JENA, Germany—Carl Zeiss Meditec (ISIN: DE 0005313704) reported further revenue growth for the first nine months of its fiscal year, with revenues of what it says was around €1,509.6 million in the first nine months of fiscal year 2022/23, compared to €1,332.9 million in the prior year, a growth of +13.3 percent or +12.9 percent adjusted for currency effects. Earnings before interest and tax (EBIT) declined to around €244.9 million compared to €275.9 million in the prior year. The EBIT margin was 16.2 percent compared to 20.7 percent in the prior year.

“In the third quarter of 2022/23 we made further progress in stabilizing our supply chains and accelerated equipment deliveries, in spite of the delivery times of many products still being too long. Our innovation pipeline and targeted growth initiatives in sales and marketing are making steady progress,” said Dr. Markus Weber, president and CEO of Carl Zeiss Meditec AG.

Revenue in the strategic business unit (SBU) Ophthalmology increased by +12.2% percent after nine months of the fiscal year (+11.8 percent, adjusted for currency effects), to €1,152.3 million, compared to €1,027.2 million the prior year). Supply chains gradually stabilized over the course of the reporting period, allowing the delivery of equipment to progress well, the company said.

The strategic business unit Microsurgery achieved revenue growth of +16.9 percent (+16.5 percent, adjusted for currency effects), from €305.7 million in the prior year to €357.3 million. The strained supply chains gradually stabilized over the course of the reporting period, thus further accelerating the delivery of equipment recently. The order backlog remained high.

Revenue in the strategic business unit (SBU) Ophthalmology increased by +12.2 percent after nine months of the fiscal year  (+11.8% adjusted for currency effects), to €1,152.3 million (compared to €1,027.2 million in the prior year). Supply chains gradually stabilized over the course of the reporting period, allowing the delivery of equipment to progress well.

Revenue in the EMEA  region increased by +11.4 percent (+13.0 percent adjusted for currency effects) to €372.3 million (versus €334.2 million the prior year). France and Southern Europe, among others, made good contributions to growth.

Revenue in the Americas region increased significantly by 24.2 percent (up 19.5  percent, adjusted for currency effects), from €330.4 million to €410.3 million. The order backlog in the U.S. market was reduced, particularly in the diagnostics business; surgical microscopes also developed well.

Revenue in the APAC region developed at a constant level compared with the strong year-ago period, increasing by 8.8 percent (+9.5 percent, adjusted for currency effects) to €727.0 million (compared to €668.3 million the year before). While India and Southeast Asia, especially, made good contributions to growth, the Japanese and South Korean markets showed a slight downturn. The Chinese market, however, increasingly recovered over the course of the third quarter after the weak start to the year due to the pandemic.

Although the operating result (earnings before interest and taxes: EBIT) remained behind the prior-year level after the first nine months of fiscal year 2022/23, at €244.9 million, a sequential recovery was achieved in the third quarter of fiscal year 2022/23 compared with the first six months of fiscal year 2022/23. The downward trend is due, among other things, to an unfavorable product mix, the company stated.
 
The company said, "The continued long delivery times for refractive laser systems are currently preventing more dynamic growth of related consumables. At the same time, the planned strategic investments in research and development, including those in the area of digitization, and sales and marketing had an adverse effect. In addition, long lead times in a number of device categories also mean that the effect of price adjustments introduced to offset inflation has been delayed."

The company said that Carl Zeiss Meditec revenue is expected to amount to around €2.1 billion in fiscal year 2022/23, corresponding to growth of approximately 10 percent compared with the prior year. The strategic investments in sales and marketing, and research and development shall continue at a high level in the short to medium term. In spite of the gradual stabilization of the supply chains, the delivery times for key products remain long.

As explained in the 2021/22 Annual Report, stocks of consumables for refractive laser surgery were significantly increased in the Chinese distribution channel as a one-off strategic measure in the second half of fiscal year 2021/22, in order to ensure security of supply in the event of renewed regional COVID-19 lockdowns. These additional stocks are to be largely reduced at the beginning of fiscal year 2023/24, according to current company planning.
 
This planned stock reduction shall have a significant temporary impact on revenue and earnings in the first six months of fiscal year 2023/24, Carl Zeiss Meditec's announcement said. A small portion of the stock reduction is expected to take place in the fourth quarter of fiscal year 2022/23, which has already begun. Overall, the one-off negative effect of the stock reduction on revenue and EBIT is expected to be in the mid-double-digit million range.

The EBIT margin for fiscal year 2022/23 is expected to be at the lower end of the forecast range of 17 percent to 20 percent. In the medium term, the EBIT margin is expected to stabilize and return to the level of 20 percent. However, the duration of this recovery is currently not precisely predictable and will be determined to a large extent by the timing and amount of strategic investments in research and development as well as sales and marketing.