Carl Zeiss Meditec AG Q3 2024 Earnings Call Transcript

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

Question: Oliver Reinberg - Kepler Cheuvreux - Analyst : Three, if I may. And firstly on China, can you share with us what kind of volume growth in terms of treatment you have seen so far in the kind of key summer period on an absolute basis and also on a like-for-like basis, if you adjust for the widened installed base? That would be question number one. And secondly, on DORC. And I mean, noting a bit of a softer margin print here and also now you talked about involving consultants to streamline the kind of cost base here initially, the understanding was that this is kind of some very simple integration work. So can you just give us a bit of flavor? Is there anything like you figured out that once more negative for DORC and also what is now a kind of reasonable margin assumption for DORC next year on size accounting standards, please? And then thirdly, on the midterm margin outlook, I'm not sure if it's just the wording. I think you now talked about 20% sustainable margin. In the past you were shooting for more, not sure if that is a change. And can you just confirm, does it also apply now still for a reported EBIT or does it now move to adjusted EBITDA as well considering that you have this kind of PPA charges coming from DORC? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2024 / NTS, AFXG.DE - Q3 2024 Carl Zeiss Meditec AG Earnings Call

Question: Graham Doyle - UBS - Analyst : Just two questions. Firstly, -- first on microsurgery, when you think of the -- this slowing order intake there and obviously the very strong numbers in the first half, how could you feel about finding a baseline of demand for 2025? And do you think you should have that now because you've seen a stabilization. And then just on China refractive, could you give us a sense as to how the potential shift, the pressure that we're seeing a little while ago in terms of the switch delayed, how that's playing out over the summer as well? Just to get a sense as to we think about next year and the potential for a restock in the first half whether we would see a full sort of 55 minute benefit or maybe some might get eaten away with LASIK?

Question: Dylan van Haaften - Stifel, Nicolaus & Company, Incorporated - Analyst : Thank you. So just one follow up on Graham's question, just on the mix. Is there also I mean shift between SMILE and SMILE PRO? I was just interested to hear if there is, let's say, traction here given sort of the mix implications? And then maybe just a question on the book-to-bill number that we got. Is that -- are all orders entered into book-to-bill or is that also excluding ship orders? Because I know that sometimes these numbers can differ. And yeah, I'll just keep it there. If there's follow up, I'll jump in. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2024 / NTS, AFXG.DE - Q3 2024 Carl Zeiss Meditec AG Earnings Call

Question: Dylan van Haaften - Stifel, Nicolaus & Company, Incorporated - Analyst : Thank you. And maybe just then I think SMILE PRO or at least VISUMAX 800 is launched in Korea, right? And could you maybe comment on the traction in their market maybe as a proxy for what is ultimately maybe flattish volumes, but maybe positive mix because there is a premium implicated rack with the trade (multiple speakers) SMILE PRO.

Question: Dylan van Haaften - Stifel, Nicolaus & Company, Incorporated - Analyst : Excellent. And just maybe finally, just on VisuMax, is there still sort of an order book number you guys have because I think the number was roughly 100 in China and I think -- or was it 50 in China, another 50 international? Is there an update on that number?

Question: Sam England - Berenberg, Gossler & Co. KG - Analyst : Two for me. So on the weaker equipment sales in North America and the ophthalmology segment, do you think the declines you saw were in line with the rest of the market. I know you said the decline in equipment sales and MCS was in line with the market or was it the same in ophthalmology? And then how much of the phaco expansion plans in the US been disrupted by the sort of equipment selling season? How are you thinking about the longer-term opportunity there? And then the second one was just around the mid to long-term resiliency initiatives. I just wondered whether your goal of getting back to over 20% now relies on efficiency or cost savings to get back to that level once we see a recovery in US equipment sales in China refractive consumables, would that be enough to get the margins back to that 20% level?

Question: Falko Friedrichs - Deutsche Bank AG - Analyst : Thank you and good morning. My first question is on guidance for this fiscal year. Considering where you stand on adjusted EBIT in the first nine months, is that a fair assumption that the lower end of your adjusted EBIT margin -- adjusted EBIT range is a little bit more realistic now? Or do you still believe that the full range is perfectly doable? And my second question, on your incremental OpEx savings, these low to mid double digit millions, did I understand it correctly that and they should have a full effect next fiscal year over this year? So that's sort of the full incremental benefit that you expect next fiscal year? And then my last question is on the VBP rollout in IOLs, Can you briefly update us where we stand here with it and sort of how many provinces haven't been implemented and how much is due to Guangzhou?

Question: Jack Reynolds-Clark - RBC Capital Markets - Analyst : You talked about strong growth in EMEA. Can you just talk to kind of which categories you're seeing the most strength and is this kind of market level strength or are you seeing share gains here? And then the second question was just around capital environment in the US, though some sort of other subsectors are -- or talk about kind of relatively strong demand in medical equipment. So what's kind of causing the weakness on the2 ophthalmology side compared to these kind of other other areas? Thank you.

Question: David Menchetti - Equita Group S.p.A. - Analyst : Hi, good morning, everybody. I have two questions. I will start with the first and then I will follow with the second. Looking at the evolution of your R&D, it's already third quarter in a row of a sequential decline. In the third quarter, you booked EUR84 million on R&D, which was below (inaudible) because I was assuming the consolidation of DORC as well. So I will understand first of all, how much out of these EUR84 million R&D comes from DORC and what we should expect going forward, the fee will stay at such a low level R&D. Thank you.

Question: David Menchetti - Equita Group S.p.A. - Analyst : I didn't ask yet the second question. The second question is when you target midterm an EBIT margin above 20% at the Group level, then what do you have in mind regarding the ophthalmic devices and microsurgery. This has been because of higher competition in ophthalmic devices and also some pricing pressure, for example, coming from VBP in China. Is it a fair assumption to assume in ophthalmic devices, midterm, your margin will stay below 20%, maybe in the region of high teens, while microsurgery will run at a higher level of profitability?

Question: Oliver Metzger - Oddo BHF - Analyst : And first question is on visibility. So obviously it has come down massively in both divisions. And your communication suggests that this is to return to a better potential somewhere in '25. So is your confidence just based on macro assumptions and what what's does prevents you that the recovery might not kick in or in '26 and not not earlier and also all the measures you mentioned target primarily on the bottom line, is correct. Isn't it? Second, it's also a clarification and an add-on to David's question. So can you confirm that your order book in microsurgery. It's basically eaten up strongly during the last quarters. And last one, it's on China. Can you describe your expectations for refractive if the economic crisis in China remains as it is. So would you describe your expectations for demand also have more muted and what about the underlying demand in such a scenario? Thank you.

Question: Alexander Galitsa - Hauck & AufhSuser Privatbankiers - Analyst : On R&D, I think previously you hinted that in light of the ongoing prioritization of R&D projects that there might be a potential write-offs. Can you provide an update on that, whether we should expect anything here? And secondly, I'm not sure if you can talk about that. With regards to your share buyback product program, what has been the sort of average cost base that you have realized? Thank you.

Question: Anshul Verma - JPMorgan Chase & Co. - Analyst : I have two quick ones, please. One on DORC, can you please clarify when you expect the margins to reach mid teen? Looking into next year in terms of contribution for at the EBIT level, do you expect a positive contribution from DORC on a net basis? Second, you've mentioned order growth has returned to positive. And can you please provide any color of the order growth regionally, especially on the US and China? And then lastly, last one is on cost savings. You have new product launches coming out, how will you balance the sales and marketing spend required for the new launches versus the cost savings? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2024 / NTS, AFXG.DE - Q3 2024 Carl Zeiss Meditec AG Earnings Call

Question: Anshul Verma - JPMorgan Chase & Co. - Analyst : Regions, please.

Question: Richard Felton - Goldman Sachs Group, Inc. - Analyst : Yes, thank you very much. Just one for me, please, on 2025, sort of based on what you're saying today about FY24 EBIT, there is quite a big gap up to where current consensus for 2025 is, which I think is currently around 380. So my question is like clearly there's a lot of sort of initiatives on cost going on. So do you feel like you have good visibility on a path to reaching that level of EBIT that's currently in consensus 2025 or there's lot that'll depend on the overall market environment getting better into next year. Thank you.