Zeiss Group Reports Record Revenues and Earnings

By

Dr. Michael Kaschke.

STUTTGART, Germany—The Zeiss Group reported a strong performance in fiscal year 2017/18, the period ending Sept. 30, 2018. The company said it achieved record-breaking revenue and earnings. Revenue increased by 9 percent to €5.817 billion (previous year: €5.348 billion). After currency adjustments, revenue rose by 12 percent. Earnings performance helped fully compensate for the unfavorable currency effects. Thus, at €772 million, earnings before interest and taxes (EBIT) were slightly higher than the previous year (€770 million). The EBIT margin was 13 percent. Order intake increased by 7 percent, totaling €6.046 billion.

"All Zeiss segments and regions contributed to this outstanding result. Our innovative products for the semiconductor industry and medical technology in particular ensured significantly greater, above-market growth dynamics," commented Prof. Dr. Michael Kaschke, president and CEO of Zeiss.

"With our consistent focus on innovations, investments and expansion, we have our sights set squarely on our goal of achieving €6 billion in revenue," said Kaschke, looking ahead to fiscal year 2018/19.

All four segments made positive contributions to the Zeiss Group's earnings, but the development dynamics varied: the Industrial Quality & Research segment, comprising metrology and microscopy solutions, continued to benefit from the stable demand for measuring technology in the automotive sector. This, in turn, compensated for the weaker development in the microscopy business.

In spite of considerable negative currency effects, the Medical Technology segment proved the growth driver in the direct business and, thanks to product innovations, held its own against strong competition from the U.S. and Japan. The Consumer Markets segment, comprising the Vision Care and Consumer Products strategic business units, grew at an above-market rate in nearly all markets with Zeiss brand eyeglass lenses—especially in China, Brazil and other emerging economies, but also in Europe.

The camera lens business, however, did not meet expectations due to the broad negative market trends for photography. Significant investments in research and technology and increased capacities enabled the Semiconductor Manufacturing Technology segment to realize very strong growth of over 25 percent.

In 2017/18, the Zeiss Group generated approximately 90 percent of its revenue outside Germany. Once again, the dynamically developing economies in the APAC region in particular contributed to this positive development. Direct business in China has grown by 21 percent, superseding Germany as the company's second-largest sales market after the U.S.

Zeiss was able to continue growing in the EMEA region with a 4 percent increase in revenue. Posting 5 percent growth, the optics company again enjoyed positive gains in the Americas region.

The 16 percent increase in expenditures for research and development is a particularly strong indicator of the company's investment strategy, the announcement said, noting that in fiscal year 2017/18, these totaled €642 million (2016/17: €552 million).

During the reporting period, the investments in property, plant and equipment increased significantly to €244 million (2016/17: €183 million), as compared to depreciations totaling €164 million (2016/17: €160 million). "Our strategic investment strategy focused on continuity is the foundation for the Zeiss Group's future growth," said Dr. Christian Muller, who became chief financial officer and member of the Executive Board on Oct. 1, 2018.

"We are not only investing in technology and infrastructure at our existing sites worldwide, but are also progressively increasing our presence at new centers for high technology and digital innovation in Karlsruhe, Munich and Shanghai."

The acquisitions completed during the previous fiscal year included Bosello High Technology, a solutions provider for industrial X-ray systems, and Guardus, a software provider for production analysis and control. In October 2018, Zeiss announced that it had purchased IanTECH, which specializes in micro-interventional cataract surgery. "We have made targeted acquisitions in highly innovative solutions and companies that will reach their full potential as part of our portfolio," said Kaschke, explaining the M&A strategy.

On Sept. 30, 2018, net liquidity totaled €2,120 million, which was €134 million higher than at the end of fiscal year 2016/17. This liquidity ensures sufficient flexibility for strategic acquisitions and investments.

Free cash flow amounted to €752 million (2016/17: €658 million). Equity rose by 10 percent to €3,763 million (Sept. 30, 2017: €3,429 million).

Noted Kaschke, looking ahead to fiscal year 2018/19, "The growth drivers are the company's high-tech solutions, which will play an important role in all key future trends—from digitalization and Smart Production to health care in an aging society."