Carl Zeiss Meditec AG

Earnings Release • Feb 17, 2022

Interim Report 3 Months 2021/22

Interim Report of the Carl Zeiss Meditec Group - 3 Months 2021/22

• Successful start to FY 2021/22
• Strong growth in APAC1 and Americas regions
• Order intake well above prior year (+24.0% to €498.3m)
• Operating result increases to €74.4m; EBIT margin at 18.1%
• Forecast for fiscal year 2021/22 unchanged

Business development within the Group

• The Carl Zeiss Meditec Group generated revenue of €410.2m in the first three months of fiscal year 2021/22, corresponding to an increase of +11.2% year-on-year (prior year: €368.9m). Currency effects had a slightly positive effect, with currency-adjusted growth amounting to +10.5%.
• Revenue increased significantly in both strategic business units (SBUs). Recurring revenue business in particular, as well as the Microsurgery SBU contributed to this revenue growth. All business regions also contributed to growth.

¹ Asia/Pacific

Table 1: Summary of key ratios in the consolidated income statement

	3 months 2021/22	3 months 2020/21	Change
Unless otherwise stated	€m	€m	in %
Revenue	410.2	368.9	+11.2
Gross margin	56.8%	56.2%	+0.6 pts
EBIT	74.4	73.4	+1.3
EBIT margin	18.1%	19.9%	-1.8 pts
Adjusted EBIT2	76.3	72.9	+4.7
Adjusted EBIT in % of revenue	18.6%	19.8%	-1.2 pts
EPS	0.42	0.52	-18.1

Business development by strategic business unit (SBU)

• The Ophthalmic Devices strategic business unit increased its revenue by 9.7% in the first three months of fiscal year 2021/22, to €310.9m (prior year: €283.4m). Adjusted for currency effects, the SBU achieved growth of 9.1%. In particular the recurring revenue business made a significant contribution to this growth. The development of revenue in the equipment business was largely positive, despite the strained supply chains. Planned investments in Sales & Marketing and Research & Development had a curbing effect on profitability. The EBIT margin was lower in the reporting period compared with the prior year.
• Revenue in the Microsurgery SBU increased by 16.1% (adjusted for currency effects: +15.2%) to €99.3m, compared with €85.5m in the same period of the prior year. Recently, the development of orders received has been disproportionate to revenue. The EBIT margin increased due to the strong revenue compared with the year-ago period.

² The reconciliation to the adjusted EBIT can be found in Table 4 on page 5. The term "adjusted EBIT" is not defined in the International Financial Reporting Standards (IFRSs). There is no comparability with similarly designated key figures of other companies. Adjusted figures do not serve as a substitute for IFRS figures and are not more meaningful than IFRS figures.

Table 2: Business development by SBU

	Ophthalmic Devices		Microsurgery
	3 months 2021/22	3 months 2020/21		Change	3 months 2021/22	3 months 2020/21		Change
Unless otherwise stated	€m	€m	in %	in % (const. Fx)	€m	€m	in %	in % (const. Fx)
Revenue	310.9	283.4	+9.7	+9.1	99.3	85.5	+16.1	+15.2
Share of consolidated revenue	75.8%	76.8%	-1 pts		24.2%	23.2%	+1 pts
EBIT	51.5	55.0	-6.3		22.8	18.4	+23.9
EBIT margin	16.6%	19.4%	-2.8 pts		23.0%	21.5%	+1.5 pts

Business development by region

• Revenue in the Americas region was up by 12.3% after the first three months of fiscal year 2021/22, to €114.5m (prior year: €102.0m; adjusted for currency effects: +8.4%). Contributions to growth came from the USA, as well as positive impetus from Latin America.
• Revenue in the EMEA3 region amounted to €114.1m after the first three months of the current fiscal year (prior year: €108.7m), and therefore rose by 5.0% (adjusted for currency effects: +5.9%). There was good growth in the countries of Southern Europe and Russia. Orders received in the core European markets exhibited a positive trend.
• Revenue in the APAC region increased by 14.8% to €181.5m (prior year: €158.2m). After adjustment for currency effects, this corresponds to growth of 15.1%. China and India in particular made the largest contributions to growth. Japan and Southeast Asia recorded a high order intake in the first three months.

³ Europe/ Middle East/ Africa

Table 3: Business development by region

				EMEA				Americas
	3 months 2021/22	3 months 2020/21		Change	3 months 2021/22	3 months 2020/21		Change
Unless otherwise stated	€m	€m	in %	in % (const. Fx)	€m	€m	in %	in % (const. Fx)
Revenue	114.1	108.7	+5.0	+5.9	114.5	102.0	+12.3	+8.4
Share of consolidated revenue	27.8%	29.5%	-1.7 pts		27.9%	27.6%	+0.3 pts
								APAC
					3 months 2021/22	3 months 2020/21		Change
Unless otherwise stated					€m	€m	in %	in % (const. Fx)
Revenue					181.5	158.2	+14.8	+15.1
Share of consolidated revenue					44.3%	42.9%	+1.4 pts

Development of earnings

• Earnings before interest and taxes (EBIT) increased to €74.4m in the first three months of 2021/22 (prior year: €73.4m). The EBIT margin at 18.1% was slightly lower year-on-year (prior year: 19.9%), mainly as a result of the planned increase in selling and marketing expenses in connection with the launch of new products, among other things. Adjusted for special effects, the EBIT margin was 18.6% (prior year: 19.8%).
• The financial result amounted to €-20.3m, compared with €-6.8m in the prior year. This result is mainly attributable to negative results from currency hedges compared with the prior year. Earnings per share (EPS) decreased to €0.42 (prior year: €0.52), mainly as a result of these foreign currency losses.

Table 4: Reconciliation of the non-IFRS key ratio adjusted result

	3 months 2021/22	3 months 2020/21	Change
Unless otherwise stated	€m	€m	in %
EBIT	74.4	73.4	+1.3
./. Acquisition-related special effects4	-2.0	-1.9	-
./. Other special effects5	0	+2.4	-
Adjusted EBIT	76.3	72.9	+4.7
Adjusted EBIT in % of revenue	18.6%	19.8%	-1.2 pts

Financial position

Table 5: Summary of key ratios in the statement of cash flows

	3 months 2021/22	3 months 2020/21
	€m	€m
Cash flows from operating activities	-14.9	40.6
Cash flows from investing activities	-16.0	-15.7
Cash flows from financing activities	31.4	-21.6

• Cash flows from operating activities amounted to €-14.9m in the reporting period (prior year: €40.6m). An increase in inventories, in particular, had an adverse effect on this item, which was offset by a reduction in the same quarter of the prior year.
• Cash flows from investing activities amounted to €-16.0m (prior year: €-15,7m).
• Cash flows from financing activities amounted to €31.4m in the period under review (prior year: €-21.6m). A positive effect was had by a reduction in treasury receivables from the Group treasury of the ZEISS Group.

⁴ There were write-downs on intangible assets arising from the purchase price allocations (PPA) of around €2.0m (prior year: €1.9m) mainly in connection with the acquisitions of Aaren Scientific, Inc. in fiscal year in fiscal year 2013/14 and IanTECH Inc. in fiscal year 2018/19.

⁵ EBIT in the prior-year period includes one-time proceeds from the sale of a property in the amount of around €2.4m.

• On 31 December 2021, net cash amounted to €911.3m (31 December 2020: €730.4m). The equity ratio was 71.4% (31 December 2020: 72.4%).

Report on forecast changes

• The Outlook in the 2020/21 Annual Report remains unchanged. The Company expects further revenue growth for fiscal year 2021/22 that is at least on a par with the market growth projected for the industry.
• The EBIT margin is expected to decline slightly compared with the prior-year margin of 22.7% to within a range of around 19% to 21%, due, among other things, to the anticipated normalization of selling and marketing expenses.
• In the medium term, the Company expects to be able to sustainably stabilize its EBIT margin at a level above 20% (2020/21: 22.7%).

Contact for investors and press

Sebastian Frericks Director Investor Relations Carl Zeiss Meditec AG Phone: +49 (0)3641 220-116 Email: investors.meditec@zeiss.com press.meditec@zeiss.com

www.zeiss.de/presse

Brief profile

Carl Zeiss Meditec AG (ISIN: DE0005313704), which is listed on the TecDAX and MDax of the German stock exchange, is one of the world's leading medical technology companies. The Company supplies innovative technologies and application-oriented solutions designed to help doctors improve the quality of life of their patients. The Company offers complete solutions, including implants and consumables, to diagnose and treat eye diseases. The Company creates innovative visualization solutions in the field of microsurgery. With approximately 3,531 employees worldwide, the Group generated revenue of €1,646.8m in fiscal year 2020/21 (to 30 September).

The Group's head office is located in Jena, Germany, and it has subsidiaries in Germany and abroad; more than 50 percent of its employees are based in the USA, Japan, Spain and France. The Center for Application and Research (CARIn) in Bangalore, India and the Carl Zeiss Innovations Center for Research and Development in Shanghai, China, strengthen the Company's presence in these rapidly developing economies. Around 41 percent of Carl Zeiss Meditec AG's shares are in free float. The remaining approx. 59 percent are held by Carl Zeiss AG, one of the world's leading groups in the optical and optoelectronic industries.

For further information visit: www.zeiss.de/med

Income statement

	3 months 2021/22	3 months 2010/21
Unless otherwise stated	€m	€m
Revenue	410.2	368.9
Cost of sales	-177.4	-161.6
Gross profit	232.8	207.3
Selling and marketing expenses	-83.1	-68.2
General administrative expenses	-14.8	-13.9
Research and development expenses	-60.5	-54.2
Other operating result	-	2.4
Earnings before interest, taxes, depreciation and amortization (EBITDA)	91.1	87.8
Depreciation and amortization	-16.8	-14.4
Earnings before interest and taxes (EBIT)	74.4	73.4
Interest income	0.3	0.5
Interest expenses	-1.9	-1.6
Net interest from defined benefit pension plans	-0.1	-0.2
Foreign currency gains/(losses), net	-18.6	-5.6
Other financial result	-0.0	0.1
Earnings before income taxes (EBT)	54.1	66.6
Income taxes	-16.1	-20.3
Consolidated profit	38.0	46.3
Attributable to:
Shareholders of the parent company	37.9	46.3
Non-controlling interests	0.1	0.0
Profit/(loss) per share attributable to the shareholders of the parent company in the fiscal year (EPS) (in €)
Basic/diluted	0.42	0.52