Carl Zeiss Meditec reports revenue growth at end of first six months

Recovery from first-quarter decline, despite persistently negative currency effects

JENA, 09.05.2014.

A persistently high demand for innovative intraocular lenses and solutions for microsurgery boosted business for medical technology company Carl Zeiss Meditec AG in the first six months of financial year 2013/2014. Aided by an extraordinarily strong business in Japan, the Company managed – in spite of persistently unfavourable currency effects – to recover from the decline in the first quarter. Revenue increased by around 4 percent year-on-year, to € 461 million; earnings before interest and taxes reached € 63.7 million, which is almost the same as the previous year. For the first time, the Company has released a forecast for the year as a whole concerning the further course of business, together with the figures for the quarter.

All strategic business units (SBUs) contributed to the Company's growth. Once again, development in the regions was mixed. As in the previous quarters, currency effects had a negative impact.

"Overall, we are satisfied with this performance; we are particularly encouraged by the double-digit organic growth of our Surgical Ophthalmology business unit," says Dr. Ludwin Monz, President and CEO of Carl Zeiss Meditec AG. "The strong demand for our innovative intraocular lenses helps us to gain additional market shares in this attractive growth market. Given the persistent adverse effects of unfavorable exchange rates and the ongoing fierce competitive pressure in diagnostics, we can consider the very encouraging contributions to growth from the Microsurgery SBU as another very positive sign."

Revenue by business unit
After a restrained first quarter, the Microsurgery SBU achieved double-digit growth in the second quarter, resulting in revenue on a par with the previous year in the first six months. Revenue increased by a total of 0.3 percent in the first six months, to € 207.3 million – also driven by surge in business due to a forthcoming VAT increase in Japan.
The development of business of the Ophthalmic Systems SBU was varied. The diagnostic equipment business continued to be adversely effected by fierce competitive pressure, while the division for refractive lasers for the correction of myopia made the largest contribution to growth and profit. Below the line, this SBU achieved growth of 2.5 percent and revenue of € 180.2 million in the first six months of the financial year.
It was the Surgical Ophthalmology SBU, once again, that shone with the highest growth rates of all the SBUs. Revenue here increased sharply compared with the previous year, by 21.5 percent to € 73.4 million. The figures included Aaren Scientific for the first time, which was acquired at the start of the year. However, even without taking this acquisition into account, the SBU achieved double-digit organic growth.

Revenue by region
The EMEA region (Europe, Middle East and Africa) grew in the reporting period – with very varied development in the individual markets – by 3.8 percent, to € 158.5 million (previous year: € 152.6 million). Although Southern Europe recovered somewhat and Germany was stable, business in Russia suffered, as in the previous quarter, due to the expiry of government economic stimulus plans, which had previously resulted in very dynamic market growth.
The Americas region was steady in the first six months. In euro terms, business declined by 1.5 percent here; adjusted for currency effects, the region would have reported growth of 1.9 percent.
The extremely positive development of the Asia/Pacific region was diminished by massive foreign currency losses and very restrained market development in India. In turn, an extraordinary growth rate in Japan – after adjustment for currency effects – was partly due to a forthcoming tax increase. Overall, the region achieved revenue growth of 9.8 percent, to € 160.8 million.

Outlook
As reported, the medical technology company set itself the objective to increase its revenue at least in line with the rate of market growth in the financial year. In terms of a quantitative forecast, the Company's Management Board anticipates a revenue corridor of € 910 to 940 million for the financial year as a whole, based on the six-month figures. This equates to growth of between 0.4 and 3.7 percent. At the same time, Carl Zeiss Meditec AG continues to feel committed to increasing its EBIT margin, which was down slightly compared with the previous year in the first six months, at 13.8 percent, to 15 percent by 2015.
Ludwin Monz: "We feel well equipped to cope, even with the challenges of volatile markets. Our global presence and our substantial and targeted investments in research and development put us into the position to successfully continue our course of growth."

Revenue by strategic business unit
Figures in EUR '000 6 Months 2012/2013 6 Months 2013/2014 Change from prev. year
Ophthalmic Systems 175,766 180,192 +2.5%
Surgical Ophthalmology 60,459 73,437 +21.5%
Microsurgery 206,732 207,293 +0.3%
Revenue by region
Figures in EUR '000 6 Months 2012/2013 6 Months 2013/2014 Change from prev. year
EMEA 152,625 158,464 +3.8%
Americas 143,875 141,663 -1.5%
Asia/ Pacific region 146,457 160,795 +9.8%

Brief profile

Carl Zeiss Meditec AG (ISIN: DE 0005313704), which is listed on TecDAX of the German stock exchange, is one of the world’s leading medical technology companies. The Company supplies innovative technologies and application-oriented solutions designed to help doctors improve the quality of life of their patients. It provides complete packages of solutions for the diagnosis and treatment of eye diseases - including implants and consumable materials. The company creates innovative visualisation solutions in the field of microsurgery. The medical technology portfolio of Carl Zeiss Meditec is rounded off by promising, future-oriented technologies such as intraoperative radiotherapy. In financial year 2012/2013 (ended 30 September) the Group's more than 2,500 employees generated revenue of almost € 906 million.

The head office of Carl Zeiss Meditec is in Jena, Germany. The company has subsidiaries in Germany and abroad; more than 50 percent of its employees are based in the USA, Japan, Spain and France. The Center for Research and Development (CARIn) in Bangalore, India and the Carl Zeiss Innovations Center for Research and Development in Shanghai, China, strengthen the presence in these rapidly developing economies. Around 35 percent of Carl Zeiss Meditec shares are in free float. The remaining approx. 65 percent are held by Carl Zeiss AG, one of the world’s leading groups in the optical and optoelectronic industries. Carl Zeiss offers innovative solutions for the future-oriented markets of Medical and Research Solutions, Industrial Solutions, Eye Care and Lifestyle Products. Carl Zeiss AG, Oberkochen, is fully owned by the Carl Zeiss Foundation.