JENA (dpa-AFX) - Medical technology group Carl Zeiss Meditec slid into the red at the start of the year, due in part to problems in its key Chinese business. As a consequence, the ophthalmology specialist now plans to shift more production to the People's Republic. "To continue participating in the large Chinese market, we need to relocate more value creation there," Chief Financial Officer Justus Felix Wehmer told financial news agency dpa-AFX on Thursday. "We cannot rule out that this will have an impact on sites elsewhere in the world, and certainly also in Germany." The company's shares recently fell by around two percent.
It is still too early for more specific statements, including on possible job cuts, Wehmer added. "This must first go through the relevant committees." The forecast for the current fiscal year, which was already suspended in January and runs until the end of September, remains on hold for now.
In the first fiscal quarter (through the end of December), the company posted a net loss of €4.9 million, compared to a profit of €15.7 million a year earlier. As previously reported, operating profit (EBITA) plunged nearly 80 percent to just over €8 million. The main reasons, aside from negative currency effects and higher depreciation, were also the challenging business environment in China.
According to the CFO, the company is under significant pressure to respond in China. The rules of the game are changing ever more rapidly there, the executive explained. The government in Beijing is increasingly trying to shield the Chinese market from foreign competition with protective measures. Carl Zeiss has also felt the impact of tightened regulations, introduced in response to EU tariffs on Chinese electric vehicles. The generally weak economic situation in China and ongoing consumer reluctance are also problematic.
A withdrawal from China is out of the question for Carl Zeiss Meditec. For the Jena-based company, which manufactures artificial lenses (intraocular lenses), eye examination instruments, surgical microscopes, and medical lasers, China is the most important market, accounting for a quarter of its revenue. "China is the world's largest market for ophthalmology. As a leading company in the field, it is simply unthinkable not to have access there," Wehmer emphasized.
Carl Zeiss Meditec currently has two production sites in the People's Republic, in Guangzhou and Suzhou.
Beyond relocating production, the East German company announced a realignment of its research and development activities. Additional efficiency measures are also planned; the aim is to take a closer look at all processes within the group, potentially harmonizing and standardizing them to save costs, Wehmer explained. "I don't want to single out any particular function, but I'm not excluding any either."
The updated targets for the year are still expected to be announced no later than the half-year report on May 12, the CFO reiterated. "By then, we will have more clarity." Still open, among other things, is the outcome of a major nationwide tender in China, where the company is bidding with an expensive premium lens. If awarded, the contract would be lucrative. However, the Jena-based company only recently learned that it is competing against two local suppliers. Domestic companies are now often given preference in such tenders.
In addition, according to Wehmer, another lens has so far only received verbal approval in China. Demand around the Chinese New Year and the further development of US tariffs also remain to be seen./tav/niw/mis
