Carl Zeiss Meditec Company Presentation April 09, 2014 Sebastian Frericks, Director Investor Relations Carl Zeiss Meditec Agenda 1 Carl Zeiss Meditec Overview 2 Key Success Factors 3 First 3 Month 2013/2014 at a Glance 4 Outlook 5 Appendix Carl Zeiss Meditec 2 Are you Aware of the Following Facts? 40% of the people will have Cataract, 5% Glaucoma and 10% AMD. Every second, somebody goes blind due to AMD or glaucoma. Cataract is one of the leading cause of visual impairment worldwide. There are more than 21 millions of cataract surgeries a year. Carl Zeiss Meditec 3 Carl Zeiss Meditec at a Glance One of the world’s leading medical technology companies in : Ophthalmology Microsurgery Comprehensive systems to diagnose and treat eye diseases right from an early stage – helping to prevent blindness Complete product range of microscopes for microsurgical procedures, e.g. spinal, neuro/ENT, ophthalmic and dental Our goal is to drive progress in medicine, enabling doctors to achieve best possible outcomes for their patients. Results 2012/2013: Revenue: € 906.4mn; Growth: 5.2% EBIT: € 133.9mn; EBIT margin: 14.8% Carl Zeiss Meditec Headquarters in Jena, Germany More than 2,500 employees worldwide Listed on the TecDAX 65% of the shares held by Carl Zeiss 4 Offering the Most Extensive Portfolio in the Industry for Specific Customer Segments Customer Private practitioners SBU Ophthalmic Systems Sales 12/13: € 391.0mn Surgical Ophthalmology Hospitals Sales 12/13: € 121.3mn Segments Products Glaucoma & Retina Diagnose & Therapy Corneal Refractive Surgery Cataract Surgery Clinics Microsurgery Ambulatory surgery centers Sales 12/13: € 394.2mn Visualisation & Microsurgery Surgical Oncology Carl Zeiss Meditec 5 Successful Track Record: Revenue and EBIT over the last 5 Years Revenue EBIT | EBIT Margin in € million in € million 2012/2013 2012/2013 906.4 2011/2012 133.9 | 14.8% 2011/2012 861.9 2010/2011 122.9 | 14.3% 2010/2011 758.8 2009/2010 103.6 | 13.6% 2009/2010 676.7 2008/2009 2008/2009 640.1 In 2012/2013, we have reached the upper end of our revenue guidance of € 880 - € 910mn. Carl Zeiss Meditec 86.7 | 12.8% 76.1 | 11.9% EBIT margin gained 0.5 % pts. to 14.8%. We confirm our target of reaching a 15% EBIT margin by 2015 on a sustainable basis. 6 Successfully Positioned with a Worldwide Presence and a Well-Balanced Revenue Split CZM-Company locations: Production, Sales, Service, R&D CZM-Sales and Service locations Carl Zeiss-Sales and Service locations Germany: France: Le Pecq La Rochelle Paris USA: Dublin Ontario € 327.5mn Employees2) Carl Zeiss Meditec 740 2) Revenues1) Employees2) Japan: Tokio Asia/Pacific: EMEA: Revenues1) FY 2012/2013 Turkey: Ankara Spain: Madrid Americas: 1) Jena Berlin Oberkochen Munich € 307.6mn 1,667 Revenues1) Employees2) € 271.4mn 133 Sep 30, 2013 7 Agenda 1 Carl Zeiss Meditec Overview 2 Key Success Factors 3 First 3 Month 2013/2014 at a Glance 4 Outlook 5 Appendix Carl Zeiss Meditec 8 Focus on Key Success Factors Yields First Results Customer Focus New Markets Basis for long term growth Geographical expansion (into rapidly developing countries) New areas of business Service is a profitable recurring business opportunity (e.g. surgical oncology) Innovation Major source of competitive Make success happen differentiation Using cutting edge technologies to advance medical applications Efficient and effective business management Responsible human resources development and continuous professional improvement Our Employees Carl Zeiss Meditec Streamlining of supply chain processes Excellent Processes 9 Our Dedication to R&D Strengthens our Technological Leadership and Continues to be a Major Success Factor R&D expenses | R&D ratio to revenue in € million Tradition for gold standard products 2012/2013 97.3 | 10.7% Close collaboration with customers to develop new products and solutions 2011/2012 93.5 | 10.8% leading to more efficient workflows and better clinical outcomes 2010/2011 84.2 | 11.1% In 2012/2013, R&D expenditure 2009/2010 72.4 | 10.7% 2008/2009 63.5 | 9.9% increased by 4.1% to € 97.3mn. Approx. 16% of current total workforce are employed in R&D. Carl Zeiss Meditec 10 Significant Innovations Were Introduced to the Market in Recent Quarters CIRRUS™ photo MEL 90 Excimer Laser AT LISA® tri toric 939MP ZEISS Cataract Suite markerless CIRRUS™ HD-OCT 5000/500 VISALIS® 500 with APM™-Modus Carl Zeiss Meditec 11 Designed to Work Together: With FORUM, we add Value through Connecting all our Customers‘ Components Our data management solutions recently introduced into the market: FORUM Glaucoma Workplace FORUM GO Forum Archive & Viewer 3.1 Carl Zeiss Meditec 12 Workflow Solutions for Cataract – Enable Effective and Efficient Treatment IOL - Master Z CALC Treatment-Planning Diagnosis Data Carl Zeiss Meditec Opmi Lumera AT LISA® Management VISULAS YAG III After-Treatment Surgery Solution 13 We Have Reached our Mid-term Target for Recurring Revenue Ahead of Time and now Target a 30% Share Recurring revenue Consumables & Service as a % of sales revenue 25% 30% We have reached our mid-term (2015) target of 25% in recurring revenue and expect further progress of up to 30%. IOLs and various consumables are sources of recurring revenue (e.g. viscoelastics, phaco cassettes, refractive laser treatment packs, drapes, etc.) Mid-term target ~9% We steadily broaden our 2003/2004 2012/2013 Devices Recurring revenue increase through acquisitions Recurring revenue increase through organic growth Carl Zeiss Meditec service offering to enhance the share of recurring revenue. More recurring revenue has allowed for profitable growth and less cyclicality 14 Customer Focus is the Basis for Long-Term Growth and a Business Opportunity in Itself Strengthening of Global Service & Customer Care Early Involvement of Customers in Research and Development Our service complements our product Customers are routinely involved in all offering and improves customer satisfaction. Improved customer service level through training and certification of service technicians Focus on service has increased revenue continuously. Carl Zeiss Meditec phases of product development (e.g. Forum® 3.0). R&D centers in Europe, America and Asia support understanding specific market needs. We help our customers to be more successful. 15 Our Focus on New Markets Has Materialized in Significant Contribution to the Overall Growth of CZM Total Revenue China, India and SEA R&D center in China in € million + 9% 2012/2013 + 2011/2012 + 2010/2011 R&D center in India develops products tailored to suit individual market needs. 25% 35% + 28% 2009/2010 addresses the fastest growing market for mid-range products Customer training program in China enhances customer loyalty. Increase of sales coverage in China 2008/2009 Leverage of economic growth 20 40 60 80 100 in Latin America by expanding our sales organization High growth momentum (FX-adj.) from China (+22%) and SEA (+25%) India with a decline in revenue – mainly due to currency devaluation of approx. 24% and price pressure Strong growth also from Latin America (+21% Fx-adj.) Carl Zeiss Meditec 16 Agenda 1 Carl Zeiss Meditec Overview 2 Key Success Factors 3 First 3 Month 2013/2014 at a Glance 4 Outlook 5 Appendix Carl Zeiss Meditec 17 Slight Organic Growth is Offset By Currency Headwinds - Reported Revenues Decline by 3% Revenue in € million 219.0 - 3.1% Net Income 212.3 23.3 in € million - 13.8% 20.1 FX-adj. revenue growth of +1.7% Significant negative currency effects and a decline in MCS1) vs. a challenging base Q1 2012/2013 EBIT in € million 31.3 Q1 2012/2013 Carl Zeiss Meditec Q1 2013/2014 - 15.4% Q1 2012/2013 Earnings per Share 0.29 26.5 Q1 2013/2014 Q1 2012/2013 Q1 2013/2014 - 13.8% 0.25 Q1 2013/2014 EBIT margin decline partly due to currency losses, a lower contribution from Japan and a lower share of MCS sales Strong growth in SUR2) and improvements in OPH3) cannot fully compensate for weaker MCS sales 1) Microsurgery 2) Surgical Ophthalmology 3) Ophthalmic Systems 18 Microsurgery: Revenue Declines from a Challenging Previous Year’s Base FX-adj. revenue decline of -6.3% Sales development slowes compared to a strong prior-year quarter Currency effects (particularly JPY) have a significant impact on reported revenue. Q1 order intake slightly improved MCS Revenue | Revenue split in € million Q1 2013/2014 92.1 Q1 2012/2013 105.1 Carl Zeiss Meditec - 12.4% 43.3 % of revenue 19 Ophthalmic Systems: Robust Organic Growth in the Face of Persistently Difficult Market Conditions FX-adj. revenue growth of +7.1% OPH grows slightly despite persistently high competitive pressure and negative currency effects. Refractive laser business and innovations in diagnostic equipment key contributors to growth OPH Revenue | Revenue split in € million Q1 2013/2014 86.7 Q1 2012/2013 84.4 Carl Zeiss Meditec + 2.7% 40.9 % of revenue 20 Surgical Ophthalmology: Another Quarter of DoubleDigit Revenue Growth Driven by Premium IOLs FX-adj. revenue growth of +13.7% Benefiting in particular from ongoing high demand for IOLs for minimally invasive cataract surgery in the premium segment Successful market launch of the AT Lisa® tri toric with additional astigmatism correction SUR Revenue | Revenue split in € million Q1 2013/2014 33.4 Q1 2012/2013 29.5 Carl Zeiss Meditec + 13.5% 15.8 % of revenue 21 Positive Organic Revenue Development in the Americas and APAC offsets a decline in EMEA Revenue by region in € million Americas + 6.3% (+10.7% FX-adj.) 36.5 % Q1 2013/2014 of revenue 77.6 Both, the U.S. and Latin America showed a recovery in revenues. Q1 2012/2013 73.0 EMEA 33.2 % - 7.5% (-7.4% FX-adj.) Q1 2013/2014 70.5 of revenue investment programs in Russia contributes to EMEA decline Growth in the European core Q1 2012/2013 76.2 APAC - 8.1% (+2.9% FX-adj.) 30.3 % Q1 2013/2014 64.2 of revenue Expiration of government markets largely stable overall Decline in Sales partly caused by softer JPY and weaker organic performance in Japan Q1 2012/2013 69.8 Carl Zeiss Meditec 22 EBIT Declines Partly Due to Currency Losses as Well as Lower Share of MCS Sales in € million in % of revenue 114.0 53.7 117.4 53.6 53.7 25.3 53.4 24.4 General & admin. expenses 10.0 4.7 9.6 4.4 R&D expenses 23.8 11.2 23.1 10.6 26.5 12.5 31.3 14.3 Income statement Gross profit Selling & marketing expenses EBIT Q1 2013/2014 Carl Zeiss Meditec Q1 2012/2013 23 Continued Strong Liquidity Situation Cash Flow Statement in € million Cash flow from operating activities Cash flow from operating activities: Cash outflow resulting primarily from -6,030 higher tax payments for the reporting 7,013 period as well as a higher reduction of Cash flow from investing activities trade payables 13,758 Cash flow from investing activities: -3,421 Higher cash outflow due to the Cash flow from financing activities acquisition of Optronics A.S. in 21,155 -861 Turkey Cash flow from financing activities: Difference resulted primarily from a Cash and cash equivalents 7,284 decrease of treasury receivables 11,462 Q1 2013/2014 Carl Zeiss Meditec Q1 2012/2013 24 Financial Set-up Again very Sound Dec 31, 2013 Change to Sep 30, 2013 75.6 % +2.8%-pts Net cash and cash equivalents Cash-in-hand and bank balances + Treasury receivables from Group treasury of Carl Zeiss AG ./. Treasury payables to Group treasury of Carl Zeiss AG + Financial Investments € 326.5 mn - 7.2% Working capital Current assets ./. Current liabilities € 537.5 mn + 1.8% Days of sales outstanding (DSO) Trade receivables at the end of the reporting period (gross) Rolling monthly sales 59.3 days +16.8% Rate of inventory turnover (ITO) Cost of goods sold (annualized) Average inventories 2.5 - 11.9% Key ratio Definition Equity ratio Equity Total Asset Carl Zeiss Meditec 25 Acquisition of Optronik: Establishing Direct Sales Presence in a Key Growth Market CZM has acquired its long-standing, exclusive distribution partner in Turkey, Optronik A.S., based in Ankara – with around 60 employees. Supported by strong growth in demand, Optronik’s local business has reached critical size to justify local sales presence. Seamless integration into ZEISS’ global sales, service and support network Direct sales approach will help tap full cross-selling opportunity across SBU’s. Carl Zeiss Meditec 26 Acquisition of Aaren Scientific: Teaming up for a Successful Future in IOLs CZM has acquired Aaren Scientific Inc., a US-based manufacturer of IOLs. Purchase price: US $70mn In 2012, Aaren Scientific Inc. generated revenues of around US $20mn with 235 employees in its Ontario, California headquarters and manufacturing facility. Aaren Scientific provides capacities and competencies for developing and manufacturing - amongst others – fully preloaded hydrophobic IOLs. CZM plans to further accelerate the development of its IOL and consumables business by broadening its product portfolio and gaining market share in mid-segment IOLs. Hydrophobic Hydrophilic Leading innovation in IOL technology Portfolio expansion in mid-segment, addressing new markets Carl Zeiss Meditec 27 Positive Development also Reflected in Dividend Dividend | Total dividend distributed in € | in € million 2012/2013 0.45 | 36.6 proposed to the Annual General 2011/2012 0.40 | 32.5 0.30 | 24.4 The payout ratio amounts to 39% 2009/20101) 0.22 0.33 44.7 (prev. year: 45%) – future payout strategy of ~1/3 of net income 2008/2009 0.18 | 14.6 2) Meeting for FY 2012/2013 (+12.5% vs. previous year). 2010/2011 1) Dividend of € 0.45 per share will be remains unchanged. In 2009/2010, a special dividend of € 0.33 was paid in addition to the regular dividend. Ratio of dividend per share to opening price for the respective financial year Carl Zeiss Meditec 27 Agenda 1 Carl Zeiss Meditec Overview 2 Key Success Factors 3 First 3 Month 2013/2014 at a Glance 4 Outlook 5 Appendix Carl Zeiss Meditec 29 Future Trends and Their Potential for Carl Zeiss Meditec Globalization Demographic change Technological change Rising demand for CZM solutions: Prevention & Diagnosis Surgery Carl Zeiss Meditec Follow-up treatment Data management 30 Outlook We are well positioned for profitable growth due to: 1. Stable long-term demographic trends 2. Our innovative strength & broad product portfolio Mid-term goals: To grow revenues at a faster rate than the market To increase the share of 3. Our global presence both in sales and R&D 4. Our good position in new markets Carl Zeiss Meditec recurring revenues to at least 30% To reach an EBIT margin level of 15% in 2015 on a sustainable basis 31 Agenda 1 Carl Zeiss Meditec Overview 2 Key Success Factors 3 First 3 Month 2013/2014 at a Glance 4 Outlook 5 Appendix Carl Zeiss Meditec 32 Events 09 May 2014 6 Month Report 09 May 2014 Telephone conference on 6 month results 14 August 2014 9 Month Report 14 August 2014 Telephone conference on 9 month results 10 December 2014 Annual Financial Statements 2013/2014 10 December 2014 Analyst‘s Conference, Frankfurt am Main Carl Zeiss Meditec 33 Contact Sebastian Frericks Director Investor Relations Carl Zeiss Meditec Phone: +49 (0) 36 41 / 2 20 - 1 16 Fax: +49 (0) 36 41 / 2 20 - 1 17 Email: [email protected] Web: www.meditec.zeiss.com 34 Disclaimer This presentation does not constitute or form part of, and should not be construed as, an offer or invitation to subscribe for, underwrite or otherwise acquire, any securities of Carl Zeiss Meditec AG or any present or future member of its Group nor should it or any part of it form the basis of, or be relied upon in connection with, any contract to purchase or subscribe for any securities in Carl Zeiss Meditec AG or any member of its Group or commitment whatsoever. All information contained herein has been carefully prepared. Nevertheless, we do not guarantee its accuracy or completeness and nothing herein shall be construed to be a representation of such guarantee. The information contained in this presentation is subject to amendment, revision and updating. Certain statements contained in this presentation may be statements of future expectations and other forward-looking statements that are based on the management’s current views and assumptions and involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those in such statements as a result of, among others, factors changing business or other market conditions and the prospects for growth anticipated by the management of Carl Zeiss Meditec AG. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. Carl Zeiss Meditec AG does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements which speak only as of the date of this presentation. This presentation is for information purposes only and may not be further distributed or passed on to any party which is not the addressee of this presentation. No part of this presentation must be copied, reproduced or cited by the addressees hereof other than for the purpose for which it has been provided to the addressee. This document is not an offer of securities for sale in the United States of America. Securities may not be offered or sold in the United States of America absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. Carl Zeiss Meditec 35
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