very contributive to our margin.

The second lever to support operational performance is clearly pricing and case mix management. We are actively managing the repricing on the elderly care segment, ensuring that negotiated tariff with the local regulation authorities better reflect the complexity and the medical intensity of the elderly care we deliver, and this is particularly true in Germany. But we are also deploying a a very sophisticated and comprehensive database system in order to fully manage the case mix in our specialty care facility, and this will definitely drive both volume, both revenue and margin growth looking forward. And, of course, on the pricing, we can also improve what we already do on the private pay side of our offering, be it in urban care or in specialty care. And finally, of course, operational performance will also benefit from all the program that are in place to support cost efficiency.

This is this include an ongoing and permanent work on HR performance with a priority focus on strengthening the staff planning, reducing absenteeism. This is why the agreement, I like I I alluded to some minutes ago that we were able to sign last month with all our unions at European level, the first of this kind in the sector and in Europe, is a clear demonstration that we are all committed to improve and to further develop in that segment. We are clearly also betting on further negotiation and strengthening of our supplier base, taking advantage of our large scale and broader process optimization, especially the transactional and back office processes, essentially, and at facility level to digital tools and artificial intelligence. We have been actually actively working on these for the last eighteen months, and we see the first benefit of it, and there is more to come in the forthcoming two years. Together, all these three levels or family of levels will support the rebound in margin expected in the 2025 and into ’26.

I would also like to give some granularity on the cash generation, which is obviously the the the next key challenge for the company looking forward. We are taking a lot of very precise actions to support sustainable cash generation going forward. First level here is also continued organic revenue growth and revenue integrity. And as we see, we have a lot of visibility on that segment. Second, we, of course, expect that the margin improvement supported by the pricing and volume increase and also the various saving just mentioned will be, of course, transformed into cash generation for the company.

And we are, on the top of this, pursuing a disciplined investment strategy with clear focus on reducing and normalizing both gross CapEx and noncash items impacting our free cash flow on the back of the restructuring and disposal plan. Fourth, we will beginning to benefit from lower financial costs, thanks to the steady reduction of gross debt and the management of the maturity we have done. Finally, our refinancing capability has been demonstrated with both bank and bond transaction executed successfully comparable terms and well received by the market. These pillars position us well to continue delivering on both our operational and financial objectives. Let’s now come to the Slide 31 as a wrap up.

So Clariant is definitely now well positioned to benefit from, a, the structural growth of the European care market and to do so in a way that is both sustainable and profitable. We have as a platform three core strengths. We have the scale and the leader position as Pan European operator fully focused on nonacute care. Second, we benefit from a balanced business and country profile and portfolio with no overdependency on any single geography or segment, and this is very important in such regulated activity. This makes our model, business model, more resilient and adaptable to local dynamics and also to local regulation challenge that can happen.

Third, we operate with a best in class model, a very strong and clearly defined target operating model industry segment, and our performance is underpinned by robust quality standard, recognized and shared HR practice, active and innovative social dialogue, and a growing use of digital tools to support both care delivery and efficiency. These are the main foundation on which we will continue to build on the second half of the year and, of course, beyond. Let’s now come to the second half outlook. As we look to the second half, we do so with clarity, focus and confidence. Our main strategic objective for the year to finalize this financial structure strengthening plan has now been achieved and is six months ahead of schedule.

After a transition of first half, we expect our performance in the second half to benefit from the several tailwinds I already mentioned. First, continuous volume increase across all geographies, particularly in France where the recovery in occupancy has been visible since q two and more, more to come here in the summer. Second, the full year impact of the price increase, especially in Germany, where additional price adjustment are still expected on 70% of the network there. Third, we will see the benefit of our database case mix management efforts on the specialty care in France with already a very strong increase in the average daily rates that we can achieve through this case mix management. Fourth, we will continue to benefit from improved productivity in line with our quality commitment.

And on top, we have launched targeted saving plan on overhead following the group’s refocusing post disposal that will contribute to margin improvement in h two and mainly in ’26. And of course, we remain firmly committed to disciplined further disciplined CapEx management with strict allocation to high return projects. These various levers will support a stronger second half and enable us to confirm our trajectory for the full year. So I would like now to turn to our outlook for ’twenty five and for the midterm twenty twenty three-twenty six. Our outlook for both 2025 and midterm is unchanged.

In 2025, we expect, as we said, organic sales growth of around 5%, underpinned by strong momentum in price and volume, particularly in France and Germany, and by ramp up contribution in The Netherlands and in Spain. This growth momentum, combined with tight control of our operating cost in the context of lower inflation on supply chain will underpin growth in pre IFRS 16 EBITDA of between 69%, enhanced an increase in our margins. In terms of our financial structure, we are aiming to reduce our whole core leverage to below 5.5x, thanks to the improvement in financial performance and to the effects of the remaining part of our disposal plan, which is still to be cashed in, in the second half beside the deficit. This financial objective are, of course, accompanied by extra financial objectives, maintaining the net promoter score of plus 14, maintaining the number of employee enrolled in qualifying path over 7,000, and pursuing the reduction in the frequency of work related accident and in our carbon footprint according to our SBTI trajectory. In terms of our midterm objective for the period 2326 as a whole, we are confirming our target of an average annual growth rate in revenue of around 5%.

We are also confirming the improvement expected in margin with a target increase of 100 to 150 basis points by 2026, pro form a of disposal and 2326 scope effect. And we expect our whole core leverage to be below 5x at the ’26, consolidating the group’s financial structure and the recovery in operating performance. This achievement of our refinancing plan, strong business momentum and the strong fundamentals of our business portfolio mean that we can look forward to the coming years with a great deal of focus and renewed confidence. And more than ever, we remain focused on our purpose, taking care of each person’s humanity in times of vulnerability. Thank you very much for your attention.

Gregory and I are now ready to move on to your question.

Laura, Conference Operator: Thank you. We will now take our first question from Laurent Gelavard of BNP Paribas. Your line is open. Please go ahead.

Laurent Gelavard, Analyst, BNP Paribas: Good afternoon, Sophie. Good afternoon, Gregory. So

Sophie Boisard, Chief Executive Officer, Clariant Group: Good afternoon, Laurent.

Laurent Gelavard, Analyst, BNP Paribas: I have four questions today. So the first one relates to the €30,000,000 cost saving plan you have been initiated. Could you let us know what will be the benefits in terms of saving you expect from this EUR 30,000,001 off costs you have as a provision in your P and L in H1? So second question is that when I look at your net debt at the end of H1, are at EUR 3,500,000,000.0, and you want to be below EUR 3,000,000,000 by the 2026. The disposal plan is being completed.

So can you give us the building blocks in terms of cash in from disposal not yet being cashed in and other stuff that could explain from the move from EUR 3,500,000,000.0 to 3,000,000,000 by 2026? The third question relates to your guidance, which implies 6% to 9% EBITDA growth this year. If we look at this number on H2, it implies plus 18% to plus 24% growth versus H2 last year. So could you confirm that it is correct? And could you explain again what are the main drivers to improve the profitability?

And last question, basically on Specialty Care in France. If I’m not wrong, this issue was already live last year in H2. So why, I mean, it has been continuing in H1 of this year? And what have you been implementing basically to be able to improve again the margin on this activity going forward?

Sophie Boisard, Chief Executive Officer, Clariant Group: Thank you very much, Laurent, for the four questions. I will address the specialty care, and I’ll leave, first of all, the the stream first question to Gregory. 30,000,000 restructuring costs and and of the net debt, especially.

Gregory Lovicky, Chief Financial Officer, Clariant Group: So, yeah, on the certainly, on the if I get one of question, you know, this is what we have on the noncurrent items. You know? So the noncurrent items, as you pointed out correctly, Laurent, amounted to €55,000,000 on the on the first half of the year. When you look at it, part of it, 50% of it is noncash. When you look on the noncurrent, you you you have a part of it impairment, and the other are more restructuring and organization.

It’s more cost to implement, you know, the disposal plan. And, obviously, part of it will be will be when we stay on the h two, we come to to improve the profitability on the on h two. On the second point on the net debt, you know, and and how to to to to drive the the the debt net debt down. The first element you need to have in mind is that we didn’t make all the closing yet. So still, we’ll have some closing in h two.

You saw it as well with the pro form a we did with statistics yesterday and with a significant impact on the net debt. All the closing will come on the second part of the year. Then when you say this, we have as well some cash generation impact H2 and as well in 2026 That has the the the remaining effect, you know, to to continue to to to to reduce the the the net debt going forward. And as as we mentioned in the presentation, all the action plan we have, especially on the increasing EBITDA, working capital management, pre discipline on CapEx, reducing the gross debt with the positive impact on the on the impact effective. Obviously, all of these all of these elements come to to the reduction of of of of, let’s say, of cash flow cash flow generation.

I think this is too many things that we that we need to have in mind when in to to bridge the gap with with the reduction of net debt we have. And so that was all the two first for the two first questions.

Sophie Boisard, Chief Executive Officer, Clariant Group: On the margin guidance, would you like to discuss? Or shall I

Gregory Lovicky, Chief Financial Officer, Clariant Group: Maybe take the specialty care, and then we show the margin guidance. Yes.

Sophie Boisard, Chief Executive Officer, Clariant Group: So for the specialty care, you’re right. The the new, the new rate framework has been, implemented ’24, but, with a lot of uncertainty delay and also, mistakes because the the tariff framework did not take into consideration the newly opened or reopened facility. And this is representing in our case, because they take just to explain how it works. So until ’24, the financing of cost acute care in France was based on a fixed day rates that was actually a per diem. They decided facility by facility and inflated every year by the average indexation decided by the government.

That was basically very simple and common approach. The new tariff scheme is much more sophisticated. It’s actually a a countrywide, tariff scheme for 90 different type of care path depending from the pathology, depending from the profile of the patient. And this 90 type of rate, 90 type of pathology are to be combined with the intensity of rehabilitation, the severity and the intensity of care required, so the severity of dependency and the social situation. So there are three parameters plus the length, the recommended duration of the state.

So it’s a very sophisticated, so 90 different therapy combined with these four criteria that are, of course, unique to each patient. And the so the the the new new RIDE framework has been actually published in ’24. There has been some correction, done, where expected late twenty four, and they have been only published, in April 25. So this is explaining why we had some uncertainty between ’24 and ’25 with some actually commitments of the authorities that were not reflected in the tariff issued for ’25. And last but not least, and this is very specific to Clariano, when they took when they converted from the day price to this tariff framework, they did not take into consideration for the pound that is still fixed, so half of the funding is fixed, so per facility.

They did not take into consideration the newly opened clinics between ’22 and ’24. And for Clariant, since we have actually executed a very wide repositioning and investment plan, as you know, Laurent, started 2017, Actually, 20% of our operated network, was not, was actually extended or even newly opened between ’22 and ’24. And part of what the amount we were entitled to get was not taken in the tariff framework. So I don’t I want to make it short that, actually, this, this, led us to a lot of discussion with each of the regional agencies to progressively correct the amount we are entitled to get first, and we haven’t been getting the full amount. We are still missing some million as a basis for this new tariff framework.

That was the first thing we had to do. And this explained a lot of the negative deviation from H1 24 to H1 25, first of all. The second part is actually that in as a mitigation, we put in place a a a very sophisticated data based case mix management solution. We actually have deployed in house with a sophisticated tool, balance sheet, a foundry software platform to be able case by case, clinic by clinic, patient by patient to model in real time, the the the the case mix, the adjusted case mix for the situation. And this has actually, helped a lot our clinics.

We came from an average day rate, in Jan. It was around €105 per day for the viable part. We came up to latest, so July, we are now around €120 per day average. So it means that we’ve been able with the same environment without further funding to significantly improve the case mix management. This is, of course, not reflected fully reflected, only very partially reflected in first half, this pricing effect because it’s really this active case mix management.

And we expect, of course, to see this fueling the margin recovery in the second half. So it is going it is paying off step by step. So this is half of the margin recovery for the second half, combined actually with also the adjustment we had to do on selected facilities to the staff organization according to this new funding framework. So there are plus and minus, but there are some minus in terms of the way we allocate time and level of of staffing according to this new to this new scheme. This is a huge change, to be clear, a huge change for the 75 fertility that are at stake.

I’m looking forward very, very positive and confident, not about the way the entry in force, which was a disaster, a disaster from the uncertainty, the change, the mistake, and the the the fact that they were always late in really taking into consideration the mistake that were made. But looking forward, now we have really a full comprehension on how we need to work with it. It is actually better, reflecting the quality and intensity and outcome of care we are providing. So if, the now that we know how it works and that we have trained and groomed our facilities to work with that, I think that it is providing a very strong basis, to develop, this nonacute care that is absolutely critical in France, to tackle, the situation of aging chronic patients that are struggling to get the right support from GPs or from, university hospital. And so directionally, it was difficult to enter in this framework.

It took more time than we would have wished to, but, we will definitely be benefit a lot, from, this new environment. And as you can hear, I’m very much more confident and more positive and precise on it as I was some months ago because we’ve been actually working a lot to get educated with the the support of this database platform. So it brings me to the guidance. So the guidance, yes, the EBITDA in amount was down by 4%, 4.1%, in first half, and we expect here to be up by 6% to 9%. Where does it come from?

So half of this evolution will come from this pricing mix effect on the specialty care on the back of the progression that we have already initiated. And so we are betting that we could at least stabilize above 120. That is the point we have already reached. Maybe we’ll do we’ll do more, but this is where we are. And half of the the contribution will come from the repricing to come in Germany.

So now I’m in Germany. It’s a health care segment. So what is the situation in Germany? In twenty fourth, we had no salary increase in ’24 because all the salary increase, the huge one, were done in ’23. So in ’24, we benefit from the kind of stable salary profile plus the full benefit of the price negotiation.

In ’25, it’s a little bit different. We had to implement a 5% salary increase from first of Jan everywhere. So that is what’s mandatory. So this is reflected in the first half figures. And we are negotiating, so it’s also piece by piece for each of the 200, 220 facilities in Germany with the local funding bodies.

And 70% of the negotiation, so we have already negotiated and got a rate increase for 30% of the network. But 70% is to come over the second half, so not reflected in the first half figures. So basically, in ’25, we have front loaded the wage adjustment and the coverage of further repricing will come in the second half. Again, to give you some granularity here, we are expecting on this scope, which is EUR 1,200,000,000.0 revenue. Just to give you, we have asked for 5% to 8% of rate adjustment, and first sign on it or the first information flow on it are pretty encouraging.

So this is actually pretty much covering all what we said about the margin rebound on the second half. And of course, what we have to do along the year is, of course, to maintain a strict discipline on the staffing level according to the business model of the various segment. It’s it’s requires a very strong discipline on replacement and interim, especially in Germany. It was difficult beginning of the year. It’s now stable at a low level, and we need to maintain that over the second half.

And it is actually the same type of attention that is required in the various segments. I hope it helps on the guidance. But as you see, it’s very precisely set. We were absolutely clear when we did the budget that we would be down to buy some basis points in the first half given this seasonality of wage increase. And actually, that’s it was probably a little bit more a wider effect than expected, maybe 20 basis points more.

But we are because of the specialty care profile transformation profile in France, but we are very clear about the road map and the way down to full year ’25 when it comes to pricing cost management. Maybe some words, some complementary information on the 30,000,000 restructuring costs. So as Gregori explained, this is very much related to the impairment and the stop we had to do on the to development project. But we are preparing also a cost reduction plan on overhead that will come second half in 2026. We have reduced globally the size of the operated network in France by 15% in the last two to three years.

And so it means that we are going to and we have also done a lot of work in automatizing and digitizing a lot of transactional processes, billing, accounting, and also planning. So we are going to post some savings that we that we are going to we will communicate in the second half that there will be some significant contribution from the saving plan, both internally and externally.

Laurent Gelavard, Analyst, BNP Paribas: Thank you, Sophie. It was very comprehensive.

Laura, Conference Operator: Thank you. And we’ll now move on to our next question from Konstantin of Caius. Your line is open. Please go ahead.

Konstantin, Analyst, Caius: Hi. Good afternoon, Sophie and Gregory, and thank you for the presentation. Can I go back to hi, Sophie? Can I first go back to the SMR issue and just make sure that I understand the the elements correctly? So first, on this on the fixed element that you mentioned that was Clarion specific where you lost out on 50% of the 20% of facilities, if that’s the right sort of way to think about it.

So what’s the total annual revenue impact from that that you’re sort of missing?

Sophie Boisard, Chief Executive Officer, Clariant Group: Yeah. We are missing on this 10,000,000 to $15,000,000 $15,000,000 would be be really the absolute number that we would need if they would have deployed according to the promise because, actually, this was actually promised money under the previous setup, and we are missing those. And so we are recovering to a more active case mix management, and it will be overcome.

Konstantin, Analyst, Caius: So what you’re recovering in the second half, is it just for the second half, or is there a catch up element for the two years that that you didn’t get that?

Sophie Boisard, Chief Executive Officer, Clariant Group: The catch up will depend from the we are actually we have some litigation or pre litigation ongoing. So it’s too early to say what the result will be. But yes, we are requiring to be compensated for what we did not get on the previous year. But currently, what we are guiding on is really the run rate and what is going to come from our own internal case mix management, not from external compensation.

Konstantin, Analyst, Caius: Okay. Understand. And just to to make sure that I understand I understand the exact nature of these SMR issues and the catch up. So is the catch up is what you’re seeing in the second half, is that just better pricing for business going forward, or is there some catch up for what you missed on in the first half as well?

Sophie Boisard, Chief Executive Officer, Clariant Group: No. It’s going forward. We we cannot reprice what we have done for the the the the the the previous activity, what is billed is billed, and the the average duration of stay is four to five weeks. So, I mean, there is a permanent churn. That’s what we are saying.

So there is permanent churn on the 6,000 bed capacity that we have in that segment plus the outpatient. So each billing is, is done. That’s what we see is that step by step, day after day, we are increasing the average rate that we can that that we are recording because we are better in recognizing and and documenting, the the care intensity, the the the the the tool. We are better in using the new framework that has been that has been implemented in ’24 and deploy ’25.

Konstantin, Analyst, Caius: Mhmm. I guess where I’m struggling a little bit is because you’ve basically said that in the first half, organic growth was 4.8. For the full year, you’re guiding around five, which implies that the second half organic growth is also around 5%, give or take, so sort of in line with the first half. But at the same time, the two main catch up elements that you’ve mentioned, the SMR issue and then the Germany repricing, all of those are pricing driven. So why is there no more pricing growth?

It it does suggest that there should be more. It shouldn’t be in line with first half.

Sophie Boisard, Chief Executive Officer, Clariant Group: I mean, we are not changing our guidance. We’ll see, of course, the more we can deliver, the better.

Gregory Lovicky, Chief Financial Officer, Clariant Group: Got it.

Konstantin, Analyst, Caius: As in the numbers suggest that the catch up is sort of cost driven as opposed to as opposed to revenue, but what you’re saying is all revenue driven. Do you see where the disconnect lies?

Sophie Boisard, Chief Executive Officer, Clariant Group: Yeah. I understand. No. It’s it’s both, actually, but pricing, is is absolutely it’s balanced between the two. We are we are confirming the guidance.

That’s what what we are doing. But, I mean, your your point is valid.

Gregory Lovicky, Chief Financial Officer, Clariant Group: And then you have a sequential and company in Germany. Yes. We will get more price increase, but but then the the the front of it on the salary, then you have the full effect on the full year basis. So just some kind of seasonality effect already in back on the, for example, second quarter, and you have full effect on the year. That’s why you have as well some seasonality inside the year that that that that that help us to to to to regain some some margin effects and points.

Konstantin, Analyst, Caius: Got it. Okay. On the one second. And just to make sure that I understand, what’s the exact quantum for Germany as a euro million figure that’s gonna contribute in in the second half?

Gregory Lovicky, Chief Financial Officer, Clariant Group: We didn’t discuss with Germany, but you can see half and half on the on the on the on between France and Germany on the on the contribution on the recovery for the signal app.

Konstantin, Analyst, Caius: Okay. Fine. Then looking at the you mentioned you made a few references to cost savings measures. It seems like you have a mix of both both organization like, central functions, but also perhaps cost further down in the organization. Can you elaborate a little bit on that?

What’s the total quantum of cost savings measure, that you have in mind, and how do they split between central and, organizational?

Sophie Boisard, Chief Executive Officer, Clariant Group: Just what I can say at this at this stage, and we will be more more precise in the second half once also discussed internally with the people involved. But to be clear, in France, it’s about, we have reduced the the operated network by 15%. So it means that if we take the overhead in France central and the group and the and the and the and the France overhead, we should be able to to reflect this 15% reduction both for internal, external costs. So that’s the magnitude we are working on. So this is only for overhead.

And when it comes to the network, yes, they are networks with the best. They are there are dedicated plan on the back of the digital plan. We are actually automatizing, you know, the billing function. We are automatizing also all the all the transactional processes, and this will bring some hundreds of FTE to be to be actually repositioned or diminished depending from the profile of of the the employee involved. So that’s what we are so we are not speaking of a kind of dramatic change, but, you know, it can be one FTE, two FTE per facility depending from the way the processes are structured country by country.

Konstantin, Analyst, Caius: K. Understand. And just going back, sorry, to my previous question to make sure that I use the right reference point here. But what’s the size of the SMR business in France? Is it 600,000,000, or do I have the wrong reference point?

Sophie Boisard, Chief Executive Officer, Clariant Group: No. That’s it.

Konstantin, Analyst, Caius: Sorry. Can you repeat?

Sophie Boisard, Chief Executive Officer, Clariant Group: Yes. You’re right. Then you have the right reference for

Konstantin, Analyst, Caius: me. Okay. Great. Then a couple of financial questions. On the disposals, so can you just confirm the exact number that you have outstanding for the second half?

And then second financial question, on CapEx. So in the first half, you had $98,000,000 all in, but you’re still guiding $300,000,000 for the full year. So it implies sort of a 100% uplift in the second half. So can you comment a little bit on what that is being spent on?

Gregory Lovicky, Chief Financial Officer, Clariant Group: On the third, I confirm, it’s on the disposal. So if I put it not only on the second half, but from today because we cashed in some closing days, it’s €150,000,000 remaining. We say roughly it was half of the of the plan that needs to be closed on the second half. The plan was €1,000,000,000, you you you get it. And the second, on the CapEx, yeah, we have been very disciplined on CapEx on the first half, especially to to be sure that when we allocate on the CapEx, we have the right payback on the on the development one.

We don’t we we don’t preview the the the the the the guidance on the on the on full year on the on the 100 on the CapEx maintenance amount and the 200 on on the on the development. I I think we we we keep this, and we will follow it up on on the second semester on that point as well.

Konstantin, Analyst, Caius: Got it. But should we assume then it’s gonna be 300 or 200,000,000

Gregory Lovicky, Chief Financial Officer, Clariant Group: We don’t change the guidance. So the guidance is 100,000,000 maintenance and 200,000,000 on the development.

Konstantin, Analyst, Caius: Got it. So you’re expecting an uplift, meaningful uplift in the second half of €200,000,000 basically?

Gregory Lovicky, Chief Financial Officer, Clariant Group: I’m basically yeah. We keep the guidance. Right.

Konstantin, Analyst, Caius: Okay. And and just to make sure that I heard the right number, so you’re from today, you have 250,000,000 left of disposal proceeds to be collected?

Gregory Lovicky, Chief Financial Officer, Clariant Group: 150.

Konstantin, Analyst, Caius: 150. So 150,000,000. Mhmm. So this is because you collected yesterday on Exactly. On on Exactly.

So you

Unidentified Participant: have $1.50 left. Yeah.

Sophie Boisard, Chief Executive Officer, Clariant Group: Exactly. On the top of the tissues. Yeah. Exactly. Exactly.

Konstantin, Analyst, Caius: Yeah. And the $1.50, is this gonna be collected this year, or is it a mix of this year or next?

Sophie Boisard, Chief Executive Officer, Clariant Group: I’m not so sure we have everything cashed in by the end of the year. We will most of it’s probably but at least Mhmm. Signed and collected, hopefully. So Signed signed, actually. Most of this is firmly signed.

The collection, the closing is also depending from some local authorization. So it is not totally in our hands from a process point of view, but most of it will be collected this year.

Konstantin, Analyst, Caius: Understood. Thank you.

Unidentified Participant: Gregory, Sofia, we we we have quite a lot of questions, but, unfortunately, we won’t be able to take all of those. This one, you probably, Gregory, you confirmed that the local average calculation include the last twelve months EBITDA of disposed asset until the effective date of deconsolidation? So that’s technically.

Gregory Lovicky, Chief Financial Officer, Clariant Group: Yeah. Mhmm. Yeah.

Unidentified Participant: Second question, can you guide us through the level of nonrecurring cash expenses for 2025 as a as a whole, eventually on 2026, but that is not public. You might not answer this one. Last question. On your 1,500,000.0 of real estate debt at June ’25, What’s the amount included in the real estate TV?

Gregory Lovicky, Chief Financial Officer, Clariant Group: Yeah. On the first one, yes, I do confirm. So when we publish the the pro form a, the local average, we include the contribution from the disco data until they are deconsolidated. Now this is the way we calculate it according to the to the to the agreement we have with the the with the accounts. And this is the way we calculated it with the world cost 6.6 times EBITDA pro form a of the disposal of the disputes.

On the second one, I think on the nonrecurring, I just we say that we in the first half, we we had €55,000,000 of nonrecurring. Part of it is impairment or the restructuring. So as you can understand, major party is part of this plan, and and and we are going through. So this plan will come to an end on 2025, and you share as well. It’s good as well to to make a podium because we mentioned it in the in the in the press release.

We we didn’t fully record all the gain that we will have on the on the on the disposal plan, and and we put in the press release. So the the gain are estimated so far at €200,000,000 plus. So this is one of the reason as well we don’t guide on the noncurrent because you have plus and minus, especially for our obligers going from the plan and and and and going further. Obviously, we continue to have a discipline, but we don’t externally really don’t need. And last but not least, on the on the real estate.

So, yes, we have roughly €1,500,000,000 real estate date at today. Roughly €700,000,000 of those are are in the in the in the joint venture with with with partner.

Konstantin, Analyst, Caius: Thank you,

Unidentified Participant: Gregory. Another question, it’s a clarification one, regarding the objective of EBITDA margin up 100, basis points, to 150 basis points in 2026 compared to 2023. What is the correct is it correct that it was 11.8% in 2023?

Gregory Lovicky, Chief Financial Officer, Clariant Group: Yeah. That’s correct. That the the starting point is eight 11.8% EBITDA margin back in 2023, and the guidance for 2026 if we improve by 100 to 150 basis points in 2026 with a starting point 11.8% back in 2023.

Unidentified Participant: Thank you, Gregory. That’s it on the chat. We probably will take one more question live. So Laura, please.

Laura, Conference Operator: Sure. We will now take our next question from Thomas Mannion Just

Thomas Mannion, Analyst: in relation to the pricing, in relation to the French business, when was when did you become aware that the pricing there was gonna be a pricing delay? You know, this seems to have came as a bit of a surprise to analysts. I’m just wondering what kind of lead time did you have in this, and are you already seeing this to work its way out? I know we’ve talked about it significantly through this call, but can you please spend a bit more time on that?

Sophie Boisard, Chief Executive Officer, Clariant Group: Yes. Actually, there has been some some discussion. The so the the pricing change has been actually a discussion all along all along the 24 exercise. There had been commitment from the ministry to correct some of the basis of calculation, especially for this newly opened or reopened facility. That was a very specific for us in the magnitude.

And there has been maybe you are not aware, but in France, there have been a lot of change. And so, unfortunately, we lost the previous health minister with the the the the withdrawal of the the former prime minister. And then a new one was appointed. So all this discussion took place between November 24 where the correction was actually very, very clearly promised to us. And then the new newly appointed minister early Jan did not actually executed it the way it should, And we discovered in the final tariff allocation that happened actually in April, so the April.

When we got into the detailed information, we realized that what we were expecting was not reflected in the the the the the the framework granted in the 15 facilities at stake as as expected. So basically I’m sorry. It’s a very complex story, that has to do with the, the the current instability, in the in the French, government, which is, which is actually not so usual for us.

Thomas Mannion, Analyst: But the for clarity then, at the April was the first time that you found out that, you know, the pricing was not as expected?

Sophie Boisard, Chief Executive Officer, Clariant Group: Yeah. We, I mean, we found out we had to to, you know, to to to balance the plus and the minus. And actually, we had started, of course, already some September this this plan to to upgrade the case mix management, database case mix management to enter all the data, all the collected data, and to see how we could the best steer the case mix according to to the to the information and to and to the care framework that has been communicated. So, actually, there has been, as I said, plus and minus. The minus were a kind of more than expected when we did the budget.

And that we see also a lot of upsides confirming and firming up. And this is actually what why definitely for specialty care first half has been a transitional semester.

Thomas Mannion, Analyst: Okay. And then just one final I I appreciate the time. One final thing in respect to that, how long is this current agreement going to continue for? Or do we is there always a risk that this is gonna be an issue in FY ’26 and FY ’27? Or At what point you know, the contract you have now, I know it’s not a specific contract, but the pricing agreement, do we expect that to change again over time?

Sophie Boisard, Chief Executive Officer, Clariant Group: I think no. The overall framework, with this 90 various specialty and care pathway and the the criteria on the intensity of rehabilitation and the and the the the the care intensity and all these things. I think this is stable. What is going to change year on year is actually the overall indexation, but we have planned actually the limited expectation on indexation so that we are, you know, we are not expecting a massive positive indexation, more kind of zero plus something. So that’s where that’s our how we are modeling and planning currently.

And what I said about what the missing part of the stable one, I think we can only now have, I would say, a good news for the past because we are claiming to get to get some compensation. For the time being, we’ll see. But, I mean, we have swallowed this negative transition 2425. And now what we have to do is to steer according to the to the our own case mix management based on the of new tariff framework. And for the newly opened facility, what they have to do is to find compensation.

They haven’t been the fixed part is not the one that was promised. Okay? But they have to to to play with the rest of the tariff scheme and to to push the the right specialty and the right care intensity in what they are doing. And this is actually, exactly the way, we are working on these 15 clinics.

Thomas Mannion, Analyst: Apologies, Adam. Was on mute. Appreciate it. Thank you.

Laura, Conference Operator: Thank you. That was our last question. I will now hand it back to Sophie for closing remarks. Thank you.

Sophie Boisard, Chief Executive Officer, Clariant Group: So thank you very much for your question and your attention. As I said, we remain after the positive and successful achievement of our refinancing plan, given the strong business momentum and very solid fundamentals of our business portfolio and very high commitment of all the client community, we look forward to the coming months and years with a great deal of focus and confidence, and we are really happy to be actually back to operation and development of our business after this very significant effort we made on the disposal and the portfolio refocusing over the last eighteen months. So that’s it for the first half results, and I expect to speak to you soon for our third quarter and especially also for the full year in February 26. Have a nice summer. Bye bye.

Laura, Conference Operator: Thank you. Ladies and gentlemen, this concludes today’s call. Thank you for your participation. You may now disconnect.

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