Carl Zeiss Meditec AG

Good morning, ladies and gentlemen, and welcome to our 9-month '24/'25 Analyst Conference Call. I'm Sebastian, I'm the Head of Investor Relations of Carl Zeiss Meditec, and with me today are our CEO, Maximilian Foerst; and our CFO, Justus Wehmer.

They will present you the prepared remarks on the 9 months results, and we are happy to discuss some strategic topics and look forward to the Q&A session with you. With no further ado, I'd like to hand it over to you, Max.

Please go ahead.

Thanks, Sebastian. Ladies and gentlemen, good morning, and it's really my pleasure to welcome you to our 9 months '24/'25 analyst conference of Carl Zeiss Meditec AG.

Let's start with a brief look at today's agenda. It will begin with an overview of the group results.

Then Justus will provide more insights into the financials, and we'll also cover some key points, including a high-level assessment of where Carl Zeiss Meditec currently stands, the status and growth opportunities in our refractive business and DORC integration and some recent innovation highlights. I will then conclude with our outlook for the fiscal year '24/'25.

And following the presentation, we'll open the floor to questions. So first of all, I'm pleased to report a strong order entry, solid gross revenue and a slight increase in EBITA in the first 9 months.

Orders reached EUR 1.7 billion, marking a 23% increase. FX adjusted growth was in the same range.

Even after adjusting for FX and acquisitions, order rose by 16%, reflecting a robust growth trend in orders across all regions. Order backlog stood at EUR 431 million, further elevated compared to the end of Q2.

Revenue reached EUR 1.6 billion, an increase of 8% compared to prior year. FX adjusted revenue grew at a similar level with FX and acquisition adjusted revenues slightly above previous year.

Q3 alone also showed organic growth with revenue up 2% at constant currency plus 3%. Recurring revenue is at a all new-time high, accounting for 51% of our total revenue.

We made good progress on those new product launches during Q3. The VISUMAX 800 rollout in China began in March with the first placements in May.

And by the end of June, already over 50 devices have been installed with a total order book of over 100 units. SMILE pro 2 has been gaining increased relevance in the market, supported by excellent clinical results, highly positive customer feedback.

The KINEVO 900 S, which had a slow start early in the year, showed increased deliveries in Q3 and has a strong open order book. Most of the production constraints and some earlier software quality issues have been fixed by now.

We expect momentum to accelerate significantly in Q4. After a strong winter peak in refractive procedures during Q2, the market in China softened again in Q3, showing a decline in underlying consumption.

However, volumes still remain slightly ahead of last year's level on a year-to-year basis. EBITA came in at EUR 175 million, up 3% compared to the previous year despite headwinds such as the impact of U.S.

tariffs and weaker FX rates. Note also that last year's figures included a one-off EUR 18 million gain from the Topcon settlement.

In Q3, U.S. tariffs had a middle single-digit euro bottom line impact.

Although new pricing was introduced at the beginning of July, targeting a 10% U.S. tariff level, most of the order backlog is still at pre-adjusted prices, meaning the P&L impact of the new pricing will only begin to materialize in September and October and does not fully capture the 15% burden just yet.

In other words, we anticipate an additional tariff burden in Q4, but are quite confident we can mostly pass it on into the market for the rest of the next fiscal year. EBITA margin was at 11%, moderately below last year's 11.4%.

Adjusted EBITA margin, however, improved to 11.1%, up from the previous year's 10.2%. This positive development was driven by the DORC consolidation, growth in the refractive market and strict cost control despite pressures in the equipment business segment.

Now I'd like to hand over to Justus for a deeper dive into the financials and SBU figures.

Thank you, Max. Good morning.

Welcome also from my side. Now going to give you a more detailed overview, starting with the performance of the SBU ophthalmology.

We achieved EUR 1.251 billion revenue in the first 9 months, representing a plus 9% increase at constant currency, plus 10%. Adjusted for currency and acquisition, revenue remained slightly positive.

In Q3, we saw only moderate growth due primarily to relatively higher comps and foreign exchange headwinds. Looking at the 9-month period, the DORC consolidation has been a key contributor to top line growth.

In China, we continue to see solid volume growth in our IOLs, while refractive consumables showed slight growth year-to-date despite the softer performance in Q3. As we discussed in the last earnings call, refractive procedures linked to military enrollment in China drove Q2 results.

In Q3, the summer peak so far came in a bit below last year. We believe this mainly to be phasing of military demand, but also continue to observe weak consumer climate.

Importantly, the Chinese market continues to favor premium procedures. SMILE pro is commanding top tier pricing, thanks to strong clinical results and clear technological differentiation.

We've seen recent commentary from China listed hospitals, expressing positive sentiment about the ASP uplift and the broader premiumization [Technical Difficulty] driven in part by SMILE pro. Despite the decline in procedure volume during Q3, we haven't seen trade down trends anymore.

Overall, procedures, prices in the market remain pretty stable in our own mix. In the recent month, SMILE and SMILE pro have been picking up now to slightly above 70%.

As Mark mentioned earlier, the VISUMAX 800 installed base has already surpassed 50 units in Q3 and we are on track to ramp that up to probably somewhere around 100 units in China by the end of the fiscal year. Overall, the refractive market in China continues to reflect broader macroeconomic conditions, which remain cautious.

We will continue to closely monitor the latest trends. EBITA margin has seen an improvement of plus 1.6 percentage points, reaching 10.6% compared to 9% last year.

DORC consolidation growth in refractive consumables business and cost saving in OpEx, including lower R&D and lower DORC integration costs were accretive to this improvement. In terms of revenue split, ophthalmology contributes 78% of total revenue, within ophthalmology recurring revenue now accounts for 60%.

Microsurgery sales recorded EUR 349 million, a plus 1.6% increase year-over-year, similarly at constant currency base. Top line grew plus 10% during Q3 at constant currency, plus 12% with even stronger order entry.

The neurosurgery business continues to remain soft, largely due to the ongoing product cycle transition to the KINEVO 900. Deliveries of the new system are progressing in a favorable direction, and we expect it to contribute more meaningfully to the top line going forward.

The EBITA margin, however, declined to 12.3%, down minus 7.3 percentage points from last year's 19.6%. This contraction was mainly driven by an unfavorable product mix with the high-margin neurosurgical category still much weaker than last year, amid the new product transition periods.

In addition, U.S. tariffs and adverse foreign exchange rates added further pressure on both the gross and EBITA margin.

OpEx was higher due to increased marketing and higher IT expenses. In terms of revenue split, microsurgery accounts for 22% of our total revenue within this 19% comes from recurring revenue streams such as service contracts, drapes and instruments.

Let's look at the regional development. Top line growth was recorded across all regions and order entry growth was even stronger.

Revenue in Americas reached EUR 407 million, marking a [ 14% ] increase compared to last year. At constant currency growth was plus 15%.

The increase was mainly driven by the consolidation of DORC as well as organic growth. Revenue for EMEA reached EUR 483 million, up 12% at constant currency plus 13%.

Excluding the DORC contribution, revenue would have shown a slight decline compared to a strong prior year. Solid underlying growth in core markets, such as Germany, U.K.

and Nordics contributed positively. Revenue for Asia Pacific grew plus 2%, reaching EUR 710 million.

The positive trend continued in Southeast Asia and India. China and South Korea remained stable, though Japan was below the prior year's level.

Let's have a look at the P&L lines. Gross margin was 52.7% was slightly below previous year's level due to unfavorable product mix, including volume-based purchase-related price cuts in IOLs and softer neurosurgery business amid the transitionary period.

Excluding the DORC consolidation, underlying OpEx were down by around EUR 18 million year-over-year as a result of cost control. This reduction was mainly driven by lower R&D expenses and lower DORC integration costs.

The underlying OpEx ratio came down by minus 0.3 percentage points. Administrative expenses increased due to the consolidation and rising IT expenses related primarily to our ongoing SAP investment.

All in all, EBITA was moderately up as a result. Net income declined from EUR 108 million to EUR 89 million and earnings per share from EUR 1.32 to EUR 1.02 a minus 24% drop compared to last year.

This was driven by a lower reported EBIT, including the amortization of intangible assets from purchase price allocations and negative financial results, including negative foreign exchange hedging results and lower interest income. Finally, adjusted earnings per share came in at EUR 1.24, down minus 8% year-over-year.

The adjusted figure excludes noncash valuation effects on contingent purchase price liabilities in the financial results. As a reminder, the foreign exchange hedging result remains unadjusted as it should offset over time with foreign exchange influence on operating results.

This table now provides a brief overview of the bridge from EBIT to EBITA and to adjusted EBITA. Regular amortization on intangible assets from purchase price allocations amounted to EUR 22.3 million in the first 9 months, including DORC effects of EUR 19.8 million, and smaller effects from former acquisitions.

As for other special items last year primarily contained a one-off gain of EUR 18 million from the Topcon settlement. Stripping out the special items, adjusted EBITA amounted to EUR 178 million, a plus 17% increase.

The adjusted EBITA margin rose to 11.1%, slightly up from 10.2% last year. Now a quick overview on the cash flow statement.

For the first 9 months, operating cash flow increased to EUR 66 million, compared to EUR 57 million last year. This increase was mainly driven by lower tax payments despite a rise in working capital.

Investing cash flow rose to EUR 8 million, driven by a decline in treasury receivables, while lower CapEx investment in the first 9 months, both tangible and intangible CapEx together represented 3.6% of revenue. Last year's outflow was primarily related to the DORC acquisition.

Financing cash flow declined to EUR 58 -- to minus EUR 58 million, mainly due to the dividend payout, partially offset by an increase in treasury payables, last year's inflow was primarily related [Audio Gap] shareholder loan for the DORC acquisition. By the end of the first 9 months, net financial debt remained at EUR 384 million, slightly down from the prior year level, which was mainly refinanced through a shareholder loan from the parent company.

And with that, I will hand it over back to you, Max.

Thank you, Justus. Now let me make a few comments on my view on Carl Zeiss Meditec after having transitioned into the CEO role.

In the last couple of months, I've visited our key sites and talked to our teams. First and foremost, I will say that this current fiscal year has turned out to be quite a difficult one, as have been expected when we first gave our forecast.

However, the strong recovery in order entry and successful launch of major new products, I see as an important progress in bringing our business back on track. It is my near-term priority to bring this fiscal year over the finish line in a good way, but this requires still quite some attention.

Let me also make a few comments on my agenda for the next fiscal year and beyond. I'm still intensely focused on the run-up to the fiscal year end.

It will be a high-level overview at this point. We will then go into present it to you in more detailed agenda again at the time of our full year results in December.

Now let's move into the key topics. I'd like to provide more insights into our strategic focus, highlight our position in refractive, comment on the opportunities and status in connection with DORC and provide updates on the progress of several other products.

First of all, Carl Zeiss Meditec operates in highly attractive markets, supported by powerful long-term trends such as the aging population, the worldwide surge in myopia among young people and the more active lifestyle of older people and their willingness to invest in their own quality of life. We also benefit from the expansion of health care coverage in underserved regions and categories such as in our cataract and retina business.

There are, of course, also headwinds that affect us as well as the rest of the industry. That will be quite familiar to you.

Most probably -- most notably the geopolitical conflicts and trade wars, increasing regulation and consolidation and more low-cost players. I'm convinced that Carl Zeiss Meditec has exactly the right strategy and a workflow approach leads to a sustainable gain in recurring business and high-value consumables and services, which will be accretive to our profitability.

That said, we need to really make the most of our big growth opportunities. We have the strongest brand in ophthalmology, both in B2B as well as in the consumer-facing products.

We need to make the most of it, and one of my key priorities will be to improve the commercial access to local markets where [Audio Gap] is varying across countries and regions and where we have many untapped or not fully developed opportunities. The product portfolio we have today is very strong, and we can get more out of it, and the innovation pipeline is very well filled for the next few years.

I am particularly confident about the midterm outlook for our refractive business and will give you some reasons why in a moment. We have the market and innovation leadership in China as well as globally.

Outside of China, our growth opportunities remain huge. Even though the economic cycle has been a headwind lately, our market shares are performing strongly, and the VISUMAX 800 cycle will carry us a lot further.

Similarly, there is a big opportunity in leveraging the DORC portfolio to its full potential, especially by bringing DORC to key markets. In order to execute, we will need to be highly focused on our company's need to be agile.

The work on increasing R&D productivity will continue and be refined, always with an eye on customer and their needs. Looking at our operations footprint, we can make it more efficient.

As a result of acquisitions and running sites in a very decentralized way, we have way too many production sites around the world today. My ambition is to return the company to market-leading revenue growth.

In the strong categories such as refractive and surgical, we need to increase targeted investments in order to drive faster growth and improve local market access. However, we will find ways to further trim expenses in the weaker areas to secure our mid-term profitability targets, applying tighter expense control where needed.

Moving to refractive and in light of recent and upcoming product approvals, I'd like to first address some recent concerns about the competitive landscape in the China refractive market. I'd like to share my view on ZEISS' strategic positioning and long-term competitiveness in this market.

First of all, China continues to be a powerhouse in refractive surgery, accounting for at least 50% of global procedures, which are estimated at 5 million to 6 million annually. ZEISS holds a strong position here, capturing at least 50% of the Chinese refractive market, especially through our SMILE, SMILE pro and LASIK platforms.

This share has actually gone up slightly throughout the downturn over the last 2 years. We've observed a few developments on the competitive front.

A Chinese local brand introduced its own [ safety ] IOL, while a German company recently received regulatory approval for the flat cutting option of its full femtosecond laser platform. In addition, a couple of other companies are currently in the pipeline, seeking approval for lenticule extraction-based solutions, including a Chinese player.

None of these does yet have a significant impact on the market. And because we can roll out VISUMAX 800 largely before these competitive impacts will become noticeable, we remain in a favorable competitive position.

Besides still having the most advanced products, our competitive strength is reinforced by our strong brand recognition. According to a global ZEISS survey, our brand awareness in China stands at 72 even higher than in Germany and far above the global average.

Strategically, ZEISS remains the only total solution provider in the market, supporting clinical applications, procedure development, consulting, education and social engagement. We are also the only company offering a full range of surgical platforms.

Not to mention, we pioneered the evidence-based guidelines lines for lenticule extraction procedures. For over a decade, we have consistently served the market with a highly dedicated team and exceptional execution capabilities.

Our offering is well segmented to serve a wide range of patient budgets from RMB 14,000 for LASIK to above RMB 25,000 for SMILE pro. Notably, SMILE pro continues to gain traction in the premium market, offering advanced outcomes and strong acceptance from those doctors and patients.

Innovation is the core. We are marketing broader applications such as PRESBYOND for presbyopia and SMILE pro for hyperopia.

Our unique ZEISS refractive workflow covers the entire patient journey. Nobody will have such a wide application spectrum anytime soon.

From patient education, planning treatment to result analysis, it all contributes to more precise outcomes and adds further value to both surgeons and patients, and we are committed to advancing the frontiers of technology in this space. In this context, I'm confident for China to continue to do well.

As to where the fastest growth will come from in the future, I would, however, mainly point to outside China market opportunities. So far, much of our discussion around the refractive business has centered on China.

But now let's shift our focus to opportunities beyond China. Over the past 10 years, ZEISS procedures have grown at over 20% CAGR, significantly outperforming the mid-single-digit growth of the global market.

This map illustrates the market share of ZEISS procedures in key countries as well as the rollout progress of VISUMAX 800 by region. Outside of China, we've also been -- strong market penetration in South Korea and Southeast Asia, where ZEISS holds a solid position.

Some of the market data in this latter part of the world is of lower quality, but we'll continue to see significant upside, both through market expansion as well as share gains. There's still ample room for growth in large markets like India and the United States where our market share remains comparatively low.

In markets such as Japan, the refractive market remains largely untapped for us. Also our share in EMEA is just above 20% despite having strong relations with many KOLs, mainly due to a slow turnover of the existing installed base.

There are some signs of a pickup with VISUMAX 800, and given current myopia trends and improving patient education, it's only a matter of time for this market to grow and our share to benefit likewise, as we have the most modern product offering. All of this underscores one thing, there's still substantial growth potential in these markets.

On the other hand, we've made strong progress with the global rollout of VISUMAX 800. As of now, it makes around 20% of the global installed base of around 2,500 units.

In China alone from March to June this year, in only 4 months, we've placed over 50 devices and SMILE pro has passed 10,000 procedures. This also reflected our product mix shift.

SMILE pro now takes up 18% of total procedure volume, a strong sign of premiumization. By region, VISUMAX 800 launch in EMEA was most advanced, its installed base already accounts for approximately 40% of all VISUMAX.

This ratio in Americas is around 20% and in APAC, still below 15%. Strategically, we'll continue to focus on underpenetrated markets, accelerate VISUMAX 800 rollout and expand into broader applications like presbyopia and hyperopia.

We are confident that the continued rollout of VISUMAX 800 will further strengthen ZEISS' market position in the years ahead. The slide highlights the strong performance of DORC in the reporting period and outlines both the integration progress and strategic road map ahead.

First, DORC has a -- was a solid contributor to the group's growth for the first 9 months, delivering profitable growth well above the group average. We've seen a strong expansion in the commercial funnel, thanks to effective integration of the sales force and rising customer demand, especially for EVA NEXUS.

I can share with you that most of our KOLs and customers across the board are very excited about the combined offering of ZEISS and DORC, and instantly understand the value and innovation we can bring to the market. In APAC, interest has surged, although APAC currently accounts for only about 10% of DORC's revenue, distributor access has greatly increased this year, indicating strong future potential in this key market.

Now looking at the near-term integration targets, we're working to increase the installed base of EVA NEXUS, especially in high potential dual accounts in vitrectomy. We're also capturing strong sustained market demand with a focus on increasing market share across all regions.

A key focus is expanding regional coverage, particularly in underpenetrated markets in APAC with Japan and China as top priorities. To support this momentum, we're also working to boost supply robustness and scale capability -- capacity accordingly.

Looking ahead, we have a clear road map in place. We plan to leverage our strong market position in the OPMI segment to further drive the growth of EVA NEXUS.

At the same time, we already set a joint innovation road map in motion, which will help us further differentiate our product offering in the market. And ultimately, we want DORC to outgrow the market sustainably and profitably.

Let's take a moment now to highlight some of the recent achievements across our portfolio, reflecting our ongoing commitment to innovation and excellence in medical technology. First, we're proud to say that VISUMAX has been awarded the prestigious Berthold Leibinger Innovationspreis.

This award recognizes outstanding advancements in laser technology. VISUMAX, along with SMILE has transformed minimally evasive eye surgery for delivering high-precision computer-controlled laser treatment.

To date, this method has been used to treat over 10 million eyes worldwide. Next, DORC's ILM-Blue received NMPA approval in China.

This product helps surgeons visualize and safely remove the inner limiting membranes during vitrectomy procedures. This approval marks ILM-Blue as the first DORC posterior dye available in China, with over 900 procedures performed globally.

Moving to microsurgery. The PENTERO 800 S has received NMPA approval in China.

This system is specifically engineered to meet the demanding requirements of neurosurgery, spine surgery, plastic and reconstructive procedures as well as ENT surgery. What makes this especially significant that it's the first high-end microscope, developed and manufactured locally in China.

This achievement marks a major milestone in the localization of advanced medical equipment, underscoring our commitment to innovation and long-term growth in the Chinese health care market. And finally, we've reached a major milestone in cataract care.

Over 2 million cataract surgeries now plan to use a ZEISS Veracity Surgery Planner. This digital solution enables U.S.

clinics and operation rooms to make data-driven decisions, improving patient outcomes. It also reduced time spent per eye by up to 60% compared to traditional paper planning, a massive efficiency gain.

Together, these milestones underscore our strategic focus on innovation, global access and improving clinical outcomes through technology. Now let me talk to you about the guidance for the fiscal year '24/'25.

This is unchanged from the last quarter. For the fiscal year '24/'25, guidance will remain unchanged.

Revenue is expected to show moderate growth driven by the stabilization of recent order intake and the full year consolidation of DORC. The amount of organic growth will depend heavily on macro conditions.

EBITA and EBITA margin will develop stable to slightly higher compared to the prior year. It is encouraged that we are slightly higher on -- encouraging that we are slightly higher on EBITA at the 9-month level, while we have a solid order backlog.

As aforementioned, U.S. tariffs had a mid-single-digit EUR 1 million impact during Q3.

As we have implemented pricing measures for the U.S. market as of July 1, the large order backlog still needs some time to clear.

Also, as the new pricing will begin to materialize in September, we expect a similar level of tariff-related margin erosion in Q4. The introduction of 15% trade tariffs by the U.S.

on imports from Europe is impacting earnings in the current fiscal year. Through targeted pricing strategies, these effects are largely intended to be passed on to the market following the initial price adjustment on July 1.

We're evaluating traditional features measured to further mitigate the impact. The next round of adjustment is scheduled to take effect in the next fiscal year.

For the remainder of the year, a further depreciation, particularly of the U.S. dollar and Asian currencies has not been factored into the forecast and represents an additional risk.

Cost discipline will remain in place. It's encouraging to see the underlying reduction in OpEx as the business returns to growth.

For the long term, a gradual EBITA margin increase is targeted in subsequent years, supported by growth in recurring revenue streams, sustainable potential for EBITA margin is seen in the range of at least 16% to 20%. Lastly, before we go into our questions, and since I'm speaking to you for the first time as CEO of Carl Zeiss Meditec, please allow me to make a comment about the share price.

I feel very strongly that at this current level, it does not reflect the true value of the company. I understand that there are, of course, reasons chief among them the decline in our profitability over the last couple of years, of why we are trading at 7-, 8-year lows in terms of revenue multiples and far below some of our competitors in ophthalmology.

For the future outlook of the company, however, that represents an opportunity that by turning around profit margins and revitalizing growth, we have, what I believe, a significant valuation upside. Let me reassure that I will work hard on that turnaround and on delivering that opportunity to shareholders.

This is, of course, with the full support of the ZEISS Group for whom the listing of Meditec continues to be of high importance. Therefore, we take very seriously the shareholder feedback about the government processes as well as the relationship with the Carl Zeiss Group and executive compensation.

I'm also open to considering further capital returns in the future. If our financial situation allows for it, this will be weighed against the M&A pipeline and investment needs for the business to be sure.

Currently, they are more constrained than we used to be because of the DORC acquisition. As our earning power grows and free cash flow generation grows, we will have more options at our disposal.

Lastly, let me thank those of you listening who are shareholders and long-term owners of the company for the patience and trust you have placed in Carl Zeiss Meditec. I will work hard on your behalf.

I look forward to the dialogue with you.

So with that, thank you very much, and I hand back over to the operator for the Q&A session.

A couple for me, please. First, how are you seeing refractive surgery volumes in China progressing so far in Q4?

And then kind of following on from that, what are you hearing from customers about the outlook for procedures kind of into next year? I appreciate your order book has been strong as well across the rest of the business.

But if China refractive surgeries do remain kind of challenged into next year, can you kind of give an indication of how you expect sales across the rest of the business to develop? And then on the ex-China refractive opportunities, which markets do you see as the quickest wins.

What do you need to do to drive growth in these markets? And what time frames are you kind of looking at there?

Okay. Thanks a lot for the question.

I'll take those, Jack. So first of all, how do I see refractive surgeries procedures moving along in the end of this fiscal year.

Basically, what we are seeing is after a strong Q2, which was driven very much by the military topic, we've had a slowdown in the market. This slowdown has now move into what I would say is a lower summer peak than usual, but we are confident on the stabilization in the market on basically August and September.

What's important to see here is actually in this environment, we've actually been gaining market share. And if we want to look further in the future, I think the real indicator will be consumer confidence in China and how this continues.

So to be very honest, there's a lot of uncertainty. What we do see is a bottoming out of the market.

And the very good news, I would say, is the price reductions we had seen in the last months have now stopped. And basically, the players in the market are really looking at premiumization of protecting their margins.

And this is why we're seeing a very good uptake and drive of our VISUMAX 800, which fits perfectly into the strategy. Over the next fiscal years, I would say we will see a stable market in refractive surgery in China, not a further decline, but we will only see a substantial uptake when really consumer confidence comes back into the market.

Which brings me to your last topic, in our planning today, we are looking at growth and growth of markets actually outside of refractive in China. And clearly, here, I see substantial opportunity in other markets.

I would like to name here beyond, how should I say, Southeast Asia, in particular, Japan, where we have been historically very underrepresented, but traditionally is a market with strong potential for refractive surgery and also India, where we have quite a big market in low price, but where we have an opportunity to rebuild this market. So these would be my comments on your questions, Jack.

Just a follow up on the ex-China refractive opportunities, kind of what do you need to do from a kind of organization perspective to drive that growth? And what time frames would you expect those to come through?

So it varies very much from different markets because of [Audio Gap] situations in terms of approvals. We are now entering into a very hot phase in Japan, where we can really actually start launching SMILE and VISUMAX 800, which was not possible in the last years because we've received approval.

So here, we are in the process of actually building up our capability in the team and finding the right partners with whom to work to drive the market. In India, it's a different topic.

We've been approved here. It's more of working together with the local sales organization to drive up and launch, how should I say, more of a commercial program.

I'll be very honest to you, this will be part of the strategy for Carl Zeiss Meditec to have a much stronger focus, as I was saying earlier, on commercialization, supporting our distribution network and also reaching out to end consumers, in particular, in the elective procedures, which you see such as the case of refractive surgery.

Oliver Reinberg from Kepler Cheuvreux. Three questions, if I may.

Firstly, just in China, can you just specify what volume you have seen just in the summer treatment period so far? And also, given the kind of muted consumer sentiment, what do you actually see currently in terms of willingness to buy VISUMAX 800, given summer comes to an end, Chinese New Year is still sometimes out.

So our orders is still really coming in, in China for this kind of product range? Question number two, just on currencies.

Can you specify current spot rates, are they embedded in the guidance? Or will the guidance be at risk if spot rates do not change?

And also, if these current spot rates remain unchanged, can you just give us any kind of flavor what the earnings headwind will be for 2026, please?

Okay. Thanks a lot.

I'll take the first part of the question, and then I'll hand it over to Justus concerning the exchange rate. So back to your question, what we've seen in the last months is actually after a strong winter peak, we had a much softer summer peak.

Traditionally, I think there's been a transfer from treatments to the winter peak from the summer peak because of the change in the military uptake regulations. So we see actually negative growth in the market of refractive surgery on the summer peaks, on the summer months.

We will expect an improvement in August and September as there is a second level of uptake for militaries coming in. So we expect, as I was saying, in August and September, compared to prior year to have the same number of treatments in the total market.

In this market environment, different players have reacted differently. We have actually seen that we are growing faster than the market and have been gaining market share.

Some -- most of the other players have actually lost market share. And this is back to -- and it comes to the second part of your question, is what we've seen in the last 2 years in the Chinese market is as consumption slowed down, there was intensified competition between our customers, which led to a price erosion of the procedure in the market.

And now we've clearly seen a shift in the market where the players in the market, I'm talking about our customers here, are really trying to support the prices of the procedure in the market and are looking at opportunities on how they can regain and rebuild the pricing in the market. And this is where actually our VISUMAX 800 comes in very, very nicely, and we are really working together on our customers on the price positioning of the procedure to rebuild their margin and this is coming very successfully.

As I was saying earlier in the call, if you look at it, in the China market, we launched in May. By the end of June, we've already done 50 installations, all among our key customers.

The return has been very positive. They've managed to generate the pricing reach which they wanted to have.

We have orders coming in very nicely, and our expectation now is to be hitting about 100 in stores by the end of the fiscal year. I hope that answers your question.

Pretty much.

Yes. Oliver, Justus here.

So on your question on the foreign exchange impact, just to give you a bit of flavor, we are currently seeing for the second half of the year, foreign exchange impact on the top line in the low double-digit EUR 1 million amount and somewhat lower, but also double-digit million bottom line impact. That is considering current spot rates.

So that is also, by the way, the reason why we are cautious in terms of our guidance and are currently rather seeing that we are coming in at the lower end of the guidance, which means basically a rather stable EBIT and not a slight growth as we had in our earlier projections. Anything beyond that in terms of devaluation of the U.S.

dollar would -- especially U.S. dollar, but obviously, also other currencies, that would come basically as an additional risk.

For the next year, we are -- for our models working on the current rates, roughly $1.15 for the U.S. dollar as the base assumption, again, it remains to be seen whether this is going to be confirmed then in the next year as being a reasonable assumption, but it is what it is right now.

And with that, we are working. Does that help you?

It does. But do you have any kind of flavor?

I mean, it's obviously the U.S. dollar, also the kind of Chinese currency at current spot rates, what is the headwind to EBITA for next year from an amortization perspective.

Any idea?

Frankly, too early to tell. I think, Oliver, let's take that question then with the December discussions, yes.

But right now, I'm not yet really fully having everything basically in front of me to answer that question.

The first one is on microsurgery. So you reported a still weak neurosurgical volume.

Just as an update for us [indiscernible] it's a clinic CapEx, it's the interest rates [Audio Gap] which factors do you regard as reasons for a major headwind? Second, also you highlighted in your market overview that some low-cost players, competition has arise.

Could you be more specific how the dynamics have changed over the last 2 years in your view? And finally, we saw a few days ago, takeover of STAAR Surgical by Alcon.

So what's your view about the competitive dynamics?

Okay. Thanks.

Quite a few questions. I'll take them one by one.

In terms of MCS, I think if we look at the trend, we launched 2 very nice products globally, the KINEVO 900 S and the PENTERO 800 S. If we're honest, in many cases, the uptake at the start was slow in particularly in deliveries.

This was more for internal reasons of the company rather than market reasons. I'll be very honest here, we had some quality issues on the software side, which slowed down our ability to launch at the speed which we wanted to do so.

So that explains to a certain extent, the slowness. What we are seeing now in the development is actually order entry is really very, very positive and going in the right direction.

And now we are really in the process of ramping up our capability to deliver. So in a way, I think it's not a market-driven topic the slowness came actually from internal topics, and we have solved most of them right now and are really kind of back on track at that level.

That's concerning the MCS topic. In terms of low-cost players, the topic of low-cost players is, in particular, something which we are experiencing in China, and then to a lesser extent, also a bit in India.

But I would say in India, this is nothing really new. Whereas in China, what we're seeing is a very potent mix of not only low cost, but also very decent technology.

I think we're seeing this through the complete medical industry. This is not specific to ophthalmology.

If we now look more specifically on our product lines, there's been quite a lot of discussion and chatter on different Chinese companies, and I would differentiate between intraocular lenses and refractive surgery. Very clearly in the intraocular lens space, the Chinese manufacturers have entered the market and are doing so quite actively.

You see this across the complete range of IOLs. Here, it's less of a cost topic because the prices are regulated.

So fundamentally, we're all working within the same pricing environment. And in refractive surgery, we see now plans of Chinese startups coming with potential products in the refractive surgery market.

There are even some which are working on ventricular extraction. I am only mildly concerned.

I think this we have to take this extremely seriously because we've seen what Chinese innovation companies can do. In the environment of refractive surgery, there is also a very substantial impact on, how should I say, clinical application and experience with patients and optimization of the process.

It's not a pure technology play. There's a lot which is based actually on experience working together, and this is something you can't do without having substantial cases, which means even someone coming with a perfect technological product won't be hitting the road running, and [indiscernible] and several thousands of patients to bring them up to a level where they have a product, which is competitive in the market.

So we're taking this seriously, we're looking very closely. But in the end, refractive surgery is an elective procedure, where the level of trust in the procedure, the brand and the company, which is presenting is prime module.

And this is where, as ZEISS, in particular in China, we have a very, very strong position. So not to be underestimated, but we are following it very closely, currently in the midterm from a business aspect, not too worried yet at that level.

The new topic about STAAR Surgical. Of course, we're all interested in what's happening in this space.

I think it's a very interesting and understandable move of what Alcon has done here. Alcon is, I think, trying to expand the procedure base, and to be able to offer a broad opportunity.

I think for them, it's also an effort to, how should I say, get back into a positive dynamic in the Chinese market, where basically, they've been facing a lot of headwinds in the last years. It will be interesting to see.

I would say there's a complementary impact between STAAR and Alcon. STAAR has been losing a lot of traction recently in the Chinese market, also facing local competition.

So I see less of a topic in China and more of an opportunity for Alcon outside of the Chinese market. As you know, myopia is becoming more and more of a topic globally, also outside of the APAC region.

So I think a solution like STAAR Surgical offers is interesting also outside of the APAC region. And this is potentially an option for Alcon.

But we mustn't forget ICL and refractive surgery are more complementary than they are competitive. If you're looking the optimal area for laser refractive surgery, is with patients who will have a midrange myopia and with an ICL product you're looking at very high myopes.

So it's actually more of a complementary than a competitive impact. This would be my comment on the situation right now, but a very interesting move, fully understandable from my side on the side of Alcon.

I have 3. The first one is just a follow-up to like Oliver's question on China competition.

So you don't seem too worried about the midterm in terms of competition in the country, brand awareness, let's say like higher technology on your end. Should we understand that you don't expect volume share loss from the current peak of 50% over the midterm or any kind of pricing pressure.

I mean I'm just asking to understand what is included or not in your midterm margin guidance on your side? The second question is, can you comment a little bit about the upcoming new run for VP in IOL, in terms of expectations for further price cuts as you were also mentioning a bit more competition from local manufacturers.

I think you also mentioned they are coming in premium IOL. So your thoughts here would be super helpful.

And the last question for me. Can you give us a bit of color about the Alcon momentum in vitrectomy, especially just following Alcon launch this quarter.

Has your conversation with surgeons changed since then? Or just do you feel the need to change your pricing policy just to secure some volume?

So any comments again, super, super helpful.

So back to the Chinese competition and more specifically to the Chinese market. And if you look in what way this is embedded in our midterm strategy, I think you have to see this very clearly product line by product line.

If I'm looking in classical diagnostic equipment, so if you're looking at OCT, HFA, these type of products, then very clearly, this is a substantial increase linked to the by local policies, which is impacting our growth. This has been factored into our models for the growth in the future.

In the IOLs, which I spoke about, we are actually also quite well positioned midterm as ZEISS to be a local player in the China environment. As you know, we have quite a substantial manufacturing footprint in China, which means I think we are strategically well positioned to be actually treated as a local supplier.

And in the IOL environment, the cost advantage of the Chinese manufacturers is not particularly large. So then it's less of a cost battle and more of a future and positioning battle and the fact that whether you can manufacture locally or not as basically a gatekeeper function, which our expectation this could be part of the concept in the upcoming volume-based purchasing.

So not only a topic about pricing, but also a topic about localization and level of localization where I believe at the current time we are the only global player who is well positioned on this. The timing is not yet clear on the upcoming volume-based purchasing.

The expectation right now is that it will not be as dramatic and brutal in terms of price reductions as we've seen in the past. As you know, this is a third wave of volume-based purchasing for IOLs.

We had the first wave, which was regional, then we had the last one, which was a national one. And now we are coming into the second national one.

We see very clearly also within the China environment that within the health care community, voices are coming up against volume-based purchasing because in some other medical areas the government went too far and basically, there's been a trade-off between price and quality, and where basically, in some cases, there've been quite a few topics where prices went down too much so that actually the quality providers moved out of the market. So we see now in the discussions on the next range of volume-based purchasing, the Chinese government being much more sensible of keeping players in, keeping the environment and being more reasonable in their pricing expectations.

So I would say we're looking at it, we will have a strategy, we will follow the strategy of premiumization because this is the biggest impact we see out of the volume-based purchasing that with reduced prices, the hospitals are shifting their portfolio from standard IOL into more premium IOLs, and this fits well into, how should I say, our profile and product portfolio. Finally, your last question concerning Alcon's Unity.

To be very honest and quite surprisingly, there's been a lot of talk in the market, we have not seen any impact of the Unity launch, specifically if we're looking at actually our project pipeline. So our project pipeline for the EVA NEXUS is continued to grow very positively.

And at least as of yet, has not really been impacted by the launch of Unity. This could have varying reasons.

One of them is that Unity at least at the current moment, is priced relatively high and that we're seeing it mostly going into replacement of the Alcon installed base. So right now, we don't have it, but of course, I see Unity as a very serious competitor.

It's technologically, Alcon has upped their game. But also, we are extremely confident on the capabilities of the NEXUS procedures, also the advantages we have now bringing this in the whole process together with the operating microscope.

And we've seen actually no impact on our current projects running. And actually, at the moment, we're seeing a very nice acceleration of, how should I say, the potential for the EVA NEXUS on a global level, which most probably, to be honest, is driven by the fact that now the EVA NEXUS has access to the global sales and distribution capability of the ZEISS Group, and that's the main lever for growth right now.

I hope that answers your questions.

Yes. Just maybe for the first one on China competition.

I was more referring to refractive given the, let's say, the importance of refractive and your profit in China. I mean, all the new competition, especially like the ZEISS Vision, for example, could it put some price pressure on, let's say, like on SMILE and in terms of market share, given you reach a peak of 50%, any risk there to see a lower volume because there is more competition like more players in this market?

So what you've seen in the China market, it's a very segmented market across the different price ranges. So you go all the way at the top on basically the ICLs and then you go all the way down for, how should I say, LASIK procedures, SMILE is in the upper mid-range.

Our expectation, so we have some of our competitors, which are playing kind of in the lower end pricing. This is not the area we are in, and that will be the area which will be hit first, how should I say, by the Chinese.

The premium suppliers or those who are going on quality and trust will not be the one focusing on Chinese suppliers, maybe only partially in some of the public institutions for basically political reason that they have to buy a Chinese product. So we're looking at some of our competitors will be the first to be actually hit by this, not us currently.

Three questions for me, please. Firstly, what makes you confident that you can achieve even the lower end of the EBITA margin guidance for this year?

Second question, without obviously providing some guidance, but are you confident that you can see more meaningful margin expansion again next year? And then thirdly, can you share your view on the latest IOL and equipment end market developments by region?

Falko, Justus here. I think I'm happy to take the first 2 questions, and then the third one, Max, maybe you want to take.

What makes me confident? I think the confidence is basically building on the order book and the momentum in order entry that we have seen, especially MCS has a major catch-up ahead of them.

However, that is nothing unusual. For OPT, likewise, as we said before, we still have something like roughly 50 VISUMAX going out to the market until the end of the fiscal year.

And obviously, I'm sure you're referring to the question of will the summer peak be strong enough to ultimately bring us to the guidance, and that admittedly has always a level of uncertainty. On the other side, just building or referring to some of the statements that Max has made that we would -- from the most recent market information directly from our Chinese sales organization would actually think that this is seeing procedure rates at a level that should bring us to what we have been guiding for.

So provided that there is no massive turmoil in the world that is radically weakening consumer confidence even below the current still rather soft levels, I think from my perspective, their assessment of the situation is the best and level on which we can build our modeling. And therefore, I think -- for lack of having better data, I build our projection on this.

So that is basically where the confidence comes from. And last but not least, overall, our seasonality of the business.

So the organization at least is used and prepared both operationally, logistically and then obviously, ultimately, on the sales and service side to ensure that installations are all being completed so that revenue recognition can be taken. Margin expansion [Audio Gap] I mean, obviously, this is the key question that you all have to ask.

Again, I'd say the overall macroeconomic environment is one which makes predictions increasingly harder. Now again, we are all hoping that we get now some stability on the U.S.

trade discussion. And as I'm saying that we can already almost perceived that the U.S.

euro deal is already being opened up again. And so there remains a lot of potential negative impact.

I would, however, say and again, building on the momentum in order entry, building on the rejuvenated product portfolio with the VISUMAX and the KINEVO's and the PENTERO, not to forget and even the ARTEVO. So which you may say, 4 flagship products now rolling into the next year, having overcome their teething problems, I'd say that should give us a somewhat tailwind that ultimately, hopefully, will stabilize our business further.

And then if on top of it, the Chinese overall recovery of the business is getting a bit of tailwind, then I think I could build a bridge to a margin recovery. But as you can tell from the way I'm describing it with a lot of uncertainty associated to it.

And I think there was a question on the IOL equipment?

Yes, I'll take that. It's quite a broad question, so I'll stay at a relatively high level.

I think generally, if you're looking at the IOL market, there are some, how should I say, overarching global realities. First of all, this is a, how should I say, consistent, slowly growing market in terms of procedures at a global level.

But we do not expect any big variances in the procedure numbers at a global level, and that's similar basically also region by region. It's driven basically by the needs and aging population, which is positive, and we just see more and more of it.

And especially, how should I say, in the APAC area, we see an higher increase simply because the availability of the procedure is higher. If we go now more specifically in the U.S.

market, we've had a couple of changes. I think you've probably heard about the CMS reimbursement cut, where it seems we'll be seeing a 3% cut in the reimbursement of Medicare for cataract procedures.

I do not think this is going to have a substantial impact in the market. What it will do is accelerate the general trend in premiumization, which we are seeing and which we are seeing at a global level, where basically we see basically spheric and classical aspheric IOLs getting less and less and less, and we saw more and more multifocals, whether it's bifocal, EDoF Extend all the different kind of more premium lenses have grown.

So this is going to accelerate that trend in the U.S. market, but not generate any fundamental shift.

I think in China, I spoke already quite extensively. So I have nothing to add to my other comments.

Europe, we see the same trend for premiumization, but a consistent solid market in kind of a lower single-digit growth perspective. And then I think where we see the most movement and opportunity is probably in the India market and the rest of Southeast Asia, where -- here we see real growth in the market.

We see the early signs of a shift for premiumization, and this will be very interesting for us in the India market where we have a very strong presence in terms of our commercial teams. But to be honest, with the very low prices, which were existing in India, we were not really playing in that market.

We are now getting on some levels quite competitive, and this is an area we are planning to support in the coming years to get good access to growth in that market. I hope that helped clarify for you the question.

And just briefly on the equipment side, mainly focusing on the U.S. market, what are the latest trends there?

In cataract?

Yes. Just in general, cataract, but also on your diagnostics side, for instance.

I think the U.S. market is extremely interesting at the moment.

There's quite a lot of change going on. I think it's more we see a greater and greater focus actually on the efficiency of procedures, how we can get procedures done in an efficient way.

And it's less of a topic now of pure individual device technology, but actually how the doctors can manage more procedures at a lower cost in a certain period of time. And this is where actually our whole strategy of workflows and digitalization is coming in.

I spoke in our discussion earlier on about Veracity, we see these type of concepts and options which are seeing a very keen uptake in the U.S. market as actually the health care providers are really trying to increase their efficiency as they move along.

I have two, please. I guess just first on microsurgery, so the margin was quite low in the quarter.

Could you just quantify a bit sort of the different impacts? I think it was mainly product mix, but how much did either tariffs or FX play a role as well?

And then how should we think about the evolution into next year? Can we expect this to return to the 20%-plus margins we've seen historically?

And then second, on Veracity and sort of digitalization, you guys have been very successful as sort of a leading player in cataract digitalization. Can you talk a little bit about how you plan to monetize that and sort of what's the avenues for monetization there are going forward?

Susannah, it's Justus. I'll take the MCS part and then maybe, Max, do you want to then take the Veracity question.

So on the margin decline on MCS, I would pretty much say it's a mix of the factors that you mentioned, where the most important impact is, of course, the product mix, where we simply have seen, in the first half of the year, a very slow entry of the premium class, KINEVO 900 S, mainly a portion of the mix. Then I'd say in the total margin reduction that you see, that is clearly representing more than half of this reduction.

The remainder, I'd say, pretty evenly spread between the factors that you mentioned, foreign exchange, tariffs. And then last but not least, we do have the amortization kicking in for the IP that we built on KINEVO, and obviously, that in the first 9 months of the year has not yet seen the representing -- or the, let's say, corresponding revenue and margin contribution.

So that was weighing somewhat harder. And so all these factors together are basically the reason for the reduction.

The return to 20%, I would say the answer is yes, we would see definitely that this business can return to the margin and with the order book building up [Audio Gap] and referring also to my answer to Falko on the margin expansion going forward, then clearly, MCS is expected to be a key contributor to the margin recovery, yes, definitely. And Veracity, Max?

Yes. I'll expand also a bit beyond Veracity because in the end that question is valid for a complete digital strategy.

And as you know, one of the major cornerstones of our strategy and our digitalization strategy is the development of workflows, which we are bringing in one after the other. Veracity is part of that strategy.

We've had FORUM, how should I say, as a product for a long time in the market, but we're in the process of upgrading and expanding it. So you'll be hearing more about that later.

Similar topics on the cataract workflow with EQ Workplace, or for example, also in refractive and tumor workflows. So fundamentally, your question was how does this tie-in in terms of monetization?

For us, we see 2 major avenues. One, how should I say, is the direct avenue, which is actually how do we directly monetize these services and products?

And this, we are doing a big push in terms of pushing for subscription fees. Historically, ZEISS had either been giving this away for free, partially because the products were not completely finished or didn't have yet, how should I say, the capabilities or the feature set to be able to ask for price.

This has now developed. So we're going from onetime sale or free of charge into subscription models.

We've seen this is functioning very nicely, in particularly when doctors see that they have an improvement in the efficiency. So this is the one direction we're looking, which is what we're going to be doing across all our digital product lines and across the globe with varying speeds depending on, how should I say, the maturity of the markets we're in and also the level of approval and/or feature set, which we have in those products.

The second one, which I think mustn't be underestimated and which is extremely important is as we become more and more, in all of these single applications, a complete supplier and provider across not only the diagnostics, the instrumentation, but also the consumables, the whole workflows and digital is actually the glue, which is sticking it together and adding value for the practitioner to say, "If I stay within the ZEISS ecosystem, I'm much better off and much more efficient." And so there's an indirect impact.

We see this not on Veracity, I don't have numbers on that, but [Audio Gap] for example, our experience in Germany, if I have a FORUM installation, on average, within that topic after having installed FORUM, I fell double the number of diagnostic units into that. So because you get added features based on basically a single-standing unit, it becomes much more attractive for customers to stay within the ZEISS ecosystem because they get added value out of it.

So this is not a direct monetization, I would say, of the digital strategy, but it's a very powerful indirect one. It's the same if you're looking at the EQ Workplace with CALLISTO eye, you have all the options to be able to actually do the right selection of a lens and you have an advantage if you use the ZEISS lens.

So the whole topic, it comes and ties together, thanks to the digital strategy. And this will be a very big driver for us in basically not only gaining new customers, but actually getting a larger share of wallet of the existing customers, which from a business perspective, obviously, is basically reducing your go-to-market cost because actually with the same amount of sales outlay and presence, you actually have more products to be placing in there and you can generate higher margins at lower cost.

I have got 3, but at least one of them should be quite quick. Can you just confirm, there's a few questions from investors this morning, on that FX comment you made, just like absolutely confirm.

The guidance for 2025 is based on the rates that you're seeing today, you're only flagging that if rates were to get worse, that would be a risk. Just to confirm that.

The second question then is just the -- you talked about a real focus on improving equity performance kind of things like margins and how you approach the commercial reality of the business. Should we expect an update on that in Q4?

And is that really about maybe streamlining what you're doing in terms of R&D, for example, and taking that percentage of sales down? And then lastly, just when I look at the comments Justus just made around coming in at the lower end, so say, EUR 250 million for this year at adjusted EBITA.

I've got consensus [indiscernible] like EUR 315 million for next year. I'm just thinking incrementally, you have tariffs, you've got FX and Chinese markets, based on what you're saying in terms of the growth outlook, it's unlikely to be double digit or anything like that.

So I mean, is it probably sensible to think about next year as a similar sort of guide to this year as at least flat to slight growth to start with, given the risk there?

Graham, Justus here. So I'll take the first and the last question and then hand it over to Max.

So again, to confirm on the FX guidance, we have included the 115 there as the base for the guidance that we gave. So therefore, just confirming again only if there is major deviation from that, that will be an additional potential downside.

On the -- your question on guidance for next year, quite frankly, I'm not yet willing here to comment on next year. I think from the statements that we made so far, you can already draw your conclusions that I think the still prevailing uncertainties with regards to U.S.

trade tariffs, with regards to China, I think at this point in time, we'd rather wait until December before we have there a bit more clarity on how things are ultimately coming out. And on that, I think we can give a more meaningful answer to your question.

And with that, I'll hand it over to Max.

Yes. Thanks for the question.

And indeed, I think you've highlighted it, if we look in the last couple of years, we've had substantial outlays in R&D costs that's quite visible in our P&L. And kind of as I've come in on board and have been going through the teams, running through the projects, what I'm realizing, to be very honest, is there's a whole bunch of very good innovation in the pipeline.

There's also quite a bit of -- I wouldn't even call them Horizon 3, but basically Horizon 4 and 5 topics where I have my doubts on the direct, how should I say, efficiency and return on investment of them. We've probably got a few too many balls in the air at the moment right now.

So we -- I think the topic is you called it streamlining R&D, I would call it more prioritization. I think we've got a topic of even if we slightly reduce the R&D outlay is put more money and bigger focus on products or projects, which have direct returns, and which will have a clear and visible impact on our P&L in the short, mid and longer term, and we will probably have to and we are going to stop a few topics, which I would say are more engineers playing around.

And we don't have time and opportunity for that. It's our duty for you to bring the profitability in the market, so that's what we'll be focusing on.

Pretty well spotted there.

All of my questions just are on VISUMAX, especially in China. So just going quickly through all of them.

So how many of this 50 that you guys installed this quarter were replacements? And then my second question is, is it correct that around 20% of the China VISUMAX cases -- sorry, on the new VISUMAX 800 installs, is it correct around 20% are SMILE pro, and where should we think this number goes?

And then thirdly, do you think the SMILE pro premium versus normal SMILE on VISUMAX 500 is sustainable given there are other lenticular extraction products being launched over the next 12 months? And do you see any negativity on pricing in that gap?

Okay. Let me -- so all of the VISUMAX 800s we are currently installing are extra capacity and are not replacement.

So we're not pulling out a 500 and putting out an 800. The installs are currently with our biggest trusted customers who have a clear, how should I say, pricing and positioning strategy.

The way we are going in China is clearly differentiating the market. So we are not planning to do a phaseout.

The VISUMAX and SMILE pro -- and with the VISUMAX 800, you only do SMILE pro and with the VISUMAX 500, you can't do SMILE pro. So there's a clear differentiation in terms of patient and customer benefit and also of pricing and it's part of a segmentation strategy of the market.

And basically, the SMILE pro is the optimal tool for our customers to be regaining -- or counteracting price erosion, repositioning and capturing the segment of the market, which have a willingness to pay. And the VISUMAX 500 and the LASIK, we now have the flexibility to reposition and fight against the competition wherever it's coming so that we really make sure that we're using, how should I say, the complete breadth of the market.

And this is -- this is being very much appreciated by our customers, and the uptake is very clear. This is, by the way, not only a strategy, we are running in China, we're running this strategy in quite a few other APAC markets also, and it's been quite successful.

Does that answer your question, Dylan?

And just my other question was just on the SMILE pro cases. So it looks like there's actually a decent amount of SMILE pro representation overall of the total, let's say, so how should we be thinking about that number in the whole?

So it's roughly 1% of annualized cases, I think, right now, but maybe could it end up in double digits, [ 2 plus 1 ]?

So our conversion rate right now is about 30%. So on sites where we've put VISUMAX 800, we -- in our initial assumptions, we were running with lower adoption rates and actually -- I mean, and these are early days, I'll be very honest.

But we're seeing -- and specific customers but we're seeing a higher adoption rate at a higher price point. So clearly, we see, how should I say, SMILE pro taking a substantial portion of the market.

You're not talking single digits, you're talking higher double-digit numbers.

Understood. And just getting back to that, just a clarification on the competition.

So if the competitors in lenticular come in, basically, your, let's say, more -- less encumbered because of SMILE pro to compete with them on normal SMILE on the VISUMAX 500?

You're going very much into detail here, but you can imagine, of course, if we've got several lenticular extractions, we've got a much more leeway to react in the market and counter competition.

The first one, you talked about offsetting U.S. tariff impacts with price.

I just wondered, are you confident you'll be able keep stable or grow orders, whilst also increasing price in the U.S.? In which areas of the portfolio do you see the most scope of pricing increases, given you tend to be at the premium end pricing-wise anyway in the U.S.

market? And are there any other tariff mitigations you can put in place other than price as well?

And then just a follow-up on the question on the STAAR acquisition. You said ICL was a complementary to refractive.

I suppose, is the ICL market an area you'd ever want to get into yourselves, given your strength in refractive? And then are there other M&A opportunities out there that you could look to do?

Sam, Justus here. I'll take the question on U.S.

offsetting the tariffs. Number one.

Yes, I think especially for our flagship products, ARTEVOs, KINEVOs, we clearly think that we have a market positioning which allows us to increase pricing. And with this 15% tariff that we speak of about considering that we already had a first round of price increase a couple of weeks ago, anticipating another one for most likely beginning of the next fiscal year.

So with that, I think we feel they're comfortable. In the diagnostics area, please remind that these products are mainly built in Singapore.

Therefore, the EU tariffs do not apply. There we are talking, if I'm not mistaken, about 10%.

And then again, you have to bring that in perspective that most or key competitors in that field are also located in Asia so that we don't think that we have a relative disadvantage. So by and large, I therefore say we think we can somewhat hedge that impact for the next year.

I'll take your part of the question on STAAR Surgical. So yes, indeed, this is complementary, and this has always been, how should I say, a segment of the market which, at ZEISS, we've been looking at very closely.

As you know, we don't comment on any potential acquisitions or any, how should I say, R&D projects we could have which are not yet ready for launch. But let me say that we are constantly looking at the market.

And in parallel, we do have internally the capability to develop an ICL. I won't go further than that.

I have 2 questions. The first one regarding Americas.

In the first half of the year, you reported very solid constant currency organic growth, probably in the region of around 10%, while in the last quarter, you reported a significant slowdown with growth down, I think, around 3.6% year-on-year. I want to understand why such a weakness in the U.S.

market? And what is the outlook for the rest of the year?

And the second question is a follow-up on the very weak Microsurgery margin. You reported around 3% EBITDA margin, which is, I think, all-time low, I don't remember a margin in this division as low as, as in this quarter.

It's difficult to understand just the product mix causing such a big negative impact because otherwise, this will mean that part of your products are currently loss-making. I want to understand what is the outlook for the last quarter of the year, also considering for the positive seasonality that typically you enjoy in the last part of the year, if we could assume around the 20% margin of Microsurgery in the last quarter of the year?

Davide, Justus here. I'll take this.

So the -- your question on the slowdown in the U.S., you have rightfully pointed it out and the reason is pretty obvious: The Liberation Day announcement was April 2 and that, of course, has affected predominantly then in the weeks thereafter, some of the order placement behavior, because most people were basically holding back and trying to get first clarity what ultimately will be the applicable rate. And to answer your question completely, since we have now clarity on the situation, we do see a very strong momentum again in the U.S.

orders. So basically, we, I think, can pretty much confirm that this uncertainty was the reason for the lower Q3 numbers.

On MCS, your question with regards to the outlook for the remainder of the year. I can only reiterate, the order books are full, have been extremely dynamic in terms of orders being booked, especially in the last 8 weeks, including the U.S.

It's now basically up to convert it, and then we have the benefit of the higher per se margin on these premium products plus the operational leverage that we just didn't have in the previous quarters, and that should actually put us in a good position to reach, if not 20%, but then very close to 20% margins going forward now.

Just building on a few questions from earlier. The first one is on this year's guidance.

Can you please confirm what's now included? I mean previously, new launches were supposed to add to the top side of the guidance.

Now is it fair to assume that potential upside we would get to the guidance from new launches, including VISUMAX and KINEVO is almost proportionally offset by the FX and tariff headwinds? And then on the tariff headwinds, how should we think of tariff headwinds going into 2026, given when your new pricing will kick in?

And what are the assumptions you've baked in? And the second one, and sorry to follow up on 2026, I appreciate you can't give us full guidance, but just trying to understand when we're building the bridge for next year, our understanding from your earlier comments was that there will be tailwinds from new product launches and there's an element of expected market recovery.

But then on the flip side, there could be headwinds from tariffs and macros going forward. Have we missed anything else in building that bridge?

Anchal, Justus here. Let's answer the last one that you mentioned.

No, I think we haven't missed anything particular, at least nothing that I'm aware of today. The assumption on tariff impact for '26, that is actually, again, if things stay where they are, we think that we can pretty much compensate with the price increase that have already put in place and the ones that we are intending to put in place soon.

And on your first question, yes, indeed, ultimately, you have already given the answer in your question, the upsides that we had mentioned were the China launch for the VISUMAX and the U.S. launch.

The U.S. launch, as we all know, didn't materialize.

The China launch happened and of that, we are very happy. On the other side, we have now the double-digit million headwinds from both the tariffs and the FX, and that is basically, again, bringing us back to the statement on the guidance that I made earlier.

I think that's, in a nutshell, the answer.

And just a follow-up on your question on 2026. It sounds like the tariff headwinds you could manage them.

So what would be making you a bit more nervous on providing a -- or expecting a decent margin recovery just on the back of new product launches? We are just trying to understand what the potential downside risk could be to next year's numbers given consensus is looking for around 140 bps of margin expansion for next year.

Anchal, I think I said it earlier, it's to me, there's so many uncertainty right now on the global economic climate, the retaliation, potential retaliation to tariffs. We are not even yet clear on the full impact on the tariffs on the supply chains, which we haven't actually discussed at all in this call, but that also may provide for some other factors that are playing into our margins.

And without having that totally cleared out for me, I really don't want to start, in early August, a discussion about margins 12 months from now.

That's totally understandable. It was worth a try.

Maximilian, thank you very much for the high-level strategy update, and I'm looking forward to hearing more in December. I just wanted to pick up on one of the comments you made, which was highlighting your intention to strengthen investment in growth areas.

And my question is, how should we think about funding that incremental investment? Is it a case of moving costs around your P&L or should we think about 2026 as a year of outright investment to reignite the top line growth?

Okay, thanks for that question. So clearly, the former, not the latter.

So we're not planning, how should I say, a massive boost. I think if you look at our cost position right now, it's higher than where it should be.

So it's a topic about reallocation of resources in the right areas.

Okay. Thank you, everybody, for joining our call, and we look forward to reconnecting with you in the weeks and months ahead, and in presence with some of you potentially on December analysts conference.

Thank you very much.

Thank you. Bye-bye.