Carl Zeiss Meditec AG Q2 2025 Earnings Call Transcript

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

Question: Jack Reynolds - RBC Capital Markets - Analyst : Hi there. Thanks for taking the questions. Three for me, please. Firstly, on China refractive demand, could you talk through how you're seeing things, progress as so far in the quarter and what are your expectations, for the summer season? Based on EBITDA, so outside of tariffs and currency and kind of all of the kind of the macroeconomic caveats, you mentioned, but would there be anything else that you might call out, that would make you more hesitant, to be more optimistic on the guidance, kind of what are the other kind of potential headwinds or opportunities there through the remainder of the year? And then finally, Markus, wish you best of luck with your next adventure. Maximilian, you mentioned the recurring, revenue business, and the market access as kind of key things that you're going to be working on. Could you share any other views on where you think the opportunity might be, in the kind of the near to medium term, for you to address when you become CEO. Thank you.

Question: Jack Reynolds - RBC Capital Markets - Analyst : Yeah, absolutely.

Question: Oliver Reinberg - Kepler Cheuvreux - Analyst : Yeah, thanks very much for taking my questions. Markus (inaudible) leaving, thanks so much for the collaborations and Max welcome on board. Three questions from my side. Firstly, I think the outlook so far excluded the potential from VISUMAX and KINEVO. So I was just wondering if you can give us a bit of an update what kind of sales potentially you see from this kind of new launches in the second half of the year. This EUR40 million revenues here a kind of decent assumption, that's question number one, please. Secondly, on terrorists, I mean, if we assume that the current regime stays unchanged, we are basically talking three months, 10% on EUR250 million 20% for another three months, which brings us to I guess EUR80 million. Is this is the right way to think about it and to what share this do you believe you can offset by pricing. And then thirdly, lastly, just on the Chinese momentum. I guess the mixing the growth that you refer to is adjusted for this kind of destocking effect. Can you just give us some kind of flavor of what kind of growth have you actually seen in Q2 itself and what are the kind of trends posed to Chinese new year season please? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 13, 2025 / 5:00AM, AFXG.DE - Q2 2025 Carl Zeiss Meditec AG Earnings Call

Question: Oliver Reinberg - Kepler Cheuvreux - Analyst : Okay, super. And can I just ask the safe potential VISUMAX and KINEVO, I mean, it's [40 million, 50 million] a reasonable ballpark? The second house.

Question: Oliver Reinberg - Kepler Cheuvreux - Analyst : Okay, super. Thanks so much, Markus, all the best.

Question: Falko Friedrichs - Deutsche Bank AG - Analyst : Thank you. Good morning. My first question is whether you noticed any pre-ordering before the tariffs came into place, so anything that might have boosted your order intake in the first half because of that. Then secondly, could you speak a little bit more about the developments you have seen specifically since Liberation Day, so about five to six weeks ago. Whether there was any change in demand or ordering patterns. And then thirdly, do you notice any impact or expect any impact from stimulus measures in China to potentially spur demand over the summer season. Thank you.

Question: Falko Friedrichs - Deutsche Bank AG - Analyst : Okay, thank you and all the best to you, Markus.

Question: Sam England - Berenberg, Gossler & Co. KG - Analyst : Alright guys, thanks for taking the questions. And the first one, you commented on pricing dynamics for IOLs in China, but can you give us some more color on IOL volumes in China? And I suppose how much of an uplift you're seeing after the rollout of VDP and whether we should expect an acceleration in IOL volume growth in the second half of the year in China. And then on cost containment, R&D spend was obviously down quite a bit in Q2 in absolute terms versus last year and also as a percentage of sales. Was that all just related to your cost containment plans or are there any timing factors around R&D spend in there? And I suppose looking ahead on R&D spend, should we be thinking about a similar percentage of sales going forward?

Question: Sam England - Berenberg, Gossler & Co. KG - Analyst : Great, thanks very much and best of luck for the future, Markus.

Question: Graham Doyle - UBS - Analyst : Morning guys. Thanks for questions and good luck in the in the new role, Markus and welcome Maximilian. And it's just a few questions for me. Just firstly on gross margins be good to understand obviously year-over-year in Q2, you have the big tailwind of the cost the restocking effect on consumable refractive products in China. What's big enough on the negative side that's offsetting that within that mix? So what specifically is it means you're effectively flatish gross margins rather than say 200 bps. And then secondly, could you give us an update on the dork margins, so just how that's progressed because post acquisition obviously came down a bit, it should be interesting to see how it's performing now. And then just your comment on last one just to comment on tariffs around pricing. One of your competitors does produce pretty much everything in the US, so presumably they're not going to pass through that price. Have you thought about how that might affect competitiveness there? And thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 13, 2025 / 5:00AM, AFXG.DE - Q2 2025 Carl Zeiss Meditec AG Earnings Call

Question: Graham Doyle - UBS - Analyst : That's really helpful. Thanks so much for the call on the gross margin in particular. Thanks a lot guys. I really appreciate it.

Question: Dylan van Haaften - Stifel Financial Corp - Analyst : First of all, Markus, wishing you the best, in your future Carl Zeiss and welcome, VISUMAX. So maybe just Markus, starting on the Chinese military comments, could you tell us when the stricter enforcement of this stabilization period was implemented just to check if it doesn't affect the summer season as well. And just in terms of the numbers, just back in the envelope, I'm thinking about 200 to 300k or something, which is around 10% of annual volume. Does that sound about right?

Question: Dylan van Haaften - Stifel Financial Corp - Analyst : Sure, so at 1 point you guys talked about the Chinese military pull forward that there's this six month stabilization period, about refractive procedures. I just wanted to know whether this is really sort of a pull forward or more of an annualization impact and if you could tell us roughly when when that was implemented. And my follow up on that was what the gross impact of that is roughly in terms of the number of eyes I got to a number that said roughly 10% of annual volume is military but any color would be helpful.

Question: Dylan van Haaften - Stifel Financial Corp - Analyst : Understood no but very clear so so maybe just to recap it sounds like you know it's not just this one off, it's also just kind of extending and it it it makes total sense to be a little bit conservative there. Maybe then just one follow up maybe for VISUMAX, if you could comment on this or maybe Marcus, for that matter as well just because I understand the VISUMAX 800 launch event, took place and I'd just be very keen to get a bit of a color sorry in China. You know what kind of excitement you guys were seeing there and what kind of, who's the typical VISUMAX 800 client at this point? Is this docs replacing older 500, some of which are maybe, 5 or 10 years old, or is this like totally new installs or the second, third machines, and yeah that'd be that'd be super helpful thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 13, 2025 / 5:00AM, AFXG.DE - Q2 2025 Carl Zeiss Meditec AG Earnings Call

Question: Dylan van Haaften - Stifel Financial Corp - Analyst : Excellent thank you very much all the best Markus.

Question: Anshul Verma - JPMorgan Chase & Co - Analyst : Hi, good morning, I have two questions, please. Firstly, I just want to follow up on the China re reflective market. Could you please share what you've seen in April and May so far in terms of demand, and can you point to any market data points that either show you, sequential improvement or that the reluctance continues? And then the second one was on. Your creating cash flow was down significantly around 85% in each one, mainly due to an increase in receivables. Is this because you've been offering more favorable terms, or have you got prices towards the end of the quarter, and have you received the cash for this now? And then the last one, is just a bit of a housekeeping on your FX assumptions FX is supposed to be heading for this year. Could you just tell us what you baked in your guidance for the sales and EBIT impact? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 13, 2025 / 5:00AM, AFXG.DE - Q2 2025 Carl Zeiss Meditec AG Earnings Call

Question: Anshul Verma - JPMorgan Chase & Co - Analyst : Thank you.

Question: Richard Felton - Goldman Sachs Group Inc - Analyst : Thanks very much. Good morning and I appreciate you taking my question. Just two left for me, please, both on microsurgery. So first of all, on KINEVO 900, you mentioned in your prepared remarks that it's not yet being shipped in large quantities. Could you just explain what the what the bottleneck has been, and when you expect product. And revenue generation to ramp for KINEVO 900 and how much visibility you have on that into the second half, and then, if it wasn't KINEVO 900 driving the improvement in revenue for microsurgery in Q2, what was driving that improvement and how much is that going to, continue to drive performance into the second half of the year? Thank you.

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

Question: Susannah Ludwig - Bernstein - Analyst : Good morning and thanks for taking my questions. I have two please, I guess first on the order backlog we saw a large step up in Q1 and now it's been stable in Q2. In terms of your comments about this being sort of a new normal period, we therefore expect that this is sort of the new order backlog level we should expect it to be stable, or is there any potential for reduction in the backlog to be a contribution to revenue in the second half of this year? I don't know perhaps from the KINEVO 900 S book building that you've been doing. And then second just in terms of your comments on intensifying competition wanted to focus on the effective market in China in particular, when do you expect to see a competitor lenticular extraction platform approved and sort of what's the timeline for a potential local competitor to emerge?

Question: Susannah Ludwig - Bernstein - Analyst : Great thanks both that was very helpful.

Question: Oliver Reinberg - Kepler Cheuvreux - Analyst : Yeah, thanks so much for taking my follow up. Just a quick one. Just as I think you prepared the marks when you discussed the operating cash flow and the account receivables, I think you mentioned that there was all these are also linked to consumer goods being sold to price. Maybe I misunderstood it. Just want to clarify if there has been any kind of, unusual stocking factor that could impact the kind of sales realization in the summer peak in China. Thank you.

Question: Oliver Reinberg - Kepler Cheuvreux - Analyst : Perfect thanks so much.

Question: Graham Doyle - UBS - Analyst : So, thanks a lot for taking the follow up. I appreciate it if it's long I can speak to Sebastian offline, but it's just a follow up to Anhell's question around the trade receivables, the related party receivables. So it looks to be called $80 million $90 million in terms of an increase versus the end of last year. What exactly is that? And I just would have thought that would kind of ease at the end of March, rather than pick up. So just maybe just get a sense of faing is that just ahead of, say, summer boom in terms of refractive, is that what we're looking at?

Question: Graham Doyle - UBS - Analyst : That would you like, how would you expect that number to be by the end of the year if you know what I mean or when does that normalize just just to get a sense of how long those cycles take.

Question: Graham Doyle - UBS - Analyst : Okay, thanks a lot. I appreciate it.