Carl Zeiss Meditec Group

Carl Zeiss Meditec Group


Dr. Ludwin Monz, President and CEO Mai 11, 2020Justus Felix Wehmer, CFO


Agenda

6M 2019/20 at a Glance

Financial Performance

Focus Topics

Outlook

Carl Zeiss Meditec Group 3

Half-year 2019/20 Revenue Growth of 7% - Significant Slowdown in Business in Months of February & March

667.2

6M 2019/20

6M 2018/19

Revenue Half year-revenue still in upward trajectory (FX-adj. growth of 5.8%) - significant slowdown during

February and March due to impact of COVID-19 pandemic

Q2 2019/20 with sideways revenue vs. previous year

Weak start into Q3 2019/20 – April 2020 order entry & revenues down approx. 20-30% y/y

+ 7.2%

million

110.4

€ 102.56M 2019/20

6M 2018/19

EBIT EBIT margin down to 14.3% (prev. year 16.5%) in particular due to continued investment in

R&D, lack of growth in Q2 as well as less favorable product and regional mix.

Adj. EBIT margin amounted to 14.7% (prev. year 16.8%) - 7.1%

million

0.65

€ 0.713M 2019/20

3M 2018/19

EPS The previous year’s EPS had included significant hedging losses

+ 10.0%

€ 714.9


Agenda



Focus Topics

Outlook


Ophthalmic DevicesSignificant Slowdown in Business Growth & Profit Mix in February & March

490.7

€ 517.76M 2019/20

6M 2018/19

Revenue FX-adj. revenue growth of +4.2% in H1 2019/20

Both products for ophthalmic surgery and diagnostics contributed

Significant impact on business activity from COVID-19 pandemic particularly

in months of February and March, weak start into Q3 during month of April

+5.5%million

of total revenue

Revenue Split

72.4%

13.8%

9.5%6M 2019/20

6M 2018/19

EBIT margin EBIT margin declined significantly due to ongoing investments,

lack of growth in Q2 and lower revenue of consumables

following cancellations of non-essential surgical procedures in

several countries

OPT

MCS


Microsurgery Deceleration in Growth Trend in February & March

176.5

€ 197.26M 2019/20

6M 2018/19

Revenue FX-adj. revenue growth of +10.1%

Continuing positive revenue trend neurosurgical and spinal product category

Impact of COVID-19 pandemic clearly visible towards end of quarter,

weak start into Q3 during month of April

+11.7%million

of total revenue

Revenue Split

27.6%

24.2%

27.1%6M 2019/20

6M 2018/19

EBIT margin EBIT margin further increased compared to previous year

mainly due to operating leverage

OPT

MCS


Growth Trending Lower Across World Regions in February & March

180.9

205.56M 2019/20

6M 2018/19

Americas FX-adj. revenue growth of +10.8%

Positive development in the US market and good contributions from LatAm

Significant slowdown in March and weak start into April

+13.6%million28.8%

213.7

208.76M 2019/20

6M 2018/19

EMEA FX-adj. revenue growth of -2.3%

Heterogeneous development in major markets

Significant declines in order intake since March 2020 as a result of the COVID-19 pandemic and very weak start into April

-2.3%million29.2%

272.6

6M 2019/20

6M 2018/19

APAC FX-adj. revenue growth of +8.8%

Strong performance in South Korea and Japan, no growth in China

Early indicators improving for China, while many other Asian markets also off to a weak start in April

+10.3%million42.0%

Americas

EMEA

APAC300.7


Selling & marketing expenses

Gross profit

General admin. expenses

R&D expenses

EBIT[adj.]

Headwind to EBIT Margin From Product Mix And Continued Strategic R&D Investment

in € million in % of sales

6M 2019/20 6M 2018/19

Income Statement

397.7 55.6373.0 55.9

160.0 22.4156.1 23.4

29.7 4.228.0 4.2

105.5 14.878.5 11.8

102.5[105.3]

14.3[14.7]

110.4[112.1]

16.5[16.8]

Gross margin slightly down, particularly due to

negative trend in months of February and March

as consumables revenue in China declined

Further pressure on gross margin expected in Q3

due to cancellation of non-essential procedures in

many countries as a consequence of the

COVID-19 pandemic

Strong operating cost controls implemented in

March, but further near-term pressure on opex

ratios anticipated due to weakening revenue

outlook

Strategic R&D investment largely ring-fenced and

continues as planned


Adjusted EBIT Margin Amounted to 14.7%

6M 2019/20 € million

6M 2018/19€ million

Change to PY%

EBIT 102.5 110.4 - 7.1

Acquisition-related special effects 2.8 1.7

Adjusted EBIT 105.3 112.1 - 6.1

Adjusted EBIT in % of revenue 14.7% 16.8% -2.1% pts.

Adjusted EBIT margin

Only modest level of adjustments from acquisitions / PPA


37.1

-122.9

89.1

-29.3

-18.7

40.7

691.6581.3

Operating Cash-flow Reduction Partly Due to Increase in Safety Stocks to Ensure Deliveries

Operating cash flow declined compared to prev. year partly due to an increase in safety stocks of certain products and components to secure deliveries in the context of the COVID-19 pandemic

Cash flow from investing activities was € -122.9 million in the previous year mainly due to the acquisition of IanTECH, Inc.

Cash flow from financing activities in the previous year impacted by fund flows in relation to acquisition of IanTECH, Inc.

Cash flow from investing activities

Cash flow from operating activities

Cash flow from financing activities

Net liquidity

Cash flow statement

6M 2019/20 6M 2018/19


Agenda



Focus Topics

Outlook


Our Priorities During & Emerging From COVID-19 Pandemic (I)

Safety of employees

Safety precautions in production & admin such as distancing, masks, mobile work implemented early – minimal impact from COVID-19 infections on our workforce so far

Continuity of production

No interruption to production and supply chains

Safety Stocks increased to ensure deliveries

Financial Stability

Tight management of capacity in production & admin, including use of local flexibilization instruments (e.g “Kurzarbeit” (short term working hours), furloughs)

Reducing sales & marketing expenses (partly through increased use of digital instruments)

Strict monitoring of Net Working Capital


Our Priorities During & Emerging From COVID-19 Pandemic (II)

Support Our Customers During Crisis

Engage with customers through digital tools & outreach

Support with professional education and practice consulting services

Support Business Ramp-Up Emerging From Crisis

Ensure readiness to deliver key products and swiftly increase volumes when required

Continue strategic R&D to uphold product roadmap

Embrace Structural Changes & Market Shifts Post Crisis

Rising relevance of tele-medicine, online education

Development of Digital Solutions to be continued at full speed


Agenda



Focus Topics

Outlook


Long-Term Drivers of Our Business Remain Intact while Near-term Visibility is very Limited

Favourable Long-Term Trends

Our StrategicPriorities

FY 2019/20Outlook

Aging of the population and growing affluence

Rising access to health care in RDEs

Increasing information access and awareness

Growing patient load, growing patient expectations

Further expand recurring revenue generation

Extend technology leadership in cataract

Drive global market penetration of SMILE Refractive Laser surgery

Lead Neuro/ENT market by turning next-generation product into business growth

Significant negative impact of COVID-19 pandemic expected throughout second half of 2019/20

A reliable forecast of business development is currently not possible as visibility remains low

Carl Zeiss Meditec Group

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