Siemens Healthineers AG (SHL.DE) Q4 FY2025 Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to our annual press conference for fiscal 2025. Thank you for joining us here in Erlangen and via webcast. We would like to remind you that this press conference is being recorded. And before we begin, I would also like to draw your attention to the safe harbor statements. This press conference may contain forward -- and hopefully, forward-looking statements. These statements are based on the company's current expectations and assumptions and are, therefore, subject to certain risks. So, we have roughly 1 hour for our discussion. First, our CEO, Bernd Montag; and our CFO, Jochen Schmitz, will discuss the results of the past -- of the bygone quarter and the past fiscal year. They will then provide you with an update on the expectations of the company's further development in the new fiscal year. And after that, both will be available until 11:00 for questions. The slides you will be seeing can be found on the press page on the Internet, and there will also be a recording of this press call. And with that, I'll hand over to our CEO, Bernd Montag.

Thank you very much, Matthias, and good morning, ladies and gentlemen. It's great to have you here with us today here in our Innovation Center or virtually. In a challenging environment, the Healthineers team has successfully completed another fiscal year-end. I would like to express my sincere thanks to all my colleagues for this achievement. The very good equipment book-to-bill ratio of 1.14 in fiscal year 2025 underscores the high global demand for our products and solutions and also our strong market position. With the comparable revenue growth of 5.9%, we're at the upper end of the target range we set ourselves a year ago. Our business grew in all regions, except China. We are also very satisfied with the performance of the adjusted basic earnings per share. Here, we are clearly in the upper half of the forecast range. If we disregard the impact of trade tariffs amounting to EUR 0.12 per share. And if we would not take that into account, we would have even exceeded our original outlook from a year ago. The development of free cash flow is also remarkable. We could reduce our debit (sic) [ debt ] ratio to the 2.8x., our EBITDA over the course of the year. And based on the good results in fiscal 2025, we are raising our dividend proposal by EUR 0.05 to EUR 1 per share. And now I would like to take a look at the performance of the four segments in the past fiscal year. Our three synergistic segments: Imaging, Varian, and Advanced Therapies increased their revenue, including -- excluding tariffs by a total of almost 8%. This was driven by the excellent growth momentum of Imaging, which also further improved its margin through economies of scale. Varian once again demonstrates how important and correct the combination of the Healthineers classic team was 5 years ago. Since our merger, Varian has been growing at least in the high single digits year-after-year. In terms of margin, Varian was at the upper end of the original segment assumption in fiscal year 2025, excluding tariffs. Advanced Therapies contributed solid growth and maintained its margin at last year's level. And in Diagnostics, we achieved a further leap in profitability through the conscientious and successful implementation of the transformation program, despite the challenges of the Chinese market. And now, Jochen, I'd like to turn over to you for a look at the figures for the fourth quarter.

Thank you, Bernd. I would also like to warmly welcome you in Erlangen. The positive order intake throughout the year continued in the fourth quarter. The equipment book-to-bill ratio at Imaging, Varian and Advanced Therapies was once again well above 1. This shows the growth trajectory the segments are on. In China, the equipment book-to-bill ratio was again just above 1, nominal sales in China in the fourth quarter were around EUR 620 million as in previous years. Our figures, therefore, do not yet indicate a market recovery in China. And I will explain towards the end of my speech, how we took China into account in our outlook too. Thanks to solid growth. Sales growth in the final quarter, we achieved growth at the upper end of our forecast range as planned. Sales development in this fiscal year was much more evenly distributed across the quarters than in previous years. In 2024, we recorded growth of 4.3% in the first 9 months of the fiscal year and ended the year in the fourth quarter with a strong sales increase of 5.6%, excluding antigen that had been a topic the year before. This time, our company had already grown by 6.8% in the first 9 months. And in the fourth quarter, we achieved a growth of solid 3.7%. We had already communicated that, in our Q3 communication, the year-on-year margin development was mainly impacted by higher tariffs. Without these tariffs, the margin in the fourth quarter would have been more than 100 bps higher, reflecting the strong expansion of operating margins in the segments. Including tariffs, earnings per share were at the same level as in the previous year quarter. And excluding tariffs, earnings per share would have been around EUR 0.74. This would correspond to a growth of 10% compared to the previous year. Now, let's take a look at the segments. For Imaging, our PETNET business and the photon-counting CTs were once again the key growth drivers. Revenue rose by 6.5% compared to a strong previous year quarter. Imaging's adjusted EBIT margin was reduced by a total of around 3.50 basis points due to tariffs and unforeseeable business mix and negative special effects. The special items related to a number of minor aspects such as the bringing forward of a government grant from the fourth to the third quarter or the increase in the provision for necessary service inspections in the installed base. Now, let me move on to the two segments that focus on therapies, namely Varian and Advanced Therapies. Since fiscal year 2023, Varian has consistently recorded double-digit revenue growth in the fourth quarter compared to a very, very strong basis. Varian grew only by 1.4% this time. The exceptionally high volume in previous years has thus reflected in the somewhat lower growth rate in the fourth quarter of this year. In absolute terms, Varian's revenue development was very stable across the quarters. Margins developed very well at Varian. Excluding tariffs, Varian achieved a strong margin of around 21.5%, which is also attributable to a favorable business mix. Advanced Therapies achieved solid growth of 3.8%. And excluding tariffs, a solid margin of around 19.5%. This means that Advanced Therapies is operating at the strong level of the same quarter last year. Diagnostics recorded flat sales growth year-on-year due to the volume-based public procurement in China. We had already pointed out that volume-based procurement would primarily affect the second half of the fiscal year and continue into the new fiscal year. This will continue until the effects are included as a new baseline in the respective comparative figures from the previous year. And this expectation has happened, but we're not through with it. Nevertheless, Diagnostics remains on track for margin improvement. However, this was also supported by a weaker previous year quarter. Without the negative effects from earlier periods, the Diagnostics margin in the previous year quarter would have been around 7%. In contrast, the year-on-year margin increase was attributable to operational improvements, tariffs, cost diagnostics, around 100 bps. Let's change perspective and once again, look at Healthineers, in general. You will see that we increased revenue, excluding translation effects for the third year in a row quarter-to-quarter and also compared with the previous year. This impressively underscores our growth performance. Excluding tariffs, this success story also applies to margin expansion year-on-year, and sequentially we increased our margin for the third consecutive year. This shows that we are consistently converting our strong sales growth into operative profit growth. This brings me to the outlook for fiscal year 2026. We expect our growth trajectory to continue this year. For the fiscal year 2026, we anticipate a comparable sales growth of 5% to 6%. As in the previous year, we have decided to assess the growth opportunities in China cautiously. With regard to China, we have repeatedly said over the past year that we need sustainable recovery in order to become more optimistic, and we do not see this happening yet. We have, therefore, decided to assume flat sales development in China for fiscal year 2026 as well. We also expect our positive operating earnings performance to continue this year. At the same time, however, we expect profit growth in fiscal year 2026 to be leveled by the current macroeconomic challenges. The keywords here are a strong euro and tariffs. Taking these macroeconomic headwinds into account, we expect earnings per share to be between EUR 2.20 and EUR 2.40. I will break down the macroeconomic factors and operational improvements in more detail in a moment. But first, let's take a look at the key assumptions for the segments and the other reconciliation items for adjusted earnings before taxes. We expect Imaging, Varian, and Advanced Therapies to continue on their growth trajectory. For Diagnostics, we expect flat sales growth due to the impact of volume-based public procurement in China. In terms of margins, the headwinds from currency effects and tariffs are also reflected in the assumptions for the segments. However, if we exclude these two negative effects, we see a margin increase in every segment. For Imaging, we expect margins to decline slightly due to currency effects and the impact of tariffs. These effects are even more pronounced in Advance Therapies with our production facilities in the dollar zone, this segment is more dependent on exchange rates and tariffs. For Varian and Diagnostics, we expect fewer headwinds from tariffs and no significant headwinds from currency due to their value creation in the U.S. For Varian, we expect the underlying margin expansion to offset the headwinds from tariffs, and this will result in a largely flat margin development compared or stable margin development compared to the previous year. For Diagnostics, we expect the underlying margin expansion to more than offset the impact of tariffs. This results in a slight margin expansion in our assumption. Assuming the midpoints of the ranges for financial result and taxes, we expect a negative year-on-year development, slightly negative development in the financial results. This headwind is mainly due to the refinancing at higher interest rates and a slight normalization of the tax rate. In addition, we do not expect any onetime gains from what we call fair value accounting of smaller venture investments this time. To bring all these aspects together at the group level, the next slide illustrates the factors that will influence earnings per share in financial year 2026. In terms of currency effects, we expect headwinds of around EUR 0.15 year-on-year. This is primarily due to the stronger euro against the U.S. dollar and other relevant currencies. In addition to the U.S. dollar, many other currencies are currently weaker against the strong euro leading to significant negative currency effects. We also expect tariffs to have a negative effect of around EUR 0.15 in fiscal year 2026. Overall, we anticipate tariffs to have a negative impact of around EUR 400 million on our earnings in fiscal year 2026. In 2025, this figure was at roughly EUR 200 million. The past fiscal year included initial compensatory measures such as early delivery and even lower customs rates prior to the 15% deal between the U.S. and the EU. Their effect has now almost expired, however. For fiscal year 2026, risk mitigation measures such as sourcing, optimization and selected pricing measures have been taken into account. This does not include future reductions through better pricing or the possible relocation of value creation. And as already mentioned, the financial result does not include the profit from fair value accounting, which was reflected in the financial result for fiscal year 2025. This corresponds to a headwind of around EUR 0.03. Excluding these three negative effects from currency, tariffs and financial results, we expect EPS growth of around 10% from operational improvements in the segments. We expect fiscal year 2026 to be of the year with the most noticeable effects from tariffs. Assuming that the current tariff environment persists, we expect the net impact of tariffs to decrease year-on-year as a result of our countermeasures. We also expect that the negative effects of tariffs will be fully offset in the medium term. We have three key levers at our disposal to achieve this. First, market-appropriate pricing. We have already pointed out on several occasions that in our view, tariffs will make healthcare more expensive for everyone. Second, consistent cost control. And if that doesn't suffice, thirdly, a shift in value creation. With our global production setup and our strong presence in the U.S. and other countries, we have every opportunity to shift parts of our value creation if needed. We are examining the options available to us. However, we will take action only once there is sufficient planning certainty and it makes economic sense. Before I conclude, I would like to share a few current assessments on the ongoing first quarter with you. We expect sales growth in the first quarter to be below our growth forecast of 5% to 6%. We expect growth at Imaging and Varian in the first quarter will be roughly in line with our assumptions for fiscal year 2026, which would mean mid-single-digit percentage growth for Imaging and high single-digit percentage growth for Varian. For Diagnostics, we expect growth to decline slightly due to volume-based public procurement in China. And we also expect for Advanced Therapies, slightly lower growth at the start of the new fiscal year. Due to current tariffs and exchange rates, margins in the first quarter are expected to be below the same quarter last year. And with that, back to you, Bernd.

Thank you, Jochen. This fourth quarter marks both the end of the fiscal year and the conclusion of our new ambition strategy phase. We presented new ambition at our last Capital Markets Day in November 2021 following the closing of the transformative combination with Varian. Despite significantly more difficult environment with unexpected macroeconomic challenges, such as, the prolonged duration of the pandemic, the inflation shock, the global supply chain crisis, the impact of anticorruption measures in China, geopolitical tensions, and last but not least, tariffs, we have achieved revenue growth of around 6% and double-digit EPS growth every year since 2022. And maybe more importantly, when we look into the future, first, on the product side, we have expanded our innovation lead with groundbreaking technologies such as photon-counting CT, our low helium platform for magnetic resonance imaging, and Varian innovations such as HyperSight, RapidArc and perfect kinetics. Second, from our customers' perspective, we have increased our clinical relevance by combining imaging and therapy under one roof in the detection and treatment of cancer, and continuing our pioneering work in the field of theranostics. At the same time, we are driving forward the further development of vascular interventions through new partnerships with device and robotics companies. And we have a leading position in the rapidly growing field of diagnosis and treatment of neurodegenerative diseases such as Alzheimer's. Thirdly, we have significantly increased our relevance for decision makers among healthcare providers. This is demonstrated by our more than 200 value partnerships. Each of these partnerships proves the unique strength of this new type of collaboration. And at the same time, makes us more resilient by increasing our recurring revenues. Fourth, we have further strengthened our leadership position in the field of artificial intelligence. We now offer more than 110 approved AI applications and technologies, including Deep Resolve, which dramatically speeds up MR examinations. Since Deep Resolve was introduced in 2022, our customers have used the technology in more than 300 million MR scans. And last but not least, I would like to highlight the remarkable turnaround achieved by our diagnostics team from negative margins in a year marked by high inflation and supply chain disruptions, the DX team has brought the business to a high single-digit margin level. And of course, this is not the end of the story. On November 17, we will herald our next strategic phase at Capital Markets Day. In addition to our corporate strategy for the coming years, we will also provide information on our financial framework and medium-term financial outlook. All business units will present their growth strategy, innovation road map, and plans for further increasing profitability in London. As an additional highlight, we will provide an insight into the engine room of our AI development. I would be delighted, if you accepted our invitation and joined us live via webcast for our Capital Markets Day. And with that, back to you, Matthias.

Thank you very much, Bernd and Jochen. We will now begin the questions-and-answer session. First, I would like to ask those of you who are here with us in Erlangen to ask their questions. And after that, we will proceed into the telephone conference.

Höpner, Handelsblatt. I would like to find out what do you expect from the Siemens decision about majority share in the next week or majority participation?

Well, I'll try to take that easily. I expect and hope that there won't be any press conferences where such questions will have to be asked or in other words, it would be very helpful for both companies. If at Siemens Healthineers, we would talk about Siemens Healthineers, a fantastic company that is in the upper half of the docs, one of the few German global leaders with a great forward potential and that we don't know about who's potentially reducing shares. And Siemens AG should also talk about itself. And in analyst talks and in press conferences, we don't have to talk about the Siemens share in us. That would be in the interest of both companies, I think. You make life difficult for me. So, I think the most important thing is clarity. But I think it's also a logical point that we're here today now, and I can talk about Jochen Schmitz and myself today but also for many others that we started with the IPO in 2018, and we established an independent company, one that is fully aligned to our customers' worlds. If someone is active in healthcare, that's a decision for lifetime. Once you become a medical doctor, you are a physician. And if you work at Healthineers, you dedicate your life to healthcare, and that's something customers like and value and something that we focus on in the companies. And therefore, I think that also the outside perception of such a company should be the one-off being independent. And I have no reason whatsoever to say that we are in any way hindered by Siemens AG or that we can't do anything that we would want to do. It's just a question of perception, whether you see this or see us as an independent leading large corporation and representative company for German industry or whether you see some subsidiary or some daughter of Siemens that deals with medical technology.

Next question, Mr. [indiscernible]

Mr. Montag, I have a question. If Siemens should completely leave Siemens Healthineers, then would the new strategy also see a change of name as an option that you only called Healthineers, for example? And the second question is about the Chinese market. Can you describe in more detail what the competitive situation there is like? And what is volume-based central procurement, what effects it has? And then there is also a Chinese company that has indirect routes in Siemens Healthineers that's very active in the Chinese market.

Well, it's two very different questions. The question about the brand is not an easy question. It's difficult to answer it, and I don't want to give rise for speculation. Nevertheless, I want to provide an answer. There's three aspects in this. There is -- on the one hand, the aspect, and I think that's the most important one that we are paying into the Siemens brand ourselves. And with that, I mean when it's about our regular customers. The other day, I attended an event 50 years on computed tomography at this Siemens. We've been offering for -- we are -- or Siemens has started working in this field for the -- or 50 years ago. And these devices are just fantastic devices, and not because people were thinking that this company that also builds power plants or smartphones or industrial automation, when they do something like this, then their healthcare products are also good. But we also worked in this -- within this brand, and we'll continue doing so. So, we're not only a recipient profiting from this brand and the brand, interest in the brand, but that we are also contributing to it and make a net positive contribution, so to speak. And then, there are some geographies where the name Siemens is helpful as such and per se. And here, I'm talking about countries in the process of developing and in the Asian market where Siemens is just the top of German industry. And then, there's a point in here like the comparison you made to Infineon, in the very long, long, long term, a company that is completely a healthcare focused. Which means, in 30 years' time with -- to have this relationship to Siemens as a brand name as well, whether this will still make sense. And we have to consider this and it's not a no-brainer. The second question about China. The situation in the market in China, the -- in the last 2 years, the Chinese market has been at a lower level at a -- historically speaking, too low level because there is some reticence towards purchasing and also changes in the way procurements are made. And -- but that's going to change sooner or later. Jochen Schmitz already said we're not betting on anything, we are waiting for evidence. Our market position is something we well defended in China. We have a stable market share, which is good, but it's nothing fantastic or great. It would be great if we had reached what we have reached in the rest of the world, namely a continuous increased market share. However, we're the only multinational company, as it's -- as we're called in China, that's managed to do so. At the same time, we're seeing that local competitors are gaining market share. But this is too -- or has a negative effect of other multinationals, so at the expense of the smaller multinationals, right? Does that answer your question?

So if there are further -- no further question here from the audience present here. Are there any questions from virtual participants? Doesn't look like it at present? Okay. There is one more question. Mr. [indiscernible] from Bloomberg News.

I wanted to know, why do these tariffs, the U.S. tariffs have a rather strong effect on the earnings. I mean, EUR 400 million is quite a bit. Maybe you could explain how that is related to the footprint in the U.S.? And then my second point is thinking forward, do you have new strategic opportunities now with the possible change in the shareholder structure. I mean, you asked us not to mention this topic anymore, but nevertheless, I have to pick it up. It would be interesting to see whether there is possible other ways for you that will open up through that.

Well, let me start with the second question, and then I go back building a bridge to the first one where maybe you can take over. So, the point about the strategic opportunities, I would like to be a bit careful, really. Since the IPO, we're doing our own thing. We are following on our own path. We are a company that has a Supervisory Board, and there's nobody who tells us what to do, provides instructions. So, it's my role as the CEO to complain if I weren't allowed to do certain things and make certain decisions. This is not the case. So, when we look what's -- we were able to do and how we were able to develop the business in the last couple of years with the acquisition of Varian as the biggest step or that we built up the antigen business during the pandemic. These were things that we did on our own, independently. And that most probably are seen as part of the group structure or would have been much more difficult to accomplish if we hadn't considered really part of this group. So, I don't see that there would be -- will be many new strategic opportunities because of that. So, we are much further actually than it is in the heads that see us as a subsidiary of some listed division of Siemens. This is not the case. At the same time, we could become attractive for new investors. So, that means that it is possible for long-term investors that are interested in big tickets to invest in Siemens Healthineers, which was much more difficult in the past. I'd just like to recall the fact that when we did the IPO, the free float amounted to EUR 4.2 billion. So, if you want to invest EUR 1 billion, you have 25% or you bought 25% of the free float. And that's something different if it's a company that has a market capitalization of EUR 50 billion, EUR 60 billion, EUR 70 billion, because then it's just a different possibility of investing. And I think in the long term, this is going to be helpful for us and leads to a positive exchange rate development and for that -- are presently suffering from certain insecurities. Then about the tariffs for the -- in the footprint question you asked. We are a global company. We have 73,000 staff. We have 17,000 in the U.S. and 15,000 in Germany. The U.S. is the largest -- is the largest population in our corporation are U.S. citizens; and Germany with 15,000; and India with 7,500 follow suit. This global positioning helps us, but it doesn't mean that we do each and everything in every country. In the U.S., there's Varian, Diagnostics and Imaging. There's no tariffs in the U.S. And if you export to Germany and then there's other business like computed tomography and many others, CT or Advanced Therapies that are more strongly influenced by tariffs. And then there's a question, what happens if -- you -- if there's possibility to optimize in one position you saw. Yesterday, you saw the photon-counting center. If you try to replicate that in any larger geography, you lose efficiency and everything gets more expensive. And that is why it is a deplorable development that global companies that have to be global per se, that they are basically caught up in this trade war whirlpool.

Well, I don't want -- I can't add that much really. That's why, it's true that the entire industry is kind of standing together and they are working in the same direction and not a single one is saying, "Oh, it's cheaper for us in the U.S. market that provides more added value." Industry are standing together, and they're trying to avoid the situation that Bernd Montag just described that for structural reasons, you may be urged to make the system more expensive. Everybody tries to stay out of something like this. And then, when you look at our added value structure, you see that there is many historical aspects that play into it. As a rule, we are producing in competency centers if you want, where R&D and manufacturing are closely connected. And they were developed over time. Mr. Röntgen had a workshop in Erlangen that would build the X-ray tube for him, and that's why Imaging takes place here. And the best super conducing magnets in Europe, where produced as in Oxford as a spinoff of the University of Oxford. That's why we continue building magnets in Oxford. And Emil von Behring found the diagnostics plants in Marburg. And that's why plants continue -- diagnostics plants continue to be located in Marburg, because there's a lot of competency and manufacturing or production capabilities. That often has historical reasons. There's some exceptions, structural movements towards China 20, 30 years ago to cater to these markets from structural reasons and also competencies in India. But everything else is primarily historically and also the U.S., we cater to the Western World in Molecular Imaging from the U.S. because there is the competency in Knoxville, Tennessee, you find the detective material in similar structures and complexities as in Forchheim for the CT -- CTs. And they work with the same enthusiasm and the same technological depth. So this is not for geopolitical reasons, but we work on this wherever we have the competencies. And as Mr. Montag said, since we're not producing mass products, or sneakers or anything along those lines, but highly-developed technology. We have to really take a clear strategic glance if we wanted to relocate something. And you also explained why the tariffs EU to the U.S. are the largest headwind, because X-ray Technology and CT are mainly built, manufactured in Europe and sold to the U.S.

So, now two questions. I would like to mention two things, namely Lab Diagnostics. A year ago, we talked about it. And that Siemens Healthineers has two core centers, the Imaging and Lab Diagnostics. Would you still see it identically? And what about 12 months' time? Will there be a second course still or because recently, there's been information that possibly there is first preparations for a sale? And then, a second question about the photon-counting computed tomograph. Can you explain about the further rollout? And when will it reach a significant share -- revenue share is, so 10% like with Imaging or whatever you consider significant?

In Lab Diagnostics short history about the two core topics, sounds nicer in English with the two cores that it does in German. So there's often a question, is this a core business? And the question we cling to this, we're sticking to it, which is a strange question per se, because every business always has to be -- has to stand the test just like combustion engines. So, at a certain point, we're not core business anymore, even though at VW 10 years ago, they would have said so. So, this wording came up that we said, okay, we have two core topics and there is one Siemens health in your core, which is a clearly bigger one, namely Varian, Imaging and Advanced Therapies that pay into each other very strongly. And then there's another business, Diagnostics business, that has very little synergies with the other three. And this is a message that we've always stressed. We never said that in Diagnostics, we would rock the world. Because it's -- if connected to Imaging or that Imaging or Varian would be better, because we also do laboratory diagnostics. This is the situation that Diagnostics business is part of a larger company without being synergetic. With the rest, is something you see in the entire diagnostics industry is the same with Bosch where it's combined with pharmaceuticals, with Apple, where it's combined to pacemakers or with Danaher, where it's combined with life science tools, even with Hologic, this is true where it is combined with mammography. So, it means for these companies, just like for us, the question is, does it make sense to keep it this portfolio together, even though there are no synergies. And in Healthineers, this question is asked a bit more noisier because Diagnostics has gone through a difficult phase and because there is a combination of a market-leading business and another business that's undergoing a transformation period. That's why I understand your question. I think it's very good that the Diagnostics business has been brought forward and that the speculation that was voiced 3 months ago. And by the way, 3 years ago, that also happened, that we transformed the business and continue to transform it. So that, you can see this is the core for something where that can be transformed to become even more. And then, you can see whether this takes place within Siemens Healthineers or whether it's better for that business to develop within the partnership. But we're not at that point as yet. So, the photon-counting CTs, that when it comes to the revenue expectations, to quantify it. Imaging is a EUR 12 billion business and computed tomography of it takes up 25%. So, it's a EUR 3 billion business. And in this EUR 3 billion business, there's roughly 40% service. So, that's the equipment business of the computed tomography, which amounts to EUR 1.8 billion. And I assume that the turnover is 20%, 30% of photon-counting. Well, not that much probably, but order intake at least. And I think, it's important to see that also in terms of profitability, it contributes massively. I don't want to be too extensive in my answer, but it's important to understand this between CT, between the high end and the entry level, so the upper end and the entry level, there's a factor 10 in customer price. So, it's something like EUR 200,000 compared to EUR 2 million. At the same time, the gross profit for the top -- in the top class is twice as high as in the entry class -- at entry level. So selling photon-counting CT generates 20x as much profit as if we sold an entry-level CT. So, here, we not only have to look at the volumes. And then when it comes to the forecast and view of the future, we have clear visibility. So, the cost points of the existing price points that the classical CT products with photon-counting CTs can be made in the course of the next couple of years. So, what a customer is willing to pay for middle class or entry-level CT in the long term, that is -- so in these devices, this new technology can be integrated, and we will employ economies of scale that is reducing costs here for these devices. And our target is that by 2040, all CTs will be photon-counting CTs and that by then 1 billion people will profit from this -- will have profited from this technology.

Next question, Mr. [indiscernible] and after that one more. My colleague already asked one question that I wanted to ask, but I still have two more questions. First one on stock price. It's not just that it went down today by 8%. I don't know if you expected that. Maybe you have an explanation for it. But we also talked about the fact that in the past couple of years, it moved sideways after the high in your last strategy. Maybe you can analyze that a little bit? And how can you get out of this box, so to speak, again? And second question on the U.S. In September, there was an examination on imports of medical equipment. And that also was showed in the stock market or was reflected. So, actively engaged with policymakers was said back then. What about you? Did somebody approach you? Do you talk to the U.S. government about such developments? Or what -- how does that work?

I will start with the last part. Section 232 investigation is what you were talking about. We are in a dialogue in exchange individually and also in the context of the Industrial Association. And we're actually quite optimistic. But it's also one of the points that is important in order to take potential decisions when it's about a shift of value creation. And I would like to reiterate what Jochen Schmitz already explained very well from my point of view. It's an illusion to think you have supply chains that can completely be nationalized in our sector. It's almost like the idea that every country in the world will be able to produce vaccinations for pandemic emergencies. That's wishful thinking. That's not any of our business. And that's why I think it's extremely important to make policymakers understand that what we do is not PPP masks. It's high-tech which you cannot simply produce in any random country of the world and have a complete value creation chain in that country just to feel better. It would be extremely expensive. It's not possible, simply said. Now on price development. I'm going to start and maybe you can add something. We are not satisfied with the development of our shares, short term and also not looking back over the past couple of years. In my speech, I already tried to emphasize at the end, the topic that in the past 4 years we managed despite a lot of unexpected headwinds. We managed the 6% growth, two-digit EPS growth. That's something we achieved, nevertheless, but there is a big but, and the but is inflation, supply chain crisis, a Chinese market that is not the way it used to be or was at that time not the way it used to be, and that continues. And at the topic of tariffs. And now maybe potentially as well an overhang through the speculations coming from Siemens. These are topics that are a burden on the share prices. And we're not on our own here. I think, if you compare us to mid-tech Europe, that index, for example, we are quite parallel, but it's not a satisfactory picture for us. And the reaction today, I think, was a bit stronger than we expected. We'll observe how that will continue. But I think that's one of the points. We have to be able to explain how this balance between operative strength. And we clearly say in the next fiscal year, we will continue to have an EPS that is -- that will be increased in a two-digit range, but there are headwinds from tariffs and currency rates, et cetera. And I have the feeling that not every analyst and every investor has completely understood what these special effects actually are.

Maybe one more aspect that I would like to add. If you're looking at our -- the development of our share prices, since the initial public offering, we pretty much until the Capital Market Day in 2021, that's how long it took. That was the highest we had achieved until we got the evaluation or assessment standard of the European MSCI Healthcare Equipment and Service Index until we had reached that MSCI index. We were always structurally below that. And in that year, we achieved it for the first time. And ever since that point, we were -- have always been in the range of the sector, sometimes it's a little bit higher, sometimes slightly lower, but always in that range. That means, in other words, the entire sector is under pressure. It also means that the framework conditions in which investments are moving in this area have not improved during that time. Inflationary points -- of course, also the pandemic, the corrections after the pandemic. It was China. Now it's the tariffs. So, accordingly, it's not just something coming from us. It's also an impact coming from the industry, and you have to take that into consideration as well. On the other hand, I agree to Bernd Montag completely, not just today, that the development of our share price is something we're not satisfied with. I think, it's clear that our ambition is, and I think I had that on one of my slides for the Supervisory Board as well, it needs to be our objective to become better than this index. That's our objective for sure. And I think we have all the ingredients, all the means that we need. And to this end, I think it's a clear decision -- that a clear decision from Siemens will be helpful. That's my EUR 0.02 on the topic.

Mr. Rudolph [indiscernible] newspaper, I think you are the next one.

Yes. My name is Rudolph, like you said. Mr. Schmitz, a clear decision could mean an end consolidation. And I would be interested what this would mean for the refinancing. Are you already in touch with rating agencies? What could be an independent rating of Healthineers? Are you talking about this?

If Siemens is deconsolidated, Siemens has the right. I don't even know how to say that in German to have the term, loans, to have the financing to terminate it with across a certain period of time, which would make us pay back and then we have to refinance the whole thing. So, once a week, I would say I am receiving from all banks, you know I get a letter, a comfort letter, telling us that they would like to support us no matter what kind of financing we would be looking at. So, we're getting a lot of support. I think, it's a proof that they are trusting us, that they are trusting in the stability of this company as an independent company as well. That's the first point. And secondly, of course, we're in touch with rating agencies. We talk to them. We have discussions with them. We must do this. We must prepare. We don't know what the Siemens decision will be at the end of the day. So, we are in touch with these agencies. I think that's no news to any of you. I think it's on the first slide that we ever had publicly shown before the IPO. I think that the phrase was a little bit tricky, but we called it a solid investment-grade rating type of financial structure. That's what we want. And all discussions I'm having are confirming this initial plan that we put on that slide. And we are low A and high B, if you like.

One last question here in the first row, Mr. [indiscernible] Sorry.

Yes, one more question on the shares. What is the midterm dividend strategy. In the past 5 years, we were looking at 3.5% on average. Now you are suggesting 5% on top. And what do you think will the coming years look like because that will also make or that also has to do with the attractiveness of the share, and if you want to make it attractive again?

Well, that's one of the topics One of the big topics in the financial world influenced the impact on the dividend policy on the attractiveness of a share. I'm sure you will find studies telling you all different kinds of things, giving you all kinds of answers. Our dividend strategy has been 50% to 60% of the annual net income that we are giving out. That's our policy, our decision. And looking back on the time, we started with EUR 0.70. We are now adding -- or we are now suggesting EUR 1. I think your calculation with 3.5% growth is hopefully correct, but I can't check it now. Because we are actually adhering to what's coming from politics or I think, looking back, that's a stable/progressive dividend policy. And I don't see any reason to deviate from this policy that we've been using so far, which has been working and has been strong.

Okay, just on time. Thank you, Jochen. Thank you, Bernd. I think we've talked for long enough this morning. Thank you very much for this very vivid round of questions. And one more time, I would like to say you can find everything on the press side of our website. If you have any additional questions, you can get in touch with us at any time. And with that, we would like to close today's press conference. The 17th of November, our Capital Market Day in London, you can dial in at 11 a.m. European time, 10:00 London local time, we would be really happy to welcome you there or to see you again in quarter 1 in February. [Statements in English on this transcript were spoken by an interpreter present on the live call.]