CHIEF FINANCIAL OFFICER’S REPORT

Full-year order entry was CHF 903.6 million, a decrease of 12.1% compared to CHF 1,028.1 million in 2023, reflecting a 10.5% decline in local currencies. The Partnering Business segment was impacted by a shift in OEM customer ordering patterns, moving from larger, long-term orders in 2023 to smaller, more regular orders in 2024 as supply chain disruptions had fully normalized. Meanwhile, the Life Sciences Business segment saw moderate order entry growth in local currencies in the second half of 2024 compared to the same period in 2023. Overall, the Group's order entry in the second half decreased by 11.2% in local currencies.

In 2024, reduced spending in the biopharmaceutical industry led to decreased demand for life science research instruments, affecting both the Life Sciences Business and the Partnering Business. Additionally, a general market weakness in China impacted both direct sales and indirect business through global OEM customers. In the Partnering Business, sales were further influenced by specific customer-related factors, including normalized demand patterns following inventory replenishment by a key customer in 2023. As a result, reported sales for the Group in fiscal year 2024 decreased by 13.0% in Swiss francs, totaling CHF 934.3 million (2023: CHF 1,074.4 million). In local currencies, sales were 11.5% below the prior-year period, aligning with the revised sales outlook from October 2024, which anticipated a decline of 12-14%. Sales in the second half decreased by 12.3% in Swiss francs and by 11.3% in local currencies compared to the prior-year period. These sales results were previously communicated in a trading statement on January 8, 2025.

Sales in the Life Sciences Business in 2024 reached CHF 397.0 million (2023: CHF 451.8 million or CHF 442.1 million in local currencies), reflecting a decrease of 12.1% in Swiss francs and 10.2% in local currencies. Reduced CAPEX spending by the biopharmaceutical industry globally, along with government and academic customers in the US, resulted in decreased demand for life science research instruments. Additionally, market weakness in China negatively impacted demand, as the announced stimulus program failed to provide any impetus in 2024. Instead, it prompted some customers to delay orders while awaiting funding decisions. Contributing to a more favorable sales development in the Life Sciences Business were recovering consumables sales post-pandemic, a solid service business due to a higher installed base of instruments, and continued strong demand for newly launched products, particularly from genomic diagnostics companies. Recurring sales of services, consumables and reagents increased to 57.6% of segment sales (2023: 52.8%).

In the second half of the year, sales declined by 5.0% in local currencies, following the sharp 15.5% decline in the first half. Sequentially, the Life Sciences Business segment grew by 13.6% in local currencies when comparing the second half of 2024 to the first half.

In the second half of 2024, the Life Sciences Business segment experienced moderate order entry growth in local currencies compared to the same period in 2023, resulting in a book-to-bill ratio slightly above 1 for the full year.

The Partnering Business generated sales of CHF 537.3 million in 2024 (2023: CHF 622.6 million or CHF 613.1 million in local currencies), marking a decrease of 13.7% in Swiss francs and 12.4% in local currencies. As anticipated, Tecan did not record any meaningful sales from the pass-through of material costs from broker buys in this segment for 2024, compared to CHF 8.0 million in 2023. 

The lower demand for life science instrumentation also had a negative impact on the Partnering Business, influencing both the Cavro^® OEM components business and the contract development and manufacturing revenues for life science instruments in the Paramit product line. Market weakness in China also impacted the Cavro OEM components business and sales of in-vitro diagnostics systems in the Synergence^™ product line to larger global OEM customers with significant exposure to China. However, outside China, sales of in-vitro diagnostics systems in the Synergence product line developed positively, with increased contributions from newly launched systems. Sales in the Paramit product line, which served medical market customers, were negatively affected by normalized demand patterns following the replenishment of depleted inventories in 2023, when supply chain disruptions eased, and by the anticipated reduction in sales from the pure pass-through of material costs. These impacts were specific to a single customer and included a model transition, rather than being related to end market conditions. All these factors had a more pronounced impact in the second half of the year, when segment sales decreased by 15.9% in local currencies.

Order entry in the Partnering Business for the full year decreased slightly more than sales as OEM customers adjusted their ordering patterns, shifting from larger, long-term orders in 2023 to smaller, more regular orders in 2024 as supply chain disruptions had fully normalized. Despite this shift, the book-to-bill ratio remained close to 1.

Gross profit reached CHF 320.6 million (2023: CHF 390.5 million), which was CHF 69.9m or 17.9% below the prior-year figure. The decline is mainly due to the lower sales volume, which was also the primary factor behind the gross profit margin of 34.3% of sales (2023: 36.3%). 

Main effects contributing to the gross profit margin level:

• (-) Lower sales volumes
• (-) Increased depreciation and cost adjustments
• (+) Favorable product mix
• (+) Price increases 
• (+) Efficiency and cost improvements

In 2024, Tecan successfully reduced operating expenses with a net effect of CHF 9.6 million, while including CHF 8.0 million in restructuring-related costs. Total operating expenses, excluding the cost of sales, amounted to CHF 251.7 million or 26.9% of sales (2023: CHF 261.3 million or 24.3% of sales). This decrease was primarily driven by tight cost control, reduced performance-related compensation, and a decrease in full-time equivalents (FTEs). 

Sales and Marketing expenses totaled CHF 110.2 million (2023: CHF 119.6 million), representing 11.8% of sales (2023: 11.1%). They fell by 7.9%, largely due to lower revenue-based compensation, while maintaining the capability to capitalize on market recovery. 

In Research and Development (R&D), we sustained strong investment in innovation, with multiple new products in the pipeline. Net R&D expenses slightly decreased to CHF 68.4 million (2023: CHF 69.7 million), but increased as a percentage of sales to 7.3% (2023: 6.5%). 

General and Administrative (G&A) expenses rose to CHF 73.2 million (2023: CHF 72.0 million) due to exceptional corporate costs related to IT systems (SAP S/4HANA), M&A activities, and legal fees. However, underlying costs decreased as a result of implemented cost-saving measures. As a percentage of sales, G&A costs increased to 7.8% (2023: 6.7%).

Adjusted EBITDA¹ (operating profit before depreciation and amortization) was CHF 164.4 million, down from CHF 220.6 million in 2023. The adjusted EBITDA margin decreased to 17.6% of sales (2023: 20.5%), aligning with the revised margin outlook of 16-18%. The decline was primarily due to lower sales volumes, as profitability is highly volume-dependent. However, profitability was supported by a comprehensive cost-reduction program. Additionally, exchange rate movements in major currencies against the Swiss franc negatively impacted the margin by approximately 40 basis points.

The reported profit before interest and taxes, EBIT, was at CHF 75.6 million (2023: CHF 136.0 million).

Reported EBIT in this segment (earnings before interest and taxes) reached CHF 39.5 million (2023: CHF 84.4 million). The reported operating profit margin decreased to 9.8% of sales (2023: 18.3%), primarily due to the negative volume effect, which resulted in missing economies of scale. Cost control measures helped alleviate the impact of lower sales volumes and adverse exchange rate effects. The adjusted EBITDA³ (operating profit before depreciation and amortization) for this segment was CHF 79.1 million, compared to CHF 105.5 million in 2023. This reflects an adjusted EBITDA margin of 19.6% of sales, compared to 22.9% in 2023.

Reported EBIT amounted to CHF 46.6 million (2023: CHF 64.4 million), while the reported operating profit margin reached 8.7% of sales (2023: 10.3%). Similar to the Life Sciences Business segment, lower sales volumes and the resulting negative economies of scale were the main factors affecting margin development.

The adjusted EBITDA² for this segment was CHF 91.1 million, compared to CHF 125.6 million in 2023. This reflects an adjusted EBITDA margin of 16.9% of sales, compared to 20.1% in 2023.

Adjusted net profit3 was CHF 103.1 million, down from CHF 164.4 million in 2023, when earnings were significantly boosted by a one-time positive effect related to transitional measures from the Swiss tax reform. Adjusted earnings per share were CHF 8.08, compared to CHF 12.88 in 2023.

Shareholders' equity at December 31, 2024 was at CHF 1,435.3 million (December 31, 2023: CHF 1,348.9 million). Tecan's equity ratio increased to 67.7% as of December 31, 2024 (December 31, 2023: 65.0%).

Cash flow from operating activities was CHF 148.5 million, compared to CHF 160.6 million in 2023. Cash conversion improved to 100.0% of reported EBITDA (2023: 77.5%) mainly driven by a decrease in inventory and receivables. Thanks to solid cash flow management, Tecan's net liquidity position (cash and cash equivalents plus short-term time deposits, less bank liabilities, loans, and the outstanding bond) increased to CHF 153.7 million as of December 31, 2024, up from CHF 112.6 million on December 31, 2023.

1. The adjusted operating profit before depreciation and amortization excludes restructuring costs as well as acquisition- and integration-related
   costs (+CHF 16.4 million)
2. The adjusted operating profit before depreciation and amortization for the Life Sciences Business segment excludes restructuring costs as well as acquisition- and integration-related costs (+CHF 6.4 million). The adjusted operating profit before depreciation and amortization for the Partnering Business segment excludes restructuring costs as well as acquisition- and integration-related costs (+CHF 5.3 million).
3. The calculation of 2024 adjusted net profit and adjusted earnings per share excludes restructuring costs as well as acquisition- and integration-related costs (+CHF 16.4 million) and accumulated amortization of acquired intangible assets (+CHF 19.0 million) and they were calculated with the reported Group tax rate of 13.6%.