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Sales and earnings up strongly as Zeiss navigates pandemic

19 May 2021

Continued strength in lithography and a rebound in medical and consumer divisions as Covid effects ‘ebb away’.

Executives at the optics giant Zeiss say that the impact of the Covid-19 pandemic on the business is “ebbing away” in key areas, with demand from consumer markets rebounding strongly.

The Oberkochen-headquartered firm - due to celebrate its 175th anniversary this November - has just posted sales of €3.4 billion for the six months ending March 31, up 6 per cent on last year’s total.

And partly because of cost savings from pandemic-related travel restrictions, Zeiss’ earnings before interest and tax (EBIT) figure jumped 30 per cent year-on-year, to €591 million.

“Thanks to our broad portfolio, global structure and the exceptional dedication of our employees, we have successfully navigated through the Covid-19 pandemic,” remarked CEO Karl Lamprecht, who took over at the helm shortly before the emergence of the novel coronavirus.

Lithography boom continues
Highlighting how the company had benefited from its historic high level of investment in cutting-edge research and development activity, Lamprecht and his colleagues now expect full-year sales to be higher than last year’s total of €6.3 billion - although by exactly how much remains to be seen.

“While the impact of the global pandemic does raise some doubts, we remain optimistic as regards the second half of the fiscal year,” said the CEO.

The company’s close partnership with the semiconductor lithography equipment vendor ASML has proved critical to Zeiss’ successful navigation of the past 12 months.

Demand for that equipment has remained strong throughout the pandemic, and Zeiss’ latest figures show sales of €913 million attributable to its semiconductor manufacturing technology (SMT) division - which is in fact part-owned by ASML.

“Due to the high demand for the innovative extreme ultraviolet (EUV) lithography systems and deep ultraviolet (DUV) lithography systems, Zeiss has every reason to be optimistic about the second half of the year,” reported the firm.

“Global trends such as 5G, artificial intelligence, the Internet of Things, and high-performance computing solutions are the major drivers fueling this high demand.”

Battery opportunities
While that represented a very slight increase on last year’s figure, it was a strong rebound in both the medical technology and consumer markets divisions that drove growth in overall business.

The only Zeiss division to report a fall in sales was the industrial quality and research unit, with the automotive sector largely responsible. However, strong demand for industrial microscopes meant that the division’s sales dropped by only 1 per cent compared with last year.

Batteries for electric vehicles look like a profitable area, with Zeiss stating: “Growth opportunities for both business areas at the segment come in the form of e-mobility: microscopy and quality assurance solutions are deployed in battery research and in quality assurance for battery production.”

However, recovery from the impact of the pandemic is most evident in the medical technology and consumer sectors.

“The impact of the Covid-19 pandemic is ebbing away, allowing the segment to boost its growth rate back up to its pre-pandemic level,” said Zeiss of its medical technology business.

Major contributions to growth came from returning revenues from consumables and implants, with restrictions on movement helping to keep a lid on expenses.

Carbon neutrality by 2025
Of consumer markets, the firm added: “Despite further regional lockdown-induced limitations in the eyeglass lens market, the outlook for the second half of the fiscal year remains positive. The pandemic has meant that the conditions for logistics and delivery reliability will remain challenging.”

Commenting on the company’s development-focused strategy, CFO Christian Müller observed: “While our sizeable investments in research and development do not always immediately pay off, a little patience coupled with innovative ideas allow us to shape the market.”

Recent moves in this area include a new innovation center opened this year in California’s Bay Area. “This allows us to bolster the links between science and business, thus opening up new marketing opportunities in the digital arena,” Müller said.

A new target for the company is to become carbon neutral by 2025 - on top of the company’s existing plan to switch its operations to all-green power by next year.

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