Carl Zeiss Meditec AG Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Oliver Reinberg - Kepler Cheuvreux - Analyst : Oh yes, good morning. Two questions from my side if I may. I mean, the first one would be on the Chinese New Year. Can you just provide an update like how the season developed, what have you seen in terms of volume trends and also during the season, have you seen any kind of incremental pricing pressure in terms of high speed prices and also any kind of color you can share many of the competitor start search you talked about a significant further decline in China, this is also your expectations? And the second question just on these VISUMAX 800, obviously quite reassuring to see this kind of early than expected approval. Can you just provide an update? What have you seen so far in terms of initial demand trends, and can you also provide a bit of more clarity on the kind of pricing strategies? Is there anything that you can do to basically move also volume back from logic to smart? Thanks so much.

Question: Oliver Reinberg - Kepler Cheuvreux - Analyst : And can you just say the price in the high street has further deteriorated now in the in the season and again on this kind of smile with lasik, is there anything you can do to influence the shift? I guess when the client is now installing VISUMAX 800, he can't perform the old smile on this machine, is that correct?

Question: Anshul Verma - JPMorgan Chase & Co. - Analyst : Good morning. I have three questions please. Firstly, at Q4 results, you implied that guidance would be quantified or clarified with more granularity at Q1. Why has that not happened? What changed in the last few months that make you more cautious around putting targets in the market and has visibility improved at all? I'll take two questions after this.

Question: Anshul Verma - JPMorgan Chase & Co. - Analyst : No worries, I lost my, second and third piece. At the top line, can you quantify what you mean by moderate growth, consensus has me in digit growth in, but obviously this takes in recovering the refractive market in China, would. To your point, sounds like the overall fact of procedure volumes that your peers still report overnight is I'm seeing a downturn on you haven't seen such worsening of the trend. So just trying to understand if you can give us any more clarity on the top line guide.

Question: Anshul Verma - JPMorgan Chase & Co. - Analyst : Perfect, thank you very much, and my last question is just on [VBP] please apart from the pricing impact you've seen, how has the volumes been developing? Can you share anything you've seen in terms of market share, market shares evolving, and then market shares. Thank you.

Question: Anshul Verma - JPMorgan Chase & Co. - Analyst : Perfect, thank you very much.

Question: Jack Reynolds - RBC Capital Markets - Analyst : Hi there, thank you for taking the questions. I had a couple, please. So first on the life cycle piece, you talked about a strong order backlog in KINEVO, but I'm wondering if you're seeing the same in the VISUMAX 800. And also has kind of commentary around customers holding off for these launches come directly from customers. And if so, what proportion of customers that are saying this are actually kind of placing orders, and then on the gross margin, please could you quantify the respective impacts from kind of the cervical microscope, sales decline versus kind of other categories and then also VBP. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 12, 2025 / 9:00AM, AFXG.DE - Q1 2025 Carl Zeiss Meditec AG Earnings Call And then just another follow-up on VBP. Could you run us through your expectations for the full year? Are you expecting a continuation of kind of what you've seen in Q4 and Q1 continuing through the remainder of the year? Thanks.

Question: Jack Reynolds - RBC Capital Markets - Analyst : Yes, thanks. That's super clear. Cheers.

Question: Graham Doyle - UBS - Analyst : Morning guys. Thank you. And just one on sort of short-term trying to refractive and then one longer term in terms of the VISUMAX 800, I'm sort of just trying to get an understanding as to how this actually stimulates demand and is that what you're expecting in terms of procedures. It's just given right now that the install base might be a little bit old, but it also looks like it's probably underutilized. So what makes you think that actually putting more machines in the market will help procedure demand. And then secondly, when we do the math in terms of what you've disclosed previously around China consumable pack sales refractive sales more generally, on my maths I get to maybe 25% to 30% of [group EBITs] coming from China refractive. And I'm just thinking over the next sort of five years or so, would you expect that business to be growing at all? Would you expect it to grow high single digits, double digits? Just to get it just to get a sense of where you think this very profitable pool of business goes over the midterm and what sort of underpinning it? And that'd be super helpful for people to understand, I think. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 12, 2025 / 9:00AM, AFXG.DE - Q1 2025 Carl Zeiss Meditec AG Earnings Call Thank you.

Question: Graham Doyle - UBS - Analyst : That's really helpful. Maybe just a quick one on on the star surgical numbers last night. In terms of that they have it sounds like they had an issue with their inventory. Is it fair to say you guys have a pretty good look through on what inventory you have the channel versus your sort of sell out to consumers. Is that fair to say and therefore you feel much better position than perhaps they were?

Question: Graham Doyle - UBS - Analyst : Okay, thank you very much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 12, 2025 / 9:00AM, AFXG.DE - Q1 2025 Carl Zeiss Meditec AG Earnings Call

Question: Richard Felton - Goldman Sachs Group, Inc. - Analyst : Thank you very much. Two questions for me, please. The first one, is to follow-up on China refractive. Could you tell us what your split was between smile and lasik procedures, during Q1, and how that compares to previous periods, please. That's the first one. The second question. Can you provide any additional color on what was driving the improvement --improving momentum in audit in taking Q1, between product or market, and then how soon you expect that to flow through into better revenue trends. Thank you.

Question: Richard Felton - Goldman Sachs Group, Inc. - Analyst : Thanks. So maybe just a follow up on the mix shift. I mean, if you take that to the Q1 number and compare it to sort of Q4, for instance, has there been further deterioration or are you seeing a stabilization in the mix? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 12, 2025 / 9:00AM, AFXG.DE - Q1 2025 Carl Zeiss Meditec AG Earnings Call

Question: Richard Felton - Goldman Sachs Group, Inc. - Analyst : Great, thank you very much.

Question: Dylan van Haaften - Stifel, Nicolaus & Company, Incorporated - Analyst : Hi there, morning guys. So just a couple from my side, so maybe just to zoom in on China, just like everybody else as well, but maybe if we just look at the overall revenue and we take out the docking impact which was more limited if I -- if memory serves in the 1Q last year, what was roughly the decline sort of in, high single digit double digit type terms, and then I have two more follow ups.

Question: Dylan van Haaften - Stifel, Nicolaus & Company, Incorporated - Analyst : Excellent. Very clear. And just, and sorry to zoom in on the competitor news, but if we looked on the cash flow side, I saw there was a bit of an accounts receivable increase and given the rate and the commentary from your competitor just on the latency of Chinese distributors, is there anything happening on the Chinese distributor side? I know 70% is distributed, but as I say, is there anything happening on the. non-ZEISS distributed component of Chinese distribution.

Question: Dylan van Haaften - Stifel, Nicolaus & Company, Incorporated - Analyst : Yes. Perfect. And then my final question just on slide 13 you guys highlight VISUMAX and essentially a revenue decline and just on equipment and so I just wanted to understand in terms of the phasing of the order book because I know China obviously being 25% of the market for you -- sorry 25% of revenues for you guys. And being a very big refractive market is very important, but VISUMAX 800 outside of China has been improved for a while, right? So, how come the order book dynamics are phasing this way? Is there essentially let's say a bit of saturation on the VISUMAX 800 outside of China and let's say early days on the ramp up in China? Is that the way we should look at it? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 12, 2025 / 9:00AM, AFXG.DE - Q1 2025 Carl Zeiss Meditec AG Earnings Call

Question: Dylan van Haaften - Stifel, Nicolaus & Company, Incorporated - Analyst : Excellent. Thank you very much.

Question: Sam England - Berenberg, Gossler & Co. KG - Analyst : Hi guys, thanks for taking the questions. First one, just given where margins came in for Q1 and your commentary previously about additional potential cost savings you could find this year if needed. I just wondered if you're looking at those additional cost cuts at this stage and sort of given how demand shaped up in Q1 and with any additional cuts you may be more likely on the R&D side given that I'm assuming you need to invest in sales and marketing this year to support the new product launches. I mean, then secondly, can you give us a bit of an update on how DORC is performing, particularly on an organic growth basis, and how does order intake for DORC look like, especially in the US?

Question: Oliver Metzger - Oddo BHF - Analyst : Yes, good morning. Thanks for taking my questions. The first one is about the phasing of recovery over the next quarters. So you mentioned, some easing VBP headband, the VISUMAX launch, we can order backlog so. Could you elaborate about the moving parts right now and what does it mean for the phasing of sales for the next quarters. Second question is on VISUMAX 800. You mentioned the positive ASP effect. How should we think about the ASP effect for the consumers for the treatment packs? Thank you.

Question: Oliver Metzger - Oddo BHF - Analyst : No, apologize for not being clear enough. I was really focused on the for VISUMAX 800 for Smile pro with treatment, packs. Do you see their price increase, compared to the smile treatment packs?

Question: Oliver Metzger - Oddo BHF - Analyst : But can you give us just an indication is it somewhere in the mid-single digit territory the price increase will be in.

Question: Oliver Metzger - Oddo BHF - Analyst : Okay, great. Thank you very much.

Question: Falko Friedrichs - Deutsche Bank AG - Analyst : Thank you. Three follow-ups from me, please. Firstly, towards the end of your prepared remarks, you dropped that comment that you see the risk that this positive order intake you saw in Q1 might reverse a little bit given that there might have been a pull forward ahead of tariff discussions. Can you add a little bit more flavor to that statement and sort of what exactly makes you worried that this could in fact reverse in the second quarter again? Then, secondly, it very much sounded to me like this fiscal year hinges a lot on this June to September period in China again. When you speak with your people, your colleagues in China. Do you get the sense that this would require some type of stimulus measures from the Chinese government to stimulate demand again? Because I mean June is in 3.5 months from now, it's not that long anymore. What do you think it takes to get this this underlying Chinese demand for the procedure going again? And then lastly, very quick, could you give us a bit of a flavor for the second quarter and whether this could turn into positive organic growth or if it's more of the same in terms of absolute sales and even that figures compared to the first quarter. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 12, 2025 / 9:00AM, AFXG.DE - Q1 2025 Carl Zeiss Meditec AG Earnings Call Thank you.

Question: Falko Friedrichs - Deutsche Bank AG - Analyst : Hello, I can hear you well. Yes, I hear you.

Question: Falko Friedrichs - Deutsche Bank AG - Analyst : Okay, thank you.

Question: Alexander Galitsa - Hauck&Aufhauser Investment Banking - Analyst : Yes, good morning. Thank you for taking the question. Just a quick few add-ons, maybe on VISUMAX, the new, generation in China. Do you have generally a sense of to what extent this new VISUMAX orders will go towards the expansion of the installed base versus the replacement, that the first one?

Question: Alexander Galitsa - Hauck&Aufhauser Investment Banking - Analyst : Understood. And then another one would be on IOLs, referring to the slide 13 you showed. I'm just wondering your showcasing their 19% decline year-on-year, in Q1. Would you be able to add color around how much was the volume growth in Q1? And now basically having digested the headwinds from price reductions, what are your general expectations for the IOL's volumes, for the full year?

Question: Alexander Galitsa - Hauck&Aufhauser Investment Banking - Analyst : Understood that's helpful. Thank you very much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 12, 2025 / 9:00AM, AFXG.DE - Q1 2025 Carl Zeiss Meditec AG Earnings Call

Question: Graham Doyle - UBS - Analyst : Alright thanks guys a follow up. Just a quick one on margin phasing and there's a big step up lied in the consensus margin for Q2, but are we are you expecting margins to step up in Q2 and sort of sustain that level, or should we expect margins just to be improving quarter on quarter-on-quarter if you know what I mean, as we get through the year. What sort of phasing are you planning for?

Question: Graham Doyle - UBS - Analyst : Okay, no, that's super good, thanks a lot for that.

Question: Julien Ouaddour - Bank of America - Analyst : Thanks a lot for squeezing me in and I mean like sorry if you already addressed it during the Q&A, but as per your comment today, smile ratio seems to be around or maybe slightly below the 70%, which implies a bit of down trading from customers. But with the price increases on the new VISUMAX 800, are you not just not afraid to see further down trading pattern and like this ratio to reduce slightly more going forward?

Question: Julien Ouaddour - Bank of America - Analyst : Okay, perfect. And maybe just, let's like, following up with that. So, like start surgical, I think yesterday roughly the like the refractive procedure in China could be down 10%. Have you provided your own, like your own forecast on these calls? Sorry, I don't remember. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 12, 2025 / 9:00AM, AFXG.DE - Q1 2025 Carl Zeiss Meditec AG Earnings Call

Question: Julien Ouaddour - Bank of America - Analyst : So, I mean, so you said you said six months ago that procedure will be down 10%, right? And so and so you stick with that.

Question: Julien Ouaddour - Bank of America - Analyst : Thank you very much.