Carl Zeiss Meditec (ETR:AFX) reported a weaker-than-expected start to fiscal 2025/26, as management cited currency headwinds, an unfavorable product mix, and challenges in China and the U.S. as key drivers of lower revenue and sharply reduced profitability in the first quarter.
Chief Executive Officer Andreas Pecher opened the call with an apology to investors following the company’s decision to suspend full-year guidance on Jan. 22, calling the decline in market value and the “level of trust” a “new low point.” Pecher said the focus is now on execution and rebuilding credibility, with an update planned “latest, with the half year reporting.”
Quarterly results: revenue down and margins pressured
Revenue declines were seen in both equipment and consumables, following what management described as an “exceptionally strong” equipment delivery baseline in September of the prior fiscal year. The quarterly revenue mix was 52% equipment, 37% consumables, and 11% services.
Order intake was EUR 471 million, down 9.7% year over year (down 6.9% currency-adjusted), which management again linked to a strong year-end close in September 2025. The order backlog increased to EUR 405 million, slightly above the level at the end of the prior fiscal year.
Profitability deteriorated significantly. EBITDA was reported at EUR 68.8 million, which management described as a steep decline versus the prior year, with an EBITDA margin of 1.7% compared with 7.2% a year earlier. The company attributed the drop to product mix, FX effects, and negative operating leverage as the cost base stayed “largely stable” against lower revenue.
Segment performance: Ophthalmology hit by China IOL and refractive phasing
In Ophthalmology, revenue was EUR 357 million, down 5.1% year over year (down 2.4% currency-adjusted). CFO Justus Wehmer pointed to:
- Currency headwinds
- A pull-forward effect from strong equipment sales at the prior year-end
- Later timing of refractive treatment pack sales due to Chinese New Year
- Lost bifocal intraocular lens (IOL) sales in China tied to tender participation
Wehmer flagged an estimated EUR 8 million “scrap risk” associated with bifocal IOL inventory in China, expected to hit in the second quarter and to be treated as a non-recurring impact. Management said registration of a successor model is progressing and that the company sees a good chance of receiving the license before the start of the next tender.
Ophthalmology EBITA margin declined to -0.4%, driven by lower gross margin (including FX and mix) and a higher OpEx ratio. Within ophthalmology, consumables represented 46% of revenue, equipment 45%, and service 9%.
Microsurgery revenue was just under EUR 110 million, down 3.7% year over year (down 0.9% currency-adjusted). The company cited a pull-forward from strong deliveries into the prior fiscal year-end and slower deliveries of neurosurgical microscopes, which also weighed on profitability. Microsurgery EBITA margin fell to 8.7%, reflecting FX, mix, and amortization of capitalized R&D related to KINEVO.
Regional trends: Americas weak; EMEA stable; APAC mixed
Regionally, the Americas accounted for 25% of group revenue, with revenue of EUR 117 million, down 13% year over year (down 6% currency-adjusted). Management pointed to a weaker investment climate, geopolitical volatility, and “tariff-related price increases” contributing to subdued demand in the U.S., particularly in diagnostics.
EMEA represented 37% of revenue and was described as largely stable, supported by growth in selected markets including the Middle East, while Germany, Spain, and the Nordics were “broadly sideways.”
APAC made up 38% of revenue, with China contributing 18% in the quarter. APAC revenue was EUR 178 million, down 3% year over year (down 2% currency-adjusted). China was described as stable, with positive trends in India and Australia offset by weakness in Japan and South Korea.
Guidance suspended amid China VBP uncertainty and U.S. softness
Management laid out three developments behind the January decision to suspend guidance:
- China bifocal IOL VBP impact and inventory uncertainty, including negotiated partial recall with distributors and Carl Zeiss China, resulting in an estimated EUR 8 million earnings risk.
- More intense competitive dynamics ahead of a second nationwide VBP tender, with additional Chinese competitors passing registration in multifocal categories, increasing expected pricing pressure in premium IOLs.
- Weaker-than-expected equipment demand in the U.S. and broader Americas, extending beyond a September delivery pull-forward and leading to more cautious internal forecasts.
Wehmer said the company is monitoring swing factors including the expected timing of successor bifocal IOL registration (management said it currently expects a license “around March”), the VBP tender outcome expected in April or May, and refractive procedure demand around Chinese New Year. Management said refractive consumption data indicated continued stability in the first quarter and into January, though it could not rely on growth to offset other pressures.
On the U.S., management said it implemented cumulative high single-digit price increases to offset tariff barriers, noting that diagnostics is a particularly price-sensitive and competitive category where customers may delay purchases amid uncertainty.
Management reiterated that new guidance will be provided no later than the half-year results, once tender outcomes and one-time items are better quantified. The company also referenced continued momentum expectations for VISUMAX 800 and SMILE Pro rollout in China and global traction for KINEVO 900 S, while acknowledging elevated near-term volatility.
About Carl Zeiss Meditec (ETR:AFX)
Carl Zeiss Meditec AG operates as a medical technology company in Germany, rest of Europe, North America, and Asia. It operates in two segments, Ophthalmology and Microsurgery. The Ophthalmology segment offers products and solutions for the diagnosis and treatment of chronic eye diseases, such as ametropia (refraction), cataracts, glaucoma, and renital disorders. This segment also provides devices for general ophthalmological examination and care, including slit lamps, refractometers, tonometers, optical coherence tomography devices, and fundus cameras; and devices for functional diagnostics (perimeters), as well as digital products for storage, evaluation, and sharing of clinical data.
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