Yes. Good morning, everybody, and thank you for joining our 6 months '22/'23 call.

I'm Head of Investor Relations of Carl Zeiss Meditec. And with me, as usual, are our President and CEO, Dr.

Markus Weber; and our CFO, Justus Wehmer. And I will pass over to these gentlemen now to give you some prepared remarks.

And afterwards, we look forward to your questions. Markus, please go ahead.

Yes. Thank you, Sebastian, and also a warm good morning, ladies and gentlemen, from my side.

Welcome to the [ 6M ] '22-'23 Analyst Conference of Carl Zeiss Meditec AG. So let's go to the agenda.

Let's have a brief look. So first, I will start with an overview of the results.

Then Justus will give you a more detailed view on the financials. Afterwards, I would like to introduce some highlights at the ASCRS trade show that just took place over the last few days.

And finally, as usual, also an update on our outlook for the current fiscal year. And then there will be time for you to ask questions.

And we are happy actually to answer that. So getting started, the results.

As we had informed you in our Q1 report and with our pre-release on April 19, in the first 6 months, we faced a very challenging environment with a weaker procedure trend in China due to the COVID change for most of the period, a slower-than-expected recovery of supply chains and amid rising interest rates and rising expenses. Our strategic investment in marketing new products as well as innovation such as digitalization continues.

And sales and marketing and research and development expenses remain on a high level. Towards the end of the period, things began to turn around.

China demonstrated a recovery during the month of March, in particular. Supply chain conditions are improving, so some operational challenges that still persists.

Despite all the challenges, I'm very pleased to report a very satisfying 6 months' results. In the first 6 months, the revenue reached EUR 975 million, a year-on-year growth of 14%.

Constant currency revenue reached EUR 961 million, a year-on-year growth of 12%. Growth was achieved in both SBUs and all regions, in particular, in Americas.

The device business demonstrated a very robust performance and outpaced the consumable business. Order backlog has been slightly diminished but still on a high level of roughly EUR 570 million, on which we are ramping up capacities and anticipating a faster progress in the second half of the year.

EBIT margin dropped to 14.8% from 20.7% in the prior year as a consequence of weaker product mix and higher investments. Adjusted EBIT margin was at 15.3% compared to 21.2% in the prior year.

Our net income reached EUR 130 million, benefiting from positive currency effects on our hedging contracts, corresponding to earnings per share of EUR 1.26 versus prior year of EUR 1.44. Also the recovery towards the end of the period hasn't fully been able to compensate for the weak start to the year.

Product mix is still not as favorable as last year, conversion of order backlog not yet fast enough and our outlook on the remainder of the year is positive. And we expect an acceleration of business.

So with this, I would like to hand over to Justus, who will provide you with more background and will discuss the figures in more detail.

Yes. Thank you, Markus, and good morning, and welcome also from my side.

As Markus said, I'm now going to give you a more detailed overview of the financials, starting as always with the performance of our SBU, Ophthalmology. So yes, revenue came in with EUR 743 million.

Compared to prior year, the reported increase was 14% and at constant currency, 12%. Growth was mainly driven by our devices business as supply chain situation was improving.

Towards the end of the period, our deliveries accelerated and the order book remains still strong. Also, consumable sales managed to grow in a difficult environment.

But here in the first 6 months, mainly driven by our IOLs. As Markus mentioned, we clearly see various factors which affected the EBIT margin, weaker product mix due to the slower consumables growth compared to equipment; heavy investments in strategic R&D projects such as digital, surgical ophthalmology, regulatory affairs; also increasing sales and marketing activities, such as physical trade shows, advertising and travel.

As a consequence, Ophthalmology EBIT margin declined quite significantly, 7.1 percentage points compared to last year, to 12.3%. Let's look at MCS.

MCS, again delivered a solid performance with revenue of EUR 232 million versus EUR 204 million in the previous year. This represents a revenue increase of around 14% and at constant currency, roughly 13%, which is a strong result, given the supply chain constraints.

Our order book also at MCS continued staying at a strong level. Gross margin slightly improved year-over-year despite rising procurement costs.

Manufacturing efficiency was strong on that high volume and exchange rate remained favorable. And we are beginning to see a slight benefit also from better pricing.

EBIT margin here is still at a healthy level of 22.6%, down 2.3 percentage points year-over-year, primarily due to higher OpEx, especially R&D investments weighing on the EBIT margin. So let's look next at the regions.

All regions contributed to the growth with the strongest momentum, and this is noteworthy, this time from Americas. Americas achieved sales of EUR 271 million, which is an increase of 28% or at constant currency, 19%, among which the U.S.

delivered 23% growth. Primarily, as you know, this is attributed to our devices business, where we had a good conversion of our strong backlog.

But also Latin America, notably Argentina and Mexico, grew significantly above 50%. In EMEA, we noted revenues of EUR 247 million, an increase as reported of 8%, which is the same, currency corrected.

Core markets remained stable whereas Southern European countries demonstrated stronger momentum. Here, Italy, Turkey but also Switzerland were the highlights.

Yes. And -- but last but not least, Asia Pacific, we achieved revenues of EUR 457 million, which is roughly a growth of 10% and exchange adjusted, roughly 11%.

China, including Hong Kong, grew slightly. And that's, in particular, due to the positive strong momentum towards the end of Q1.

India and Southeast Asia also had strong performance. And Japan and South Korea are slightly down year-over-year.

Just keep in mind, as we have reported before, that in South Korea, we see a reduction of our premium IOL business resulting from the change in reimbursement policies. Now with that, let's have a look at the P&L.

We noticed a lower gross margin with 56.4% compared to previous year, dropped by roughly 2.2 percentage points. And this is due to the higher portion of device business and the relative slowdown of consumable sales due to the difficult first 4 to 5 months in the Chinese market.

The reasons, first, the lockdowns and then the infection waves that swept through China. OpEx are notably higher, mainly impacted by strategic investments.

Sales and marketing expenses are higher. We have expanded our sales force, particularly in the surgical ophthalmology markets in North America.

Most of this expansion had happened in fiscal year '21/'22. We are also working on several growth initiatives in both the surgical ophthalmology and refractive laser, including investments in product management, marketing and similar sales support functions.

But maybe as high as the surge appears, if you look at the absolute figures, let me remind you that the sales and marketing ratio actually with this is still 2 to 3 percentage points below our pre-COVID levels. R&D significantly increased due to continuous investment in strategic projects, mainly in the field of digitalization, such as cloud and software development, to build additional features for our workflows, IOL development and rising regulatory sales costs.

Price adjustments have been implemented across most of our portfolio. But effectiveness is somewhat delayed due to the still elevated order backlog and long manufacturing times.

EBIT of EUR 144 million was below previous year's level of EUR 177 million as already shown and explained by Markus. EBIT margin is at 14.8% compared to 20.7% previous year, also already mentioned before.

Yes. A quick look at the adjusted EBIT margin, which was 15.3%, below previous year's level of 21.2%.

And as you know, it's rather small effects related to purchase price allocations, related amortizations on intangible assets in connection with the acquisitions at earlier periods. Yes.

And then finally, a short look at the cash flow statement. Operating cash flow declined to EUR 48 million versus EUR 75 million previous year due to change in working capital, primarily arising from the ramp-up of safety stocks in light of still tense supply chains.

Cash flow from investing activities mainly includes payments for property, plant and equipment. As you know, we have many expansions ongoing of our production capacity for both IOLs and treatment packs basically all over the world.

Intangible assets here, especially R&D capitalization, and acquisition-associated payments are also included in these investing activities' cash flows. Cash flow from financing activities are mainly influenced by changes in receivables and payables against our treasury accounts.

Net liquidity continues at a high level of over EUR 743 million. Please note that the dividend payment of almost EUR 100 million happened in Q2 this year versus in Q3 last year, which is the main reason for the reduction in liquidity.

Yes, thanks for your attention. And with that, Markus, I hand it back to you.

Yes. Thank you very much, Justus, for the detailed view on the financials.

Now I would like to share some highlights with you from the recent ASCRS trade show as already announced. So at the ASCRS trade show in San Diego, which took place during the last few days, we presented very exciting innovations.

Front and center is the launch of our CT LUCIA 621P Monofocal IOL, now being rolled out, and actually, we already announced it to you last time, in the U.S. market.

CT LUCIA is a very well-established product family in several of our large European and Asian markets. And we are very excited to make it available now for U.S.

surgeons and patients. So CT LUCIA comes in a fully preloaded injector for an intuitive, smooth and controlled injection.

Additionally, the architecture of the IOL is designed to enable easy centering while maximizing direct capsular contact, thus ensuring stability and supporting a consistent position in the back. The underlying market size for monofocal IOLs in the U.S.

amounted to EUR 3.7 million surgeries last year. While it will take time to establish our presence, we are excited to open up this new large market for our consumables.

We are also celebrating a new milestone with more than 7 million eyes treated with SMILE worldwide, building our leading position in laser vision correction industry. Furthermore, we presented VISULAS YAG laser as a modern and compact laser workstation that offers high-precision treatment for safe and effective care following cataract surgery and glaucoma treatment.

As well as a diagnostic device, ATLAS 500, the next-generation corneal topographer capable of the imaging and measurement of the cornea for assessment of various pathologies. The ATLAS 500 provides an intuitive and well-organized interface for efficient operation and workflow-optimized visualization.

It integrates into both the corneal refractive and our cataract workflows, so very important as one of the cornerstones of our digital workflow. So following the additional cataract workflow we presented at earlier analyst conference, these products are further completion of the ZEISS Medical Ecosystem, help enhancing our ophthalmic care within the cataract and corneal refractive workflows for improved diagnosis and treatment efficiency of surgical patients.

So I think a lot of quite exciting news. So let's come now to comment on our outlook for the current fiscal year.

In the pre-release of April 19, we refined our guidance. For fiscal year '22/'23, revenue should reach around EUR 2.1 billion compared to the first half year.

This implies a significant ramp-up in our device business. We are confident in our outlook for future growth beyond the current year as well as we estimate the market-shaping trends to be still fully intact with the aging population, growing numbers of cataract surgeries, acceleration in prevalence of myopia and the need to drive both efficiency and quality of outcomes of treatments.

EBIT margin is projected between 17% and 20% for the current year as strategic investments remain on a very high level. Yet due to the acceleration in revenue, we expect to see some operating leverage in the second half when compared to the first half.

This year and beyond, we continue to see great opportunities to reshape the market by driving our innovation strategy forward and further expanding our offering of workflows and consumables. This will require continuous investment in R&D but also sales and marketing.

With that, we have come to the end of our prepared remarks on the financials. Let me pass it back to the moderator to take your questions.

Thank you so much.

Three, if I may. The first one would be on China.

Can you just give us more color on the operating trends you currently see? First, on refractive, you indicated that there was a pickup in demand towards the end of the quarter.

Is that already stocking for the summer period? And also with the opening of China, have we seen any kind of improvement in terms of demand for the hardware business?

Secondly, on the volume-based procurement, can you just provide us any kind of color on timing of procedures that are related to the introduction of VBP for intraocular lenses? And also, have you seen any impact on local demand for IOLs in China already?

And third question would be on OpEx. I mean, we have still seen a significant increase, 26% increase, in OpEx in the second quarter, even 32% for sales and marketing.

Can you just be a bit more specific what we should expect for the second half? I guess, comps may get a bit easier but not sure how much of cost inflation has already fully impacted your P&L.

And you already talked about that the sales and marketing ratio may further went up. So any kind of color where you expect OpEx growth to be in the second half?

Yes, thank you, Oliver. And this is Markus speaking.

So maybe I'll start first and then I will hand over to Justus to give you then the financial details. So maybe starting first with the OpEx and the OpEx development, as I already mentioned and highlighted and also Justus highlighted, we will continue our investments in sales and marketing and R&D, especially here in digital and in the workflow solution development and engineering.

And this has an impact not only in R&D but also in sales and marketing because this is a full transformation of the market also of the business models. So that really means we will be offering a full solution to our customer.

This has an impact how actually customers are approached by sales, especially also the big chains but also how we cover that with this service. That's one thing.

The other thing, in terms of digital, we have already heavily invested in that. And we see that the outcomes of the service and also the first installation shows us that there's a huge gain in efficiency and also in terms of outcomes, stability and quality that actually gives us a good indication that our market-shaping investments are well done and that there will be, in the mid- to long term, a good return.

So that means, Oliver, that especially in R&D but also in sales and marketing, our investments will stay in a high level because we want to shape the market. And definitely, we want also to keep the innovation pace to make sure that we still win in -- also in emerging countries, but especially also in countries like China, as you know, with all the decoupling and geopolitical challenges, where innovation is, from our point of view, to keep a good presence in the market.

And with this, we come directly to the VBP. So VBP is, to be honest, nothing new for us.

Because VBP, at least on a regional level, this is already something what we are facing, especially for monofocal IOLs. This is also mainly on monofocal IOLs, which has pro and con.

So it's not only disadvantages. This gives us also opportunities because it's a little bit winner-takes-all approach.

So from this point of view, when you're well positioned and when you have a good price level, this helps. Especially also, it helps to tighten and actually to shortcut the distribution chain, which is also actually gaining or actually brings some cost advantages to us.

So having this said, so there will be definitely VBP coming up. And we will prepare on that, not only in terms of how to position ourselves but also how to ensure that when the VBP comes for us that we have the capacities to satisfy the demand of the market.

Because as I said, then the winner takes it all so that means big tenders will come in. And then COVID, so COVID -- so as Justus and myself, as we already mentioned and highlighted, so there was -- from a COVID point of view, there was a change.

Because we actually expected from the beginning that COVID -- that there will still -- zero-COVID strategy in politics will remain for at least for the year until COVID is penetrating somehow into the country. And this was the reason also that we increased the stock level to ensure when there are lockdowns to cover that.

So there is a change in the policy by Xi Jinping beginning of the year. So that actually, he opened the entire country at a sudden.

And then a big infection wave came through China, and especially during Chinese New Year. And that has created, I would even call it, a kind of black swan event because it was Chinese New Year.

Chinese New Year means always that people go to the hospital, especially then for ophthalmology procedures. And most of the people were sick and were not able to go there for procedures.

And that was actually then the reason that Chinese New Year, the peak season for us in our consumables business, was not as high as normally. And that actually also triggered then the [ drop ].

So having this said, we believe that by end of now the second half year, that things are going in the right direction. So that actually, everything is now settling down.

We see that this is actually already happening. And nobody of us can really predict what will happen because VUCA world is just increasing.

But overall, we are quite positive. As Justus mentioned, as I mentioned in the outlook that there will be EBIT and profitability recovery.

So Justus, if you want to add?

Yes, your OpEx question, Oliver, I think two things to mention. The inflationary pressure, especially as far as it concerns the payroll, I think there, we should have seen most of the impact, just assuming that overall, the inflationary trends seem to somewhat at least now go sidewards.

And however, for the second half of the year, as you know, our historical patterns are that we typically have a higher expense in sales and marketing in Q3 and Q4. That has to do with there's a lot of variable cost factors associated with commissions and so on.

So the stronger revenue quarters also therefore incur higher sales and marketing expenses. We clearly will see that again this year.

And we also have a bit of a second half year's good curve in our trade shows. And therefore, we also see that typically each year giving a bit of a peak in the sales and marketing expenses in the second half of the year.

So that would be my answer to your question.

Okay. Can I just follow up?

So on VBP, do you have any kind of color on the timing when it's going to initiate? And do you see any impact on IOL demand in China already?

So Oliver, it's -- and Justus, you can definitely second me. So as I said, so we see currently, on a regional level, there is already VBP happening.

So this is not new. On a national level, if this really comes, then this is still open.

So we have not a full indication that this will be rolled out on a national level. But if this would come, we would assume that this would come in '24, '25, somewhere in this regime.

But again, so this is -- in China, I think the things that we learned in China is especially that there's always a lot of changes. So that means there's always adoptions.

And we have seen this in the past. And the challenge or the opportunity for companies like us because we are very well established in China, which is also an advantage is then to react fast on these challenges and then to turn it in an opportunity.

And that's exactly what we do. So that means we are preparing now with our manufacturing in Guangzhou.

We are preparing ourselves to be well established in our -- in our national -- in our local production. We are preparing ourselves with local production capacities in Shanghai and also in Guangzhou to ensure that we can build in local products with local policies.

And we are also looking for joint ventures.

First question is also on China. We're hearing from some companies from the med tech sector that local competition and product copying in China is currently increasing.

And so how do you see the risk that China companies are going to copy your previous tech for a refractive laser? Or do you have some technical barriers like a specific -- a tech-specific coding which makes sure that the [indiscernible] work with Carl Zeiss [indiscernible]?

First one. The second one is on Microsurgery.

And how do you see the current environment for Microsurgery products in hospitals developments? In most Western countries, the cost pressure is increasing especially with the wage inflation currently?

Okay. So maybe coming first to the concern of local competition in China.

And I don't know, do you want then to take the second question if this is okay? He's nodding.

Okay, good. So the first question, RTP, so first of all, yes, there are local competition coming up.

And I think that, for all business fields and markets in China, this is always the underlying plan. So this is also true for med tech and the medical technology market.

Having this said, and that's exactly what I said before, I strongly believe in innovate or die. So that really means to keep the innovation pace and to make sure that we come up with new innovations, which are so appealing and attractive, that we are very well positioned and that is not easy for local competition really to keep that pace.

And this is not only in technology, be aware of that especially in refractive laser correction, that application knowledge and applicators' knowledge of the [indiscernible] is super important. And we have a very strong, very good network, where we have a good understanding what's the job to be done and how we can convert that in technologies, in workflows and workflow solutions.

That the entire ecosystem, combined with the respective devices, makes it so unique for us. That's the one thing.

The other thing is, indeed, we have a strong IP portfolio. And the team is continuing to work on that.

And that's also the reason that for the current competition, not only in China but also worldwide, it's not easy to catch up because of, first of all, application knowledge but also because of our IP situation, which blocks our competition to penetrate in technology. And thirdly is actually that we also have license and license codes so that when it comes to treatment packs that it's not possible now to copy these treatment packs and to use it with our VisuMax.

So that really means that our VisuMax has a hard coding to the treatment pack and a clear license program so that we can cover that. And Justus, concerning [indiscernible], I would like to hand over to Justus.

Yes. Honestly, Sven, can you repeat your question?

I'm not sure whether I fully got it. I understood that you are concerned whether tenders may kind of be kept in terms of pricing and that this could put pressure.

If you could maybe...

No. The question was rather, we have a lot of wage inflation going on in the hospital sector.

There's a lot of cost pressure on hospitals. And the question is does this impact the spending for your Microsurgery product in any way?

Yes, okay. Thank you.

Then I totally misunderstood it. So I mean, what I can tell you is we don't see that in our project pipeline and in the order book.

So far, that's the short answer to it. I could elaborate.

But if that's your concern, that basically the hospital budgets for hardware investments are kind of cannibalized due to the wage inflation, it's not an issue that we see on a global scale. And let's also remind you that maybe it's a bit of a German discussion, too.

The German market is an important one for us. But it is not the most meaningful for the overall growth of MCS.

One, on the order destocking piece, you have quantified, is it a few Qs ago, how much more do you think we have. And second, on VBP, please, you've already mentioned that you went through national VBPs over the few years.

Can you maybe give us some color on whether that led to the elimination of distributors in the middle segment? And what kind of margin impact that had?

And do you think that can be replicated on a national level? And one more thing related to that, given your current market share in China, how much more upside could you do with and without a joint venture in terms of capacity if you were to win the tender?

Okay. It's me, Markus.

Unfortunately, it's really hard to understand you. So we will try our very best to answer it.

Otherwise, please correct us and give us maybe a better indication whether we are on the right path, what you would like to know. So what I understood now in VBP was that you asked, is this -- do we see a kind of margin erosion in the VBP currently, which may affect this -- or which would be increased by a national VBP?

So the VBP, as I said before, has advantages and disadvantages. And I think what we see is that the distribution channels, what is normally necessary to go to the customers and actually to activate it and then maybe to go to dealers and so on, it's shortcut.

So that means our sales and marketing expenses are reduced. On the other hand, the selling price, because of VBP, is also reduced.

So that means that's a kind of competing effect. And for us, what we see -- and Justus, you can give then more detail.

But we don't see now a big margin erosion in this regard. But more to come because it's now really a process which is just established.

And we will see how this will continue. But once again, we really believe that we are very well positioned also with the partnerships and with the local production.

And be aware of, we are the only Western company who has a local production here. And from this point of view, we are well positioned for the future, not today but for the future, to be able to serve this important market.

Yes. I mean, the only thing I can add is that, factually, I can confirm that the VBP that are already in place have not been at our expense, so to speak.

And checking our margins on those products, we clearly can see that we have been able to defend them. However, at the same time, going forward, there's still a lot of uncertainty on the modalities on these nationwide tenders will work.

And let's look at it once we have more details on this. So I don't rule out that for a nationwide tender, of course, the impacts might be bigger.

My biggest concern is rather if it is a winner-takes-it-all kind of tender, then the question is how do you operationally prepare for that? I mean, we're talking about China.

So I think everybody understands that this is massive if you win such a tender. It's also massive if you lose it.

So I'd say that this impact is potentially even more meaningful than the question how much margin we may lose once we win a tender.

Okay. And so please forgive me, but can you repeat the other question again?

It was really hard to understand.

Sure. Sorry for the disturbance a moment ago.

The other question is on destocking. You've given us a number a few quarters ago.

How does that number look now? And actually, my first question was you understood pretty correctly.

Thanks for the answer. Just wanted to check if national tenders override the previous regional VBP deals.

Okay. So maybe...

Yes, on destocking, I think you're referring to the RTP stocking. I think we are slowly progressing.

As I said, pickup in the Chinese demand was mainly only kicking in late in the second quarter. So that's why I say by now, there's only a minor change.

But the second half of the year is the more meaningful one with the higher summer peak season. And I think we can have a more meaningful update once we are behind that.

Yes. And concerning the VBP and the national versus regional tenders, so as I mentioned before, so we have not seen national tenders so far.

But the regional tenders are increasing. And it might be the Chinese government sees that this is not efficient and it's not supporting their strategy, then it can really happen.

We have seen this also in the past that they are changing this directly again. So I would not say that this is written in stone that it will happen.

And again -- and Justus mentioned that very nicely, so the biggest challenge for us is this winner-takes-it-all thing and then -- in both directions. Because on one hand, if we don't make -- if we don't win, then it's bad because then -- at least some of the IOLs because it's also clear, it's not all of the IOLs.

So we are talking about the governmental-funded IOLs, not the private-funded. And 50% of the business goes actually in private hands.

So that's the one thing. And the other thing is then that when we don't get the business.

The other thing is if we get the business, then we need the capacities. And that's the reason that we are building up capacities around the world actually to have a full network that we can provide, let's say, stability.

Some of the countries have peak tenders coming in because of the change of the procurement of these things, so could also, for instance, happen in India and other big countries.

I have two questions on China. The first one going back to VBP.

How likely do you think that the refractive laser business could also be included at some point? And is there any sort of indications for that at this point in time?

Then my second question on China is can you provide a bit more color on procedure growth at the beginning of Q3, so in April essentially? Then my third question is on your EBIT margin going into Q3 now.

I'm aware you can't say too much about it. But is it a fair assumption that you should be at least back within your guidance range in the third quarter on the EBIT margin?

Falko, this is Markus speaking. I will take the first question and Justus will cover the second and the third.

So concerning RTPs and whether this falls under the VBP policy, hard to say, Falko. But we believe this will be not the case.

Because the license or, let's say, the RTPs are heavily connected to the installed base of the refractive lasers. So that means the Chinese government cannot change just RTPs because then actually there's installed base and they don't have actually then the lasers installed.

So this is the first. Secondly, actually, the main number of the procedures are paid by private.

So this is not reimbursed now by health insurers in that way. So overall, we believe that the RTPs of the refractive business, as we know today, I think it's also clear is not affected by this.

Okay. Falko, you were asking about procedural growth in April.

I mean, obviously, I can't disclose here any figures. What I can tell you is that the positive momentum that we start kicking in, in March is certainly continuing.

And I'd say, I leave it there, but I think it gives you an indication that we see actually now the positive impact of a country that has abandoned the lockdown policy. So the clinics are open.

The utilization for laser are on very high levels. So all the -- or should I say, all the ingredients are there, that there's capacity and a higher installed base than ever before.

Because even throughout the last year, of course, we could grow our total number of lasers. And I think the third data point that may give you a little bit of confidence is that actually consumer spending in China is on record levels.

You can read that after these awful years in China of people basically being deprived from any, how should I say, social and personal entertainment that there currently right now is a big, how should I say, return of people spending their money on things that they just enjoy. And so we see that also bringing patients back into the clinics to get their eyes lasered.

So that's maybe our -- my answer on your second question. Then EBIT margin, I think the short answer is again considering that this quarter is one where we -- in the end of this quarter, where we should see basically the first signals of the summer season, I would think, yes, you -- we should see some then return of the EBIT margin to levels that are bringing us into our guidance.

Just a couple for me. So firstly, just on the margin, not so much this year, but when we think of 2024 and over the mid-term, you've obviously previously talked about a margin of at least 20% as being sustainable.

And just when we think of the headwinds this year being mix and supply chain and a lack of pricing in terms of raising prices through the order book, it sounds like those things should all improve next year. So is it reasonable to think that the mid-term guidance is a sensible starting point for 2024?

And then a second question just around the U.S. business and how you're getting on in cataract and phaco, it would be good to get a bit of an update there in terms of placements and just market momentum.

This is Markus. Yes, so maybe start with U.S.

and cataract business and then handing over to Justus concerning the guidance, the mid- and long-term guidance. So as we actually also reported last time, Graham, there's no big change in the overall situation.

So that means we have the phaco, the QUATERA, installed at the KOLs. This is progressing well.

So now with the LUCIA now actually registered and launched in U.S., we can start now to bundle these things. So that is the next step.

And then there's the cataract workflow solution, [indiscernible]. And this combination will help us then to penetrate the market and to win unfair market share.

But what is also clear, Graham, is this is nothing what will happen tomorrow. Because this is a very mature market, well established.

The big competition is there. And it's definitely -- I think we have a good, let's say, portfolio to attack the market and to win there.

Nevertheless, there is a very, let's say, good installed base and also good competitor power there. And this is definitely something a long way to go.

And I really want to also here in this group, I just want to make it clear that we are not expecting to have that in the next half year now done and that this will be surging like hell, that we see big growth numbers. Because again, this is a penetration which will start and which will then accelerate.

And this is exactly what we have planned and where we are on plan.

Yes. Okay.

And on your margin question, Graham, I fully understand that you -- I was expecting that question actually -- actually, that you want to have confirmation here. Bear with us for later this year until you get the final answer.

And the reason is simply that the uncertainties that we see right now are still big and at the same time -- and uncertainties, I mean, we have the inflation pressure. As you know, we are currently trying to set up our supply chains, which is costing more money than we would have hoped for.

And we have the ramp-ups in basically all our production sites. And as Markus was just quite extensively elaborating on China and the preparations for being ready for those nationwide tenders, that means we have to invest heavily, not only in R&D, as Markus mentioned, but also basically in our capability to cope with growth under, I would call it, under changed circumstances with more complex export laws, with more regulations on what is local content and so on.

And that was not part of our previous assumptions when we gave these guidances of -- in the mid-term sustainably above 20%. So we kind of have to reassess once we are back to a new normal and have kind of consumed the inflationary pressure impacts that are right now distorting somewhat our capability to assess what is our new normal typical run rate.

We simply need some more time to understand where this folds out to. And then we come with the precision -- or precise -- more precise statement on our guidance.

So I hope you understand the reasoning and have the patience to wait until later this year.

So just on the last one, so effectively, you're going to review your mid-term guidance later this year, that's what I understood correctly?

Yes.

Okay, perfect. Understood.

And three other quick questions. Firstly, on the U.S., I mean, it's quite encouraging to see really 23% growth in the U.S., which we haven't seen in a while.

Can you just provide a bit more color on what kind of product groups were driving that and whether it's just order backlog conversion or also generally stronger demand? I guess, so far, this was not supported by CT LUCIA or QUATERA.

And second question, please. You talked earlier in this call about your willingness to defend IP on refractive.

So J&J obviously got the approval for their ELITA system. Can you just confirm, have you taken any kind of IP action on that kind of approval?

And third question, thanks for the color on the order book, which you disclosed, standing at EUR 573 million. Can you just give us any kind of color how that compares on a year-on-year comparison?

And also whether you expect most of this to be converted into sales in the second half or whether it will more likely spill over into next year?

Okay. So I will take the question with IP and J&J.

And Justus will answer the other question, Oliver. So J&J -- I hope for your understanding that we cannot disclose any IP litigation activities with our market -- with other market contributors.

So it's definitely something what we're saying to the news as soon as there is something to report. Nevertheless, and that's also clear, we will defend and being really active in making sure that we keep our position.

So we are investing heavily in IP. And it's clear that this is something what we even have accelerated in reps now to make sure that we are well established here.

Secondly, and that's also quite important, I mentioned that already before, Oliver. It's not only the technology.

So the refractive business is also a lot about parameters, a lot about procedures and how to run the procedures and how to train actually the users or our customers. And this is really something where we believe, and I think the numbers are showing this, that we are leading here in the market.

And that means even now with the new systems coming in from Ziemer, SCHWIND or J&J, these systems are -- still have to show the clinical accuracy and quality and outcome in comparison to us. And here, we really believe that also the launch of our VISUMAX 800, which will be then also registered and will have a market launch in the big countries, that this has been also manifesting our market leadership in refractive.

So having this said, yes, there is a competition. And I always see challenge, also opportunities.

It shows us that our procedure is the leading procedure. And that competition is moving into this procedure because they realize that this is quite more effective and relevant than LASIK.

And this is something where we actually keep our investments, and that's also one of the reasons of the high R&D quotas, that we keep our investments here, being very aggressive in the markets and winning there and making sure that we have a strong installed base, even if this means that we have, maybe for a given time, to reduce a little bit of profitability here to make sure that we have a strong installed base here.

Okay. I think there's the question on the order book left, Oliver.

That compared to last year, basically on the same level. As Markus said, and as we have communicated earlier, it is tough for us with the instability in supply chains to basically significantly reduce that order backlog and at the same time, of course, also continuing to have a good and solid order entry.

So therefore, not a big change. We hope that in the second half of the year with the expectation of more stability in supplies and with the beefed-up capacity that we have or are putting in place that we then hopefully can start to reduce that backlog.

That's at least our expectation. So I hope that covers your questions.

Perfect. There was just a question on the U.S.

dynamic outstanding.

Yes, I can make a couple of comments. So you are absolutely right with your assessment.

It's obviously not yet a consumables influence here in the U.S. It is indeed mainly our device portfolio across the board, I have to say, it's not only the diagnostics, it's also the microsurgical portfolio and the -- in general, the ophthalmic microscopes.

So across the board, we have basically transferred and converted orders and some of the backlog now finally into revenue. And that basically explains that very good development.

The first one is on your EBIT margin guidance. So the 200 basis points, still a meaningful range despite first half is already known.

Basically, it implies a higher volatility or risk for second half. Can you comment on the most important swing factors which drive you to be upper or to be lower end of your guidance?

Second question is you mentioned already that the momentum continued also in early Q3. How should we think conceptually between the phasing between Q3 and Q4, please?

Yes. Oliver, no problem.

The swing factors are mostly what we discussed throughout this call. Obviously, China has always the potential to be extremely meaningful from its growth contribution and product mix contribution to our bottom line.

To remind you all, basically, Asia Pacific accounts for half of the group's revenues. And within that half, basically China then again accounts for roughly half of it.

So that is the kind of the volume and powerful impact that the China business can have on us. And let's now say, in the best case, China will see now an unaffected, strong recovery in business, so a lot of high consumer confidence and willingness to spend money.

And as I said before, now our installed base is bigger than before and the utilization rates are up. And not all the lasers in China in the last years have been always at their maximum capacity.

So that provides a lot of opportunity for potentially a very strong second half of the year. So that could certainly bring us then to the higher end of the guidance that we gave.

And the other factor is, of course, the supply chain. The faster we get stability, the faster we can ramp up our monthly run rate for the big meaningful in terms of ASP devices.

And that again will then also mean that, as I elaborated before, that we can start to really not only serve the incoming orders but also reduce the backlog. And both factors certainly have the potential to bring us then to the higher end of the guidance.

I hope that answers your question.

Yes. One quick follow-up.

So would China be potentially give you enough business really to reach the upper end? Or is it that you really need both factors to reach the upper end?

I mean, again, it's a very kind of theoretical discussion here. You would need certainly both being in stable conditions, so both the supply chains and China not being affected by any other major setback.

Yes, I'm sure that's it. And obviously, we would also need other markets in the world to continue to prosper.

That's -- but as I said, in terms of the existing order backlog being strong and the order entry that we overall see still on a solid level, the ingredients are there.

Okay. My second question, regarding phasing in Q3 and Q4, please?

Excuse me?

My second question, regarding the phasing between Q3 and Q4, please?

Sorry. You're a bit hard to understand.

Could you try again? Sorry.

Sorry. My second question was about you mentioned momentum -- you said the momentum continued in early Q3.

So how should we think about the phasing between Q3 and Q4?

Well, I mean, the historical patterns, you can trace that, that typically Q3 and Q4 are, for various factors, the strongest quarters in our fiscal year. And the one factor is certainly the peaks for the consumable business in some Asian markets.

The second one is that there are, for hardware budgetary reasons, also peaks in the deliveries or taking deliveries of devices until end of September. And that both together typically leads to a strong momentum.

And I think in all the years that I remember for med tech, therefore, Q4 typically is the strongest revenue month. And right now, I have no reason to believe that it would be different this year.

Okay. Thanks, everybody, for joining and the discussion with you on our conference call.

We look forward to catching up with you again in August. Until then, we look forward to speaking with some of you at conferences and meetings.

And please reach out to the Investor Relations department if you want to speak with us in the meantime. Thank you very much.

And everybody have a good day and rest of the week.

All the best. Goodbye.

Thank you.