Release Date: May 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Carl Zeiss Meditec AG (CZMWF) reported a robust revenue growth of 10.9% in the first six months of 2025, with Q2 revenue growing by 19%. The company achieved a significant milestone with recurring revenue now making up 50% of total revenue for the first time in its history. Strong order entry was observed, with a 33.4% increase in orders, indicating a positive trend for future revenue. The company maintained a stable order backlog of 385.4 million, providing a solid foundation for future growth. The launch of the VisoMax 800 in China has been well-received, signaling strong customer excitement and potential for increased sales in the region.

Negative Points

The EBITA margin decreased to 10.8% from last year's 12%, indicating pressure on profitability. Net income declined significantly from 84 million to 61 million, and earnings per share dropped by 26% compared to last year. The company faces challenges from US tariffs, which could impact competitiveness and pricing strategies. There is continued uncertainty in the global macroeconomic environment, particularly with US trade tariffs and currency risks. Operating cash flow decreased significantly to 9 million from 60 million last year, mainly due to weaker operating results and increased account receivables.

Q & A Highlights

Warning! GuruFocus has detected 6 Warning Signs with CZMWF.

Q: Could you provide insights on the current state of Chinas refractive demand and expectations for the summer season? A: Dr. Marcus Weber, CEO, explained that the China refractive market showed strong performance in Q2, partly due to changes in military regulations. The market appears to have stabilized, and there is cautious optimism for continued stabilization throughout the year. The Viso Max 800 has been well-received, which is expected to positively impact future quarters.

Q: What are the potential headwinds or opportunities for the remainder of the year, excluding tariffs and currency impacts? A: Jo Weber, CFO, highlighted that currency fluctuations, particularly the potential devaluation of the US dollar against the euro, pose a significant headwind. The ongoing uncertainty regarding US-EU tariff negotiations also remains a concern.

Q: Can you provide an update on the sales potential from new product launches like Viso Max and Knivo in the second half of the year? A: Dr. Marcus Weber, CEO, noted positive momentum for these products, especially in the US and Japan. The company is focused on ensuring timely delivery despite potential tariff-related uncertainties. The Viso Max 800 is gaining traction in China, contributing to the company's growth plans.

Story Continues

Q: How are you managing the impact of US tariffs, and what is the expected financial impact? A: Jo Weber, CFO, stated that the company is positioned to offset a significant portion of the tariff impact through pricing strategies. The competitive landscape, with most competitors also facing tariffs, allows for some flexibility in managing these costs.

Q: What are the current trends in IOL volumes in China, and how is the rollout of VDP affecting growth? A: Jo Weber, CFO, reported a 4% growth in IOL volumes, with premium IOLs showing even higher growth. The company is optimistic about offsetting previous negative impacts through volume growth in the private sector.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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