Getinge AB
STO:GETI B
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Hello, and welcome to the Getinge AB Q1 Report 2021. [Operator Instructions] Just to remind you, this conference call is being recorded. Today, I'm pleased to present Mattias Perjos, CEO. Please begin with your meeting.
Thank you very much, and welcome to today's conference, everyone. I have Lars Sandström, our CFO, with me, and he will present the financials a little bit later on. But let's move directly over to Page #2, please. So we'll start with a bit of a summary from a financial perspective of the first quarter. So these are the key takeaways. We had organic net sales growth of 12.6% for the first quarter of this year. This is mainly explained by large deliveries of products for Sterile Transfer and ECMO therapy, where we expect continued strong demand going forward as well. We also delivered a large number of advanced ICU ventilators in the quarters, but expect sales events to return to more normal levels for the full year of 2021. So we confirm what we've said earlier in that regard. Order intake decreased organically by 22.8% compared to 2020. And the 2020 was the -- Q1 there was the first quarter where we had an exceptional COVID-19-related order intake, as you may remember. The large volumes and the continued focus on productivity as well resulted in higher margins. It also strengthened our free cash flow. And as a result, we had a much lower net debt year-on-year as well. And the consequence of that is obviously that our leverage improved to 0.7 compared to 2.4 from a year ago. We can then move over to Page #3, please. So a lot of moving parts when it comes to order intake trend. So if we take a closer look at this, we can clearly see that the trends largely continue to converge. And the exception here is Life Science, where growth was exceptional also in this quarter. When it comes to ventilators, we continue to move towards normalization, while we expect the strong underlying demand in Cardiopulmonary to stay on, even if the order comp year-on-year on year is up there. When it comes to products for planned cardiovascular surgery, we continue to see improved traction during the quarter, and we expect this part of the business to continue to gradually improve as more and more people get vaccinated and more hospitals can focus on handling the backlog of surgeries rather than the pandemic itself. As a large portion of our sales in these categories take place in North America, it is highly important that we continue to see good development in this -- in the vaccination -- ongoing vaccination campaign. We also start to see good signs of recovery of the order book in Surgical Workflows as hospitals start to look beyond vaccination and invest in more effective infrastructure. So this was encouraging during the start of the year. We expect this recovery to continue and also materialize in consistent net sales growth in the second half of 2021 and onwards. When it comes to Life Science, we still have good growth in Sterile Transfer products, but it was also encouraging to see our other categories in Life Science growing in the quarter. So this is really positive.We can then move on to Page #4, please. So we take the trends that we saw on the previous page and look at what this could mean in terms of net sales for 2021 compared to 2019. It might look like something like what you see in the picture here. In Cardiopulmonary, we expect high demand on products for ECMO therapies to continue, so we're driving growth throughout the year. This is supported by gradually increasing capacity as well. You may remember that we are still in the midst of a capacity expansion program here that will have gradual effect throughout 2021. When it comes to Critical Care, we expect the year to be on par with 2019, despite coming a bit stronger in the first quarter of 2021. And the reason for this is that we believe in normalization in demand for ventilators for the rest of the year. So we will have a bit of a reverse hockey stick here. When it comes to products for Cardiac and Vascular procedures, we started off around 10% below 2019, but expect recovery as hospitals back to new -- to whatever the new normal will look like. And from there, we expect to grow to meet the modeling to the backlog of surgeries. In Surgical Workflows, we expect orders to continue to recover in the first half of 2021 and then transform into a net sales growth in the second half of the year, which will bring us closer to 2019 levels for the full year. And then when it comes to Life Science, we expect approximately 100% net sales growth in Sterile Transfer, and this is mostly related to production of vaccines, which is an additional volume compared to what we've had before for this part of the product range in Life Science. And the capital goods portion of Life Science, we expect the recovery in orders in the first half of 2021 to transform into increased sales in the second half of the year. So all in all, this sums up in a rather dynamic 2021 as expected and also guided for earlier.With that, we can move to Page #5, please. So based on what I just described here and based on what we know from our customers and also given the risks that do remain regarding COVID-19 and also currency impact, we choose to keep the outlook for 2021 unchanged. Of course, if we continue to see stable and consistent improvement, we may consider adjusting this. But for now, we remain with the guidance given earlier. So with that, we can move to Page #6, please. So we take a step back and then look at some of the key activities and events during the quarter. It's been a busy quarter also from that perspective. So during the quarter, we launched, for example, a new integrated solution for efficient sterilization of bioreactors for labs. I like this because it's the first major example of how we can capitalize on the combined strength of Getinge and Applikon, which we acquired in the beginning of 2020. Also, in the wake of the pandemic, we've introduced a virtual hospital where our customers can interact with our products, which is a really good complement to the experience centers that we have in the U.S., in Europe and in Japan, where customers can interact physically with our products. So this is a very good complement to avoid travel. To strengthen Getinge's attractiveness as a workplace as well, we launched a global flexible workplace concept. And in short, this means that employees can choose to continue to work remotely as they've been doing throughout COVID-19 and combine this with also, of course, the face-to-face interactions once we have our arms around the pandemic. So internal reactions have been very positive, and we see good opportunities for increased productivity for Getinge. This is also supported by research that's been done both before and during the pandemic. We also see potential for further improved employee engagement. And it's also, of course, positive from a sustainability perspective. We also initiated a strategic partnership with the School of Business, Economics and Law at the University of Gothenburg, and this is focused on sustainability and also customer-centric innovation in health care and life science context. So very excited to be part of this. We've also decided to host a virtual Capital Markets Day towards the end of the year. The date for this is November 22, and we very much look forward to this. So please make a note in your calendars for this day. Then if we move to the right-hand side of this picture, our improvement journey continues when it comes to productivity as well. We have a restructuring plan in place for our facility in Rastatt in Germany. What this means is that we will focus on R&D and high-value-add assembly of operating tables and cardiopulmonary hardware products, where we have a strong local heritage and a strong competence. In parallel, the -- we will increase our efforts to reduce cost and improve productivity. So for example, here, savings are expected from capacity reductions, from procurement, from support function and outsourcing of noncore activities. The restructuring costs that we've taken in the quarter is SEK 90 million, and approximately 70% of this is related to Surgical Workflows and the rest is related to Acute Care Therapies. And the measures under implementation now are expected to have a gradual effect from late 2021 and onwards, and the annual effect is the same as the restructuring cost of SEK 90 million. We're also continuing the consolidation of our operations in New Jersey in the U.S. The project is running according to plan and expect to be finalized by the end of 2021. And I really want to compliment the team who has done an amazing job in very difficult conditions during the whole of last year. And we look forward to finalizing this now in a good way in 2021. One of the financial effects of this right now in this quarter is a capital gain of SEK 37 million from sale of real estate in the first quarter. And this is reported as an item affecting comparability. We can then move over to Page #7, please. So we had organic net sales growth in all business areas in the first quarter, sales growth. But when we look at order intake, we had a decline as expected. We had a 22.8% decline when it came to order intake. I assume this wasn't a surprise to anyone given that we were comparing now with the first quarter of 2020, where we had the positive impact of the early phase of the pandemic, especially related then to ventilators and products for ECMO therapies. However, I think it's good to point out that we have a really strong order momentum in Life Science with growth in all product categories and all regions. It's especially nice to see the strong comeback in Asia Pacific within Life Science. Here, we had almost 200% organic growth in the quarter. We also see orders recovering in a nice way in Surgical Workflows and the parts of Acute Care Therapies that have been negatively impacted by COVID-19. So quite a mixed picture under the aggregated number here. Net sales then. We had 12.6% organic growth in sales in the quarter. We had growth in all business areas and in all regions. When it comes to Acute Care Therapies, this explains a large portion of the strong development in EMEA. We had also Life Science growing sales significantly in EMEA, and Surgical Workflows showed really good progress year-on-year, especially in Asia Pacific. So from that top line view, we can move to Page #8, please, and look at this from a different perspective. When it comes to order intake then, it amounted to SEK 6.616 billion in the quarter. In Acute Care Therapies, we had an organic decline of 38.8% and was SEK 3.133 billion decline in actual numbers here. And order intake then decreased as a result of the very challenging comps that we had when it comes to ICU ventilators and products for ECMO therapy in the first quarter of last year. When it comes to order intake in cardiovascular surgery products, we saw a gradual improvement during the quarter, but didn't quite reach the level of last year. In Life Science, we had a 55.5% organic growth and SEK 277 million in actual numbers. We saw significantly increased organic order intake in all product categories and in all regions within the Life Science business area. The good order growth in Asia Pacific, which I mentioned, is attributable to good order intake in sterilizers, in bioreactors and in Sterile Transfer products. Also very encouraging to see that Surgical Workflows had a 9.1% organic growth in the quarter, SEK 20 million in actual numbers. And the organic growth there from an order perspective was in all product categories and contributed to a good sequential recovery in the order book as well. If we look at the subareas for Surgical Workflows, we had Integrated Workflow Solutions accounting for the largest increase in relative terms with strong growth in EMEA and Americas primarily. In absolute terms, Infection Control accounted for the largest organic growth, attributable to the Americas and followed by EMEA. Let's then move over to Page #9, please. So net sales amounted to SEK 6.169 billion in the quarter. We had Acute Care Therapies with 12.9% organic growth or SEK 57 million in actuals. Large deliveries of ICU ventilators in all regions for advanced treatment for COVID-19 patients contributed to the good growth. So some of the lingering pandemic effects that we talked about in the fourth quarter is clearly visible here. We also saw that sales of ECMO therapy products continued to grow organically, and this is a longer-term trend that we expect to continue. When it comes to organic sales of cardiovascular surgery products, we saw a gradual strengthening in the quarter that's in line with the order intake development there. When it comes to Life Science, we had a 38% organic increase in sales, SEK 162 million in actuals. We had significant organic sales growth in all regions and in all product categories, except for sterilizers, which have longer lead time from order to delivery. When it came to Sterile Transfer products and bioreactors, these are the categories that we see the strongest growth in, followed by dishwashing disinfectors. Also positive to note that we had service and spare parts increasing organic sales by almost 15% compared to Q1 of 2020. So overall, really good in Life Science. Surgical Workflows, we had a 3.1% organic growth, but minus SEK 84 million in actual numbers. And we saw sales growing organically in all product categories and particularly good growth in operating room products, with significant deliveries in EMEA and in Southeast Asia. And despite the headwinds to 2020, we've kept the residence to support customers, which really pays off now in the beginning of 2021. Last but not least, we had a significantly negative currency impact on net sales in the quarter, so minus SEK 638 million or equal to minus 10.6%. Let's then move over to Page #10, please. So when it comes to adjusted gross profit, we had an increase by SEK 67 million to SEK 3.285 billion in the quarter, and this is driven mainly by a significant contribution from Life Science and, to some extent also, from Acute Care Therapies. If we compare with 2019, gross profit is at almost SEK 0.5 billion all in all, so a rather robust performance from that perspective. We can see that FX is, of course, hitting us hard on gross profit this quarter, with minus SEK 418 million of impact there. However, we are still benefiting from positive volume and mix effects from ventilators, but also from ECMO and Sterile Transfer. And I must say that it's encouraging to see Surgical Workflows improving versus last year as well. The team here has done a very good job during 2020 preparing for a post-pandemic reality. With regards to Sterile Transfer, you can clearly see -- start to see how the strong momentum is having a positive effect on the gross margin for Life Science, which is up almost 3 percentage points from 2019. And it's also encouraging to see the improvements in Surgical Workflows compared to 2019, as I mentioned. For the group as a whole, the gross margin is flat year-on-year. On the positive side, we had support from volume and product mix while at the same time we still have a very negative FX impact, but also under-absorption in production in parts of our business areas. This is something that, on the other hand, creates an opportunity as we go forward and continue to fill the order books and so on.With that, I suggest we move over to Page #12, and I leave over to you, Lars, to talk about the financial development a bit more in detail.
Thank you, Mattias. Well, starting with adjusted EBITA. It increased by SEK 418 million in the quarter despite the fact that we had a negative FX effect of SEK 169 million. The main reason for the improvement comes from a significant decrease in OpEx year-over-year. They are mostly from selling and admin expenses, as you can see here, on the margin OpEx explains 5.4 percentage points on the difference in EBITA margin year-over-year. In relative terms, OpEx decreased by 14.8% compared to Q1 2020, mainly due to currency effects, restructuring activities and the new ways of working as a result of COVID-19 that has started to take effect from Q2 2020. Organically, adjusted operating expenses decreased by 4.6%. Adjusted gross profit growth also contributed positively by SEK 67 million due to the reason Mattias just mentioned. On the GP -- on the margin, GP explains 1.1 percentage points of the improvement from last year. As we have higher sales and lower depreciation, we also see positive contribution from depreciation at almost 1 percentage points on the margin year-over-year. Currency had a negative impact of 0.8 percentage points on the margin year-over-year. All in all, this resulted in adjusted EBITA of SEK 1.079 billion compared to SEK 661 million in Q1 2020, and the margin increased from 11% to 17.5% year-over-year. In 2019, we were at SEK 369 million and an EBITA (sic) [ EBITA margin ] of 6.7%. It's also worth mentioning here in -- compared to 2020 that we can see that the improved EBITA was actually attributable coming from all business areas. Then let's move over to Page 13, please. As we have mentioned before, currency had a material effect on our net sales and profit for the quarter due to the strengthening of the SEK year-on-year versus most other currencies. This is, of course, taking into account when setting the outlook for the year. On the left, on the page, you can see 3 major currency pairs for us, followed by a combination of smaller, so to say, currencies with high volatility against SEK. Each of them represents a small portion of our business. But put together, they stand for approximately 10% of our revenues. And of course, we use strict pricing discipline and use prices in many currencies in these countries in order to secure a good integrated margin, but you cannot mitigate all effects when you see volatility like this. The dark blue solid line in each graph is average rates, which we use in our reporting. And you can see there is quite a substantial difference year-on-year, especially here in the first column. The dotted line represents closing rates each month. As we are [ sort of ] long in U.S. dollars, where we have more revenue and cost, and the U.S. dollar represents more than 1/3 of our total revenue, depreciation of the U.S. dollar in relation to SEK of well above 10% will, of course, have a negative impact for us, especially then in the first half of the year. I wanted to show this as a reminder when taking FX into account. You'll also find some good information on this in the annual report that we have launched. Please then let's move over to Page 14. Free cash flow doubled year-over-year to approximately SEK 2 billion, mainly due to increased earnings and continued good control of working capital. We also had a capital gain from sales of real estate impact the net investments in the quarter. When it comes to working capital days, this continues to decrease on a rolling 12-month basis, which is, of course, helped by an increase in revenue. We are down some 36 days from the peak in Q2 2018 now. We also see a continued increase in our operating return on invested capital, where we are at 20% sharp on a rolling 12 months basis. And one could expect to see some kind of reversal trend, of course, a more long-term trend on working capital days and return on invested capital when net sales move into, so to say, more normal territory. Let's move to Page 15, please. Net debt was positively impacted by the free cash flow, taking us to SEK 5.6 billion. And if we adjust for pension liabilities, we are at SEK 2.4 billion. We have continued to reduce funding during the quarter with more than SEK 2 billion and we'll continue in coming quarters as well. This brings a leverage of 0.7x EBITDA. And if we adjust for pension liabilities, leverage is at 0.3x EBITDA. Cash amounted to approximately SEK 5.7 billion at the end of the quarter. And this is, of course, something we are looking closely at as our intention is to have an effective balance sheet over time. Let's move to Page 17, and over to you, Mattias.
All right. Thank you, Lars. So before we move to Q&A, let me just summarize some of the key takeaways after the first quarter of 2021. We can see that we have a market that is moving towards some kind of new normal, but a lot of uncertainty remains. There are pandemic effects in several of our markets. And at the same time, we do see hospitals trying to really get or shift the focus towards working on the surgery backlog and some of the longer-term investments instead. We've also had a quarter with rather good activity levels, not only on the market but also with really good progress on the strategy implementation, continue to work on our productivity. From a financial perspective, we've recorded a good organic net sales growth. We can see that both the volume effect, the mix effect, but also the productivity work had a positive impact on our margins. And we've been able to continue to strengthen our free cash flow as well. And as a result of this, we have now a leverage ratio of 0.7 compared to 2.4 a year ago. And what this means for the rest of the year is that we do keep our outlook for 2021 unchanged. So at least SEK 27 billion in sales is what we expect for the full year. With that, I thank you for listening, and we move to the Q&A part of this conference call.
[Operator Instructions] Our first question comes from the line of Annette Lykke from Handelsbanken.
And I think it's in place to say congrats on a very, very strong quarter. I would like you to share a little bit more on the ventilator sales. How many units did you actually sell here in Q1? And based on that, where do you see the full year range to be? I know you have highlighted the 8,000 to 12,000 systems for 2021. Have orders in, for example, Brazil or Portugal made you change that? Or where are you in that range? Then Mattias, please, any help you can offer to us on the margins? You have incredible margins this quarter. Of course, not all of that is sustainable for the rest of the year, but where should we be compared to what you had in 2020? And then how much in this quarter of the improvements we have seen come from the BetaBag? It would be very nice to have a feeling how much of an impact. Do we actually have more to come for the remainder of the '21 in terms of BetaBag? And then finally, are you discussing orders for 2022 with the vaccine companies? That's all for me.
All right. Thanks, Annette. There was quite a lot of questions there. So we'll start from the beginning. We had about 3,500 ventilators sold in the first quarter. And we -- this is in line with our own expectations. So it doesn't change the outlook. As you said, we've guided for between 8,000 and 12,000 for the full year, and we remain with that number as well. So we have a bit of a reversed hockey stick is the best way to put it probably here for 2021. When it comes to the margin development, there are a lot of moving parts here as you've noted. And I think the best thing that we can say, I'd like more to talk about the underlying margin improvement journey that we are on. That we said also in the previous quarter that we do expect this to continue also in 2021. So at least 1 percentage point of underlying improvement. That's really the best view on the future that I can give you. When it comes to the BetaBag margin impact, we don't break that out, per se. But it's, of course, positive. We have higher average margin than Life Science in general and higher gross margin than the group average as well, and it draws very little OpEx. So it does continue to have positive mix effect for us. And we do expect that to continue during 2021. We -- as I mentioned when -- during the presentation, we do expect our Sterile Transfer products to increase in sales with about 100% for this year. So there will continue to be a positive impact from this. And the longer-term outlook is that we -- in our discussion with customers, we have long-term discussions as well. This is not only for 2021, it would press through to 2022 and probably into '23 as well. But given how the vaccine rollout is going right now and also given the different mutations that we see, I think the outlook is that we will have to live with this for a while, and that will obviously impact our Sterile Transfer business.
And the next question comes from the line of Michael Jungling from Morgan Stanley.
I have 3 questions. Firstly, how much were the COVID-19-related savings in the quarter from lower travel, marketing costs, et cetera? I'm looking at Page 4 of your report and it says it was down -- or operating costs were down 4.6% down organically. Is that all because of COVID-19? Or were there other things in there that were relevant? So a bit of a split from COVID-19. Secondly, you made a big point in your report about the new way of working. And I'm trying to understand what the reduced expenses may be. Do you foresee that the savings that you had from COVID-19 will be permanent going forward? Is that the statement that you're trying to make in your Q1 release? And then thirdly, on Surgical Workflow, can you comment on how much restructuring you think is left in terms of time until this business has achieved close to where you want it to be? Will it be 2021?
Yes. Okay. When it comes to the COVID-19-related savings, we don't break them out, per se. The bulk of it -- if you compare this quarter compared to the quarter of -- first quarter of 2020, there is a significant portion of COVID-19 savings because Q1 last year we operated as normal at least 2 of the 3 months. It was really only in March, the second half of March, that we saw any real impact of this. So it's a big portion of it, absolutely, but there are also some underlying productivity savings in that. When it comes to the Smart Workplaces concept, we do this for 3 reasons. One is that it will increase the productivity of the company, so that's really a key point. Second is that we do see that it does increase employee engagement as well, which I think supports many good things in the operation of the company. And the third thing is that it has a positive impact on sustainability as well. So it will lead to a portion of the COVID-19 savings being permanent, but I don't have any new breakdown other than the figures we gave you, I think, after Q3 of last year, that about half of the COVID-19-related OpEx savings were going to be permanent and half would likely come back. And then your final question when it comes to Surgical Workflows, I think the team has done a really good job during 2020 continuing implementing the productivity improvements that we have in our plan. So the restructuring you saw now is really one of the key last ones, I would say. I think a lot of work has been done now. A lot of implementation will be done by the end of this year. So we should really see a continued gradual improvement in Surgical Workflows reinforced as well by the fact that the market is likely to come back for that part of our business.
Okay. And then if I may just follow up on the COVID-19-related savings, i.e., the permanent change in the way that your employees will work. Do you foresee that this will have no impact on organic sales growth, meaning you can run these businesses now much leaner with the same level of organic growth? Is that sort of the conclusion that you've come to?
Yes, absolutely. We don't expect any negative impact on growth. And I think I could talk at length about this concept. We've gone through, I think, it's about 60 types -- different types of work roles in the companies, and we have the whole spectrum from roles that cannot work remotely at all to roles that can work remotely permanent. So what the average is there I really couldn't tell you, but we certainly don't expect any impact on growth there. It's -- as I said, it's productivity, it's employee engagement and it's sustainability.
Okay. I promise it's the last question, but I find this interesting. If you look at the COVID-19-related savings, is it mostly -- how will it impact your sales force? Will you have less salespeople because they will do more remote connecting with clients? I'm just -- it's really around the sales function and these work-from-home type scenarios. Can you comment on that directly, please?
Yes, sure. No, absolutely. I think the -- actually, the customer effect of this is also really positive. We can see that our customers have become used to also a smarter way of working. So I don't expect any less interaction with customers. Quite the opposite, actually. And I think when it comes to number of salespeople, again, there's no reduction in this, but it's more effective ways of working, both with sales but also with service. We're finding new and smarter ways of being more effective and productive when it comes to service. So both in terms of increasing customer satisfaction, but also doing it in a more productive way. So we're quite enthusiastic about this.
And the next question comes from the line of Karl Norén from Danske Bank.
So I have a couple of questions. If we start with the Surgical Workflows, if you just could comment on how you're seeing the discussions going right now with kind of a third wave or whatever wave you want to call it. How is this impacting the ongoing discussions you have with hospitals regarding the infrastructure investments? And then also on Acute Care Therapies, what trends are you seeing right now with -- on the ventilator side? Because I think it was in the Q3 report, you also said that you saw kind of an uptick when you had kind of a second wave. Are you seeing the same thing right now? Or how is the order side looking during the last couple of weeks within ventilators?
Yes. Okay. When it comes to Surgical Workflows, the third wave hasn't really impacted as much the discussions as we saw this time of 2020. So we do see more positive activity. I'd say, overall, we have more tenders out there. There seems to be confidence despite the third wave to continue and plan for investments. So quite a big difference depending on where you look in the world. But on average, I'd say it's clearly positive. When it comes to Acute Care Therapies, we've had a mini ramp-up in the first quarter of 2021 as well to deliver against the increased demand that we have seen. But we do expect this to tail off still here in the last 3 quarters of the year. So order intake was at about the same level as sales in Q1. And that really gives us comfort that this 8,000 to 12,000 ventilators that we've guided for this year will materialize. And then when it comes to the other quarter with Acute Care Therapies, we continue to see a good demand situation when it comes to our Cardiopulmonary business and especially ECMO therapy products then, and then a gradual recovery of both the [ ICU ] business but also the other elective procedure-related types of products. And I think I said after the fourth quarter that our main plan, our main scenario for 2021 is that this will come back to pre-pandemic levels during Q2, and we stand by that statement.
And the next question comes from the line of David Adlington from JPMorgan.
So again, firstly, on Surgical Workflows. It looks like you took a lot of orders through Q1 that you actually filled in Q1. Is that fair? And maybe just a bit of further comment on how you expect that trend to continue into the very short order to delivery time. And then secondly, just on elective surgeries. I just wondered if you could give a bit more detail in terms of how you saw that improving through the quarter. Was January, February softer than a big March? Or was it more tedious?
Yes, yes. When it comes to SW, it's correct observation that we had a higher-than-normal order book in turn in the quarter. So we've remained ready to supply despite the challenges of 2020. I think that's one of the things -- good decisions that we made in Surgical Workflows, to maintain the readiness to deliver. So we benefited from that in the first quarter. I don't think you should take that as a new normal that we would have a much shorter lead time going forward. We -- as this business continues to come back to normal, we'll gradually fill the capacity and probably have the same lead times as before. There may be some productivity improvement, but I think you should assume that it's in line with historic patterns here. And then when it comes to elective surgeries, yes, it was a slower start of the quarter, and it has gradually improved here. So a stronger month -- month by month through the quarter is a correct pattern.
Perfect. And overall, elective surgeries -- I may have missed it in the commentary through the call, but was that still up on year-on-year? Or are we still negative territory in the first quarter in terms of the electives?
Still slightly negative.
And the next question comes from the line of Kristofer Liljeberg from Carnegie.
Two questions. Coming back to this never-ending story of ventilators. Is it correct that what you say here is that you will have below-normal shipments in the second, third and fourth quarter? And also on operating costs, a lot of different moving parts. But if you take all of it together, is it possible to, in some way, explain how much higher operating cost will be, let's say, in 2023 versus the current level? Or is there even a possible scenario where operating costs are flat in this period?
Well, yes, thanks. When it comes to ventilators, there would be a bit of a reversed hockey stick. So we -- if you take the 3,500 we delivered now and if you choose, I mean, the middle-of-the-road approach with 10,000, yes, it would be a little bit lower in the coming quarters. But still a lot of uncertainty. So that's really the best future view that I can give. Then when it comes to the future OpEx question, I really can't answer. We don't guide that -- on that level and that long time perspective either. So I really couldn't give you a view on that going forward.
Could I ask a follow-up on that? When you say that half of the COVID-related savings are sustainable, does that include future efficiency gains as well? Or will that come on top of those savings?
I think when we made that statement after Q3 last year, I think it was not meant to include efficiency savings. We do continue to work with productivity, of course, in addition to this. So the COVID-related savings, they come from new ways of working, which I guess is an efficiency measure as well. But we talk about this purely in relation to COVID-19 and those different ways of working.
Okay. Could I ask one more? On ECMO, you mentioned that being a growth driver. Have you changed your view in any way how much ECMO will increase this year?
No, we remain with the same view as earlier.
[Operator Instructions] We have one more question from the line of Scott Bardo from Berenberg.
Yes. So firstly, on Life Science, please, obviously strong dynamic with Sterile Transfer. Has there been any requirement or need to anticipate or accelerate your manufacturing expansion plans? I know you're looking to double Merrimack towards the end of the year or classes in Merrimack towards the end of the year, is there any ability to bring that forward? And perhaps on Life Science, I wonder if you could comment a little bit more about the bioreactor demand. Is this a function of the new product launches for Applikon? Or just a strong overall end market? The second question, please, relates to Surgical Workflows. I note that you've called out strong demand in Infection Control and your software business. Can you talk a little bit about the dynamic of your operating table business, whether there's some green shoots there? Or is that still somewhat hindered as a market? And last question from me, please. Clearly, the balance sheet has pivoted into a lot of strength in the last 12 months. Can you talk a little bit about the M&A landscape and appetite to do deals at the Getinge Group businesses?
Yes, sure. We start from the top. When it comes to Life Science and transfer the manufacturing plant that we're setting up from Merrimack, there's for sure a request to -- or a need, a demand, to do this earlier but it's not possible really. So we do still expect this to come online in the fourth quarter of this year. There's no way to speed this up, given the construction work and also the validation required to make this operation here. So we're doing the business quickly as we can, and the demand is certainly there. When it comes to bioreactors, it's more underlying demand than any new products. I think I called out an example of a good development here, but that's not something that's contributing to growth at the moment. It's newly launched product, really. So it's more the underlying demand that we see here, which is very positive at the moment. And in Surgical Workflows, I didn't mean to send any negative signal when it came to the Surgical Workplaces part of it to the operating table. For example, we do see also positive -- we do have a lot of positive dialogues with customers now. We do see more tender activity also on that part of the business, no question.And then when it comes to the balance sheet, yes, we are definitely interested in adding through M&A. It is an integral part of our strategy to continue to [ complement ] the offer that way. We continue to have a very busy pipeline here as well, but it is also a competitive market when it comes to M&A. So I really cannot predict what's possible this year, other than that we are seeing a lot of activity and remain interested in reinforcing our offering this way.
Very good. And perhaps a follow-up. Sorry, I know I said that was my last question. But as I look to your performance in the first quarter. I think all of the growth came from capital goods and consumables flat. I don't think you're BetaBag business, you call out as a consumable. But nevertheless, I wonder if you could share with us in your order book, is the mix now a little bit more orientating towards consumables? Or would you expect consumables to remain subdued in the near term?
I think the -- I mean, the numbers are what we reported here and the exception is in terms of the nature of the business is what you mentioned when it comes to the BetaBag, which are recorded as capital goods here, but they are really the single-use products. It's for legacy reasons and small elements of customization really that they are called capital goods here. So you will have the mix effect of -- I guess of -- that would look like more consumables going forward even if it's recorded as capital here. But that's the only thing, I think, unusual thing to be aware about in that mix. I don't know if Lars has something to add in this respect, but that's my [ view on this ].
No, I think that's a good conclusion. So we will see good support from BetaBags in Life Science and then the normal development in the other areas. And of course, on the elective part when that starts coming as planned.
And as there are no further questions, I'll hand it back for any closing remarks.
Yes. Thank you very much, everyone. Thanks for listening in today. And I think we've done the summaries that we need to do here. So nothing to add from my perspective right now. I just wish you a good rest of the day here. And stay safe, everyone.
This concludes our conference call. Thank you all for attending. You may now disconnect your lines.