Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- DORC integration contributed EUR53 million in Q3 revenue.
- Book-to-bill ratio stabilized to slightly above 1 in Q3.
- Strict cost control measures kept OpEx trending sideways.
- Positive order entry in the US market after several weak quarters.
- Strong performance in EMEA with 16% revenue growth.
Negative Points
- Revenue down by 1.5% to EUR1.487 billion.
- EBIT declined by 34% year-on-year to EUR163 million.
- Net income dropped by 42% to EUR180 million.
- Weaker consumer sentiment in the refractive business.
- High interest rates and difficult financing environment in North America.
Q & A Highlights
Q: Can you share the volume growth in terms of treatment in China during the key summer period?
A: Year-to-date, we see year-over-year growth in RTP consumption, nourished by a bigger installed base compared to last year. However, the summer peak started slower, and we will have more clarity on growth after the summer peak.
Q: What is the margin outlook for DORC, and are there any surprises in the integration process?
A: No surprises in the DORC integration. We expect a mid-teen margin for DORC in the future. The current margin is affected by conservative accounting policies and non-recurring issues. Consultants were engaged as part of the planned integration process.
Q: What is the midterm margin outlook, and does it apply to reported EBIT or adjusted EBITDA?
A: The midterm margin outlook targets a 20% sustainable margin, referring to adjusted EBIT. We aim to return to a 20% EBIT margin, with a focus on both cost efficiency and top-line growth.
Q: How do you feel about finding a baseline of demand for microsurgery in 2025?
A: We see stabilization and positive order entry in microsurgery. Innovations and a strong sales funnel indicate a reasonable year ahead, despite the current market softness.
Q: Can you provide an update on the VBP rollout in IOLs in China?
A: A single-digit number of regions have adopted VBP, with positive effects in terms of volumes. We expect the rest of the regions to adopt VBP in the next six months. Our strategy is on track, with higher volumes and unit numbers.
Q: Considering the current adjusted EBIT, is the lower end of the guidance range more realistic?
A: Yes, the lower end of the guidance range is more realistic due to a softer start to the summer peak and uncertainties in the US device business.
Q: What are your expectations for refractive demand in China if the economic crisis remains?
A: The market is not saturated, and myopia progression continues to drive demand. Despite current consumer climate stress, we see strong order entry and untapped market potential in China.
Q: Can you clarify when DORC margins will reach mid-teen levels, and will it be EBIT accretive next year?
A: We expect DORC to reach mid-teen margins by the first quarter of the next fiscal year. EBIT accretive growth depends on market developments and synergy exploitation.
Q: How will you balance sales and marketing spend for new product launches versus cost savings?
A: We will ensure necessary investments for product launches while implementing surgical adjustments in other areas to achieve cost savings.
Q: Do you have good visibility on reaching the current consensus EBIT for 2025?
A: Achieving the current consensus EBIT for 2025 depends on the recovery of the Chinese market and the US. We will have more clarity by the end of the fiscal year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
