Carl Zeiss Meditec (AFX) Q1 2025 earnings summary

Executive summary

• Q1 revenue grew 3.2% year-over-year to EUR 491 million, mainly due to the DORC acquisition, but organic sales declined 7.3% after adjusting for FX and acquisitions, reflecting tough prior-year comparisons and weak investment climate in China.

• Order entry surged 34.2% year-over-year, with backlog rising to EUR 382 million, driven by new product launches and tariff fears in the U.S.

• EBITDA/EBITA fell 23.5% to EUR 35 million, with margin dropping to 7.2% from 9.7%, mainly due to unfavorable product mix and price declines for IOLs in China.

• Adjusted EPS declined 22.3% year-over-year to EUR 0.36, reflecting lower EBIT, negative FX hedging, and higher interest expenses.

• EPS dropped to EUR 0.18 from EUR 0.42 year-over-year.

Financial highlights

• Gross margin declined to 51.4% from 53.2%, impacted by product mix and price cuts in IOLs.

• Operating cash flow was -EUR 26 million, down from EUR 1 million, mainly due to weaker operating results and higher receivables.

• Net financial debt increased to -EUR 366 million, mainly refinanced by a shareholder loan.

• CapEx spending was 4.3% of revenue in Q1.

• Significant increase in PPA amortization due to DORC acquisition.

Outlook and guidance

• Guidance for FY 2024/25 remains unchanged, expecting moderate revenue growth driven by order intake stabilization and DORC consolidation.

• Organic growth and margin stability depend on macroeconomic conditions; cost containment measures to continue.

• New product launches (KINEVO 900 S, VISUMAX 800) and potential stimulus in China could provide upside.

• Long-term EBITDA/EBITA margin target is at least 16%-20%.