Carl Zeiss Meditec achieves further strong revenue growth after nine months of fiscal year 2022/23 with continued high strategic investments

Jena | Carl Zeiss Meditec AG

Carl Zeiss Meditec generated revenue of around €1,509.6m in the first nine months of fiscal year 2022/23 (prior year: €1,332.9m) - growth of +13.3% (adjusted for currency effects: +12.9%). Earnings before interest and tax (EBIT) declined to around €244.9m (prior year: €275.9m). The EBIT margin was 16.2% (prior year: 20.7%).

“In the third quarter of 2022/23 we made further progress in stabilizing our supply chains and accelerated equipment deliveries, in spite of the delivery times of many products still being too long. Our innovation pipeline and targeted growth initiatives in sales and marketing are making steady progress,” says Dr. Markus Weber, President and CEO of Carl Zeiss Meditec AG.

Revenue in the strategic business unit (SBU) Ophthalmology increased by +12.2% after nine months of the fiscal year (adjusted for currency effects: +11.8%), to €1,152.3m (prior year: €1,027.2m). Supply chains gradually stabilized over the course of the reporting period, allowing the delivery of equipment to progress well.

The strategic business unit Microsurgery achieved revenue growth of +16.9% (adjusted for currency effects: +16.5%), from €305.7m in the prior year to €357,3m. The strained supply chains gradually stabilized over the course of the reporting period, thus further accelerating the delivery of equipment recently. The order backlog remained high.

Revenue in the EMEA region increased by +11.4% (adjusted for currency effects: +13.0%) to €372.3m (prior year: €334.2m). France and Southern Europe, among others, made good contributions to growth.

Revenue in the Americas region increased by a significant +24.2% (adjusted for currency effects: +19.5%), from €330.4m to €410.3m). The order backlog in the U.S. market was reduced, particularly in the diagnostics business; surgical microscopes also developed well.

Revenue in the APAC²eveloped at a constant level compared with the strong year-ago period, increasing by 8.8% (adjusted for currency effects: +9.5%) to €727.0m (prior year: €668.3m). While India and Southeast Asia, especially, made good contributions to growth, the Japanese and South Korean markets showed a slight downturn. The Chinese market, however, increasingly recovered over the course of the third quarter after the weak start to the year due to the pandemic.

Although the operating result (earnings before interest and taxes: EBIT) remained behind the prior-year level after the first nine months of fiscal year 2022/23, at €244.9m (prior year: €275.9m), a sequential recovery was achieved in the third quarter of fiscal year 2022/23 compared with the first six months of fiscal year 2022/23. The downward trend is due, among other things, to an unfavorable product mix. The continued long delivery times for refractive laser systems are currently preventing more dynamic growth of related consumables. At the same time, the planned strategic investments in research and development, including those in the area of digitization and sales and marketing, had an adverse effect. In addition, long lead times in a number of device categories also mean that the effect of price adjustments introduced to offset inflation has been delayed.

The EBIT margin was 16.2% after the third quarter (prior year: 20.7%). Adjusted for special effects, it was 16.8% (prior year: 21.2%). Earnings per share benefited from gains on currency hedges and increased to €2.29 year on year (prior year: €2.14).

Revenue is expected to amount to around €2.1 billion in fiscal year 2022/23, corresponding to growth of approximately 10% compared with the prior year. The strategic investments in sales and marketing and research and development shall continue at a high level in the short to medium term. In spite of the gradual stabilization of the supply chains, the delivery times for key products remain long.

As explained in the 2021/22 Annual Report, stocks of consumables for refractive laser surgery were significantly increased in the Chinese distribution channel as a one-off strategic measure in the second half of fiscal year 2021/22, in order to ensure security of supply in the event of renewed regional COVID-19 lockdowns. These additional stocks are to be largely reduced at the beginning of fiscal year 2023/24, according to current Company planning. This planned stock reduction shall have a significant temporary impact on revenue and earnings in the first six months of fiscal year 2023/24. A small portion of the stock reduction is expected to take place in the fourth quarter of fiscal year 2022/23, which has already begun. Overall, the one-off negative effect of the stock reduction on revenue and EBIT is expected to be in the mid-double-digit million range.

The EBIT margin for fiscal year 2022/23 is expected to be at the lower end of the forecast range of 17 – 20%. In the medium term, the EBIT margin is expected to stabilize and return to the previously planned ambitious level of around 20%. The duration of this recovery cannot be predicted with any certainty at this time, however, and will be determined to a large extent by the timing and amount of strategic investments in Research & Development and Sales & Marketing.