Key Takeaways
Carl Zeiss Meditec AG (ETR: AFX) reported a 5.7 percent decline in first-half revenue to €991 million and launched a multi-year restructuring program after currency headwinds and a slowdown in China eroded profitability.
"Despite the challenging market environment, our strategic initiatives and strong innovation pipeline position us well for future growth," Chief Executive Dr. Ludwin Monz said, framing the plan as a necessary step to restore earnings power.
The medical technology firm saw its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin shrink to 6.1 percent from 10.7 percent a year earlier. The drop was driven by an unfavorable product mix, including lower sales of intraocular lenses (IOLs) in China, and a €13 million write-off related to its Infinite Vision Optics project. For the full fiscal year, the company guided for revenue of €2.15 billion to €2.2 billion and an adjusted EBITDA margin of 8 to 10 percent.
Shares rose modestly in pre-market trading as investors weighed the weak first-half results against the potential long-term benefits of the cost-saving measures. The company also flagged a potential goodwill impairment that could exceed €100 million in the second half, primarily linked to its 2018 acquisition of IanTech.
The company’s “Profit Up” initiative is designed to deliver more than €200 million in annual profit improvements by the 2028/2029 fiscal year. The plan involves optimizing supply chains, portfolio adjustments, and efficiency measures across all functions.
Chief Financial Officer Justus Felix Wehmer noted that about €40 million of the gross savings would be reinvested into infrastructure, leaving a net improvement of €160 million. The restructuring is expected to incur one-off costs of up to €150 million over three years and may affect up to 1,000 positions globally, though the net job reduction is expected to be smaller.
The core Ophthalmology division posted a 6.7 percent revenue decline to €754 million, with its EBITA margin falling to just 1.5 percent. The segment was hit by the loss of bifocal IOL sales in China after a license revocation and a €6 million impact from scrapping recalled products.
The Microsurgery business showed more resilience, with currency-adjusted revenue growing 1.8 percent to €237 million. Regionally, Europe was a bright spot with 5.6 percent currency-adjusted growth, while the Americas and Asia-Pacific regions saw declines of 3.5 percent and 8.6 percent, respectively.
The guidance for a second-half recovery relies on reduced currency headwinds and a seasonal summer peak for its refractive laser business in China. Investors will watch the upcoming launch of China's next volume-based procurement tender in June or July, which will be critical for the company's successor IOL product.
This article is for informational purposes only and does not constitute investment advice.
