Zeiss ends year on a high despite poor semi manufacturing market
The Semiconductor Manufacturing Technology business group faced a declining market - particularly at the beginning of the reporting period, with a slight recovery being evident in the second half of the year
Zeiss has brought fiscal year 2012/13 to a successful conclusion up to 30th September 2013, with an all-time high in revenue.
The company put in a good performance in some sectors despite a partly difficult economic environment and generated revenue totalling € 4.190 billion as compared to last year when it was €4.163 billion. Earnings (EBIT) totalled € 335 million, when in the prior year it was € 420 million.
In fiscal year 2012/13 different developments were observed in the market segments relevant to Zeiss.
Overall, the market situation was tense: while slight growth was reported in the market for medical technology, the markets for microscopy, industrial metrology and eyeglass lenses remained stable.
Demand in the market for lithography systems continued to decline in the first half of the fiscal year compared to the previous year, but picked up again in the second half.
"In fiscal year 2012/13 we reached and partly exceeded our targets. Zeiss put in a good performance despite the challenging business environment and the weakness of the economy at the beginning of the year," said Michael Kaschke, President and CEO of Carl Zeiss AG. "We made no compromises in our multi-year investment program - the biggest ever in the company's history - but continued to implement it consistently and systematically."
Zeiss grows in all economic regions
Zeiss generated 81 percent of revenue through direct business compared to the previous year when it was 79 percent and around 19 percent with cooperation partners (prior year: 21 percent). The company generated 85 percent of direct business outside Germany (prior year: 85 percent). Zeiss reported particularly high growth in the rapidly developing economies such as China, India and Latin America, where the Group posted an 11 percent increase in revenue.
In the Asia/Pacific (APAC) region revenue rose by six percent to € 796 million (prior year: € 782 million) after currency adjustments.
In the Americas region revenue totalled € 1.127 billion (prior year: € 1.086 billion). This equates to an increase of five percent after currency adjustments.
Zeiss achieved a two percent increase in business in the Europe, Middle East and Africa economic area (EMEA). Revenue totalled € 1.452 billion (prior year: € 1.426 billion), including € 512 million in Germany, an increase of five percent (prior year: € 487 million).
The business with cooperation partners showed a downward trend in fiscal year 2012/13 and fell by six percent to € 815 million (prior year: € 869 million). This development is primarily attributable to the restrained trend observed in the market for semiconductor manufacturing technology, particularly at the beginning of the year.
Investment and modernisation measures continued
In fiscal year 2012/13 Zeiss continued to invest in the expansion of its global sites. Overall, investments in property, plant and equipment amounted to € 245 million (prior year: € 289 million). Depreciation came to € 141 million (prior year: € 135 million). In Germany Zeiss continued the modernisation of its sites commenced in the preceding years.
In Oberkochen Zeiss officially opened the new buildings for the part of the Medical Technology business group based at this site, as well as the new production facilities for the Semiconductor Manufacturing Technology business group. In addition, a site logistics centre was completed in Oberkochen. A total of just under 100,000 square meters of additional production and office space has been created in Oberkochen over the past three years.
Targeted acquisition of future-oriented technology
In fiscal year 2012/13 Zeiss also expanded its portfolio through targeted acquisitions: one important investment in future-oriented technology was the acquisition of Xradia, Inc., Pleasanton (USA), a manufacturer of 3D X-ray microscopes.
With this acquisition, Zeiss is expanding its microscopy business and meeting the growing demand for multimodal microscope imaging techniques. X-ray microscopes supplement the Zeiss portfolio that already includes light and electron microscopes, enabling the company to now offer cross-technology application solutions for the materials and life sciences.
With the acquisition of HGV Vosseler GmbH & Co. KG, Öhringen, Germany, a supplier of 3D inline metrology solutions, Zeiss strengthened its position as a solutions provider for the automotive industry and expanded its offering in the field of process control and inspection in car body construction.
In addition, Zeiss acquired a 60 percent interest in KLEO Halbleitertechnik GmbH, Tettnang, Germany, a company specializing in optoelectronics, parallelised data processing and ultra-precision engineering. For Zeiss, this participation is an investment in future-oriented laser direct writing technology for production processes in electronics production.
Further increase in expenditure on research and development
Zeiss invested € 411 million in its research and development activities in fiscal year 2012/13, corresponding to around ten percent of revenue and an increase of five percent over the previous year (prior year: € 390 million, nine percent of revenue).
The Group's research and development departments comprise a total of 2,685 employees "“ about 11 percent of the workforce "“ working on new solutions and technologies for the optics industry (prior year: 2,474 employees; ten percent). In the development of new technologies and solutions Zeiss works in a global network of renowned universities and research institutes.
As of the reporting date, Zeiss held 5,863 patents worldwide. In fiscal 2012/13 the Group applied for 421 new patents (prior year: 396).
Solid financial situation
In fiscal year 2012/13 consolidated revenue rose slightly by one percent to € 4.19 billion. The increase amounted to two percent after adjustments for currency effects.
At the end of the fiscal year EBIT (Earnings before Interest and Taxes) totaled € 335 million (prior year: € 420 million). The sustained high level of expenditure on research and development "“ primarily in the Semiconductor Manufacturing Technology business group "“, the investments in the modernization of production machinery and infrastructure, and currency effects have all impacted the EBIT development. After adjustment for currency influences, EBIT totaled € 351 million. Earnings before income taxes amounted to € 285 million (prior year: € 335 million). Consolidated profit amounted to € 193 million (prior year: € 250 million).
Free cash flow improved considerably in the second half of the fiscal year and reached € 258 million (prior year: € 332 million).
Gross liquidity totalled € 681 million (30 September 2012: € 762 million). Net liquidity reached € 211 million, a decrease of around € 160 million over the previous year (30 September 2012: € 373 million) due to the high levels of investment and the acquisitions implemented during the reporting period. Thomas Spitzenpfeil, Chief Financial Officer of Carl Zeiss AG, emphasized: "We are proud that we can finance such investments and acquisitions from our own resources "“ our financial situation is still extremely solid."
Equity rose by € 17 million to € 1.23 billion (prior year: € 1.21 billion). The equity ratio came to 25 percent (prior year: 26 percent).
Development of the business groups in fiscal year 2012/13
The Semiconductor Manufacturing Technology business group still faced a declining market - particularly at the beginning of the reporting period - and generated revenue of € 934 million. This corresponds to three percent less than the previous year (prior year: € 967 million), with a slight recovery being evident in the second half of the year.
The biggest challenge confronting the Semiconductor Manufacturing Technology business group is the development of Extreme- Ultra-Violet (EUV) lithography, the future-oriented technology for microchip production, toward its usage in stable volume production. The introduction of EUV technology to volume microchip production is expected for 2015/16.
In fiscal year 2012/13 the Industrial Metrology business group reported an increase in revenue of seven percent to a total of € 528 million (prior year: € 495 million). Business was particularly successful in China and North America. A stable trend was seen in Germany and in Europe as a whole. The demand for customer services continued to be high.
During fiscal year 2012/13, the Microscopy business group generated revenue of € 629 million, a drop of three percent over last year's figure (prior year: € 650 million). This was chiefly attributable to the restrained level of investment by the public sector "“ particularly in the USA and in many parts of Europe.
In the rapidly developing economies, however, the business group continued to show substantial growth and won market share. In order to sustainably reduce the dependence on government budgets, the business group is focusing on expanding its business with microscope systems for industrial applications.
The Medical Technology business group posted a five percent increase in revenue over the previous year to € 1.032 billion (prior year: € 984 million), therefore topping the one billion mark for the very first time. This made Medical Technology the business group with currently the highest revenue in the Zeiss Group. It has grown in all economic regions.
The business of the Surgical Ophthalmology and Microsurgery business sectors has continued to develop positively. Particularly strong growth was generated in the business with intraocular lenses. The values deviate from the published figures of Carl Zeiss Meditec AG as a result of different consolidation models.
At € 841 million, revenue of the Vision Care business group was only slightly below last year's figure (prior year: € 860 million) "“ despite the difficult market environment and the discontinuation of business offering attractive profit margins. The business group reported a clear increase in earnings. The restructuring and modernization of the business group's global production and distribution network initiated in the preceding years are therefore clearly taking effect and led to substantial contributions to the earnings and cash flow of the Zeiss Group by the business group during fiscal year 2012/13.
The Camera Lenses, Sports Optics and Planetariums strategic business units together generated revenue of € 195 million in fiscal year 2012/13, corresponding to an increase of just under ten percent over last year (prior year: € 178 million).
Zeiss looks to the future with confidence
For fiscal year 2013/14, Zeiss anticipates continued stable development of the Group. "In the past few years we have shown that we can also grow in the company overall despite a declining market for our Semiconductor Manufacturing Technology sector," Kaschke emphasised.
"For fiscal year 2013/14, we predict a slight improvement in our revenue and earnings with a largely unchanged economic environment. We are confident that our strong, future-oriented portfolio and our investment efforts of recent years will pay off."
The more optimistic forecast is founded on the progress being made in the ongoing development of the company initiated in 2011 that is already having a positive impact on the consolidated result. "In the future we will work consistently on further increasing the performance of Zeiss," said Kaschke. "The Carl Zeiss Agenda 2016 strategic program lays the foundation for this." With this program, the Group is working constantly on making Zeiss more modern, global and dynamic.
