By Andrea Figueras
Shares in Carl Zeiss Meditec have experienced a decline after the company revised its expectations for fiscal 2023. The impact of its plans to reduce inventory will extend into the next fiscal year, affecting its earnings and revenue significantly.
Lower Earnings Forecast
At 0914 GMT, shares were down 3.5% at EUR97.72. The German medical-technology company now projects its earnings before interest and taxes margin for the year ending in September to be at the lower end of its previous forecast range of between 17% and 20%. While it expects the margin to recover to 20% in the medium-term, it remains uncertain how long it will take to reach that level again.
Inventory Reduction Plans
Carl Zeiss Meditec plans to decrease inventory of consumables for refractive laser surgery in China at the beginning of fiscal 2024. However, this decision will have a negative impact on earnings and revenue in the first half of that fiscal year. Consequently, the destocking plans will likely result in a flat margin, disappointing investors who had anticipated a margin recovery to between 18.5% and 19% in fiscal 2024, according to UBS analysts.
In the first nine months of fiscal 2023, Carl Zeiss Meditec reported a net profit of 205.2 million euros ($224.7 million), compared with EUR191.2 million in the same period of the previous year. The company’s revenue during this time increased by 13% to EUR1.51 billion.