Half-year figures: ZEISS looks back on good first six months overall

• The Semiconductor Manufacturing Technology and Medical Technology segments contributed in particular to growth in the first six months
• Initial impact of the COVID-19 pandemic felt particularly in Q2
• ZEISS portfolio ensures stability even during the COVID-19 pandemic
• Difficult to form outlook on further progression of fiscal year
• ZEISS CEO Lamprecht: "Overall, we were successful during the first half of the fiscal year. However, the COVID-19 pandemic has had a major impact on the global economy – including on ZEISS' lines of business. ZEISS' resilience measures will help it combat the current challenges in the best possible way."
  

Overall, the first six months of fiscal year 2019/20 (ended 31 March 2020) went well for the ZEISS Group. It saw its revenue rise by 6 percent (compared to 3 percent) to EUR 3,213 billion (first six months of 2018/19: EUR 3,019 billion). 90 percent of this sum was generated by markets outside Germany. At EUR 455 million, earnings before interest and tax (EBIT) were slightly higher than the previous year (EUR 443 million). The EBIT margin was 14.2%. Incoming orders hit 3,601 billion euros (first six months of 2018/19: EUR 3,161 billion).

"Overall, we were successful during the first half of the fiscal year. However, the COVID-19 pandemic has had a major impact on the global economy – including on ZEISS' lines of business, " said Dr. Karl Lamprecht, ZEISS President and CEO. He continued: "ZEISS' resilience measures will help it combat the current challenges in the best possible way."

In the first half of the year, the four segments of the ZEISS Group developed according to different dynamics. The Semiconductor Manufacturing Technology segment was able to continue expanding, thanks in particular to the high demand for extreme ultraviolet (EUV) lithography systems, a technology that is still in the launch phase, and continues to focus on deep ultraviolet (DUV) lithography systems.

In the Industrial Quality & Research segment, the Industrial Quality Solutions area felt the effects of the COVID-19 pandemic due to weak development in the automobile industry. In the past fiscal year ZEISS acquired GOM (Brunswick, Germany), a leading supplier of hardware and software for optical 3D coordinate metrology. This enabled ZEISS to generate further growth potential in surface measurement and digitalization. The business at Research Microscopy Solutions grew overall. Researchers worldwide looking into the coronavirus (SARS-CoV-2) also relying even more on the ZEISS Celldiscoverer 7, an automated light microscope.

While the Medical Technology segment achieved a lower growth dynamic than in the previous year due to the impact of the COVID-19 pandemic, the segment successfully expanded its market position through its innovative systems for neurosurgery and ophthalmology.

The Consumer Markets segment was the most affected by the COVID-19 pandemic. The Vision Care area saw growth in the first six months of the fiscal year and the expansion of its market position in the eyeglass lens market. Nevertheless, the impact of the COVID-19 pandemic resulted in a sharp decline in sales across all regions when the lockdown came into effect.

Free cash flow amounted to 180 million euros (first half of 2018/19: EUR 341 million), With a total of EUR 4,179 million, the company's equity rose by 5 percent to the end-of-year figure for fiscal year 2018/19 (30 September 2019: EUR 3,990 million).

ZEISS' expenditure on research and development totaled around 12 percent of revenue. This amounted to EUR 398 million in the first half of fiscal year 2019/20 (first six months of 2018/19: 322 million euros),
The investments in property, plant and equipment amounted to EUR 215 million in the reporting period (first six months of 2018/19: 133 million euros), as compared to depreciations totaling EUR123 million (first six months of 2018/19: 105 million euros),

Net liquidity totaled 1,362 million euros on 31 March 2020.

The COVID-19 pandemic led to a downturn in revenue, particularly in the EMEA and APAC regions. Conversely, the Americas region saw slight growth in revenue. China saw a renewed upward trend in March.

"Our global investment strategy involves investments in innovations and digitalization in particular, but also in the further expansion of our modern infrastructure. It lays the groundwork for the ZEISS Group to continue growing," says Dr. Christian Müller, Chief Financial Officer of the Carl Zeiss AG. Lamprecht added: "Our investment strategy is supplemented by the acquisition of highly innovative companies that will allow them to unlock their full potential in our portfolio, and thus form a key part of the ZEISS future strategy."

ZEISS' acquisitions during the first six months of the year include the acquisition of software firm Saxonia Systems AG. The company has been operating under the name Carl Zeiss Digital Innovation since March 2020. With this acquisition, ZEISS is systematically expanding its software know-how and securing the expertise and resources of Saxonia Systems to realize digital projects of strategic significance.

At the end of the first six months of the year (31 March 2020), ZEISS had a global workforce of 31,906 employees. Its headcount thus increased by 5 percent as compared to 31 March 2019.

While the Semiconductor Manufacturing Technology segment continues to see very stable developments, the other segments have certainly been affected by the global economic impact of the COVID-19 pandemic.

A central task force was formed early on and is responsible for coordinating all the required measures in close collaboration with local and area-specific units. ZEISS is pursuing four aims to limit the impact of the crisis: To protect its employees' health and safety, ensure smart business continuity as best as possible and support its customers worldwide. At the same time, the company will be demonstrating its resilience in combating the economic impact of the pandemic on the company as best we can. In addition to these three urgent goals, ZEISS shall be guided by a further aim that goes beyond the current crisis: that of more strongly using the market opportunities and strategic options, as they arise from the current changes.

Many predict that the COVID-19 pandemic will result in considerable challenges for the global economy.
ZEISS is now also feeling the impact of the COVID-19 crisis and a decline in its business – to differing extents at the regional and segment levels. However, thanks to a package of measures launched early on, ZEISS has been able to navigate its way through the COVID-19 crisis. ZEISS is now consistently pursuing this program of measures.

At this time it is not possible to make a reliable prediction for the 2019/20 fiscal year due to the global uncertainty surrounding the COVID-19 pandemic. However, a decline in revenue and EBIT is to be expected during the second half of the fiscal year.

"This is the time for stability – particularly with regard to providing our customers with the best possible service. The impact of the COVID-19 pandemic requires a high level of flexibility and a concerted effort from all employees," says Lamprecht. "Moreover, we are already thinking about life after the COVID-19 pandemic so that we, as an innovative company, can better leverage the opportunities to emerge from this situation even stronger." Since launching its comprehensive packages of measures to combat the COVID-19 crisis, ZEISS believes it is stable and well-structured due to its portfolio - which is aligned with megatrends - as well as its strong market position, international setup and strategic investment for the future.