Carl Zeiss Meditec AG (AFX) Earnings Call Transcript & Summary

Ladies and gentlemen, hello, and welcome to the Carl Zeiss Meditec AG Analyst Conference Nine Months 2026 Results. The conference will be recorded. [Operator Instructions] Let me now turn the floor over to your host, Sebastian Frericks, Head of the Investor Relations.

Hello, everybody. Good afternoon. Welcome to our nine months analyst conference. Our CEO, Andreas Pecher; and our CFO, Justus Wehmer, will present the nine-month figures to you, guide you cover the key business topics and provide the outlook for you. Thank you for your flexibility for having this call a bit unusually so in the afternoon. After the presentation, we will address your questions. And with that, without further ado, Andreas, please go ahead.

Super. Thank you, Sebastian. Good afternoon, dear analysts, investors. Welcome to the nine months '25/'26 Analyst Conference at Carl Zeiss Meditec. I'm currently traveling at the U.S. West Coast, more to that later. So we have to schedule this call in the European afternoon. Really apologies for the scheduling constraints and big thanks for your flexibility. I wanted to make sure I can also speak to you. And also apologies if my voice is having a little trouble here, I caught a small sore throat. So I hope I'm still going to be understood well. I'll begin with an overview of our nine months results, and then Justus will take you through the financial performance in more detail. And after that, we'll cover several key topics, including the appointment of the new Head of Ophthalmology, traveling with him here, the launch of the ZEISS Ultrasonic Aspirator, our strategic partnership with the Aier Group to advance the refractive workflow in China and the status of the first ProfitUp initiatives. And then we'll conclude with an update on our financial 2025-'26 outlook. And then, of course, following the presentation, we'll be happy to take your questions. With that, let me start with an overview of our nine months performance. So looking at revenue and EBITA, it remains below the prior year, while the recovery of Q3 partially offset the headwinds from the first half. Order entry in none months amounted to EUR 1.606 billion, down 5.5% year-over-year and down 3.3% on an FX adjusted basis. We did achieve solid order growth in EMEA, while demand in the Americas and APAC remained weak. Order backlog stood at EUR 432 million, largely unchanged compared to the end of Q2, but higher than at the beginning of the fiscal year. Revenue for the nine months amounted to EUR 1.554 billion, representing a 2.2% decline year-over-year. On a constant currency basis, revenue declined 0.7%, mainly in this case, due to the U.S. dollar. But factoring in all currency headwinds, mainly the Chinese yuan arising from German exports invoiced in foreign currencies to the ZEISS Group distribution network, FX adjusted revenue was broadly stable. The weaker Ophthalmology business was the key factor holding back revenue development. A key reason for the decline aside from FX was the already known headwind in the IOL business due to the recall of the bifocal IOLs in China since the start of the fiscal year. Also, refractive consumables came in weaker, particularly in Asian markets outside of China. And looking at the revenue mix, equipment accounted for 49%, consumables for 41% and service for 10% of total EUR 9 million revenue. Adjusted EBITA came in at EUR 124.5 million with an adjusted EBITA margin of 8.0% compared with 11.1% in the prior year. Reported EBITA amounted to EUR 108.4 million with a margin of 7.0%. Looking at operating results, they were pressured by continued FX headwinds in Q3 and unfavorable product mix, particularly weaker consumables and several one-off items. We will take a closer look at these one-off items later in the presentation. And stripping out one-offs, our core operating expenses remained stable. And with that, I'd like to hand over to you, Justus.

Yes. Thank you, Andreas, and a warm welcome from my side to all of you as well. I'll walk you through the SBU performance, starting with Ophthalmology. In the first nine months, reported revenue came in at EUR 1.191 billion, down 4.8% year-over-year. And on a currency-adjusted basis, revenue declined by 2.9% Equipment sales declined by 3%, while consumables sales declined by 5.7%. Revenue was mainly pressured by foreign exchange headwinds, the suspension of bifocal IOL sales and its associated inventory scrapping in China and softer refractive treatment pack sales in Asia. The successor bifocal IOL, which received license in Q2, cannot yet be commercialized until it is relisted under the next volume-based tender. Following the postponement of the VBP process, it is now expected to take place in September or October with implementation around December of this calendar year. The delay in the VBP process is unfortunately yet another headwind to our revenue as the negative impact of the delayed relaunch outweighs the benefit of continued better pricing for some of the [indiscernible] models. Refractive procedure volumes softened in South Korea and Southeast Asia, while China continued to show slight year-to-date growth. The start into the main summer peak season in June, however, was weaker on a year-over-year basis. We are seeing a pattern of somewhat later peak in consumption, and we'll continue to watch the trends closely as we get the July and August data. Equipment sales remained sluggish, in particular, the cataract and diagnostic equipment. Gross margin declined by 1.5 percentage points, reflecting foreign exchange headwinds, the scrapping of bifocal IOLs, weaker consumable sales and inventory devaluation at Katalyst following the measures to wind down the Katalyst portfolio, which I will discuss in more detail in this presentation. These effects were partly offset by tariff refunds on which I will also provide you with some numbers later on in the presentation. OpEx ratio increased by 3.9 percentage points, mainly driven by the extraordinary IVO write-off, legal expenses and ProfitUp related effects. Stripping out these one-off items, core OpEx remained roughly stable. As a result, EBITA margin for ophthalmology declined to 5.2%, significantly below prior year level. Looking at the revenue split, Ophthalmology accounts for 76% of total revenue. Within Ophthalmology, consumables represent 50%, equipment accounts for 41% and service contributes 9%. Turning to Microsurgery. Revenue and EBITA margin were above prior year, supported by strong Q3 revenue growth and robust delivery of neurosurgical systems. Revenue in the first nine months reached EUR 362 million, up 3.8% year-over-year. On an exchange rate adjusted basis, revenue grew by 7.1%. Both equipment and consumable sales increased, gross margin remained 2.4 percentage points below prior year, still pressured by currency effects and higher amortization of capitalized R&D. EBITA margin improved to 12.7%, up 0.4 percentage points year-over-year. Looking at revenue split, Microsurgery accounts for 23% of total revenue within microsurgery equipment represents 78% service 14% and consumables 8%. Let me walk you through our regional development. EMEA continued to deliver solid growth, while APAC remained below the prior year level. But let's start with the Americas. The region accounted for 25% of group revenue. Revenue in the Americas came in at EUR 397 million, down 2.6% year-over-year, while exchange rate adjusted revenue increased by 3.6%. The U.S. grew slightly on a constant currency basis, while Latin America declined. Moving to EMEA. The region represented 33% of group revenue and delivered solid growth across all core European markets. Revenue in EMEA reached EUR 509 million, up 5.4% year-over-year and exchange rate adjusted 5.8%. Finally, Asia Pacific represented 42% of revenue, including China at 23% APAC revenue amounted to EUR 648 million, down 8.7% year-over-year or down 7.6% on an exchange rate adjusted basis with growth in India, but weaker revenue in China, Japan and South Korea. Turning to the P&L. Nine-month margins fell below prior year, while core operating expenses remained stable. Gross profit declined to EUR 793 million, with gross margin decreasing to 51% from 52.7% last year. Gross margin remained below prior year, driven by exchange rates and unfavorable product mix, in particular, weaker sales of intraocular lenses and refractive treatment packs. This was partly offset by tariff refunds. We received an overall tariff refund of EUR 20.8 million during the third quarter. Out of the refunded tariffs, around EUR 11.5 million had been paid in fiscal year '24, '25 and around EUR 9.3 million had been paid in '25, '26. I will come back to this on the next slide as we discuss adjusted EBITA. OpEx ratio increased to 45.6%, mainly driven by the lower sales base and one-off items. These one-offs included the extraordinary impairment of capitalized R&D at InfiniteVision Optics, IVO, legal expenses and ProfitUp measures. Excluding these one-offs, core OpEx was broadly in line with previous year level. EBIT declined to EUR 87.4 million and EBITA declined to EUR 108.4 million. Adjusted EBITA amounted to EUR 124.5 million, corresponding to an adjusted EBITA margin of 8% and earnings per share was at EUR 0.80 and adjusted earnings per share was at EUR 1.02, both below prior year. Let's have a brief look at the bridge from EBIT to EBITA and to adjusted EBITA for the nine months of this fiscal year. EBIT amounted to EUR 87.4 million, as stated before. Regular amortization of purchase price allocations amounted to EUR 20.9 million, including DORC and Kogent Surgical. This led to EBITA of EUR 108.4 million and an EBITA margin of 7%. Special items included U.S. tariff refunds for fiscal year '24/'25, legal expenses in connection with the lawsuit related to former IanTECH in the U.S., scrapping of bifocal IOLs, extraordinary R&D impairment, ProfitUp-related expenses and other one-offs. As discussed on the previous slide, we received U.S. tariffs refunds of EUR 20.8 million for both fiscal year '24/'25 and the nine months of '25/'26. The fiscal year '24/'25 figure of EUR 11.5 million was excluded under our adjusted EBITA as it pertains to the previous year's period. The remainder of the EUR 9.3 million is contained in the nine-month adjusted EBITA figures because they had been mainly in Q1 and Q2 of this same year. The net impact on the nine-month period and therefore, also on our guidance is zero. Adjusted for these special items, EBITA amounted to EUR 124.5 million with an adjusted EBITA margin of 8%. A quick overview of the cash flow statement. The nine-month operating cash flow was strong and net financial debt reduced. Operating cash flow came in at EUR 146 million, significantly above prior year. The improvement was driven by better working capital, mainly lower trade receivables, U.S. tariff refunds and lower income tax payments, reflecting the earnings development. Investing cash flow turned negative at EUR 83.5 million, primarily reflecting higher receivables against treasury of Carl Zeiss AG. CapEx ratio was 2.6% compared with 3% in the prior year, and net financial debt reduced to EUR 234.8 million as of June 30, '26. And with that, I hand it over to you, Andreas.

Thank you, Justus. And now let me move to the key topics. And let me actually start with personnel. We're making progress on building the team of the future for Meditec. We've appointed Andreas Volker as the new Head of Ophthalmology, effective August 2026, so brand new. And the Ophthalmology segment has previously been led by Magnus Reibenspiess, who has served well in the double role as Chief Commercial Officer since December 2025. Andreas has more than two decades of global medtech leadership experience from Fresenius Medical Care and Vivonic before that. And in his former role, he held P&L responsibility for an approximately EUR 800 million therapy system portfolio at Fresenius Medical Care, where he had led strategy, product and portfolio management, R&D and while major transformation programs. He successfully drove the commercialization of innovative dialysis platforms, led significant portfolio and organizational transformations and brings extensive international experience across the U.S., China and other growth markets. So his combination of innovation leadership, operational excellence and value created or value creation focused business transformation makes him an excellent fit to lead the next phase of transformation and growth in our Ophthalmology business. And Andreas and I are actually currently spending time in the U.S., well, important time to spend with our customers and our teams. So from the get-go, he gets sort of the first impression on what our challenges are, but also what our opportunities are. With that, I move on, and I'd like to present an innovation in our microsurgery business that ZEISS TORUS Ultrasonic Aspirator. This has been presented at AANS 2026. It is still pending FDA 510(k) clearance which we expect towards the end of the calendar year. The TORUS Ultrasonic Aspirator builds on the Kogent portfolio and is designed for tissue removal throughout cranial and spinal procedures. The device combines 3 tissue removal modes in one system. These modes are ultrasonic ablation of soft and fibrous tissue, ultrasonic bone cutting and ultrasonic bone dissecting or dissection using torsional motion technology. This product is highly differentiated from competing solutions. It's quite a unique 3-in-1 device that can replace three incumbent devices in the operating room that are typically used for the soft tissue aspiration, bone dissecting and bone cutting. It is designed to integrate with the ZEISS KINEVO 900 S visualization system, enabling system parameters to be displayed directly in the microscope's field-of-view during the procedure. And out of the Kogent acquisition, we've already successfully introduced the electronic bipolar forceps. Now the TORUS Ultrasonic Aspirator represents an important milestone in our instruments strategy. And building on our strong position in neurosurgical and spinal surgical microscopes, we're expanding our presence in the operating room and extending our workflow offering beyond visualization to treatment. Moving on. In June, we announced a strategic agreement with Aier Eye Hospital Group for the purchase and installation of 25 ZEISS VISUMAX 800 femtosecond lasers across multiple Aier Eye Hospital locations. The rollout is expected to start later in 2026 across domestic and international sites. And this strengthens our position in the global refractive market, supports higher surgical efficiency and patient outcomes. Together with Aier Group, we will explore deeper collaborative innovation in areas such as international expansion, integrated digital workflows and platforms and AI-assisted diagnosis. And needless to say, we're quite happy about this deal. As we have commented about throughout the year, the CapEx environment in China and across most of APAC has not been easy lately and replacement of these machines to China's largest private hospital operator signaling the continued high interest in our refractive technology and the size VISUMAX 800. Globally, we have recently reached 1 million cumulative SMILE pro procedures being performed on VISUMAX 800. And with that, over to you, Justus.

Thank you, Andreas. So a quick glance on the status of the ProfitUp program. During Q3, first initiatives related to this program have been launched. I'm pleased to report that we have entered into talks with the labor representatives here in Germany are being held in a constructive way and making good progress. So let me flag a few decisions taken in the initial phase of the projects. On operations, we are consolidating handpiece production by closing the door site in Westerburg, Germany and shifting all handpiece production to Chesterfield, U.S., allowing us to improve scale and operational efficiency. We also plan to establish a production site in India to improve flexibility and cost competitiveness. We are joining the site being constructed in Bangalore by ZEISS as a manufacturing hub. This will further help us diversify our footprint and create a more balanced exposure to geopolitical risks. The decision on which products will be manufactured there has not yet been made. On organization layers and portfolio decisions, we will merge Surgery Interior segment and the Surgery Posterior segment. That means bringing together the cataract and retinal business. This will enable us to better integrate clinical workflows, strengthen our customer offering and generate greater recurring revenue synergies. We will wind down the Katalyst portfolio by the end of this fiscal year as it largely overlaps with dark dork instruments. This is expected to impact annual revenue in the mid-single-digit million euro range, while the Kogent portfolio will continue to be manufactured in Chesterfield. This portfolio optimization will not have a significant impact on the Chesterfield production side overall. Its capacity will be refilled with handpiece production, what I just mentioned and expansion of Kogent product portfolio. We will sunset QUATERA and focus on EVA NEXUS as the primary anterior and posterior device, leveraging the popularity of the DORC technology in the surgical market and its large installed base. It is still too early to quantify the exact phasing of savings. But as I told you in the last call, there will be a certain time to implementation and transition for many of the measures involved, leading to a back-end loaded realization of the savings with comparatively little impact on next fiscal year yet. We will continue to update you on the progress of the ProfitUp program and provide transparency on the expected financial benefits as we make progress with the labor bodies and the implementation advances. Turning now to the outlook section. The outlook remains broadly unchanged. For fiscal year '25, '26, we continue to expect revenue in the range of approximately EUR 2.15 billion to EUR 2.20 billion. Adjusted EBITA margin is expected to be between 8% and 10% as the nine-month adjusted EBITA margin has already reached 8%. And given that Q4 typically delivers above-average top line and margin, we believe the lower end of the margin guidance is well supported at this stage. Where exactly we end up within the range will be determined by the shape of the typical year-end sales ramp in the equipment business on the one hand as well as the trend in the Chinese summer peak season for refractive consumables on the other hand which, as discussed before, has been starting off on a relatively weak note in June. The current business trend is, therefore, pointing more towards the lower part of the range. The guidance excludes special items in the mid-double-digit million euro range, including costs related to R&D reprioritization, the scrapping of bifocal IOLs, legal expenses and the costs related to the ProfitUp program. As discussed on the Q2 earnings call, based on our current assessment together with our auditors, we expect a goodwill impairment of approximately EUR 150 million in the ophthalmology SBU in Q4 '25-'26. This impairment relates mostly to the already mentioned IanTECH acquisition, and will have no impact on adjusted EBITA or cash flow. Our midterm and long-term guidance remains unchanged. For the midterm, fiscal year '28, '29 and beyond, organic revenue growth is expected to recover to at least a mid-single-digit percentage rate. Adjusted EBITA margin is targeted to recover to above 15% in the medium term. In the long-term EBITA margin is expected to increase to the previous target range of 16% to 20%. With that, I'd like to conclude the presentation and open the floor for your questions.

[Operator Instructions] So the first question is from Mr. Oliver Reinberg from Kepler Cheuvreux.

Two question blocks, if I may. Firstly, on China refractive, can you just provide a bit of more color what kind of decline you have seen in June and also how treatment packs overall have developed in Asia in the third quarter? And I think so far, you talked about slight growth in China. Can you just update us on the kind of full year assumption in this regard? And also, if you have any kind of color if this kind of weakness has already translated into pricing pressure, that would be helpful. And then second question, just on 2026. I appreciate it's a bit out, but it would be great to get expectation in the right ballpark. Can you just talk about the pulls and pushes for next year and whether you are fully committed to EBITA growth next year?

Oliver, thanks for the questions. So to give you a little bit of color, I think to start with year-to-date in terms of procedures in China, we still see slight growth in the neighborhood of 2% to 3%. That is the good news. However, it's also fair to say that we have seen this melting down somewhat over the last two months. And if we take the single data for month June and the very, very fresh data that we just received last night out of our Chinese team, we know that in June, we were 8% below prior year and 5% in July below prior year. So that is basically where we are right now. And explanations that we see is that apparently, the pull-in of the military-related treatments has been somewhat stronger this year. And therefore, so to speak, this portion is right now missing in the summer peak. So I hope that gives you a little bit of better understanding. You were asking about the remainder of RTP in Asia. I think there's different factors that apply to different countries. I'd say Indonesia and Philippines -- Indonesia and Thailand, sorry, there you have more recently quite a lot of political instability, as you can read in the news, and that is clearly not helping investment decisions. So that is one factor. In South Korea, I think we have reached already with the VISUMAX roll-in that started -- the VISUMAX 800 roll-in that started in Korea, as you know, well earlier than in China. I think somewhat a level of saturation. So therefore, out of Korea, we also haven't seen any kind of significant growth contribution during the course of this year. You had a question on the pricing pressure, whether we see there are some pricing pressure already. That is not the case. I can clearly, at this point, confirm that we are still in terms of our price realization for the treatment packs in China tracking according to our expectations. 2026, you wanted to get a little bit of color on what is it, what we see for next year. Obviously, a somewhat bold moment to give you an answer on that. But I mean, what I can share with you right now is that we would, over the course of next year, obviously number one, expect some more momentum out of the integration of our DORC sales organization into the ZEISS sales organization because that has advanced throughout this year, and we think that we are now basically in a position to get more traction in terms of rolling and with that, of course, older generation. I think we would see or expect at some point next year then also clarity at least on the NVBP. As we said, right now on the -- our estimation is that by end of this year, it should kick in. And obviously, it's a lot of speculation right now, but frankly spoken, after now a delay of almost nine months, I would be already satisfied to have it behind us and have the results and with that having better clarity on what we can expect in terms of volumes and especially at which sort of pricing. Beyond that, please understand speculations on the U.S. I think I have stopped trying that because we have too often changes in tariff announcements and tariff applications. And for EMEA, at least, considering that this year against all odds, so to speak, in the scheme of bigger, we are seeing quite a solid development. I would at least right now, expect this to continue. And yes, I think this is my five cents at this point in time, Oliver. I hope that helps you a little bit.

Next question is from Jonathon Unwin from Barclays.

You mentioned that you expect to be closer to the bottom end of the margin range for this fiscal year. But I'm just wondering what's kind of happened in the last quarter to make you feel that the full guidance range that you set at Q2 is no longer in play. Is it really the refractive treatment pack weakness you've seen in Q3 in China and earlier on in the year in APAC? Or is there something else to call out? And if there is something else, just interested to hear how you expect those areas to play out in FY '27. And I was wondering if you could also confirm whether you had expected a tariff refund in when you set the margin guidance of 8% to 10%. So was that expectation already baked into that margin?

So I think the explanation the -- do we have -- maybe you can go on mute. We see the weaker indications for the refractive business that we start with, and you know that the leverage of this business is massive, is probably the key indicator for the margin profile that we expect for Q4, and that brings us to this lower range of the margin as we have just explained in the presentation. I think beyond that, there is no specifics. I could potentially add that we also know, of course, that in Q4, we always have two effects. Number one, MCS device business coming in strongly with better margins. And against that, you have the stronger diagnostic device revenue, especially from the U.S. And there, of course, then again, the question is how will the currency fare? And because both MCS and CDM are strong businesses in the fourth quarter in the U.S. And there, currency can either be in your favor or potentially come in as a more stronger headwind that from our current estimates, these two key factors combined explain why we are currently guiding more for the closer end. In terms of the question on the whether we had expected the refund when we had designed the guidance. Yes, it was kind of -- yes, somewhat expected. Of course, not knowing what exactly would be the outcome of the U.S. justice who was taking this case up.

The next question is from Oliver Metzger from ODDO BHF.

First was also on refractive in China. So you still see some slight growth. And I assume that just on the back of SMILE pro, you still have a positive volume price effect. So does it mean that actually you see the underlying market is shrinking? And second question is about your TORUS ultrasonic device. So will you execute the sale by yourself? Or do you plan also to partner this device? Last question is quickly on Microsurgery. So yes, we saw some encouraging development for some quarters. You already made a comment for Q4. How should we think? Would you consider that the trough now is over and so that we progress from this current still slow growth level?

Thank you, Oliver. So, refractive in China, your question on the slight growth. Yes, of course, we do have the benefit of the higher pricing for the SMILE pro treatment pack that is helping, but we are not seeing a shrinkage of the market to be clear here. And I would argue probably the reason that Aier has put in this 25 VISUMAX order is also an indication that a shrinkage is not something that is considered to be happening anytime soon. So much on that. On the TORUS, we are considering to use the same channels to address our customers as we do right now, which is a mix of direct and indirect sales, depends a little bit on the regions in the world. But obviously, this is strategically a device that extends our current pure single hardware play into a what we would call a not yet a workflow, but at least a work band because everywhere where our microscopes are being used, you will find devices that do the application of this TORUS. And with that, I think it's highly complementary. And what's also worth mentioning, it comes also with the consumable portion. That means the end pieces being used on the TORUS are consumables, which, as you also know, strategically, has always been our target to extend our instrument and recurring revenue portion in MCS. And finally, your question on has MCS basically passed the inflection point? And are we more confident going forward? I would say, at least the indicators in terms of order book and project pipeline are giving us some reasons to believe that this is the case. And as we have learned in the last years. You are never safe from tariff discussions or tariff impacts, especially in our core market, U.S. But generally, Oliver, yes, I would say we are hoping for some reasonable growth next year.

And Justus, let me just build on the second point on the TORUS. Actually, here on the West Coast, we just spent some time with one of our larger and actually largest customers and one of our long-standing partners that together with him, we're serving this customer. He is quite aware of the TORUS. He's very excited actually about it. So that's a good signal that this is something that he's really happy to bring into the market. And talking to some of the customers, they're really curious. So we have quite some hopes that this will be a good product.

The next question is from Richard Felton from Goldman Sachs.

First thing I wanted to come back on, you mentioned that there are certain products that are sort of being phased out or wound down as part of the ProfitUp initiatives. Do you have any sort of firmer views at this stage of how much of a headwind that's going to be on revenue into 2027, just so we get models in the right place? And then sorry to follow up on the 2027 point again, but we're getting quite a lot of questions from investors on it. So maybe just helpful to clarify. But as you head into sort of '27, I guess sort of what are the kind of the main building blocks for the bridge for margin? I think you said that on the cost savings side, you don't really expect to see that much of an impact yet. I guess China refractive remains uncertain. VBP potentially unlocks some more bifocal sales. What else should we kind of keep in mind when we're trying to think about numbers heading into 2027? It would be really helpful just to get a sort of broad view of main drivers you see them currently.

Richard, of course, happy to take these questions. So on the products that we are taking off, I think you can expect this to be a rather mild impact of anywhere mid- to high single-digit million because as you just heard, we are talking about instruments, predominantly here with Katalyst. And from that perspective, it shouldn't be something of material headwind on the top line. Just as a disclaimer, however, all decisions in terms of portfolio alignment or portfolio shaping have not yet been taken. So we keep you posted if there was more to come. And if so, what exactly will be the impact, yes. But from what we have shared with you here in this call, it's roughly what I said, mid- to high single digit. Building blocks for next year. I mean, if we just look at this year's numbers and look at what are the key distractors, so to speak, then obviously, this nightmare of the IOL revocation associated with the scrapping that was necessary, that was a weight that we clearly wouldn't expect to be repeating itself. And yes, of course, on the other side, we have the uncertainty of the NVBP on pricing. And I think it is also fair to assume that it will be a steep impact. But on the other side, there's also the volumes associated to it that like in the first tender that we participated could potentially then provide some upside for recovery. Will this all come in, in '27? Obviously, not so sure. But over the course of two years, I think they are conceptually at least should be an opportunity and especially with a better ability to plan and schedule. I think the other point that I already mentioned is MCS that there is some cautious optimism for a better start into the new fiscal year. And obviously, as Andreas just highlighted, the fact that we do have some hopes for this new product, giving us a little bit of new upsides and opportunities. Again, I wouldn't generate here too high hopes, but maybe we be surprised because the reception so far has been very well. And we clearly can say that we have a value proposition that is unique, and there is no competitor in the market right now who can offer a device with these three modularities. So it is quite a good differentiator. I think last but not least, I would dare to mention that the exchange rates after two years being heavy, heavy headwind for us, right now, at least indications are more reasonable for next year and the absence of further headwinds from the exchange rate would already also be a meaningful improvement in our P&L. And yes, I think I'd leave it there. There's a lot of speculation, of course, about refractive and how it ventures. And of course, as you know, that is ultimately always going to be a decisive factor. But being now in the third year of a market in China, that has been challenging, but in which we have been able to solidly defend our position and to defend our margins, I think at least we have proven that we can cope with it. So I think that's what I, at this point in time, could share with you.

The next question is from Falko Friedrichs from Deutsche Bank.

I have two questions, please. The first one, given your comment that you're trending towards the lower end of this year's margin guidance, and it sounds like there is unlikely going to be a big step-up in margins next year either. Do you still have an unchanged confidence in delivering this more than 15% margin target in fiscal '28, '29? And can you just give us a little bit more comfort on the points that are giving you this confidence? And then secondly, a question for Andreas. Are you able to share if the ZEISS Group has already started to increase its shareholding in Carl Zeiss Meditec since the announcement in June? And if yes, potentially also give us an indication of the magnitude?