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Operator: Greetings. Welcome to the Champions Oncology Second Quarter Fiscal Year 2026 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Rob Brainin, Chief Executive Officer. Robert Brainin: Good afternoon, and thank you for participating in our second quarter fiscal 2026 earnings call. I'm joined today by our CFO, David Miller. Before we begin, I'll remind you that today's remarks may include forward-looking statements. Actual results may differ materially, and more information can be found in our filings with the SEC. Before we get into the quarter, I want to ground everyone in our 3 core goals for the year: one, deliver year-on-year revenue growth, scaling matters, and we can get margin leverage in our core TOS business as we grow; two, invest in our big growth levers, especially our data platforms, which opens the door to more strategic biopharma relationships; and three, stay fiscally disciplined, maintaining full year positive adjusted EBITDA and self-fund our growth without shareholder dilution. These goals guide our priorities, our investments and our execution focus. We remain committed to them. And importantly, based on our year-to-date results and visibility into the second half of the year, we believe we are on track to deliver on all of these. Turning to the broader environment. We continue to see gradual improvement across pharma and biotech budgets. Funding levels are not fully restored, but customer engagement and our opportunity pipeline generation are gradually improving relative to what we experienced over the last 1.5 years. As R&D budgets reset for calendar 2026, we're cautiously optimistic for booking momentum in the next calendar year. Within that context, our focus continues to be on execution, maximizing conversion of existing bookings, improving operational efficiency and advancing the capabilities to distinguish Champions in the market. Our second quarter reflects this execution focus. Revenue was up year-over-year, driven by stronger conversion of booked work due to reduction in cancellations. Importantly, margin performance continued to improve, supported by the operational efficiencies we've implemented as we capitalize on the leverage in our operating model as study revenue increases. A key highlight of the quarter was our continued success in our radiolabeling and radiopharmaceutical support workflows. As we introduced recently, Champions operates under the very few labs in the industry approved to perform this type of highly specialized radiolabeling work. This is an emerging area of significant interest within oncology drug development and the demand we're seeing from customers reinforces the strategic importance of this capability. Our radiolabeling offering positions us uniquely with both established and emerging radiopharmaceutical testing and we expect this segment to become an increasingly meaningful part of our service offering over time. Bringing more of this work in-house over the coming quarters should also improve gross margin as reliance on outsourced services declines. Alongside radiolabeling, we continue to invest in our data platform, enhancing its functionality and expanding its utility for our pharma partners. The combination of deep biological data, pharmacology capabilities and our PDX assets gives us a differentiated platform that supports target identification, validation and translational insights. Customer interest continues to grow and we view this as a critical long-term value driver for Champions. We've made targeted investments in our commercial and business development teams to support the anticipated growth of these offerings. While these investments do increase near-term OpEx, they are aligned with our strategy and are necessary to expand our revenue base and customer footprint. I also want to address Corellia, our wholly owned subsidiary focused on target discovery. We are making solid progress in discussions with potential venture capital funding partners and are encouraged by the level of interest in that business. Until the transaction is completed, Corellia will continue to be reflecting in our P&L and that may remain the case through fiscal 2027. Importantly, once external funding is secured, our plan is to redirect the majority of those investment dollars toward accelerating growth in our data business. We're not managing this transition for near-term P&L impact. Instead, the focus is on using capital efficiently to reflect longer-term revenue growth curves, particularly in areas where we believe that Champions has competitive advantages. Stepping back a bit, we're encouraged by the progress we made during the quarter. Our performance reflects improved operational discipline, a strengthening commercial position and continued strategic investment in areas where we hold clear competitive advantages, namely our uniquely characterized tumor bank, radiolabeling capability and our data platform. As we enter the second half of the fiscal year, we remain focused on delivering year-over-year revenue growth and full year positive adjusted EBITDA, and we believe the actions we have taken position the company to meet these goals. With that, I'll turn the call over to David to discuss our financial results in more detail. David Miller: Thank you, Rob, and good afternoon, everyone. Before I dive in, as a quick reminder that our full results will be filed on Form 10-Q with the SEC later today. And as always, I'll reference certain non-GAAP metrics with reconciliations to GAAP included in our earnings release. As Rob highlighted, the second quarter reflected meaningful progress across both revenue and margin performance, supported by disciplined execution and a more stable operating environment. Total revenue for the quarter was $15 million compared to $13.5 million last year, an increase of 11% year-over-year, driven by improved conversion of booked work due to a lower level of cancellations. Income from operations for the quarter was $185,000 and adjusted EBITDA was approximately $800,000. Importantly, on a year-to-date basis, we remain on track to achieve full year positive adjusted EBITDA which is one of our core financial goals for fiscal 2026. Turning to margins. Cost of sales for the quarter was $7.3 million compared to $7.4 million last year. Our flat cost of sales on an increased revenue base generated gross margin of 52% compared to 45% last year. While there is quarterly margin variability due to the timing of specific costs such as outsourced lab services, this quarter is a good reflection on the margin expectations of our core business. Operating expenses for the quarter were $7 million, up about $2 million from last year, but the increase was in line with our strategic priority, specifically investment in our data platform. Let me break that down. R&D increased by about $900,000 due to investments in sequencing and related costs to support the development of our data platform. Approximately $200,000 of the total increase was related to Corellia's target discovery initiatives. Sales and marketing increased modestly, driven by higher compensation as we strengthened our commercial organization to support data sales, and G&A increased about $800,000 and mostly related to leadership transitions and IT infrastructure investments. We expect some of those G&A increases to be temporary as we work through system inefficiencies and find ways to streamline costs. Although these investments raise OpEx in the short term, they are essential to positioning the company for sustained growth and operating leverage. Turning to cash flows. Net cash used in operating activities for the quarter was $1.9 million, the primary driver was a decrease in deferred revenue as we recognized revenue on a cash received in advance. All changes in our working capital accounts were in the ordinary course of business. We ended the quarter with $8.5 million in cash and no debt, maintaining a solid financial position. Looking ahead, our focus remains on driving consistent execution, strengthening margins and supporting long-term growth through continued investment in strategic capabilities. While quarterly results may fluctuate, with improving market conditions and increased engagement across both services and data offerings, we believe the company is well positioned to deliver year-over-year revenue growth and positive adjusted EBITDA for the full fiscal year while we continue to invest in our data platform and core services to drive our longer-term growth. With that, we'll open the call for questions. Operator: [Operator Instructions] The first question comes from Matt Hewitt with Craig-Hallum. Matthew Hewitt: It sounds like cancellations have kind of gotten back to maybe historic levels. The funding environment is improving. So a lot of good things from an external standpoint. I'm just curious, from an RFP perspective, the inbound call volume that you're receiving, have you seen an uptick there? And how quickly do you think you can translate that into kind of getting back to that recurring double-digit revenue growth? Robert Brainin: Yes, I'll take that one. And David, maybe you want to weigh in question. We're definitely feeling good about the -- what we call OpGen, the opportunity generations we're seeing. It still is a tough market out there, but it is improving, and we have optimism. Endpoints News did a recent survey of 77 biotech execs and over 1/3 of them talked about increasing their outsourcing next year. It wasn't specific to preclinical pharmacology. But in general, with less than 2% forecasting a decline. And so we can play right into that. We've -- as David mentioned, we've built out some investments in our commercial team as well. So we feel really well positioned as the market continues to recover with what we'll be able to do there. Matthew Hewitt: That's great. And regarding the data platform, it's nice to see that you're making some investments there. When you look at the sales and marketing investments, specifically, are those new hires, are they specifically and exclusively targeting the data opportunity? Or are they also supporting the PDX and some of the other services that you provide? Robert Brainin: To some extent, some are both, but I really want to highlight a recent hire we just made. I was very excited to be able to bring on Dr. Tammer Farid to lead the data business as a General Manager. He joined us most recently from Illumina, but spent a chunk of his early career at the Boston Consulting Group. So he brings not only a very strategic mindset to the business, but also important domain expertise that will serve us well, not only as we execute against the opportunities we have in the near-term pipeline, which we're seeing and getting excited about, but also then longer term as we really think strategically about what is the right way to grow this business and to partner with our customer base around their opportunities to use this data in ways that will really enhance their discovery and development programs. We still have a lot of work to do, just to be clear, but we're believers in it, and we'll continue to invest there. Matthew Hewitt: Got it. I guess lastly is on the margin side, specifically gross margins, a nice pop here, both sequentially and year-over-year. It sounds like this is kind of a way to think about the base business or the core business. As you look out over the remainder of the year, what would -- where could those go? You've obviously added a few people. I don't know if that's going to necessarily impact gross margins. It sounds like it's more OpEx. But can we expect to see further growth in gross margins, which in theory should be flowing through to the bottom line? Or is there something that would cause those to kind of trick down a little bit here, maybe in Q3 or Q4? David Miller: Yes. I could take that one. So a couple of things. So I think this is really where we see the margin for the service business being in the 50%, 52%, even a little bit higher range, all things remaining equal. We all think this is covered on several quarters over the years. There can be various expenses that hit in a given quarter. We mentioned one of them, which is outsourced lab service costs, specifically related to radiolabeling. So while we bring some of that work in-house, we are still in the middle of the transition, and there can be some left over outsourced services costs that will hit in a future quarter, which can impact margin. But -- so that would be a change. But overall, this is the area where we really expect to be in our core services business. And obviously, when we get more heavily into data, we can certainly see an overall lift to margins. And then similarly, based on variances, fluctuations in revenue, that would impact the margins. But overall, this is the way we're thinking about the business. Operator: [Operator Instructions] The next question comes from [ Richard Beferin ], private investor. Unknown Attendee: Can you comment on how far along your drug candidates are for Corellia before Corellia files for an IND application. Can you comment on that? And as a follow-up, can you comment or give us a range as to what kind of valuation you're looking at or the investors are looking at too on Corellia, please? Robert Brainin: Richard, thanks for the question. We really haven't shared that information publicly about Corellia. What I will share is that we're very excited about the data we're seeing and where we are on our lead program and programs and the traction we're starting to get with some of these VC partners as we share that story is gaining real traction. So I think we'll have to leave that one as a watch this space coming attractions, and we'll be sure to share that information as soon as there's something more meaningful and relevant that we can share. Operator: [Operator Instructions] Okay. We currently have no further questions in the queue. I would like to turn the floor back to management for any closing remarks. Robert Brainin: Yes. I just want to say thank you all for joining. As you can tell from what David and I have shared, we're excited about the business and the direction we're heading. We're looking forward to updating you more in future quarters about our radio opportunities, about our data opportunities, about Corellia to be able to give more clarity and crispness around where we are on those. But in the meanwhile, I just want to wish everyone a happy holidays, and thank you again for joining. Have a great afternoon and evening. Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
Operator: Ladies and gentlemen, thank you for standing by, and I'd like to welcome you to MHP's Third Quarter and 9 Months 2025 Results Conference Call on the 15th of December 2025. [Operator Instructions] So without further ado, I'd like to pass the line to Anastasiya Sobotyuk, Director of Investor Relations. Please go ahead, madam. Anastasiya Sobotyuk: Thank you very much. Good day to you. Thank you for joining us for MHP's conference call dedicated to our third quarter and 9 months results. I'm Anastasiya, and I'm joined today by Viktoriia Kapeliushna, Chief Financial Officer of MHP. Together, we will present and discuss the company's financial and operational performance for the reporting period. Please note that today's discussion is based on the press release, investor presentation and financial statements released earlier today. In addition, during our discussion, we will share our outlook and strategic plans, which reflect current assumptions as well as domestic and international market trends. We kindly ask you to take this context into account during the call. We move on to Slide #3 of the presentation. Just a second. My slides do not move. Yes, I can move the slides now. Perfect. So a few words about the macro environment in the reporting period. Despite challenging environment, including ongoing missile attacks on critical infrastructure, Ukraine's economy continued to demonstrate resilience in the third quarter of the year. Ukraine's GDP expanded by 2% year-on-year in the third quarter of 2025, according to preliminary national statistics, reflecting continued economic resilience despite ongoing challenges. The economy continues to contend with substantial headwinds related to the conflict, including damage to critical infrastructure, particularly energy systems, labor shortages due to mobilization and displacement and broader disruptions to trade and investment, which have constrained growth and increased uncertainty in Ukraine. Looking ahead, the National Bank of Ukraine projects GDP to grow by 2% in 2025. Inflation trends have also shown some moderation, as you can see on the diagram, the National Bank's current forecast anticipates inflation for the full year to reach 9%, approximately 3 points lower than in 2024 with a projected further decline to around 7% in 2026. Since October 3, 2023, the National Bank has adopted a managed exchange rate regime, which is actually in place today. The exchange rate remains highly sensitive to global geopolitical developments, including shifts in international trade and tariff policies. In 2025 harvest season, Ukraine's agricultural sector delivered a substantial output despite ongoing war-related operational challenges and adverse weather conditions during summertime. Early official data and industry estimates indicate that farmers are on track to collect significant volumes across major commodity groups, including grains, corn and oilseeds. Deputy officials have projected that Ukraine could harvest around 52 million tonnes of whole grains and approximately 21 million tons of oilseeds, broadly in line with 2024 results. Overall, the total harvest of grain and oilseed crops for 2025 is expected to be in the range of about 70 million, 75 million tonnes. Despite logistics and security constraints linked to the war, Ukraine farmers continued operations across major agricultural regions, underscoring the resilience of the country's agri-food sector and its critical contribution to both domestic food security and international markets. In summary, all these macro indicators collectively highlight both the resilience and the potential of Ukraine's economy as it continues to navigate complex and evolving environment. We move on Slide #4 of the presentation. Just give me a second. Yes. Here, let's look at the financial performance for the reporting period and the main points are following. First of all, it's revenue growth. In Q3 2025, revenue increased by 29% year-on-year to approximately $1 billion, while in 9 months 2025, it increased by 16% year-on-year to over $2.6 billion, and it increased by 17% quarter-on-quarter. This strong performance in Q3 2025, both in revenue and EBITDA, is driven by strong results in poultry, agricultural and the European operating segment, reflecting especially an integration of UVESA, the Spanish company, which MHP acquired this summer into consolidated results of the group. Second point is the adjusted EBITDA net of IFRS 16 gross. In Q3 2025, EBITDA increased by 27% to over USD 200 million, while in 9 months 2025, it increased by 4%. I would say remained relatively stable year-on-year and reached USD 455 million. And actually, EBITDA also increased by 75% quarter-on-quarter. Strong results in 9 months 2025 is driven by factors reflecting Q3 2025 trends. However, EBITDA increased slightly, experiencing pressure on profitability from higher payroll cost, SG&A costs and increased war-related expenses. Let us move on Slide #5, and we will look at the financial results by segment. In the 9 months of 2025, poultry and related operations segments remained the largest contributor to the company's performance, accounting for 53% of total revenue and 53% of EBITDA. This was primarily driven by an increase in poultry prices, however, partially offset by poultry production costs and slightly lower poultry sales volumes. Agricultural operations were second biggest contributor to the group's EBITDA, driven by good harvest, especially for winter crops. I'm talking about wheat in this case, especially, and growing prices for crops, both in Ukraine and internationally. Main triggers for adjusted EBITDA growth in 9 months 2025 were an increase in poultry prices, however, partially offset by poultry production costs and slightly lower poultry sales volumes, good harvest and strong crop prices, as I mentioned earlier, and integration of UVESA's financial results as well as slightly higher sales volumes of poultry and processed meat products at Perutnina Ptuj with stable pricing environment. Let us now take a closer look at the performance of each business segment. And here, I pass my word to Viktoriia. Viktoria Kapelyushnaya: Thank you, Anastasiya. Good afternoon, everyone. Let's have a look at poultry and related operations segment performance. Slide #6. Despite our ongoing challenges of the war in Ukraine, MHP delivered solid performance in Q3 and 9 months with a result exceeding those of the same period last year. This was driven by stronger poultry and processed meat prices, together with effective cost management, demonstrating the company's resilience and efficiency in operations. Poultry costs both in 9 months and Q3 increased year-to-year, primarily due to the higher grain prices, payroll and utilities prices. Poultry price, both in 9 months and Q3, increased year-on-year, while remained stable quarter-on-quarter, mainly compensate for increased production costs during the last period. Commodity price volatility remains a key challenge for MHP. To mitigate this, we strategically towards higher-margin value-added products. This transaction required ongoing investment in innovation, product development and market expansion. Our team remains fully committed to the transformation. We support both margin resilience and long-term growth. We can also see increase in sales volume of processed meat products in Q3. We further prioritize sales of processed product, focusing on those delivering the strongest returns. A few words about our vegetable oil segment, Slide #7. Performance in the segment remained weak with EBITDA for both 9 months and Q3 declined year-on-year. However, results stabilized quarter-on-quarter, supported by slightly better margins. The pressure mainly reflected in high sunflower and soybean seed price, which were not fully offset by oil price changes. The increase in seed price was driven by lower harvest yield in 2024 and increased crushing capacity in Ukraine. During the 9 months, Ukrainian vegetable oil producers continue processing seeds carried over from the '24 season. To mitigate the negative effect on group result in 2025, we have adjusted our fodder recipe, switching from sunflower cake to [indiscernible]. This resulted in higher soybean oil output, while sunflower oil production decreased correspondently. We expect profit to increase slightly in next year, driven by high production volume of sunflower oil and rising price for both sunflower and soybean oil. Let's move to Slide #8, agriculture operations. As of early December, MHP harvested more than 330,000 hectares, representing over 90% of the land under cultivation for the 2025 season and collected in excess of 2 million tonnes of crops, wheat yield reached a record high of 7.7 tonnes per hectare compared to the 7.2 tonnes per hectare last year, while [indiscernible] seed yield were slightly below the prior year at 3.3 tonnes per hectare compared to the 3.7 tonnes last year. As of today forecast, corn yield are estimated 8.7 tonnes per hectare with sunflower yield projected at approximately 3 tonnes per hectare. As of today, we anticipate spring crops yield to be broadly comparable to the last year. The overall harvest is expected to total between 2.0 million to 2.2 million tonnes. The harvesting of the winter crop has been completed. Segment revenue remained unchanged as higher price across most crops and increased sales volume of soybean and wheat offset the decline in volumes of corn and [indiscernible] seed. EBITDA of Agricultural Operations segment improved significantly, driven by higher price of grain and oilseeds. Let's proceed to the Slide #9. Several words about European operations segment. Following the acquisition completed on 31 of July 2025, UVESA results have been fully consolidated into European Operations segment. In the first 2 months post acquisition, UVESA generated revenue of USD 126 million and EBITDA $9 million. The result together with increased sales volume and stronger price at Perutnina Ptuj contribute to 18% year-on-year increase in the segment EBITDA for 9 months. Slide #10. A few words about our cash flow and liquidity position. Cash from operations before changes in working capital amount $313 million this year and $132 million in Q3, both exceeded last year's levels, release of working capital of $46 million in 9 months in contrast to the investment recorded in 9 months 2024. This release was mainly driven by, first of all, consumption of corn and soybean stock purchased in 2024 and settlement of recoverable VAT. CapEx in both 9 months this year and Q3 slightly decreased and was directed to several key areas, include expensive maintenance and modernization of existing facilities, the expansion on international poultry operations, the construction of new bioenergy production facility and also compliance standards and margin improvement initiatives. As you already know, on 31st of July, the group finalized the acquisition of 92% of the share capital of UVESA Group, a leading Spanish producer of poultry and pork meat and animal feed. The total consideration for transaction amount to $312 million. Approximately 80% of this amount was financed through debt facilities from private European banks, while the remainder was funded from the group's own resources. Total identifiable net assets amounted $283 million with goodwill arising on acquisition $44 million. Regarding debt, as at the end of the period, the company total debt was nearly $1.1 billion and net debt about $1.5 billion. The liquidity position at the end of Q3 was $463 million in cash, only $185 million of which was held by the group's subsidiaries outside in Ukraine. At the 30th of September, the group's leverage ratio was 2.6, below the defined limit of 3.0. Pro forma leverage ratio calculated as if the UVESA acquisition had occurred on the 1st October 2024 amounted to 2.4. With respect to the $550 million notes due in April 2026, this matter remains a top priority for company, and we fully recognize its importance to investors. By the end of September, they not have been reclassified from long-term to short-term debt. There have been no recent changes to Ukrainian capital controls of liquidity regulations, which require foreign currency proceeds from export originated in Ukraine to be repatriated with 120, 180 days. In practice, these requirements limit the company's ability to utilize offshore cash for debt repayment. While MHP is able to service its existing loan portfolio and bond obligation from Ukraine, there are no restrictions on coupon payment. The repayment of principal from offshore entities remains restricted. We continue to operate under uncertainties and challenges due to the ongoing war. With the notes maturity in approximately 4 months, we are actively evaluating all available options and to remain confident in our ability to implement an effective repayment strategy. We sincerely appreciate the support from our investors since the beginning of the war in Ukraine and look forward to continue our constructive cooperation. And now I give the floor to Anastasiya. Anastasiya Sobotyuk: Thank you very much, Viktoriia. Let me conclude the presentation before we start our Q&A session. Despite highly uncertain and volatile operating environment, which you also mentioned, marked by ongoing war in Ukraine, fluctuating export market conditions from poultry instability in grain and vegetable oil prices, MHP continues to demonstrate operational resilience, and we can all see this resilience in our financial and operational results. The company not only sustains core business activities under persistent disruptions, but also persists strategic growth and is becoming an international company as reflected in the acquisition of UVESA in Spain. As the company approaches the bond 2026 refinancing milestone, it remains focused on prudent financial management even as capital controls by the NBU remains unchanged, as Viktoriia has just mentioned. In a landscape lacking clarity on ceasefire or peace negotiations, MHP adapts, innovates and positions itself to navigate near-term headwinds while building the long-term strength. Dear stakeholders, let us take your questions now. Thank you very much. Operator? Operator: [Operator Instructions] So our first question is from Anton Anikst from Knighthead Capital Management. Anton Anikst: First one is a clarification. Slide 5 shows a $13 million positive impact from UVESA on year-over-year EBITDA performance, but slide 9 shows $9 million. So which number is correct? And part of the reason I'm asking is I'm trying to understand what's happening with Perutnina. Because if UVESA was $13 million, then it sounds like Perutnina is down year-on-year. But if UVESA was $9 million, then Perutnina is up slightly over year. So if you could clarify that, that would be great. Did you follow that? Anastasiya Sobotyuk: Yes. Just give us a second, we will open 2 slides, right? And we'll come back to you in a minute. Anton Anikst: Yes. And then my next question is just -- any early thoughts on '26 guidance or at least as you think about the refinancing of the 2026 bonds, do you expect to be free cash flow positive between now and the maturity of the bonds. Viktoria Kapelyushnaya: Anton, sorry, I'll come back to the -- thank you for your question. I'll come back to -- maybe I did not catch exactly your question. Because if you look at -- in Slide 9, we see the better financial result in EBITDA from -- in European $13 million. I see it is not UVESA effect. UVESA effect only $9 million, $4 million is effect from Perutnina. Total better financial result in European Perimeter segment, $13 million, $9 million of them just UVESA. Anton Anikst: Got it. The other $4 million is Perutnina. So Perutnina grew as well. That's helpful. Viktoria Kapelyushnaya: Yes. Perutnina grews well. And please repeat the second question about positive [indiscernible]. Anton Anikst: Yes. Any early thoughts on '26, high-level production, maybe EBITDA, CapEx? And a related question, do you expect to be generating cash between now and [indiscernible]. Viktoria Kapelyushnaya: As you understand, unfortunately or fortunately, in Ukraine during the last 10 years, we have been working at 100% capacity utilization. We cannot produce more in our current capacity as the main driver for increase our -- increasing the European operations. And yes, we understand the biggest increase we expect from UVESA, from our new company in our family. And we understand how we can increase sales volumes there and how we improve efficiency and cost optimization, yes. And if you ask me about, yes, our expectation about total EBITDA because unfortunately, MHP remains -- is not just noncommodity company, we continue to produce 50% of total commodity, and that is why our business correlate with prices. But we expect that our total EBITDA for next year will be very similar with this year. It would be around $580 million, $600 million. And regarding cash flow total, yes, so we expect that we will have positive cash flow, not so high, around maybe $30 million, $40 million, $50 million. But now we're considering our company as the 2 divisions, one of them in Ukraine division and the second, European operations. In European operations, because we understand that we need to invest money in UVESA for increasing this business. We expect the negative cash flow. At the same time in Ukraine, we expect positive cash flow. It is in total the expectation for the next year. Operator: Our next question is from Stella Cridge from Barclays. Stella Cridge: I wanted to ask a couple of areas. So yes, I wondered in terms of the first 4 months that you've been consolidating UVESA, I mean, you touched on it briefly already. I mean, what -- in your first year in 2026 of kind of owning the asset, what are the main kind of targets or things you're going to look at to try to improve performance there? That would be great. And also just on the prior question, I'm sorry if I missed it there, what you expect CapEx to be for the whole group next year and kind of the main projects that you're looking at? And then finally, I understand that you've been talking with investors recently about the bond. I was wondering what kind of feedback you got from that experience? What kind of options might be possible? And what do you think potential you could go up to, say, on coupons and a new bond or any kind of cash component? It'd be great to get some feedback from those discussions with investors. Viktoria Kapelyushnaya: Thank you for your question. We will then answer one by one. The first question, if you ask me about pro forma for 2026. As I have mentioned just a few minutes ago, we see the big potential for growth in UVESA and we understand how to improve cost of production. We understand how we can increase sales volume there and our estimation about increasing EBITDA in t UVESA approximately by 25%, 30% year-to-year. Total CapEx of the group. Yes, total CapEx around $250 million. But what I would like to emphasize our maintenance CapEx because we are a big company with revenue of $4 billion plus with EBITDA of $500 million, $600 million. And that is why, yes, our total maintenance CapEx today around $100 million -- if you -- $130 million, $150 million -- take into account Ukrainian operations and European operations and plus additional $100 million CapEx, which correlates mostly with our European operations and our project -- noncommodity project in Ukraine. Yes, -- feedback from -- yes, as I told during the presentation, our priority #1, it is our issue with Eurobond 2026. I think, yes, we understand that only in from us, and we try to find the best, how to say, to the best solution for company, for bondholders, for investors. And I think that -- because all our strategy -- all our history, MHP always demonstrated very good -- strong -- not just strong performance and strong trade records. And during the whole history, we were the most reliable partners for all our creditors, and we would like to be the same. Stella Cridge: Super. If I could also ask as well, I noticed in the short-term borrowings, there's $318 million of other short-term borrowings. Could you just run through the breakdown there and how you also plan to address those? Viktoria Kapelyushnaya: If you speak about short-term loan borrowing, it is a part of the PXF financing because you know that we have the huge crushing businesses. And part is for financing working capital, the same is in Ukraine and in Perutnina. Operator: [Operator Instructions] Our next question is from Dmitry Ivanov from Jefferies. Dmitry Ivanov: Thank you very much for the presentation. I just wanted to ask a few follow-up questions. You mentioned that you expect positive free cash flows next year. We just discussed the CapEx expectations for you. Can you unpack the way you look at the poultry prices? Like basically, we see a material increase year-over-year in poultry prices. Basically, how do you see the poultry prices evolving into 2026, given like all the demand-supply balance? And also kind of also subquestion, basically, when it comes to your expectations for 2026, how should we look at the working capital because working capital was a positive inflow this year. Also kind of curious when you expect positive cash flows, how do you look at the working capital impact for the next year? So this is my first question. Viktoria Kapelyushnaya: Regarding the poultry price, yes, our expectation, you're completely right. This year, the poultry price increased substantially. And we don't expect further increase in poultry price. Even in some region, if you have to be honest, yes, in some region, report slightly lower than even current price because always at the beginning of the year, we try to be more conservative and this was -- our budget will always -- for me, personally is more comfortable to be this very conservative budget. Yes, it is much better to see the higher figures by the middle of the year compared to the budget because, yes, we don't expect any further increase in poultry price. Regarding the second question about working capital, yes, if you look at our 9 months result, we have some release in working capital. But if you speak about the whole year, we expect that we will have some investment in working capital, not very significant, around $20 million, $30 million because mostly -- because we significantly increased price and that is why trade receivables increased. Regarding next year, we don't expect any investment in working capital, yes, it is close to 0. Dmitry Ivanov: Understood. That's helpful. I also wanted to ask you about cash outside of Ukraine, which is around $185 million as of now. Are there any kind of restrictions like when it comes to this cash? So for example, do you have just to hold like a minimum amount of cash in Spain or in Perutnina [indiscernible] Slovenia as part of the covenants with the bank. So should we look at this cash as kind of available for any kind of debt management liability management exercise? So there is some restrictions when it comes to offshore cash of $185 million. Viktoria Kapelyushnaya: Yes, the question -- yes, you're completely right. Around $60 million of this amount is the amount on account to UVESA and Perutnina, not the special restriction regarding the pledge of this cash. Yes, you're right. But the second -- your question about what? Dmitry Ivanov: I mean is it like -- can you use this cash without any kind of restrictions, any consent from lenders just to use this cash. So basically freely available cash that can be used for like the intergroup operations? Viktoria Kapelyushnaya: No, you're completely right. Yes, you're completely right. The base of credit -- base of loan agreement, the company cannot -- yes, cannot pay -- yes, cannot upstream as dividend to MHP. Yes. Just UVESA because UVESA is a subsidy to Perutnina and Perutnina to acquisition of UVESA [indiscernible] possible intercompany debt. Yes. Dmitry Ivanov: That's helpful. And probably like one kind of clarification on like current capital control rules and et cetera, because you're kind of about to come to like a potential agreement or like a deal just to extend the bond or do something else with the bond. I'm just trying to understand, are there any restrictions on how much you can pay like interest rates or any kind of limitations on the interest rate the company can offer to bondholders. So for example, like 10%, not more than 11% is allowed to [indiscernible]... Viktoria Kapelyushnaya: No, no. No limitations. Yes, it seems to me just 12% -- yes, accordingly in Ukraine is the maximum interest rate from Ukraine outside 12% you're right. Dmitry Ivanov: 12% is the maximum that can be offered to new [indiscernible] holders -- interest rate all in. Okay. That's clear. And final clarification, apologies. You mentioned that you expect free cash flow negative profile at UVESA given CapEx and expansion CapEx. How do you plan to fund this negative cash flow? Like additional loans expected to be drawn? Viktoria Kapelyushnaya: Yes, additional loans, but it would not be a very big amount. It would be very [indiscernible]. Yes. Dmitry Ivanov: So it will be funded from loans, not from Ukrainian box perimeter, right, basically? Viktoria Kapelyushnaya: No, no. From Ukrainian box, you understand that we cannot do it. So yes, we don't have any possibility to do it. Dmitry Ivanov: Yes. Just -- thank you for this clarification. Viktoria Kapelyushnaya: Yes, from Ukraine, we said the priority #1 is the issue with our Eurobond of $550 million. Operator: [Operator Instructions] Okay. It looks like we have no further voice questions. I will now hand it back to the MHP team for the closing remarks. Anastasiya Sobotyuk: Thank you. Can you hear me now? Yes. Thank you. Thank you very much. Thank you for the meeting. Thank you for the questions. Of course, I understand that there are some questions which we didn't cover during our meeting. And of course, you are more than welcome to get in touch with me, and we will cover those questions directly. Thank you, and we'll stay in touch. Bye. Viktoria Kapelyushnaya: Thank you. Thank you so much. Good day. Operator: That concludes the call for today. Bye-bye. Thank you. Have a nice day.
Operator: Ladies and gentlemen, thank you for standing by, and I'd like to welcome you to MHP's Third Quarter and 9 Months 2025 Results Conference Call on the 15th of December 2025. [Operator Instructions] So without further ado, I'd like to pass the line to Anastasiya Sobotyuk, Director of Investor Relations. Please go ahead, madam. Anastasiya Sobotyuk: Thank you very much. Good day to you. Thank you for joining us for MHP's conference call dedicated to our third quarter and 9 months results. I'm Anastasiya, and I'm joined today by Viktoriia Kapeliushna, Chief Financial Officer of MHP. Together, we will present and discuss the company's financial and operational performance for the reporting period. Please note that today's discussion is based on the press release, investor presentation and financial statements released earlier today. In addition, during our discussion, we will share our outlook and strategic plans, which reflect current assumptions as well as domestic and international market trends. We kindly ask you to take this context into account during the call. We move on to Slide #3 of the presentation. Just a second. My slides do not move. Yes, I can move the slides now. Perfect. So a few words about the macro environment in the reporting period. Despite challenging environment, including ongoing missile attacks on critical infrastructure, Ukraine's economy continued to demonstrate resilience in the third quarter of the year. Ukraine's GDP expanded by 2% year-on-year in the third quarter of 2025, according to preliminary national statistics, reflecting continued economic resilience despite ongoing challenges. The economy continues to contend with substantial headwinds related to the conflict, including damage to critical infrastructure, particularly energy systems, labor shortages due to mobilization and displacement and broader disruptions to trade and investment, which have constrained growth and increased uncertainty in Ukraine. Looking ahead, the National Bank of Ukraine projects GDP to grow by 2% in 2025. Inflation trends have also shown some moderation, as you can see on the diagram, the National Bank's current forecast anticipates inflation for the full year to reach 9%, approximately 3 points lower than in 2024 with a projected further decline to around 7% in 2026. Since October 3, 2023, the National Bank has adopted a managed exchange rate regime, which is actually in place today. The exchange rate remains highly sensitive to global geopolitical developments, including shifts in international trade and tariff policies. In 2025 harvest season, Ukraine's agricultural sector delivered a substantial output despite ongoing war-related operational challenges and adverse weather conditions during summertime. Early official data and industry estimates indicate that farmers are on track to collect significant volumes across major commodity groups, including grains, corn and oilseeds. Deputy officials have projected that Ukraine could harvest around 52 million tonnes of whole grains and approximately 21 million tons of oilseeds, broadly in line with 2024 results. Overall, the total harvest of grain and oilseed crops for 2025 is expected to be in the range of about 70 million, 75 million tonnes. Despite logistics and security constraints linked to the war, Ukraine farmers continued operations across major agricultural regions, underscoring the resilience of the country's agri-food sector and its critical contribution to both domestic food security and international markets. In summary, all these macro indicators collectively highlight both the resilience and the potential of Ukraine's economy as it continues to navigate complex and evolving environment. We move on Slide #4 of the presentation. Just give me a second. Yes. Here, let's look at the financial performance for the reporting period and the main points are following. First of all, it's revenue growth. In Q3 2025, revenue increased by 29% year-on-year to approximately $1 billion, while in 9 months 2025, it increased by 16% year-on-year to over $2.6 billion, and it increased by 17% quarter-on-quarter. This strong performance in Q3 2025, both in revenue and EBITDA, is driven by strong results in poultry, agricultural and the European operating segment, reflecting especially an integration of UVESA, the Spanish company, which MHP acquired this summer into consolidated results of the group. Second point is the adjusted EBITDA net of IFRS 16 gross. In Q3 2025, EBITDA increased by 27% to over USD 200 million, while in 9 months 2025, it increased by 4%. I would say remained relatively stable year-on-year and reached USD 455 million. And actually, EBITDA also increased by 75% quarter-on-quarter. Strong results in 9 months 2025 is driven by factors reflecting Q3 2025 trends. However, EBITDA increased slightly, experiencing pressure on profitability from higher payroll cost, SG&A costs and increased war-related expenses. Let us move on Slide #5, and we will look at the financial results by segment. In the 9 months of 2025, poultry and related operations segments remained the largest contributor to the company's performance, accounting for 53% of total revenue and 53% of EBITDA. This was primarily driven by an increase in poultry prices, however, partially offset by poultry production costs and slightly lower poultry sales volumes. Agricultural operations were second biggest contributor to the group's EBITDA, driven by good harvest, especially for winter crops. I'm talking about wheat in this case, especially, and growing prices for crops, both in Ukraine and internationally. Main triggers for adjusted EBITDA growth in 9 months 2025 were an increase in poultry prices, however, partially offset by poultry production costs and slightly lower poultry sales volumes, good harvest and strong crop prices, as I mentioned earlier, and integration of UVESA's financial results as well as slightly higher sales volumes of poultry and processed meat products at Perutnina Ptuj with stable pricing environment. Let us now take a closer look at the performance of each business segment. And here, I pass my word to Viktoriia. Viktoria Kapelyushnaya: Thank you, Anastasiya. Good afternoon, everyone. Let's have a look at poultry and related operations segment performance. Slide #6. Despite our ongoing challenges of the war in Ukraine, MHP delivered solid performance in Q3 and 9 months with a result exceeding those of the same period last year. This was driven by stronger poultry and processed meat prices, together with effective cost management, demonstrating the company's resilience and efficiency in operations. Poultry costs both in 9 months and Q3 increased year-to-year, primarily due to the higher grain prices, payroll and utilities prices. Poultry price, both in 9 months and Q3, increased year-on-year, while remained stable quarter-on-quarter, mainly compensate for increased production costs during the last period. Commodity price volatility remains a key challenge for MHP. To mitigate this, we strategically towards higher-margin value-added products. This transaction required ongoing investment in innovation, product development and market expansion. Our team remains fully committed to the transformation. We support both margin resilience and long-term growth. We can also see increase in sales volume of processed meat products in Q3. We further prioritize sales of processed product, focusing on those delivering the strongest returns. A few words about our vegetable oil segment, Slide #7. Performance in the segment remained weak with EBITDA for both 9 months and Q3 declined year-on-year. However, results stabilized quarter-on-quarter, supported by slightly better margins. The pressure mainly reflected in high sunflower and soybean seed price, which were not fully offset by oil price changes. The increase in seed price was driven by lower harvest yield in 2024 and increased crushing capacity in Ukraine. During the 9 months, Ukrainian vegetable oil producers continue processing seeds carried over from the '24 season. To mitigate the negative effect on group result in 2025, we have adjusted our fodder recipe, switching from sunflower cake to [indiscernible]. This resulted in higher soybean oil output, while sunflower oil production decreased correspondently. We expect profit to increase slightly in next year, driven by high production volume of sunflower oil and rising price for both sunflower and soybean oil. Let's move to Slide #8, agriculture operations. As of early December, MHP harvested more than 330,000 hectares, representing over 90% of the land under cultivation for the 2025 season and collected in excess of 2 million tonnes of crops, wheat yield reached a record high of 7.7 tonnes per hectare compared to the 7.2 tonnes per hectare last year, while [indiscernible] seed yield were slightly below the prior year at 3.3 tonnes per hectare compared to the 3.7 tonnes last year. As of today forecast, corn yield are estimated 8.7 tonnes per hectare with sunflower yield projected at approximately 3 tonnes per hectare. As of today, we anticipate spring crops yield to be broadly comparable to the last year. The overall harvest is expected to total between 2.0 million to 2.2 million tonnes. The harvesting of the winter crop has been completed. Segment revenue remained unchanged as higher price across most crops and increased sales volume of soybean and wheat offset the decline in volumes of corn and [indiscernible] seed. EBITDA of Agricultural Operations segment improved significantly, driven by higher price of grain and oilseeds. Let's proceed to the Slide #9. Several words about European operations segment. Following the acquisition completed on 31 of July 2025, UVESA results have been fully consolidated into European Operations segment. In the first 2 months post acquisition, UVESA generated revenue of USD 126 million and EBITDA $9 million. The result together with increased sales volume and stronger price at Perutnina Ptuj contribute to 18% year-on-year increase in the segment EBITDA for 9 months. Slide #10. A few words about our cash flow and liquidity position. Cash from operations before changes in working capital amount $313 million this year and $132 million in Q3, both exceeded last year's levels, release of working capital of $46 million in 9 months in contrast to the investment recorded in 9 months 2024. This release was mainly driven by, first of all, consumption of corn and soybean stock purchased in 2024 and settlement of recoverable VAT. CapEx in both 9 months this year and Q3 slightly decreased and was directed to several key areas, include expensive maintenance and modernization of existing facilities, the expansion on international poultry operations, the construction of new bioenergy production facility and also compliance standards and margin improvement initiatives. As you already know, on 31st of July, the group finalized the acquisition of 92% of the share capital of UVESA Group, a leading Spanish producer of poultry and pork meat and animal feed. The total consideration for transaction amount to $312 million. Approximately 80% of this amount was financed through debt facilities from private European banks, while the remainder was funded from the group's own resources. Total identifiable net assets amounted $283 million with goodwill arising on acquisition $44 million. Regarding debt, as at the end of the period, the company total debt was nearly $1.1 billion and net debt about $1.5 billion. The liquidity position at the end of Q3 was $463 million in cash, only $185 million of which was held by the group's subsidiaries outside in Ukraine. At the 30th of September, the group's leverage ratio was 2.6, below the defined limit of 3.0. Pro forma leverage ratio calculated as if the UVESA acquisition had occurred on the 1st October 2024 amounted to 2.4. With respect to the $550 million notes due in April 2026, this matter remains a top priority for company, and we fully recognize its importance to investors. By the end of September, they not have been reclassified from long-term to short-term debt. There have been no recent changes to Ukrainian capital controls of liquidity regulations, which require foreign currency proceeds from export originated in Ukraine to be repatriated with 120, 180 days. In practice, these requirements limit the company's ability to utilize offshore cash for debt repayment. While MHP is able to service its existing loan portfolio and bond obligation from Ukraine, there are no restrictions on coupon payment. The repayment of principal from offshore entities remains restricted. We continue to operate under uncertainties and challenges due to the ongoing war. With the notes maturity in approximately 4 months, we are actively evaluating all available options and to remain confident in our ability to implement an effective repayment strategy. We sincerely appreciate the support from our investors since the beginning of the war in Ukraine and look forward to continue our constructive cooperation. And now I give the floor to Anastasiya. Anastasiya Sobotyuk: Thank you very much, Viktoriia. Let me conclude the presentation before we start our Q&A session. Despite highly uncertain and volatile operating environment, which you also mentioned, marked by ongoing war in Ukraine, fluctuating export market conditions from poultry instability in grain and vegetable oil prices, MHP continues to demonstrate operational resilience, and we can all see this resilience in our financial and operational results. The company not only sustains core business activities under persistent disruptions, but also persists strategic growth and is becoming an international company as reflected in the acquisition of UVESA in Spain. As the company approaches the bond 2026 refinancing milestone, it remains focused on prudent financial management even as capital controls by the NBU remains unchanged, as Viktoriia has just mentioned. In a landscape lacking clarity on ceasefire or peace negotiations, MHP adapts, innovates and positions itself to navigate near-term headwinds while building the long-term strength. Dear stakeholders, let us take your questions now. Thank you very much. Operator? Operator: [Operator Instructions] So our first question is from Anton Anikst from Knighthead Capital Management. Anton Anikst: First one is a clarification. Slide 5 shows a $13 million positive impact from UVESA on year-over-year EBITDA performance, but slide 9 shows $9 million. So which number is correct? And part of the reason I'm asking is I'm trying to understand what's happening with Perutnina. Because if UVESA was $13 million, then it sounds like Perutnina is down year-on-year. But if UVESA was $9 million, then Perutnina is up slightly over year. So if you could clarify that, that would be great. Did you follow that? Anastasiya Sobotyuk: Yes. Just give us a second, we will open 2 slides, right? And we'll come back to you in a minute. Anton Anikst: Yes. And then my next question is just -- any early thoughts on '26 guidance or at least as you think about the refinancing of the 2026 bonds, do you expect to be free cash flow positive between now and the maturity of the bonds. Viktoria Kapelyushnaya: Anton, sorry, I'll come back to the -- thank you for your question. I'll come back to -- maybe I did not catch exactly your question. Because if you look at -- in Slide 9, we see the better financial result in EBITDA from -- in European $13 million. I see it is not UVESA effect. UVESA effect only $9 million, $4 million is effect from Perutnina. Total better financial result in European Perimeter segment, $13 million, $9 million of them just UVESA. Anton Anikst: Got it. The other $4 million is Perutnina. So Perutnina grew as well. That's helpful. Viktoria Kapelyushnaya: Yes. Perutnina grews well. And please repeat the second question about positive [indiscernible]. Anton Anikst: Yes. Any early thoughts on '26, high-level production, maybe EBITDA, CapEx? And a related question, do you expect to be generating cash between now and [indiscernible]. Viktoria Kapelyushnaya: As you understand, unfortunately or fortunately, in Ukraine during the last 10 years, we have been working at 100% capacity utilization. We cannot produce more in our current capacity as the main driver for increase our -- increasing the European operations. And yes, we understand the biggest increase we expect from UVESA, from our new company in our family. And we understand how we can increase sales volumes there and how we improve efficiency and cost optimization, yes. And if you ask me about, yes, our expectation about total EBITDA because unfortunately, MHP remains -- is not just noncommodity company, we continue to produce 50% of total commodity, and that is why our business correlate with prices. But we expect that our total EBITDA for next year will be very similar with this year. It would be around $580 million, $600 million. And regarding cash flow total, yes, so we expect that we will have positive cash flow, not so high, around maybe $30 million, $40 million, $50 million. But now we're considering our company as the 2 divisions, one of them in Ukraine division and the second, European operations. In European operations, because we understand that we need to invest money in UVESA for increasing this business. We expect the negative cash flow. At the same time in Ukraine, we expect positive cash flow. It is in total the expectation for the next year. Operator: Our next question is from Stella Cridge from Barclays. Stella Cridge: I wanted to ask a couple of areas. So yes, I wondered in terms of the first 4 months that you've been consolidating UVESA, I mean, you touched on it briefly already. I mean, what -- in your first year in 2026 of kind of owning the asset, what are the main kind of targets or things you're going to look at to try to improve performance there? That would be great. And also just on the prior question, I'm sorry if I missed it there, what you expect CapEx to be for the whole group next year and kind of the main projects that you're looking at? And then finally, I understand that you've been talking with investors recently about the bond. I was wondering what kind of feedback you got from that experience? What kind of options might be possible? And what do you think potential you could go up to, say, on coupons and a new bond or any kind of cash component? It'd be great to get some feedback from those discussions with investors. Viktoria Kapelyushnaya: Thank you for your question. We will then answer one by one. The first question, if you ask me about pro forma for 2026. As I have mentioned just a few minutes ago, we see the big potential for growth in UVESA and we understand how to improve cost of production. We understand how we can increase sales volume there and our estimation about increasing EBITDA in t UVESA approximately by 25%, 30% year-to-year. Total CapEx of the group. Yes, total CapEx around $250 million. But what I would like to emphasize our maintenance CapEx because we are a big company with revenue of $4 billion plus with EBITDA of $500 million, $600 million. And that is why, yes, our total maintenance CapEx today around $100 million -- if you -- $130 million, $150 million -- take into account Ukrainian operations and European operations and plus additional $100 million CapEx, which correlates mostly with our European operations and our project -- noncommodity project in Ukraine. Yes, -- feedback from -- yes, as I told during the presentation, our priority #1, it is our issue with Eurobond 2026. I think, yes, we understand that only in from us, and we try to find the best, how to say, to the best solution for company, for bondholders, for investors. And I think that -- because all our strategy -- all our history, MHP always demonstrated very good -- strong -- not just strong performance and strong trade records. And during the whole history, we were the most reliable partners for all our creditors, and we would like to be the same. Stella Cridge: Super. If I could also ask as well, I noticed in the short-term borrowings, there's $318 million of other short-term borrowings. Could you just run through the breakdown there and how you also plan to address those? Viktoria Kapelyushnaya: If you speak about short-term loan borrowing, it is a part of the PXF financing because you know that we have the huge crushing businesses. And part is for financing working capital, the same is in Ukraine and in Perutnina. Operator: [Operator Instructions] Our next question is from Dmitry Ivanov from Jefferies. Dmitry Ivanov: Thank you very much for the presentation. I just wanted to ask a few follow-up questions. You mentioned that you expect positive free cash flows next year. We just discussed the CapEx expectations for you. Can you unpack the way you look at the poultry prices? Like basically, we see a material increase year-over-year in poultry prices. Basically, how do you see the poultry prices evolving into 2026, given like all the demand-supply balance? And also kind of also subquestion, basically, when it comes to your expectations for 2026, how should we look at the working capital because working capital was a positive inflow this year. Also kind of curious when you expect positive cash flows, how do you look at the working capital impact for the next year? So this is my first question. Viktoria Kapelyushnaya: Regarding the poultry price, yes, our expectation, you're completely right. This year, the poultry price increased substantially. And we don't expect further increase in poultry price. Even in some region, if you have to be honest, yes, in some region, report slightly lower than even current price because always at the beginning of the year, we try to be more conservative and this was -- our budget will always -- for me, personally is more comfortable to be this very conservative budget. Yes, it is much better to see the higher figures by the middle of the year compared to the budget because, yes, we don't expect any further increase in poultry price. Regarding the second question about working capital, yes, if you look at our 9 months result, we have some release in working capital. But if you speak about the whole year, we expect that we will have some investment in working capital, not very significant, around $20 million, $30 million because mostly -- because we significantly increased price and that is why trade receivables increased. Regarding next year, we don't expect any investment in working capital, yes, it is close to 0. Dmitry Ivanov: Understood. That's helpful. I also wanted to ask you about cash outside of Ukraine, which is around $185 million as of now. Are there any kind of restrictions like when it comes to this cash? So for example, do you have just to hold like a minimum amount of cash in Spain or in Perutnina [indiscernible] Slovenia as part of the covenants with the bank. So should we look at this cash as kind of available for any kind of debt management liability management exercise? So there is some restrictions when it comes to offshore cash of $185 million. Viktoria Kapelyushnaya: Yes, the question -- yes, you're completely right. Around $60 million of this amount is the amount on account to UVESA and Perutnina, not the special restriction regarding the pledge of this cash. Yes, you're right. But the second -- your question about what? Dmitry Ivanov: I mean is it like -- can you use this cash without any kind of restrictions, any consent from lenders just to use this cash. So basically freely available cash that can be used for like the intergroup operations? Viktoria Kapelyushnaya: No, you're completely right. Yes, you're completely right. The base of credit -- base of loan agreement, the company cannot -- yes, cannot pay -- yes, cannot upstream as dividend to MHP. Yes. Just UVESA because UVESA is a subsidy to Perutnina and Perutnina to acquisition of UVESA [indiscernible] possible intercompany debt. Yes. Dmitry Ivanov: That's helpful. And probably like one kind of clarification on like current capital control rules and et cetera, because you're kind of about to come to like a potential agreement or like a deal just to extend the bond or do something else with the bond. I'm just trying to understand, are there any restrictions on how much you can pay like interest rates or any kind of limitations on the interest rate the company can offer to bondholders. So for example, like 10%, not more than 11% is allowed to [indiscernible]... Viktoria Kapelyushnaya: No, no. No limitations. Yes, it seems to me just 12% -- yes, accordingly in Ukraine is the maximum interest rate from Ukraine outside 12% you're right. Dmitry Ivanov: 12% is the maximum that can be offered to new [indiscernible] holders -- interest rate all in. Okay. That's clear. And final clarification, apologies. You mentioned that you expect free cash flow negative profile at UVESA given CapEx and expansion CapEx. How do you plan to fund this negative cash flow? Like additional loans expected to be drawn? Viktoria Kapelyushnaya: Yes, additional loans, but it would not be a very big amount. It would be very [indiscernible]. Yes. Dmitry Ivanov: So it will be funded from loans, not from Ukrainian box perimeter, right, basically? Viktoria Kapelyushnaya: No, no. From Ukrainian box, you understand that we cannot do it. So yes, we don't have any possibility to do it. Dmitry Ivanov: Yes. Just -- thank you for this clarification. Viktoria Kapelyushnaya: Yes, from Ukraine, we said the priority #1 is the issue with our Eurobond of $550 million. Operator: [Operator Instructions] Okay. It looks like we have no further voice questions. I will now hand it back to the MHP team for the closing remarks. Anastasiya Sobotyuk: Thank you. Can you hear me now? Yes. Thank you. Thank you very much. Thank you for the meeting. Thank you for the questions. Of course, I understand that there are some questions which we didn't cover during our meeting. And of course, you are more than welcome to get in touch with me, and we will cover those questions directly. Thank you, and we'll stay in touch. Bye. Viktoria Kapelyushnaya: Thank you. Thank you so much. Good day. Operator: That concludes the call for today. Bye-bye. Thank you. Have a nice day.
Sebastian Frericks: Okay. So welcome everybody to Frankfurt. Thanks for joining us today -- the conference today for our year-end. I think it will surprise nobody if I'm -- I say we planned it a little bit differently in light of this week's news. I'm delighted to have Andreas with us, CEO of the ZEISS Group and as of January 1, our new interim CEO at Meditec as well. And Justus, of course, was always planned to be here today. So no, thank you very much for joining us. Also, warm welcome to everybody joining us online for this year-end conference, our numbers out this morning. We'll first, as you would typically expect, go through the financials, go through the outlook for fiscal '25, '26 and after that you will have Andreas do a bit of a strategic review on a high level of Meditec, how -- and, of course, then you can ask us with questions on both items afterwards. So it's not a very complicated agenda. We'll have the presentation, we'll have the Q&A afterwards, and we'll -- we can have some lunch afterwards and continue the conversation a little bit. I wanted to let you know that Andreas, because this was all a bit spontaneously and improvised, you will unfortunately not be able to join for lunch. So you'll only be here for the Q&A session to use the opportunity to fire away questions during that period. And Justus and I and the IR team will, of course, be there afterwards as well for you. We will do -- in the Q&A, we'll take questions from the room and also take online questions. Technical commentary. The microphones need to be switched on so that when you later speak to us, that people who follow us online can also hear you. And with no further ado, I'll pass it on to Justus first to walk us through the financials. Justus Wehmer: Thank you, Sebastian. Walking over here. And welcome to all of you here in Frankfurt in the room. Thanks for having made the trip over here. And of course a warm welcome to everybody who has dialed in, wherever you are. So dear analysts and investors, welcome to our annual analyst conference for the fiscal year '24, '25. Let me begin now with an overview of the past fiscal year. Our fiscal year '24, '25 results show solid revenue growth and strong order entry along with a slight uptick in EBITA. Let's start with a look at the order entry. We achieved EUR 2.288 billion, representing a growth of 18.2% year-over-year. On constant currency, order entry increased by 19.1% and by 13.9% when adjusted for both FX and acquisitions. We saw a robust order trend across all regions, with the order backlog remaining at an elevated level of EUR 380 million. Let's turn then to the revenue. Revenue reached EUR 2.228 billion, which is up by 7.8% year-over-year. Breaking it down, equipment sales grew by 2.3% while consumable sales grew 15.2%. By category, equipment accounts for half of our revenue, consumables 41% and service 9% which -- and I think that's something to highlight. This is a new all-time high and the first time we achieved 50% of our revenue with recurring items. FX adjusted growth was 8.6% and FX and acquisition adjusted revenue was slightly above prior year by 3.3%. In Q4, we saw particularly strong momentum with revenue up by 8.3% and foreign exchange adjusted by 10.4%. Key drivers of this growth included solid VISUMAX installations in China, the accelerating ramp-up of the KINEVO 900 S, while refractive procedures in China remaining largely flat overall. Finally, EBITA came in at EUR 258 million, which represents a 3.5% increase compared to last year despite, and that I want to highlight, despite headwinds from U.S. tariffs which have cost us a bit more than EUR 10 million during the fiscal year, and negative foreign exchange effects which presented an earnings headwind of more than EUR 20 million for the entire year. That, however, is unfortunately continuing into this year and the absence of a one-off gain of EUR 18 million from last year's Topcon settlement. So this represents an EBITA margin of 11.6%, slightly below the 12% in the previous year. Adjusted EBITA margin was 11.6%, up from 11.2% last year. The main adjustment here being Topcon in last year's base. Organic operating expenses was below prior year, mainly due to R&D savings as we had promised to you. Let's take a closer look at our strategic business units and regional performance. And here we are. And we start, of course, with Ophthalmology. Revenue reached EUR 1.724 billion, an increase of 8.5% year-over-year. On a foreign exchange adjusted basis, that corresponds to plus 9.3% growth and 2.3% when adjusted for both foreign exchange and acquisitions. We achieved only modest growth in equipment amid a continued restrictive investment climate. Consumables grew more strongly mainly because of DORC, but also there was solid volume growth in IOLs, especially in premium IOLs. VISUMAX 800 installations in China progressed well. Refractive consumables in China remained stable with a slightly more favorable mix, even though the overall consumer climate still remained rather weak in our view. EBITA margin increased by 1.3 percentage points to 10.9% driven by better operational leverage and full year DORC consolidation. In terms of business split, Ophthalmology accounted for 77% of the group's revenue. Within Ophthalmology, consumables accounted for 51%. Together with service revenues, recurring revenue now stands at a record high of 59%. Let's move on to Microsurgery. Revenue increased to EUR 504 million, up by 5.7% compared to the previous year and exchange rate adjusted growth was 6.6%. After what had been a really, really slow year during the first 6 to 9 months, we finally saw much stronger momentum in Q4, and I think we had guided for that with top line acceleration of more than 16% and very strong order entry as well. KINEVO 900 S ramp-up continued successfully toward year-end, contributing to the strong performance. EBITA margin declined by 6 percentage points to 14%. Main reasons included overall unfavorable product mix with delayed deliveries of KINEVO 900 S and also a significant impact of tariffs and foreign exchange. Please everybody be reminded that, of course, the U.S. market is extremely important for the KINEVO or for the Microsurgery division. In addition, OpEx were higher due to increased marketing and G&A expenses. Finally, looking at the revenue split, Microsurgery accounted for 23% of total revenue. Within Microsurgery, equipment still represented the majority at 81% of its revenue. Yet we are making good progress here with our recurring revenue as well, with service as well as the drapes and instruments business achieving excellent growth. Let's then move on to the regional development. Overall, growth was recorded across all regions with APAC contributing the largest share at 45% including 25% from China. Revenue in Americas came in at EUR 579 million, up 8.7% year-over-year or 10.4% foreign exchange rate adjusted. Growth was supported by both organic performance and the full year DORC consolidation. Order entry overall rose, but following tariff-related pricing measures in Q4 we observed some slight weakness late in the year. As some of our competitors have also been referencing, we believe overall market climate to remain quite weak and price action by foreign companies in reaction to tariffs are certainly not helpful. In EMEA, revenue reached EUR 658 million, an increase of 12.5% year-over-year or 13.6% currency adjusted. We saw solid growth in key markets like Germany, the U.K. and the Nordics. APAC revenue was EUR 991 million, up 4.4% year-over-year or 4.6% currency adjusted. We had good growth in Southeast Asia, India and Korea while Japan declined. As discussed before, it certainly hasn't been a strong year in China, but final results showed some stability in refractive and cataract compared to a weaker 2024. Let's now look at the overall P&L. We delivered stable profitability while keeping underlying operating expenses and impact of U.S. tariffs under control. We delivered EUR 1.175 billion in gross profit with a margin of 52.8%, essentially stable year-over-year despite headwinds from negative currency movements and U.S. tariffs. Excluding DORC, underlying OpEx actually declined year-over-year mainly driven by lower R&D spending and reduced DORC integration costs. G&A expenses increased slightly due to the DORC consolidation and higher IT costs. We have mentioned that we are introducing a new ERP system S/4HANA and that requires additional expenses in that area. R&D expenses were lower year-over-year reflecting disciplined project prioritization. Earnings per share came in at EUR 1.61 and adjusted earnings per share at EUR 1.90, down 3.9% year-over-year. Earnings per share declined despite the higher EBIT. This was mainly due to negative currency hedging results and lower interest income. The prior year also benefited from a one-off positive effect related to reduced contingent purchase price liabilities from the CTI or formerly known as IanTECH acquisition. Let's quickly look at the adjusted numbers. EBIT increased to EUR 223 million, up 14.8% year-over-year. The amortization of purchase price allocations mainly relates to DORC at EUR 26 million and former acquisitions of EUR 8 million in the reporting period. In other special items, prior year included the already mentioned one-off gain from the Topcon settlement. There have been only very moderate adjustments during the fiscal year. Adjusted for special items, EBITA improved to EUR 259 million with an adjusted EBITA margin of 11.6%, a slight improvement compared to the prior year. Turning then to our cash flow statement. Operating cash flow came in at EUR 210 million, slightly below last year. This was mainly driven by an increase in working capital, in particular higher accounts receivables as well as higher interest payments. Investing cash flow was significantly lower at EUR 91 million compared with a high outflow last year related to the DORC acquisition. During the reporting period, CapEx was also lower. Tangible and intangible CapEx amounted to 3.4% of revenue compared with 7.4% last year. Financing cash flow was minus EUR 109 million, reflecting dividend payout and a decrease in treasury payables. By contrast, last year's strong inflow was mainly driven by the shareholder loan associated with the DORC acquisition. Net financial debt at EUR 277 million remained below last year. Now I'd like to provide the outlook for fiscal year '25, '26. And you know me a little bit. Before we turn to revenue and margin guidance, I would like to highlight the key risks and potential upsides we anticipate for fiscal year '25, '26. On the risk side, we expect a potential negative currency impact year-over-year at current exchange rates in the low double-digit millions. In China, we foresee continued pressure from volume-based procurement of IOLs, especially in the multifocal category, which could lead to considerable price reductions. As you all know, the second nationwide volume tender is due most likely somewhere March, April. Last month, Chinese regulators have told us that one of our successful bifocal intraocular lenses needs to be reregistered and the old product can no longer be sold to public hospitals under the old VBP tender. While there's nothing wrong with the product, it was initially approved in the year 2015 and then reapproved in the year 2020 and it has been sold for all those years and safety data is excellent. We have been quick to launch the required reregistration process. And hopefully, we'll be there in time for the new tender that we expect in the spring. Our Chinese team is now withdrawing some of the old product from the market, creating a scrap risk for a number of stocks of the old product also in the low double-digit million euro. We also anticipate potentially intensifying competition in refractive. Though no direct launch preparation by a Chinese competitor are being observed as of now, we continue to monitor government policy changes in that market, too. We are very clear-eyed about China, which, as you know, is a very significant portion of our revenue today. We have to massively speed up localization of product to defend our market access. In addition, potential trade barriers between the EU and the U.S. including risk from the Section 232 topic as well as uncertainty around U.S. health care and hospital budgets remain external factors to watch closely and which could cause risk to our U.S. revenue. On the upside, there are several opportunities that could positively impact our performance. We may see stronger adoption of SMILE pro in China on the back of good growth of the installed base during '24, '25 and a successful entry into the refractive market in Japan. The start into the new fiscal year has been rather sideways, but we are currently in the off-season for refractive procedures. As you all know, the first really meaningful indicator for the business will be the spring peak around Chinese New Year vacation. We could further benefit from above-average growth in the DORC business, particularly in APAC where we are now rolling in the marketing and sales integration. Microsurgery will have more steady performance, in particular from the ongoing product cycle of KINEVO 900 S, and with that and hoping that our supply chains will hold that could potentially provide additional revenue upside. All in all, for fiscal year '25, '26, we expect organic revenue to grow by a mid-single-digit percentage range corresponding to reported revenue of approximately EUR 2.3 billion. EBITA margin is expected to increase to around 12.5% supported by an improved product mix driven by higher recurring revenues in particular from the refractive laser business and the DORC portfolio within Ophthalmology as well as by growth in Microsurgery. However, it's important to note that this guidance does not contain a margin of safety for potential impacts from current geopolitical uncertainties, trade barriers or regulatory changes such as the ones that I just outlined to you. Such factors could require organizational adjustments or measures related to our global footprint and value chain which may result in additional nonrecurring effects. Restructuring-related one-off payments can be expected, but it is too early to provide a precise estimate. We will update you as we move into the second quarter on this topic. Similarly, our ongoing R&D reprioritization, which started already under Max's tenure, could lead to one-off items during the fiscal year if certain projects were to be stopped. We currently expect these nonrecurring effects to total up to a mid-double-digit million euros amount. As the exact impact remains uncertain, they are not included in the EBITA guidance that you see here on the slide. We continue to provide updates and transparency as these items evolve. Looking at the midterm horizon of 3 to 5 years, we expect organic revenue to grow in the mid- to high single-digit percentage range. Over the same period, we anticipate a gradual improvement in our EBITA margin moving toward our target range of 16% to 20%, and you will hear more to that in a moment when I hand it over to Andreas. But before I do so, let me close on a more upbeat message. Losing Max unexpectedly is clearly a setback for us and I -- as you know, I'm 8 years in that role with Meditec and I can speak here also on behalf of the top management of Carl Zeiss Meditec. But I can also tell you that in the last days, we, as the leadership team, together with Andreas, have already spent significant amount of time to ensure that we are now moving ahead and that we are not losing time. We have a plan on how to make the business more competitive, a strategy that we want to execute upon. And we are determined to not lose any time in making the necessary changes while a long-term CEO can be found. And with that, I'd now like to hand it over to Andreas, our interim CEO as of January 1 and CEO of ZEISS Group, to talk about the strategic view of where Meditec is today. And let me highlight again that I'm really pleased, Andreas, that you could make that happen today on really, really, really short notice because, as you can imagine, his calendar is pretty tight. So with that, Andreas, I hand it over to you. Thank you. Andreas Pecher: Yes, thank you, Justus. Good morning, good afternoon, good evening, wherever you are on the planet. Well, let me introduce myself, Andreas Pecher, I'm the CEO of ZEISS Group and the designated interim CEO of Carl Zeiss Meditec as of January 1. Warm welcome. I'm really happy that I could make it happen already to be here today. Well, following the decision of Max's departure, of course, our Supervisory Board immediately launched a search for successor. I said that on Tuesday already. And ideally, this process will be completed before the end of this fiscal year. But as you know, that would be the ideal, and we're working on it to make that happen as fast as possible. My goal as the interim CEO is above all to ensure management continuity as well as team and strategic continuity. I do highly appreciate Max's contribution to ZEISS Group for many, many years. He's been with the company for 30 years. And during his tenure as CEO of Carl Zeiss Meditec, he did initiate very important changes at Carl Zeiss Meditec, including new sales organization to drive commercial excellence, a review of our R&D portfolio as well as a review of the global footprint. And from my perspective, these initiatives are entirely sound and need to be continued, and I will ensure that they move ahead at full speed. And as the CEO of ZEISS Group and interim CEO of Carl Zeiss Meditec, I can assure you that the Supervisory Board and the ZEISS Group fully support these initiatives. So being here also with the other hat gives an opportunity to talk a little bit about one of the shareholders. So just briefly, let me talk about that. And given our ownership structure, ZEISS Group is a long-term investor. So our aspiration is to drive sustainable, profitable growth to foster innovations that benefit society. That's what ZEISS Group is trying to do. And just to make sure that everybody understands what ZEISS Group is. I heard the comment I did on Tuesday about my -- I'm fully aligned with my family to make this interim as short as possible. There were questions whether my family would be ZEISS. No, the ZEISS Group is not involved at all anymore. Mr. Abbe donated that 1889 into an endowment completely. The family exists, they're doctors and whatever, but they have no whatsoever connection to the ZEISS Group. We're an AG, German AG setup, fully professional, regular boards, anything else. Just like that, just like Carl Zeiss Meditec AG, except the share is owned by the endowment. They also own SCHOTT, by the way. So they have 2 assets. And of course, Meditec is a great business for ZEISS. Actually, it's at the core of the portfolio. See that here with the numbers that we have. And I do fully acknowledge that the last couple of years have been tough. And there is no doubt in my mind that the business is fundamentally sound and operates in excellent markets. And keep in mind, ZEISS is a deep tech company at its heart. Don't know if anybody heard of EUV. That took us many, many years to get there. And that's one of the -- some people call it chokepoint technologies in digital. So we are, by heart, a deep tech company. And we do, of course, have a pipeline of innovations coming all the time. That's our history. That's one of the cores of what we're doing. And that's shown by being 4 times the finalists in the German Future Prize handed over by the German President the last 5 years, 2 times winning it. Having the CES Innovation Award, et cetera, et cetera, I could continue like that. And just looking at the innovation pipeline across our businesses, Meditec, of course, stands out. Also, ZEISS Group remains committed to investing in the Meditec business. The stock listing provides an important platform for further growth and creates advantages for both Meditec and the ZEISS Group. And while in the end it's really all upon us to create more value for all the shareholders. So now let me talk a little bit about the aspirations for the coming years. At Carl Zeiss Meditec, our aspiration is clear. Just like the ZEISS Group, we also want to deliver sustainable, profitable growth while creating long-term value for the patients, customers and, of course, the shareholders. And our aspiration is to not only grow but to outperform the markets by making disciplined investments, improving commercial excellence and also by achieving more balanced geographical mix. Just looking at the historical development you can see that until fiscal year '22, '23, we had a nice growth pattern and, I would say, healthy margin levels. Throughout the summer '23 and fiscal year '23, '24, we experienced a slowdown in revenue alongside a significant decline in margins. This was largely driven by macroeconomic headwinds such as, of course, restricted hospital CapEx and low consumer confidence for elective procedures. Additionally, several internal factors contributed to this situation including de-stocking of refractive consumables. Also, regulatory changes and restrictions such as volume-based procurement of IOLs in China and tariffs in the U.S. were headwinds to our business. During the years of strong growth, we also made substantial investments in CapEx and certain R&D projects as well as targeted M&A with arguably somewhat mixed results. In the past fiscal year, we have returned to a modest growth trajectory, also margin levels remain under pressure. And for fiscal year '25, '26, as Justus has already spoken, we expect revenues of around EUR 2.3 billion and an EBITA margin of roughly 12.5%, of course, excluding potential nonrecurring items. And for the midterm, over the next 3 to 5 years, we're committed to delivering a mid- to high single-digit organic revenue CAGR. A key focus will be to increasingly diversify our revenue base by growing faster outside of China to achieve a more balanced geographical mix. At the same time, our surgical businesses including cataract, refractive and retina are expected to grow above the group average and become stronger drivers of group performance. On profitability, our ambition remains unchanged. We aim to reach an EBITA margin in the range of 16% to 20% over the midterm. And this is also what ZEISS Group expects from Meditec. So let's take a moment of self-reflection and review the environment and markets we operate in. So what you see here is our strategic positioning matrix which maps our businesses by market attractiveness and competitive strengths, both dimensions, high, low, medium. And well, strong product innovations have allowed us to become market shapers in several key areas. For instance, surgical visualization and refractive laser surgery. Furthermore, recent portfolio additions, for instance, with the acquisition of DORC have significantly strengthened our competitive positioning, giving us access to new markets and improved positioning. However, despite these successes, some selected product categories, including diagnostics, continue to struggle to deliver their full aspired value. And additionally, our focus on commercialization has not been strong enough to capture the full potential of our technology. This has limited our ability to fully leverage the portfolio. In a way, we're ambidextrous, right? We have, on the one hand, a very, very well-trained arm on innovation, strong muscles. And on the other hand or the other arm, in this case, we have one that still requires a training camp, let's call it this way. So moving forward, improving commercialization and unlocking the value in these areas will be a key priority as we strive to accelerate growth and profitability. Also allow me to highlight a few key strengths. Of course, our strong presence in profitable growing markets, our position as a digital first mover, powerful product portfolio and brand, and a highly qualified workforce, global workforce. Our market-leading workflow strategy further differentiates us. Well, it's rooted in customer needs. That's where everything starts. And it strengthens our position and expands our recurring revenue stream. And we'll continue to work on workflow strategy, and I won't go into the details here today. But I always like to focus first on the things that we have directly under control. So we might have many strengths, and I personally rather focus on the areas where we must improve in order to not only safeguard our financial position, but to also ensure long-term success. And to be frank, our long-term strategic investments have not yet delivered the commercial success we expected. Examples include our digital portfolio and our investments in phaco. These initiatives are promising, but the returns have been slower than planned. We're also seeing declining innovation efficiency. Our broad and sometimes unfocused investment pipelines have limited our ability to convert innovation efforts into profitable outcomes. Well, isn't that the difference between invention and innovation? That's what I tell our R&D folks all the time, innovation delivers money in the end and inventions is great for science. But we're a company and we want to have innovations that make money and, of course, also benefit society. And I've already stated that we're not fully capturing the market potential that is available to us despite having strong and competitive products. So the commercial focus needs to improve. And finally, our functions remain fragmented across different geographical locations and there might be good historical reasons for that. The consequence is that the fragmentation leads to lower efficiency and effectiveness. So you can see we have our work cut out for us. And I believe with a disciplined and well-coordinated execution, we can establish a solid basis for reinforcing our financial resilience and ensure long-term success. Now have a look at the -- let's have a look at the outside world. While there are a number of megatrends that continue to support the long-term growth of our industry, we must also recognize that a number of restraining forces are becoming increasingly prominent. So on the one hand, we have aging populations, advances in digital technologies, industrialization of health care providers and the shortage of qualified medical personnel. All that drives demand for more efficient, standardized and innovative treatment solutions. So that's great for us. However, on the other hand, alongside these positive drivers, we're facing a set of challenges that are growing in scale and complexity. Geopolitical conflicts, I think everybody just needs to open the newspaper every day. And rising local content requirements. These developments are forcing us to adapt our global manufacturing innovation footprint, and they introduce additional uncertainty in our long-term planning. And cybersecurity has become a significant regulatory challenge across the medtech sector. So we have increasing requirements for data protection, system resilience, and that places pressure on product development, compliance and operational processes. Then, while risks in China, our key market, are increasing, we are experiencing a growing local competition, tighter regulatory frameworks and lower consumer confidence in recent years. Of course, all these factors impact both market access of new products and revenue predictability. And the U.S. tariffs continue to represent a notable risk for our growth ambitions in this strategically important market. They influence prices, pricing competitiveness and our ability to scale certain products. Also, supply chain risks are rising against the backdrop of geopolitical tensions. And taking all that together, these restraining forces create a more complex environment requiring greater agility and more deliberate strategic adjustments as we move forward. And of course, we need to drive localization of products much faster. We heard that already before to be very clear there. So let me walk through the three strategic vectors that will drive our growth and profitability going forward. They do align very closely with the ZEISS Agenda 2030, which is the agenda for the whole ZEISS Group. And namely there is four elements: customer at the core, speed, truly global and high-performance team size. I think that fits very well with also the challenges and the work that Carl Zeiss Meditec has ahead of itself. So first of all, customer centricity. This means that we will place the customer at the center of all commercial activities we do. It's about ensuring that every function, including sales, marketing, service or product management works in a coordinated and aligned way towards delivering real value for our customers. We want a deep understanding of our customers' needs, a faster reaction to their feedback and a more seamless experience across all touch points. And by driving greater responsiveness to customer needs, we build trust and long-term partnerships which in turn supports sustainable, profitable growth. The second vector is focus. Here, our goal is to sharpen our priorities and concentrate on activities that have a clear and direct market rationale. This includes placing strong emphasis on innovations that respond to real customer requirements and contribute meaningful to revenue generation. At the same time, we must be disciplined about reducing or discontinuing aspirational projects that may lack clear strategic alignment. Just to be clear, that doesn't mean we're stopping innovation, but it means that we're doing innovations with purpose and guided by evidence and by the needs the markets have that we serve. And third, we need to see more speed and efficiency. To remain competitive, we will selectively optimize our processes and nurture a culture that empowers our people, at the same time, expect performance and enables fast decision-making. This is all about removing unnecessary complexity, shortening cycle times and ensuring that the organization moves quickly. By doing this, we not only improve our internal efficiency and effectiveness, but also become more agile in responding to customers and market shifts. I think that's very important in the setup that the world is these days and can be a competitive advantage. Together, these three vectors will guide our decisions, our resource allocation and our behavior. And we implement them consistently across the organization. And with that, I believe we will unlock meaningful impact for both our customers and our business and ultimately then also for our shareholders. If I look at the recent few years, our market environment has changed a lot, and that requires us to rethink how we operate as an organization. This curve that you see here outlines the path we're taking from scaling through transitioning and ultimately back to profitable growth. Up to 2023, our focus has been on scaling for growth. Following very rapid growth in our consumables business in the 2010s years and coming out of COVID, we needed to adapt our structures to counter increasing complexity. And then during this period, we implemented new organizational structures to support expansion beyond our established anchor products, we made significant investments, e.g., expanded our manufacturing capacity, enhanced R&D to diversify our portfolio and strengthen our digital capabilities to ensure workforce -- workflow solutions. We also heavily invested in workforce and talent base. However, not all these investments have translated into the level of strong growth we wanted and expected. However, it's important to note that this foundational work was essential to prepare us for broader opportunities and to ensure that we have the capabilities needed for this next stage. So since 2024, we began to see a rapid and I would say initially unexpected market weakness. And this year, in the next few years, we're in the necessary transition phase. This is where we must adapt to, of course, rapidly evolving market dynamics and increasing regulatory complexity. And our priority here is to revise our existing structures, portfolios and footprint. And these adjustments allow us to respond effectively to developments that are challenging our profitability. After this, we expect to see the benefits of our efforts. And this is the phase where we expect to return to healthier growth rates and renew our profitability ambitions. Also, this all will help us reap additional benefits from our innovation pipeline. And we are confident that in the long term, these strategic actions that we're taking now will bring us back to the strong upward trajectory. So in the end, it's always nice to talk about strategy. That's very nice. What ultimately matters is implementation and results, and that's what we're focusing on. If you look at it, of course, long-term strategy sets the direction, that's important. More important is that several important steps are already underway. And for us, it's of paramount importance that we do not lose the momentum. And this is a big part of why I decided to take the interim CEO job myself, even though it's additional work, but it's important. I want to make sure that no time gets lost and the Meditec management team gets what it needs to move ahead. And as I've described, we have a strong R&D capability. That's really the core of ZEISS and also Carl Zeiss Meditec, but we don't have yet the equivalent commercial arm. So first, we've taken a major step by introducing a Chief Commercial Officer, training camp essentially, you can call it that way. Effective as of December 1, we will have a dedicated commercial unit that is fully responsible for driving our global revenue. Now we have a unified customer interface that brings together sales, sales-related digital and services. And our sales structures are becoming flatter and enabling faster decision and greater efficiency. Also, this new structure gives us clearer accountability, a stronger commercial alignment across the regions and the ability to accelerate growth with greater consistency. Second, as a consequence of the R&D review, we have also repositioned our digital organization. Our digital business unit has been reallocated into the SBUs, the strategic business units, which allows us to increase efficiency, strengthen the collaboration and ensure that digital is embedded directly within our business lines. And this move brings digital closer to customer needs and closer to our innovation cycles. And our operations footprint review has started. I just reviewed it this week. Our goal is to identify opportunities for consolidation and higher efficiency across our network. And as this work progresses, so will we provide updates on the insights that are coming up. So as you can see, our transformation is already in motion. We already started for a little bit already, and this is only the start. There's more to come. So I'm confident that during this fiscal year we will share more insights into our strategic realignment and you will be informed, of course, in due course. So with that, I'd like to conclude my presentation and look forward to your questions. And first of all say thanks for your attention and pass back to Sebastian. Sebastian Frericks: Okay. Thanks, Andreas. So yes, Jack, why don't you kick it off? Jack Reynolds-Clark: It's Jack Reynolds-Clark from RBC. I had two, please. One kind of near-term focused and one slightly longer-term focused, both regarding margin. My first question does have a few parts. I was wondering if you could walk through the building blocks for EBITA margin guidance for next year. You mentioned that some of the unknown political and regulatory risks are not included, but I wasn't sure if other headwinds around the IOL withdrawal in China and VBP are included. So if you could just run through that. Then a second part to that, VBP, could you just run through what your latest thoughts are on the potential kind of basically what's going to happen and what the impact is going to be on your business there? And then moving on to the midterm guide, could you talk through your latest thoughts on delivering that 16% to 20% EBITA margin? Did I interpret the slide later on in the deck that actually it might not be till 2028 where we start to see that kind of come through more meaningfully. Justus Wehmer: Yes, Jack, I think I take that, hopefully you can hear me now. The walk-through on the building blocks and happy to do that. So maybe we start with the write-down of some R&D projects that decisions have not been finally taken, but that could amount to a lower double-digit million euro amount during the course of this year. The restructuring, as you may call it, that still remains to be decided in detail, so we cannot yet share any further quantification at this point in time. It's simply too early, but we will keep you updated on that. The IOL topic that I was mentioning, there is a potential scrapping risk that also can be low double-digit million amount. And this, however, is still unclarity with regards to the question whether we can potentially sell in other markets this material because we have -- that is a little bit the ambiguity in the regulator's decision in China. While they have basically taken the admission to sell this product under the existing or running VBP, they have not taken away the license for the product. So that, therefore, leaves some room that is currently being investigated on what potentially could be still done and what these lenses could be used for. So -- but it could, in the worst case, certainly become, as I said, low double-digit million euro hit. Your other part of that question was aiming at the -- our expected impact of the next VBP. And there's also related uncertainty. Number one, as we mentioned, we are currently in the process to already run through the reregistration for the product that would replace the one that I was just talking for. But it looks right now a little bit like a photo finish. From the data that we know we will have the approval by NMPA for that lens by end of February, early March, but it is unclear when the new tender is going to be opened. In a worst-case scenario, we could see the tender being opened without us being able to basically pitch with this new lens being included. And that is certainly, again, a headwind that is too early to be at this point in time, quantified, but that's something that we have to keep on our list. I hope that gives you a little bit of color on those building blocks. On the mid-term question, I can make a few comments and Andreas, if you want to build on that. I think what we want to convey today is basically that we think we have a portfolio that is stronger than ever before, yes. We do have, for example, and we didn't really mention it here in the presentation, we have the excimer laser MEL 90 approval in the U.S. since a couple of months and although you could argue the investment climate in the U.S. has been rather soft but there's a huge market potential for that laser in the U.S. because, as you know, excimer lasers in the U.S. are widely spread and the registration for that product we have now in our hands since a couple of quarters. We have, through the DORC acquisition, I think a very nice completion in our vitrectomy business. And actually, again, although we didn't mention it specifically, but the DORC growth rates in the last fiscal year have actually been above our own expectations. So therefore, there could be some upside out of that business. And going forward with it and driving our ever-increasing portion of recurring revenues, I think that will certainly bring us in a position to get into the 16% to 20%. So now the question is in this environment where regulatory policies become more and more weapon in free trade, we have to accelerate the efforts to keep the market access, especially in China. But if need be, and nobody knows how Section 232 is going to run -- to end up with, but also in the U.S., we need to provide and maintain the access to these markets. The two markets in total are 50% of our business. And we will make a lot of effort to keep this access because if we are not present in the Chinese market, Chinese competition will come after us and all the rest of the world. And that, Jack, is the -- how should I say, the other uncertainty here. We now have to very carefully go through our list of priorities for accelerated localization, as Andreas has lined out in his speech. And that is, let's say, it's a rather complex exercise. And again, to quantify by when all this is going to be completed is a little bit tough. But the key question is or the key message for you is we have a great and admired position in the Chinese market, and we will do, not going to say whatever it takes, but maybe actually I could say whatever it takes, but we do a lot to ensure that we keep that market access for us. Andreas Pecher: Maybe I can, 1 or 2 things... Operator: Sorry, we cannot hear the question online. Andreas Pecher: Now my mic -- is my microphone on? Justus Wehmer: Yes. Operator: Now it is. Sebastian Frericks: It's not a question. It's still the answer. Andreas Pecher: I'm still answering. So first of all, we're in very good markets. That's clear. We have a great portfolio and this geopolitical topic that is coming up the last couple of years, of course, it's a headwind, but it's not necessarily only a downside, right? Because if you are better reacting towards it than your competition, you do have an advantage. And that's -- just to add that, that's why it's important to also look at the speed, the agility of the organization and make sure that we are focused on the customer and react better. Ultimately, you don't have to be perfect, you just have to be better than your competition. That's our goal, of course, to support all that to make out of this great portfolio in the great market something that's actually beating also the competition. Sebastian Frericks: Falko and then Oliver and Lauren. Falko Friedrichs: It's Falko Friedrichs from Deutsche Bank. My first question is a quick clarification on the wording of the midterm EBITA margin target, is the plan to increase the margin towards the 16% to 20% over the next 3 to 5 years? Or do you plan to be inside this range in 3 to 5 years? My second question is on the phasing of growth and your targeted margin expansion in fiscal year '25, '26. Will this likely be a more back-end loaded year again or rather a little more evenly split? And could you give a first glimpse into how Q1 is shaping up? Justus Wehmer: I can take that. So my perspective is I want to be inside and that's clearly -- so inside the 16% to 20%. And that's clearly the aspiration. And it's, by the way, also in line with the aspiration of the ZEISS Group's perspective to -- you would have probably said it anyways, Andreas, but just to ensure that it's not only you expecting that, it's him also expecting it in his main role, if I may say so, yes? Andreas Pecher: Other role. Justus Wehmer: Yes, in his other role. The back-end loading and the start into the fiscal year, I think we had historically -- and I mean, if you have carefully looked at the Q4 numbers, you have seen that Q4 has been crazy and September has been the craziest of craziness in terms of volume that we have delivered into the markets. And it was simply a culmination of many factors. So not only the typical, let's say, year-end race optimization from sales target achievement motivation, but it's simply also because we had the skewing in the Microsurgery business, which was heavily geared towards the last weeks of the year. However, like always, once you have done this, you kind of fall in a somewhat of a slump and that is what we are actually seeing right now. So I would probably not expect a miraculously wonderful first quarter. And therefore, the back-end loadedness, and I tell you, Falko, I hate it. I wish for once that I go on summer vacation and I can relax and say we have done it, simply doesn't happen. It's always photo finish. And I'm a little bit afraid that you will see that happening this year again. Sebastian Frericks: Oliver? Oliver Metzger: It's Oliver Metzger from ODDO BHF. Three questions. One, first, also a follow-up on Falko's question. On Microsurgery, you had technically a tough year. Now with Q4, you made more positive comments which sound encouraging. Could you just describe whether really you see the worst is over now or we technically have to wait until '27 until your portfolio is -- U.S. is more complete? Second question on China, it's the 25% of sales are still meaningful. Midterm, you target a higher share outside of China. So just as a rough understanding how to go there, do you expect that China as a market will remain challenging also for midterm and therefore just the other markets technically grow normally? Or do you see China turn to a better but simultaneously higher growth outside of China? And the last one is, Justus, focus on innovation with more purpose. If you bring that to a more financial perspective, would you describe your R&D spend just as too high or looking back your R&D productivity as too low? Justus Wehmer: Okay. So Microsurgery, and interrupt me, Oliver, if I don't hit the nail of your questions. So yes, Q4 was very dynamic, and we see the dynamics continuing. Again, as a little recap, you all remember that we had KINEVO and PENTERO brought into the markets in spring of last year, and then we had a software bug, and therefore, we were somewhat stalled for 3 months to have efficient demoing. And for these products, demoing is basically the first step in the conversion from a lead to an order and then ultimately a revenue that we have overcome. The funnels are nicely filled now, and the business management is really upbeat that those 2 products will carry throughout a year. That should see solid growth. And the only caveat is that we need to ensure that the supply chains can keep up. That's -- hopefully, that answers your question. China, I can give a few comments. And Andreas, happy for you to add. I mean, overall, I think this market is going through a transition where you will see much stronger local competitors across the board of the entire portfolio. You have in diagnostics competitors, you have in the implant competitors. And I think it's clearly safe to assume that it's probably only a few years until we will see companies entering the refractive laser business. But beyond your innovation capabilities, let's not forget, especially in the latter businesses that I mentioned, it's your application competence, it's your service, your customer dedication and focus. And if Max was sitting here, he would probably tell you that I think 5 years in a row, the Chinese organization has won the award for the best service whatsoever. So what we have also learned, and in some markets, the hard way, is that you can have a nice product. If the surgeon doesn't get the training and doesn't feel 100% comfortable with the equipment, you will not get to the rate of utilization of the systems and you will not see the consumer business kicking in at the levels that you want to have to have this steady stream of revenues and contribution. So having said that, that means I think we have the infrastructure there, and we have a very good acceptance in the market by our customers. Will that make us bulletproof? No, and we can't get complacent by no means. But I think we are in a pole position, and it's up to us to make use of it. And Andreas? Andreas Pecher: Yes. Maybe I'll just add a couple comments on that. Since in this case it's Carl Zeiss that has the China organization. ZEISS in China has more than 7,000 people. So that's a lot of people and that's a lot of good people. Of course, they're not all working for Meditec. Specific, it's a lot of good people. We're super highly recognized. Before April 1, I started my other role. Before that, I spent a lot of time traveling the world, also spent some time in China and talked to a lot of customers. We're very well recognized in China, outside of China. So we do have this asset. We have very good people. We have the infrastructure to do that, and we have the recognition also of the government to be a company that contributes. So I think it's up to us to do the best out of that. In the end, if you don't play in China, I think can be risky. That's our view. We see that in other businesses as well. Maybe some other industries in Germany have seen that as well. You better be there, you better play there, you better make sure you learn there, you grow there. And then at the same time you grow in the other growth markets which specifically are Southeast Asia and India. That's sort of the next growth markets. And that's, of course, it's a dual strategy, right? Make sure you grow in China, make sure you hold the competition at distance, ideally beat them and then you win in Southeast Asia and in India. Justus Wehmer: On your innovation question, so first of all, I think it's not only investors listening in here, but the transcripts will be read by all our R&D people. And therefore, first of all, I will tell you that we have extremely smart, extremely hardworking and bright people across our R&D organization all over the world. So what we do have, and that's a fact, and this is not a ZEISS-specific problem that we see since corona, let's say, a lower productivity, if you measure it in terms of patent recognition and so on. And there's some trends that you can clearly see that come especially in creative productivity that do not necessarily -- that are not helped by more home office and things like this. That's simply a matter of fact. And this is, I think, where we clearly from our company need to work on to regain that productivity levels. But let me also maybe highlight that it's also management task, and I think you have heard this several times today that we help the teams to focus because if you have people stretched over several projects at the same time you are just losing focus and you're losing productivity. And that is more on management. And that's why some people may not like if we are talking about stopping projects, but I think you will have a return on other projects in the pipeline. Sebastian Frericks: Lauren, please. Lauren Mitchell: Lauren Mitchell from Goldman Sachs here for Richard Felton. I have 2 on OPT and then one sort of more broader question. Firstly, on OPT, just in terms of China refractive, what did China procedures end up sort of year-on-year? Was it sort of in line with the expectation for roughly 2%? And what is baked into your guidance for next year in terms of China procedures? Second question is on VISUMAX. We know you've done sort of roughly 100 units this fiscal year after launching halfway through. Building on that next year and the pricing premium that's associated with SMILE pro and the consumables, how should we think about the contribution to organic growth from that consumables as the utilization of that procedure ramps? And then a longer-term question, Andreas, really appreciate your perspectives and observations on some of the endeavors that maybe haven't paid off and appreciate the transition phase that you spoke to. I think last year when there was sort of changes at the management level of both the ZEISS parent group and of Meditec, there was sort of some hope that maybe there would be sort of scope for more meaningful change perhaps in terms of both costs and portfolio optimization. I know you mentioned something like diagnostics, which, if I'm not mistaken, was loss-making this year. So my question is, in this sort of CEO transition, how should we think about the company's ability to execute on some more meaningful changes within the business in this period? Justus Wehmer: On China refractive, I think we said it actually in the presentation that overall we have seen slight growth in the procedure numbers in China, but really slight, but more meaningful for us is that we have seen, especially in Q4, then now the pickup of the SMILE pro procedures. And that, of course, is carrying higher margins on the procedures. So having said that, the expectations for the fiscal year that just started would be by and large that we -- again, there's no major changes in the global economic environment, no major changes in consumer confidence, but with the investments that have been made in the VISUMAX 800, and Sebastian, correct me if I'm wrong, but I think by the end of the fiscal year we had achieved almost 100 deliveries into the Chinese market. So these lasers are now kicking in as they are being -- as the surgeons are being trained on. So we would basically, if you want to say so, on the total number of procedures, see a qualitative improvement with a higher utilization of the SMILE pro lasers in the field. So that in itself should give us, hopefully, a little bit of tailwind on the margin. But in volume, I'm reluctant here to give you any sort of too positive expectation. Yes, I think I hope I have covered your questions or do you have -- had any specific further question on the VISUMAX 800? Lauren Mitchell: Maybe just on the contribution in terms of utilization, how you see that evolving throughout the year? Justus Wehmer: October, November is not a good measure. We -- I think the numbers were higher utilization in October on the lasers, November, lower utilization. But as I said earlier, the moment of truth is the spring peak. Thank you. Andreas Pecher: Yes. And to answer your more broader question, well, the short answer would be, yes, that's exactly what we want to do to broaden it. That's what actually Max and the whole team were there to do. And I brought some example. One is digital, by integrating that into, where the business is happening means into the SBUs, this will be more meaningful. Means more effective, potentially reducing the R&D cost, but more importantly will be driving the results that ultimately our sales folks need. And then looking at the portfolio diagnostics you brought up is clear. I mean, just putting that up, you see where your stars are. And the other ones, of course, you have to take a look at. And that's clearly a focus to look at and make sure that there's a reason why we have a certain business. And frankly, there are all options on the table. Doesn't mean that you sell or not. Certainly what will be very important, there will be and are already very pointy questions asked to the business to make sure that we have a plan to get the overall portfolio up. And that will also be a means in addition to many others to get us between the 16% and 20% ultimately. Sebastian Frericks: Okay. We'll take one more from -- or 2 more from the room, actually. Maybe we -- yes, let's start with you, Sven, and then go over. And then we'll take some online questions. And afterwards, we do another round in the room, if that's okay for everybody. Sven Kuerten: Sven Kuerten from DZ Bank. Would you say that the margin improvement for next year is exclusively based on Microsurgery? That's first question. And secondly, do you think that at the end of your forecasting period in the midterm, it's possible to come close to the very high historical levels in Microsurgery or is that not on the table any longer? Justus Wehmer: I would actually not entirely bank my hopes for next year on Microsurgery, if I understood your question correctly. As I said before, I still do see in the U.S. market. I just was in touch yesterday with our Head of Sales in the U.S. And as I mentioned earlier, with the MEL 90 approval, where we have not yet really benefited from in the last fiscal year, that certainly could become a good driver for an improvement in ophthalmology next year. The VISUMAX 800, let's not forget, the 100 systems that we ship to China is not the end of the story, so to speak. The Japan market penetration with refractive is actually only starting now. So there is, I think, more than Microsurgery to the entire guidance story baked in. If I understood the second leg of your question correctly, you were referring to when do we see Microsurgery margins hitting plus 20% again. It's obviously mainly a mix question and I am careful here, but I would obviously anticipate for this year an improvement in the Microsurgery margins beyond what we have seen last year simply for the fact that we now have a funnel which is filled and hopefully a better mix over the year than we had last year. So I hope that answers your question. Sebastian Frericks: All right. Yes. Then please go ahead with one more from the room. Wolfgang Lickl: It's Wolfgang Lickl from Apo Asset Management. A very much -- a focus question on refractory business in China on a kind of more long-term view. We are talking a lot about demographic developments, people getting older. I could imagine that means a typical client or patient for a refractory surgery being more young and then we have declining birth rates. So the number of people who could have the service are declining. Maybe we have some increase in penetration, but could that business -- because you are an equipment manufacturer and maybe the installed base is still growing, maybe the amount -- number of treatments is growing, but the additional number of lasers the market needs is declining and then you have a declining business as the equipment manufacturer. What's your opinion? Is this a wrong thinking from my side? Justus Wehmer: You see, first of all, myopia treatment is nothing that is secluded to people between, let's say, 20 and 30. So there is well -- until you are 40, 45 people are going for the treatment. And let's also not think statically about laser vision correction because we are focusing right now on myopia. Why? Because myopia requires a rather -- let's put it this way, a rather slim diagnostical investment. And then the treatment itself is typically not requiring a lot of tailoring to the patient's requirements. Of course, you are measuring the eye and do all the biometrical work, but then you basically program the laser and shoot 2 eyes equally with the same focus and done. What we are not considering is the presbyopic market. And the presbyopic market is basically guys like me, and it's rather younger people here in the room, but many others in more, let's say, my generation who are actually either wearing bifocal lenses, glasses or use other means. And this market is pretty untapped. And why is it untapped? Because if, as a surgeon, you have the choice between going for the bread and butter and basically patient always happy going home and never seeing again business with the myopic treatments versus the presbyopics, which are people where you have to exactly understand what is the visual preference profile of a patient, where people will say, I am a guy who is doing a lot of whatever. I'm a golfer, I want to see my golf ball on 200 yards out there. Therefore, I want to have the focus more in the long range and not in the short range and so on. So there's much more diagnostic work and a more demanding patient. And that has been, if you have the choice between myopia treatment and presbyopia treatment, has been a bit of a, let's say, a hurdle. And I would tell you that I think this presbyopia market is a huge untapped market potential that I still see for China. Andreas Pecher: And just to build on that, having an installed base there, of course, gives you an advantage, right, on the machinery, but also with the relationship with the doctors. That also brings in the diagnostic picture. There is value, of course, of having that. And let me just add another one. It's not only China. Myopia is actually, according to United Nations, one of the largest -- I mean, it's a pandemic, more or less. So there is -- besides opportunities in China, we see a lot of opportunities, specifically also in Asia because that has to do with the setup of the eye of a typical Asian person. Southeast Asia, India, there's other things as well like cataract are very strong. So we do see, besides China opportunities, large opportunities outside already. Sebastian Frericks: Okay, then I think we take a moment of pause in the room. If somebody has a follow-up, we'll take another go at it in just a moment, but I first ask the operator if there are any online questions in the queue. Operator: Yes, there are. Thank you, Sebastian, and thank you very much for the presentation and your time for the questions, Andreas and Justus. We have two raised hands. One is from Jon Unwin, and you can start your microphone, Jon. This takes a moment to unmute. Jon, we will come back to you later. I will go over to Davide Marchesin. Davide Marchesin: I have 4 questions, 2 regarding the last reported quarter and the other 2 regarding the full year guidance. So starting with the last quarter numbers. I see that in Ophthalmology in the quarter, you reported 11.6% EBITA margin. So down sequentially from previous quarter, 13.2%, despite reporting an increase of revenues. I will understand why the margin of this division was down quarter-on-quarter, if there is some specific reason? Second question regarding the quarter regarding the R&D. You reported EUR 92 million R&D, so significantly up from the previous quarters which were running below EUR 80 million. I think the average in the previous quarters was like EUR 78 million. So I want to understand what we should expect going forward. So if the R&D run rate is more like EUR 80 million or more like EUR 90 million? Then regarding the full year guidance, the first question is on the mid-single-digit organic growth. So in the last quarter, you reported organic growth of more than 10%. In the first quarter next year, you will have a very easy year-on-year comp. I want to understand why you are guiding for such a significant slowdown of organic growth if there is some issues you are kind of anticipating in some business or products? And finally, full year guidance on margin, you reported, I would say, a very low margin in Microsurgery. So assuming next year a partial normalization of Microsurgery profitability would explain essentially all the 100 basis points expansion of the margin at the group level so implying essentially a flat operating margin for the Ophthalmology business. So looks like there is some margin of conservativeness in the guidance on the margin evolution. Tell me if maybe I'm missing some elements in terms of the margin evolution. Justus Wehmer: Davide, it's Justus. So I have my go on your first question on Q4. I'll start with the portion on R&D. So you're asking EUR 92 million in the last quarter versus a run rate which was closer to EUR 80 million in the other 3 quarters. It is a little bit of a historical pattern. If you look in the disclosures of previous years, you will see that we somehow always have it somewhat skewed to the last quarter when it comes to the R&D run rate. So therefore, I think nothing peculiar to mention here other than simply that come to end of the fiscal year, everybody is basically getting final bills from consultants and external partners, which are working with R&D. So more importantly, your expectation going forward, EUR 80 million or EUR 90 million you were asking. I pretty much guide you on expecting a rather flattish total R&D expense number for the year to come and the distribution over the 4 quarters is most likely to look similar to what you have seen this year. You were asking on OPT EBITA level in Q4 and why it was down. Frankly spoken, I would refer or open it to Sebastian to chime in. But I think there is a little bit of mixture or mix effect because the last quarter for OPT and so it was this year is typically a very strong device quarter and especially in the U.S. And you have seen that we had good growth in the U.S. last year. And in the U.S., it's mainly a diagnostical business and then the high portion, especially once we have such a strong Q4 of diagnostical products in the mix are actually somewhat margin diluting. But Sebastian, anything to add that would be worth mentioning? Sebastian Frericks: Maybe 2 details just to add but what -- the product mix indeed is the main reason in the fourth quarter, also there was an increasing impact of U.S. tariffs because we did have the price increase on July 1 and then second step in August once we knew that it was going to be actually the 15% and not the 10% but because of the 2 to 3 months order time, the backlog time, these prices did not kick in yet economically for us in the fourth quarter. So we -- this took some margin out of our microscope business, in particular, and the Ophthalmology division. And lastly, there was about a EUR 2.5 million, let's say, onetime or special impact in terms of scrapping of some therapeutic laser parts. I'm hesitant to call it a complete one-timer because these things can happen every now and then but we need to clean up a topic there with that impact of EUR 2.5 million. So these taken together contributed to the weaker margin in the fourth quarter and the stocking pattern for refractive typically benefits Q3 a bit more than Q4. Justus Wehmer: Yes. Thank you. And then your question on the guidance, asking why we are guiding single digit and after the strong Q4. I mean, again, Q4 is always strongest quarter in the year, and therefore we shouldn't basically simply linearly then continue with the same growth rate. But just to bring our own guidance into perspective, I think we clearly have seen from public data, from competitors' data that the ophthalmic market growth is more seen now in the neighborhood of depending on the currency, around 3% and 3.5%. So with our guidance, we are, therefore, basically saying we are maintaining the -- our market share, growing with the market or even slightly beyond. And that is pretty much in line with what we have always guided in many, many years. And then you said if MCS is recovering to a normal year, why don't we have then more margin expansion on other businesses? I mean, I think we allude to it in our presentation that there's an NVBP in China and that has nothing to do with the IOL license topic that I mentioned. But there's an NVBP ahead and that will certainly be putting, again, pressure on prices for our IOLs in China. I think, as I said, there's uncertainty on the question on how is the American market developing in light of this Section 232 and potentially even higher tariffs on products that are coming or that are being imported. And there's, therefore, a little bit of carefulness in our guidance that is indicating that maintaining margin levels in this environment may already be somewhat challenging. So I think that's, in a nutshell, the answer. Sebastian Frericks: Okay. So moderator, could we take another try with Jon from Barclays. He's dialed in through the phone, so maybe if there's a way to unmute the phone. As a backup, I have the questions here, and I can read them out in case there continue to be problems. Operator: Thank you very much. That would be nice, Sebastian, because questions via telephone cannot be submitted. We apologize for any inconvenience. Sebastian Frericks: Yes, no problem at all. I read them then. So first question from Jon. Can you confirm that you exited the year with 70% -- 72% product mix in China SMILE versus LASIK? Is that also the right split to think about for the new year, but that of this -- out of the 72%, a higher proportion will be SMILE pro? That's the first one. The second one on Microsurgery, a bit similar to the question that Davide asked. What is your growth expectation for MCS next year? And how much of that is already in the backlog? And then on margins, is the Q4 level the right level also for the full year '26 to think about? And the final one, on the digital business, has putting the digital business unit into the SBUs resulted in cost savings in R&D yet? How should we think about R&D expense year-over-year? Justus Wehmer: Okay. Thank you. So first question on the share between SMILE and LASIK. And again, I assume this refers directly to China. Yes, I would confirm that we have seen the bottoming out of the shift from SMILE to LASIK. And therefore, I think the assumption of 70%, 72% mix is probably the right one. And as I mentioned earlier, now the key is to drive up the SMILE pro portion within that 70-something percent. MCS growth expectation, I think I can keep that rather short. We do expect here up to a mid-single-digit growth rate for next year. Then profitability of Q4 level, right, for next year. I'd say potentially, yes, with -- on the -- and that's why we mentioned the risks and the upsides on it, provided that we are not hit too hard with additional exchange rate issues, and we said there is a risk. Right now, the trends are clearly not in favor of the euro. And you all know that with a high export rate of our products, the currency can make a big difference. But assuming exchange rates are somewhat milder in their development then I think a Q4 level or slightly better is probably not the wrong assumption. And R&D expense I think I answered before, I'd say, as a ratio, you should expect it to rather go sidewards. Sebastian Frericks: Okay, so I pause for a moment. Just any questions in the room? Yes, Volker, please, and then Richard. Volker Stoll: Yes, I have a question regarding the Japanese market. We saw the yen heavily declining in the last 5 years and you mentioned that you want to enter the market with more refractive activities. How should we think about the pricing capability with this exchange rates? And is it then a growth market for the coming years? Justus Wehmer: I would start with the statement that ZEISS has maybe in Japan an evenly strong -- potentially even stronger brand reputation than in China or in many other places. So that gives us some hope that even though we do see this exchange rate weakness of the yen versus the euro, but that the market perception for our products being at a premium price, that this is not putting us completely out of business there. And then secondly, let's not underestimate that in the Japanese market for our product portfolio you can argue why didn't you do that prior. But at some point, we are also opportunistically acting. And if you have a great business in China, you are wondering how many millions do I spend on registrations in other countries. But we do feel that there's an underserved market in Japan and that there's an opportunity and that we are obviously with our refractive lasers always have some opportunities to bundle and do the pricing a little bit smart so that the cash flow for the clinic is optimized. Andreas Pecher: Maybe add a little bit to Japan on the brand and then also on this market, specifically for Med. ZEISS was already in Japan well before Nikon was founded. I heard one reason why Nikon was founded was because ZEISS was there and the Japanese government realized the importance of having optical know-how. By the way, the most favorite binocular of the admiral of the Japanese Navy back then was ZEISS binocular. So there's quite a brand recognition in Japan that certainly helps us. And then just to add what you said, specifically, if you look at the laser market in Japan, there had been some issues many years ago, don't know exactly when they were not involving us, but involving others. So I think that can be an additional advantage for us that we have actually a solution that is perceived as safe. And so we see a good potential there. Sebastian Frericks: Okay. Then, Richard, and then we'll do another stab at online questions. Richard Hombach: Richard Hombach from Bernstein asking on behalf of Susannah Ludwig. So the first question, on the localization of products, could you confirm what products are currently made in China, what you're considering shifting, and what the time line to implement the shift would be? Would there be any cost benefit once manufacturing has shifted? Second question, in the 12.5% EBITA margin guidance, what is the assumption on the incremental impact from tariffs? Is there a net headwind? Or are tariffs offset by price increases? Justus Wehmer: Okay. I'll start with the second part. At this point in time, we are expecting tariffs to stay where they are and therefore offset by the price increases that we have gone through last year. Clearly, especially referring here to the U.S. and we have three price increase rounds in the U.S. had and the last one just became effective, I think, in October. So therefore, yes, at this point in time, our guidance assumes basically neutral impact of tariffs. On localization, what do we produce today already in China? We produce in China IOLs. We produce in China some of our ophthalmic microscopes. No, sorry, I correct myself on our surgical microscopes, PENTERO, yes, correct. And in terms of what do we think we want to shift and until when? Frankly spoken, I'm not going to disclose here what we are going to shift. Our competitors would love to know that. And therefore, I leave it here. And how long it's going to take? Again, is, of course, a function of the question what ultimately we decide to do, but you can know or you know we do have both a consumable factory which is brand new and very capable in terms of the local competencies. And we do have for how many years in Suzhou, the assembly and so for probably 30 years or so, at least as long as I'm with the company, which is more than 20 years, we do have an assembly where we have a really -- a very capable team that know our products across the ZEISS portfolio. So that certainly can be used. Andreas Pecher: I think it's -- in the end, we have the receiving team. I talked about it before. Overall, the group level, more than 7,000 people in China. It's a decision to do things and then we do it. Justus Wehmer: Yes. The registration part, however, and that, of course, everybody who knows our business, that is most likely the trickier one. But then again, since we are not talking about having to basically build from scratch, but can basically integrate it in existing facilities, that will make registration somewhat easier. But again, that is the big caution -- the piece of caution here that, of course, we have to undergo. Sebastian Frericks: Okay. I think there might be more online questions. Can we take a look at the queue again, please? Operator: There are two more online questions. It's David Adlington's turn. David Adlington: Can you hear me? Justus Wehmer: Yes. David Adlington: Perfect. Great. Most of my questions have been asked, but maybe a slightly bigger picture question and a follow-up. Just given the challenges of the last couple of years, has that changed the way that you built up the guidance for this year? And then following on from that, what have you assumed in your guidance for Chinese VBP? Have you assumed that your new product will be approved in time for the tender or not? Justus Wehmer: David, I'll take the question. Yes, for the NVBP, we -- yes, indeed, we have assumed that we have the registration for that lens, number one. And the reason being, let me make that comment, we are already in the final leg of the registration and there is -- the regulations by NMPA clearly define the time frame until then the approval has to be given, and that is 60 working days. And therefore, we know that by the latest, at the end of the 60 working days, we will have that registration. So it's not completely, how should I say, naive that we assume that if the tender comes out in spring as we have as a working assumption that we then will have the registration for that product. On the bigger picture, you said with our history and experience, whether the guidance is reflecting some of it. A bit of a nasty question, yes. So let me answer it this way. I don't want to convey to you that this is a completely derisk guidance here and that, in fact, we are much more optimistic and that's not the case to make that very clear. And I took the time deliberately to talk about the risks and the headwinds that we see there. But I also will tell you that in the last 4 years, I twice had to disclose profit warnings. And I very well remember the conferences after our profit warnings, and they do not rank among the most beautiful days in my life. So I want to keep it to the minimum to come back and disappoint all of you another time, although no promises that I can make here. It all depends more on external factors, I think, than on internal factors. But if that helps you to calibrate the guidance, then yes, hopefully, it does. Operator: We will move on to Graham Doyle. Graham Doyle: Hopefully, you can hear this. Justus Wehmer: Yes, we hear you well, Graham. Graham Doyle: Sorry, it's a new system for me. Okay, so just one question. Again, it's on the guidance, Justus. So it kind of follows up on Dave's question and to your last comments. The last few years have been tricky because there's been a number of heads and tailwinds and so it's been hard to kind of forecast and largely H2 weighted. Now I'm just looking at the numbers, you've done like mid-250s of EBITA this year. The guidance implies EUR 290 million, so that's EUR 35 million. There's a EUR 15 million to EUR 20 million on my numbers headwind from FX. And then we've got this China scrappage thing, which may be difficult in terms of the comp of like EUR 10 million. So on that basis, and I know there's tailwinds, but it's like EUR 65 million of incremental EBITA to get to where we're going. What of that's in your control? You just talked about external factors, but what's actually in your control to get us there? It's a big number. Justus Wehmer: Thank you, Graham. So your mathematics are, of course, correct. What do we have in our hands? I said to start with that MCS clearly with basically rejuvenated portfolio and the KINEVO funnel nicely filled is clearly helping us. You also have seen that we start with a much better order backlog than what we had a year ago. Number two, we -- although we are obviously cautious on the situation in China, but we also felt that considering that everything is, in terms of the economic environment, not really much different this year than what it was in the last 6 months that we were actually in that market environment, delivering almost 100 lasers into the Chinese market, at least as an indication, certainly was rather on the higher end of our expectations given the circumstances. And therefore, there could obviously be with a higher SMILE pro penetration in the market, there could be a little bit of a tailwind out of that. And as you know, that tailwind can be material. So that could obviously compensate for some of the headwinds. And last but not least, the NVBP, I think we could prove that we have been acting pretty reasonably intelligent in the first tender, and we actually intend to do that again. And therefore, it's very early to talk about the result of a tender that still needs to come in. But at least, I'd argue, yes, there will be price pressure again. But we have also seen, and we said it 2 years ago to you all that it actually could also boost the market share and give us more market presence. And so from that perspective, maybe there's also a little bit of potential there. So that is some of the thoughts that I can share with you at this point in time. Sebastian Frericks: May I add one comment, Graham, on your question on how to treat the scrap risk. We have not taken that decision yet. If it's the case that we get the reregistration done in time and we fully participate normally in the VBP and we then may end up depending on the analysis happening right now in negotiations with the external distributors of having to scrap some old product, we may classify it as a nonrecurring item in the sense of the adjusted EBITA. So it may not count towards the guidance. But we cannot tell you this for sure. I think we will know by Q2 -- sorry, by the Q1 report, we will know for sure how we treat it. So just to make that clear for all the analysts. Graham Doyle: Maybe just going back on that, Sebastian, so you would have sold, call it, EUR 10 million last year, which you may scrap now. But the point is regardless, you won't sell it. It's unlikely you'll sell it in fiscal '26 if it's not registered, right? So that will be a EUR 10 million kind of headwind. That's more what I mean... Sebastian Frericks: Exactly. The revenue impact that is clear. That is not a nonrecurring item. It's just if we basically move to a new product within the year and then we have to scrap parts of the old product. In that case, it may be -- we will break it down precisely by the time we have done the work and have the exact number. So these two things have indeed to be separated. I have one more from Jon in writing or 2 more actually from Jon. The first one, I think we didn't quite fully answer it is, can you confirm if R&D expenses will be flat on a euro million basis or as a percentage of sales this fiscal year? The second one, which price cut are you assuming for the IOL VBP in, a, premium; and b, monofocal category? Justus Wehmer: R&D, I was referring to percentage as a ratio of revenue with the statement that I made. And for IOL, again, it's obviously a bit of guessing here at this point in time. What experience tells you is that for many of those tenders that happened in other medical fields of consumables, I think the strongest hit was typically the first tender and then it kind of -- tender by tender, it softened out somewhat. And I think that is probably the answer to your question without knowing, of course, who is going to participate and with what sort of tactics. But at least our expectation is, yes, there will be a hit, but we would see it or expect it to be lower than what we have seen with the first tender just by, as I said, by the experience that we have seen for other consumables. Sebastian Frericks: Okay. Do we have any more online questions? Or if not, we go back to the room for the last chat follow-ups. Operator: Thank you very much. No, we don't have any online raised hands. Sebastian Frericks: Okay. Looking at the room, don't know if you're ready for lunch yet if there's any follow-up? Okay. Then I think that concludes the Q&A session. Thank you, Andreas, Justus for -- and thank you for all for the discussion, also to those attending online. And yes, we'll stay around a little bit longer, Justus and the IR team for -- to have -- we'll invite you to have lunch out here in the hallway. And thanks again for joining us and the IR team is also available for questions and calls in the next days, of course. So looking forward to keeping in touch. And for those who we may not speak again, wish you a nice pre-Christmas period and then a very restful break and looking forward to continuing our meetings and talks next year. Justus Wehmer: Thank you. Andreas Pecher: Thank you.
Sebastian Frericks: Okay. So welcome everybody to Frankfurt. Thanks for joining us today -- the conference today for our year-end. I think it will surprise nobody if I'm -- I say we planned it a little bit differently in light of this week's news. I'm delighted to have Andreas with us, CEO of the ZEISS Group and as of January 1, our new interim CEO at Meditec as well. And Justus, of course, was always planned to be here today. So no, thank you very much for joining us. Also, warm welcome to everybody joining us online for this year-end conference, our numbers out this morning. We'll first, as you would typically expect, go through the financials, go through the outlook for fiscal '25, '26 and after that you will have Andreas do a bit of a strategic review on a high level of Meditec, how -- and, of course, then you can ask us with questions on both items afterwards. So it's not a very complicated agenda. We'll have the presentation, we'll have the Q&A afterwards, and we'll -- we can have some lunch afterwards and continue the conversation a little bit. I wanted to let you know that Andreas, because this was all a bit spontaneously and improvised, you will unfortunately not be able to join for lunch. So you'll only be here for the Q&A session to use the opportunity to fire away questions during that period. And Justus and I and the IR team will, of course, be there afterwards as well for you. We will do -- in the Q&A, we'll take questions from the room and also take online questions. Technical commentary. The microphones need to be switched on so that when you later speak to us, that people who follow us online can also hear you. And with no further ado, I'll pass it on to Justus first to walk us through the financials. Justus Wehmer: Thank you, Sebastian. Walking over here. And welcome to all of you here in Frankfurt in the room. Thanks for having made the trip over here. And of course a warm welcome to everybody who has dialed in, wherever you are. So dear analysts and investors, welcome to our annual analyst conference for the fiscal year '24, '25. Let me begin now with an overview of the past fiscal year. Our fiscal year '24, '25 results show solid revenue growth and strong order entry along with a slight uptick in EBITA. Let's start with a look at the order entry. We achieved EUR 2.288 billion, representing a growth of 18.2% year-over-year. On constant currency, order entry increased by 19.1% and by 13.9% when adjusted for both FX and acquisitions. We saw a robust order trend across all regions, with the order backlog remaining at an elevated level of EUR 380 million. Let's turn then to the revenue. Revenue reached EUR 2.228 billion, which is up by 7.8% year-over-year. Breaking it down, equipment sales grew by 2.3% while consumable sales grew 15.2%. By category, equipment accounts for half of our revenue, consumables 41% and service 9% which -- and I think that's something to highlight. This is a new all-time high and the first time we achieved 50% of our revenue with recurring items. FX adjusted growth was 8.6% and FX and acquisition adjusted revenue was slightly above prior year by 3.3%. In Q4, we saw particularly strong momentum with revenue up by 8.3% and foreign exchange adjusted by 10.4%. Key drivers of this growth included solid VISUMAX installations in China, the accelerating ramp-up of the KINEVO 900 S, while refractive procedures in China remaining largely flat overall. Finally, EBITA came in at EUR 258 million, which represents a 3.5% increase compared to last year despite, and that I want to highlight, despite headwinds from U.S. tariffs which have cost us a bit more than EUR 10 million during the fiscal year, and negative foreign exchange effects which presented an earnings headwind of more than EUR 20 million for the entire year. That, however, is unfortunately continuing into this year and the absence of a one-off gain of EUR 18 million from last year's Topcon settlement. So this represents an EBITA margin of 11.6%, slightly below the 12% in the previous year. Adjusted EBITA margin was 11.6%, up from 11.2% last year. The main adjustment here being Topcon in last year's base. Organic operating expenses was below prior year, mainly due to R&D savings as we had promised to you. Let's take a closer look at our strategic business units and regional performance. And here we are. And we start, of course, with Ophthalmology. Revenue reached EUR 1.724 billion, an increase of 8.5% year-over-year. On a foreign exchange adjusted basis, that corresponds to plus 9.3% growth and 2.3% when adjusted for both foreign exchange and acquisitions. We achieved only modest growth in equipment amid a continued restrictive investment climate. Consumables grew more strongly mainly because of DORC, but also there was solid volume growth in IOLs, especially in premium IOLs. VISUMAX 800 installations in China progressed well. Refractive consumables in China remained stable with a slightly more favorable mix, even though the overall consumer climate still remained rather weak in our view. EBITA margin increased by 1.3 percentage points to 10.9% driven by better operational leverage and full year DORC consolidation. In terms of business split, Ophthalmology accounted for 77% of the group's revenue. Within Ophthalmology, consumables accounted for 51%. Together with service revenues, recurring revenue now stands at a record high of 59%. Let's move on to Microsurgery. Revenue increased to EUR 504 million, up by 5.7% compared to the previous year and exchange rate adjusted growth was 6.6%. After what had been a really, really slow year during the first 6 to 9 months, we finally saw much stronger momentum in Q4, and I think we had guided for that with top line acceleration of more than 16% and very strong order entry as well. KINEVO 900 S ramp-up continued successfully toward year-end, contributing to the strong performance. EBITA margin declined by 6 percentage points to 14%. Main reasons included overall unfavorable product mix with delayed deliveries of KINEVO 900 S and also a significant impact of tariffs and foreign exchange. Please everybody be reminded that, of course, the U.S. market is extremely important for the KINEVO or for the Microsurgery division. In addition, OpEx were higher due to increased marketing and G&A expenses. Finally, looking at the revenue split, Microsurgery accounted for 23% of total revenue. Within Microsurgery, equipment still represented the majority at 81% of its revenue. Yet we are making good progress here with our recurring revenue as well, with service as well as the drapes and instruments business achieving excellent growth. Let's then move on to the regional development. Overall, growth was recorded across all regions with APAC contributing the largest share at 45% including 25% from China. Revenue in Americas came in at EUR 579 million, up 8.7% year-over-year or 10.4% foreign exchange rate adjusted. Growth was supported by both organic performance and the full year DORC consolidation. Order entry overall rose, but following tariff-related pricing measures in Q4 we observed some slight weakness late in the year. As some of our competitors have also been referencing, we believe overall market climate to remain quite weak and price action by foreign companies in reaction to tariffs are certainly not helpful. In EMEA, revenue reached EUR 658 million, an increase of 12.5% year-over-year or 13.6% currency adjusted. We saw solid growth in key markets like Germany, the U.K. and the Nordics. APAC revenue was EUR 991 million, up 4.4% year-over-year or 4.6% currency adjusted. We had good growth in Southeast Asia, India and Korea while Japan declined. As discussed before, it certainly hasn't been a strong year in China, but final results showed some stability in refractive and cataract compared to a weaker 2024. Let's now look at the overall P&L. We delivered stable profitability while keeping underlying operating expenses and impact of U.S. tariffs under control. We delivered EUR 1.175 billion in gross profit with a margin of 52.8%, essentially stable year-over-year despite headwinds from negative currency movements and U.S. tariffs. Excluding DORC, underlying OpEx actually declined year-over-year mainly driven by lower R&D spending and reduced DORC integration costs. G&A expenses increased slightly due to the DORC consolidation and higher IT costs. We have mentioned that we are introducing a new ERP system S/4HANA and that requires additional expenses in that area. R&D expenses were lower year-over-year reflecting disciplined project prioritization. Earnings per share came in at EUR 1.61 and adjusted earnings per share at EUR 1.90, down 3.9% year-over-year. Earnings per share declined despite the higher EBIT. This was mainly due to negative currency hedging results and lower interest income. The prior year also benefited from a one-off positive effect related to reduced contingent purchase price liabilities from the CTI or formerly known as IanTECH acquisition. Let's quickly look at the adjusted numbers. EBIT increased to EUR 223 million, up 14.8% year-over-year. The amortization of purchase price allocations mainly relates to DORC at EUR 26 million and former acquisitions of EUR 8 million in the reporting period. In other special items, prior year included the already mentioned one-off gain from the Topcon settlement. There have been only very moderate adjustments during the fiscal year. Adjusted for special items, EBITA improved to EUR 259 million with an adjusted EBITA margin of 11.6%, a slight improvement compared to the prior year. Turning then to our cash flow statement. Operating cash flow came in at EUR 210 million, slightly below last year. This was mainly driven by an increase in working capital, in particular higher accounts receivables as well as higher interest payments. Investing cash flow was significantly lower at EUR 91 million compared with a high outflow last year related to the DORC acquisition. During the reporting period, CapEx was also lower. Tangible and intangible CapEx amounted to 3.4% of revenue compared with 7.4% last year. Financing cash flow was minus EUR 109 million, reflecting dividend payout and a decrease in treasury payables. By contrast, last year's strong inflow was mainly driven by the shareholder loan associated with the DORC acquisition. Net financial debt at EUR 277 million remained below last year. Now I'd like to provide the outlook for fiscal year '25, '26. And you know me a little bit. Before we turn to revenue and margin guidance, I would like to highlight the key risks and potential upsides we anticipate for fiscal year '25, '26. On the risk side, we expect a potential negative currency impact year-over-year at current exchange rates in the low double-digit millions. In China, we foresee continued pressure from volume-based procurement of IOLs, especially in the multifocal category, which could lead to considerable price reductions. As you all know, the second nationwide volume tender is due most likely somewhere March, April. Last month, Chinese regulators have told us that one of our successful bifocal intraocular lenses needs to be reregistered and the old product can no longer be sold to public hospitals under the old VBP tender. While there's nothing wrong with the product, it was initially approved in the year 2015 and then reapproved in the year 2020 and it has been sold for all those years and safety data is excellent. We have been quick to launch the required reregistration process. And hopefully, we'll be there in time for the new tender that we expect in the spring. Our Chinese team is now withdrawing some of the old product from the market, creating a scrap risk for a number of stocks of the old product also in the low double-digit million euro. We also anticipate potentially intensifying competition in refractive. Though no direct launch preparation by a Chinese competitor are being observed as of now, we continue to monitor government policy changes in that market, too. We are very clear-eyed about China, which, as you know, is a very significant portion of our revenue today. We have to massively speed up localization of product to defend our market access. In addition, potential trade barriers between the EU and the U.S. including risk from the Section 232 topic as well as uncertainty around U.S. health care and hospital budgets remain external factors to watch closely and which could cause risk to our U.S. revenue. On the upside, there are several opportunities that could positively impact our performance. We may see stronger adoption of SMILE pro in China on the back of good growth of the installed base during '24, '25 and a successful entry into the refractive market in Japan. The start into the new fiscal year has been rather sideways, but we are currently in the off-season for refractive procedures. As you all know, the first really meaningful indicator for the business will be the spring peak around Chinese New Year vacation. We could further benefit from above-average growth in the DORC business, particularly in APAC where we are now rolling in the marketing and sales integration. Microsurgery will have more steady performance, in particular from the ongoing product cycle of KINEVO 900 S, and with that and hoping that our supply chains will hold that could potentially provide additional revenue upside. All in all, for fiscal year '25, '26, we expect organic revenue to grow by a mid-single-digit percentage range corresponding to reported revenue of approximately EUR 2.3 billion. EBITA margin is expected to increase to around 12.5% supported by an improved product mix driven by higher recurring revenues in particular from the refractive laser business and the DORC portfolio within Ophthalmology as well as by growth in Microsurgery. However, it's important to note that this guidance does not contain a margin of safety for potential impacts from current geopolitical uncertainties, trade barriers or regulatory changes such as the ones that I just outlined to you. Such factors could require organizational adjustments or measures related to our global footprint and value chain which may result in additional nonrecurring effects. Restructuring-related one-off payments can be expected, but it is too early to provide a precise estimate. We will update you as we move into the second quarter on this topic. Similarly, our ongoing R&D reprioritization, which started already under Max's tenure, could lead to one-off items during the fiscal year if certain projects were to be stopped. We currently expect these nonrecurring effects to total up to a mid-double-digit million euros amount. As the exact impact remains uncertain, they are not included in the EBITA guidance that you see here on the slide. We continue to provide updates and transparency as these items evolve. Looking at the midterm horizon of 3 to 5 years, we expect organic revenue to grow in the mid- to high single-digit percentage range. Over the same period, we anticipate a gradual improvement in our EBITA margin moving toward our target range of 16% to 20%, and you will hear more to that in a moment when I hand it over to Andreas. But before I do so, let me close on a more upbeat message. Losing Max unexpectedly is clearly a setback for us and I -- as you know, I'm 8 years in that role with Meditec and I can speak here also on behalf of the top management of Carl Zeiss Meditec. But I can also tell you that in the last days, we, as the leadership team, together with Andreas, have already spent significant amount of time to ensure that we are now moving ahead and that we are not losing time. We have a plan on how to make the business more competitive, a strategy that we want to execute upon. And we are determined to not lose any time in making the necessary changes while a long-term CEO can be found. And with that, I'd now like to hand it over to Andreas, our interim CEO as of January 1 and CEO of ZEISS Group, to talk about the strategic view of where Meditec is today. And let me highlight again that I'm really pleased, Andreas, that you could make that happen today on really, really, really short notice because, as you can imagine, his calendar is pretty tight. So with that, Andreas, I hand it over to you. Thank you. Andreas Pecher: Yes, thank you, Justus. Good morning, good afternoon, good evening, wherever you are on the planet. Well, let me introduce myself, Andreas Pecher, I'm the CEO of ZEISS Group and the designated interim CEO of Carl Zeiss Meditec as of January 1. Warm welcome. I'm really happy that I could make it happen already to be here today. Well, following the decision of Max's departure, of course, our Supervisory Board immediately launched a search for successor. I said that on Tuesday already. And ideally, this process will be completed before the end of this fiscal year. But as you know, that would be the ideal, and we're working on it to make that happen as fast as possible. My goal as the interim CEO is above all to ensure management continuity as well as team and strategic continuity. I do highly appreciate Max's contribution to ZEISS Group for many, many years. He's been with the company for 30 years. And during his tenure as CEO of Carl Zeiss Meditec, he did initiate very important changes at Carl Zeiss Meditec, including new sales organization to drive commercial excellence, a review of our R&D portfolio as well as a review of the global footprint. And from my perspective, these initiatives are entirely sound and need to be continued, and I will ensure that they move ahead at full speed. And as the CEO of ZEISS Group and interim CEO of Carl Zeiss Meditec, I can assure you that the Supervisory Board and the ZEISS Group fully support these initiatives. So being here also with the other hat gives an opportunity to talk a little bit about one of the shareholders. So just briefly, let me talk about that. And given our ownership structure, ZEISS Group is a long-term investor. So our aspiration is to drive sustainable, profitable growth to foster innovations that benefit society. That's what ZEISS Group is trying to do. And just to make sure that everybody understands what ZEISS Group is. I heard the comment I did on Tuesday about my -- I'm fully aligned with my family to make this interim as short as possible. There were questions whether my family would be ZEISS. No, the ZEISS Group is not involved at all anymore. Mr. Abbe donated that 1889 into an endowment completely. The family exists, they're doctors and whatever, but they have no whatsoever connection to the ZEISS Group. We're an AG, German AG setup, fully professional, regular boards, anything else. Just like that, just like Carl Zeiss Meditec AG, except the share is owned by the endowment. They also own SCHOTT, by the way. So they have 2 assets. And of course, Meditec is a great business for ZEISS. Actually, it's at the core of the portfolio. See that here with the numbers that we have. And I do fully acknowledge that the last couple of years have been tough. And there is no doubt in my mind that the business is fundamentally sound and operates in excellent markets. And keep in mind, ZEISS is a deep tech company at its heart. Don't know if anybody heard of EUV. That took us many, many years to get there. And that's one of the -- some people call it chokepoint technologies in digital. So we are, by heart, a deep tech company. And we do, of course, have a pipeline of innovations coming all the time. That's our history. That's one of the cores of what we're doing. And that's shown by being 4 times the finalists in the German Future Prize handed over by the German President the last 5 years, 2 times winning it. Having the CES Innovation Award, et cetera, et cetera, I could continue like that. And just looking at the innovation pipeline across our businesses, Meditec, of course, stands out. Also, ZEISS Group remains committed to investing in the Meditec business. The stock listing provides an important platform for further growth and creates advantages for both Meditec and the ZEISS Group. And while in the end it's really all upon us to create more value for all the shareholders. So now let me talk a little bit about the aspirations for the coming years. At Carl Zeiss Meditec, our aspiration is clear. Just like the ZEISS Group, we also want to deliver sustainable, profitable growth while creating long-term value for the patients, customers and, of course, the shareholders. And our aspiration is to not only grow but to outperform the markets by making disciplined investments, improving commercial excellence and also by achieving more balanced geographical mix. Just looking at the historical development you can see that until fiscal year '22, '23, we had a nice growth pattern and, I would say, healthy margin levels. Throughout the summer '23 and fiscal year '23, '24, we experienced a slowdown in revenue alongside a significant decline in margins. This was largely driven by macroeconomic headwinds such as, of course, restricted hospital CapEx and low consumer confidence for elective procedures. Additionally, several internal factors contributed to this situation including de-stocking of refractive consumables. Also, regulatory changes and restrictions such as volume-based procurement of IOLs in China and tariffs in the U.S. were headwinds to our business. During the years of strong growth, we also made substantial investments in CapEx and certain R&D projects as well as targeted M&A with arguably somewhat mixed results. In the past fiscal year, we have returned to a modest growth trajectory, also margin levels remain under pressure. And for fiscal year '25, '26, as Justus has already spoken, we expect revenues of around EUR 2.3 billion and an EBITA margin of roughly 12.5%, of course, excluding potential nonrecurring items. And for the midterm, over the next 3 to 5 years, we're committed to delivering a mid- to high single-digit organic revenue CAGR. A key focus will be to increasingly diversify our revenue base by growing faster outside of China to achieve a more balanced geographical mix. At the same time, our surgical businesses including cataract, refractive and retina are expected to grow above the group average and become stronger drivers of group performance. On profitability, our ambition remains unchanged. We aim to reach an EBITA margin in the range of 16% to 20% over the midterm. And this is also what ZEISS Group expects from Meditec. So let's take a moment of self-reflection and review the environment and markets we operate in. So what you see here is our strategic positioning matrix which maps our businesses by market attractiveness and competitive strengths, both dimensions, high, low, medium. And well, strong product innovations have allowed us to become market shapers in several key areas. For instance, surgical visualization and refractive laser surgery. Furthermore, recent portfolio additions, for instance, with the acquisition of DORC have significantly strengthened our competitive positioning, giving us access to new markets and improved positioning. However, despite these successes, some selected product categories, including diagnostics, continue to struggle to deliver their full aspired value. And additionally, our focus on commercialization has not been strong enough to capture the full potential of our technology. This has limited our ability to fully leverage the portfolio. In a way, we're ambidextrous, right? We have, on the one hand, a very, very well-trained arm on innovation, strong muscles. And on the other hand or the other arm, in this case, we have one that still requires a training camp, let's call it this way. So moving forward, improving commercialization and unlocking the value in these areas will be a key priority as we strive to accelerate growth and profitability. Also allow me to highlight a few key strengths. Of course, our strong presence in profitable growing markets, our position as a digital first mover, powerful product portfolio and brand, and a highly qualified workforce, global workforce. Our market-leading workflow strategy further differentiates us. Well, it's rooted in customer needs. That's where everything starts. And it strengthens our position and expands our recurring revenue stream. And we'll continue to work on workflow strategy, and I won't go into the details here today. But I always like to focus first on the things that we have directly under control. So we might have many strengths, and I personally rather focus on the areas where we must improve in order to not only safeguard our financial position, but to also ensure long-term success. And to be frank, our long-term strategic investments have not yet delivered the commercial success we expected. Examples include our digital portfolio and our investments in phaco. These initiatives are promising, but the returns have been slower than planned. We're also seeing declining innovation efficiency. Our broad and sometimes unfocused investment pipelines have limited our ability to convert innovation efforts into profitable outcomes. Well, isn't that the difference between invention and innovation? That's what I tell our R&D folks all the time, innovation delivers money in the end and inventions is great for science. But we're a company and we want to have innovations that make money and, of course, also benefit society. And I've already stated that we're not fully capturing the market potential that is available to us despite having strong and competitive products. So the commercial focus needs to improve. And finally, our functions remain fragmented across different geographical locations and there might be good historical reasons for that. The consequence is that the fragmentation leads to lower efficiency and effectiveness. So you can see we have our work cut out for us. And I believe with a disciplined and well-coordinated execution, we can establish a solid basis for reinforcing our financial resilience and ensure long-term success. Now have a look at the -- let's have a look at the outside world. While there are a number of megatrends that continue to support the long-term growth of our industry, we must also recognize that a number of restraining forces are becoming increasingly prominent. So on the one hand, we have aging populations, advances in digital technologies, industrialization of health care providers and the shortage of qualified medical personnel. All that drives demand for more efficient, standardized and innovative treatment solutions. So that's great for us. However, on the other hand, alongside these positive drivers, we're facing a set of challenges that are growing in scale and complexity. Geopolitical conflicts, I think everybody just needs to open the newspaper every day. And rising local content requirements. These developments are forcing us to adapt our global manufacturing innovation footprint, and they introduce additional uncertainty in our long-term planning. And cybersecurity has become a significant regulatory challenge across the medtech sector. So we have increasing requirements for data protection, system resilience, and that places pressure on product development, compliance and operational processes. Then, while risks in China, our key market, are increasing, we are experiencing a growing local competition, tighter regulatory frameworks and lower consumer confidence in recent years. Of course, all these factors impact both market access of new products and revenue predictability. And the U.S. tariffs continue to represent a notable risk for our growth ambitions in this strategically important market. They influence prices, pricing competitiveness and our ability to scale certain products. Also, supply chain risks are rising against the backdrop of geopolitical tensions. And taking all that together, these restraining forces create a more complex environment requiring greater agility and more deliberate strategic adjustments as we move forward. And of course, we need to drive localization of products much faster. We heard that already before to be very clear there. So let me walk through the three strategic vectors that will drive our growth and profitability going forward. They do align very closely with the ZEISS Agenda 2030, which is the agenda for the whole ZEISS Group. And namely there is four elements: customer at the core, speed, truly global and high-performance team size. I think that fits very well with also the challenges and the work that Carl Zeiss Meditec has ahead of itself. So first of all, customer centricity. This means that we will place the customer at the center of all commercial activities we do. It's about ensuring that every function, including sales, marketing, service or product management works in a coordinated and aligned way towards delivering real value for our customers. We want a deep understanding of our customers' needs, a faster reaction to their feedback and a more seamless experience across all touch points. And by driving greater responsiveness to customer needs, we build trust and long-term partnerships which in turn supports sustainable, profitable growth. The second vector is focus. Here, our goal is to sharpen our priorities and concentrate on activities that have a clear and direct market rationale. This includes placing strong emphasis on innovations that respond to real customer requirements and contribute meaningful to revenue generation. At the same time, we must be disciplined about reducing or discontinuing aspirational projects that may lack clear strategic alignment. Just to be clear, that doesn't mean we're stopping innovation, but it means that we're doing innovations with purpose and guided by evidence and by the needs the markets have that we serve. And third, we need to see more speed and efficiency. To remain competitive, we will selectively optimize our processes and nurture a culture that empowers our people, at the same time, expect performance and enables fast decision-making. This is all about removing unnecessary complexity, shortening cycle times and ensuring that the organization moves quickly. By doing this, we not only improve our internal efficiency and effectiveness, but also become more agile in responding to customers and market shifts. I think that's very important in the setup that the world is these days and can be a competitive advantage. Together, these three vectors will guide our decisions, our resource allocation and our behavior. And we implement them consistently across the organization. And with that, I believe we will unlock meaningful impact for both our customers and our business and ultimately then also for our shareholders. If I look at the recent few years, our market environment has changed a lot, and that requires us to rethink how we operate as an organization. This curve that you see here outlines the path we're taking from scaling through transitioning and ultimately back to profitable growth. Up to 2023, our focus has been on scaling for growth. Following very rapid growth in our consumables business in the 2010s years and coming out of COVID, we needed to adapt our structures to counter increasing complexity. And then during this period, we implemented new organizational structures to support expansion beyond our established anchor products, we made significant investments, e.g., expanded our manufacturing capacity, enhanced R&D to diversify our portfolio and strengthen our digital capabilities to ensure workforce -- workflow solutions. We also heavily invested in workforce and talent base. However, not all these investments have translated into the level of strong growth we wanted and expected. However, it's important to note that this foundational work was essential to prepare us for broader opportunities and to ensure that we have the capabilities needed for this next stage. So since 2024, we began to see a rapid and I would say initially unexpected market weakness. And this year, in the next few years, we're in the necessary transition phase. This is where we must adapt to, of course, rapidly evolving market dynamics and increasing regulatory complexity. And our priority here is to revise our existing structures, portfolios and footprint. And these adjustments allow us to respond effectively to developments that are challenging our profitability. After this, we expect to see the benefits of our efforts. And this is the phase where we expect to return to healthier growth rates and renew our profitability ambitions. Also, this all will help us reap additional benefits from our innovation pipeline. And we are confident that in the long term, these strategic actions that we're taking now will bring us back to the strong upward trajectory. So in the end, it's always nice to talk about strategy. That's very nice. What ultimately matters is implementation and results, and that's what we're focusing on. If you look at it, of course, long-term strategy sets the direction, that's important. More important is that several important steps are already underway. And for us, it's of paramount importance that we do not lose the momentum. And this is a big part of why I decided to take the interim CEO job myself, even though it's additional work, but it's important. I want to make sure that no time gets lost and the Meditec management team gets what it needs to move ahead. And as I've described, we have a strong R&D capability. That's really the core of ZEISS and also Carl Zeiss Meditec, but we don't have yet the equivalent commercial arm. So first, we've taken a major step by introducing a Chief Commercial Officer, training camp essentially, you can call it that way. Effective as of December 1, we will have a dedicated commercial unit that is fully responsible for driving our global revenue. Now we have a unified customer interface that brings together sales, sales-related digital and services. And our sales structures are becoming flatter and enabling faster decision and greater efficiency. Also, this new structure gives us clearer accountability, a stronger commercial alignment across the regions and the ability to accelerate growth with greater consistency. Second, as a consequence of the R&D review, we have also repositioned our digital organization. Our digital business unit has been reallocated into the SBUs, the strategic business units, which allows us to increase efficiency, strengthen the collaboration and ensure that digital is embedded directly within our business lines. And this move brings digital closer to customer needs and closer to our innovation cycles. And our operations footprint review has started. I just reviewed it this week. Our goal is to identify opportunities for consolidation and higher efficiency across our network. And as this work progresses, so will we provide updates on the insights that are coming up. So as you can see, our transformation is already in motion. We already started for a little bit already, and this is only the start. There's more to come. So I'm confident that during this fiscal year we will share more insights into our strategic realignment and you will be informed, of course, in due course. So with that, I'd like to conclude my presentation and look forward to your questions. And first of all say thanks for your attention and pass back to Sebastian. Sebastian Frericks: Okay. Thanks, Andreas. So yes, Jack, why don't you kick it off? Jack Reynolds-Clark: It's Jack Reynolds-Clark from RBC. I had two, please. One kind of near-term focused and one slightly longer-term focused, both regarding margin. My first question does have a few parts. I was wondering if you could walk through the building blocks for EBITA margin guidance for next year. You mentioned that some of the unknown political and regulatory risks are not included, but I wasn't sure if other headwinds around the IOL withdrawal in China and VBP are included. So if you could just run through that. Then a second part to that, VBP, could you just run through what your latest thoughts are on the potential kind of basically what's going to happen and what the impact is going to be on your business there? And then moving on to the midterm guide, could you talk through your latest thoughts on delivering that 16% to 20% EBITA margin? Did I interpret the slide later on in the deck that actually it might not be till 2028 where we start to see that kind of come through more meaningfully. Justus Wehmer: Yes, Jack, I think I take that, hopefully you can hear me now. The walk-through on the building blocks and happy to do that. So maybe we start with the write-down of some R&D projects that decisions have not been finally taken, but that could amount to a lower double-digit million euro amount during the course of this year. The restructuring, as you may call it, that still remains to be decided in detail, so we cannot yet share any further quantification at this point in time. It's simply too early, but we will keep you updated on that. The IOL topic that I was mentioning, there is a potential scrapping risk that also can be low double-digit million amount. And this, however, is still unclarity with regards to the question whether we can potentially sell in other markets this material because we have -- that is a little bit the ambiguity in the regulator's decision in China. While they have basically taken the admission to sell this product under the existing or running VBP, they have not taken away the license for the product. So that, therefore, leaves some room that is currently being investigated on what potentially could be still done and what these lenses could be used for. So -- but it could, in the worst case, certainly become, as I said, low double-digit million euro hit. Your other part of that question was aiming at the -- our expected impact of the next VBP. And there's also related uncertainty. Number one, as we mentioned, we are currently in the process to already run through the reregistration for the product that would replace the one that I was just talking for. But it looks right now a little bit like a photo finish. From the data that we know we will have the approval by NMPA for that lens by end of February, early March, but it is unclear when the new tender is going to be opened. In a worst-case scenario, we could see the tender being opened without us being able to basically pitch with this new lens being included. And that is certainly, again, a headwind that is too early to be at this point in time, quantified, but that's something that we have to keep on our list. I hope that gives you a little bit of color on those building blocks. On the mid-term question, I can make a few comments and Andreas, if you want to build on that. I think what we want to convey today is basically that we think we have a portfolio that is stronger than ever before, yes. We do have, for example, and we didn't really mention it here in the presentation, we have the excimer laser MEL 90 approval in the U.S. since a couple of months and although you could argue the investment climate in the U.S. has been rather soft but there's a huge market potential for that laser in the U.S. because, as you know, excimer lasers in the U.S. are widely spread and the registration for that product we have now in our hands since a couple of quarters. We have, through the DORC acquisition, I think a very nice completion in our vitrectomy business. And actually, again, although we didn't mention it specifically, but the DORC growth rates in the last fiscal year have actually been above our own expectations. So therefore, there could be some upside out of that business. And going forward with it and driving our ever-increasing portion of recurring revenues, I think that will certainly bring us in a position to get into the 16% to 20%. So now the question is in this environment where regulatory policies become more and more weapon in free trade, we have to accelerate the efforts to keep the market access, especially in China. But if need be, and nobody knows how Section 232 is going to run -- to end up with, but also in the U.S., we need to provide and maintain the access to these markets. The two markets in total are 50% of our business. And we will make a lot of effort to keep this access because if we are not present in the Chinese market, Chinese competition will come after us and all the rest of the world. And that, Jack, is the -- how should I say, the other uncertainty here. We now have to very carefully go through our list of priorities for accelerated localization, as Andreas has lined out in his speech. And that is, let's say, it's a rather complex exercise. And again, to quantify by when all this is going to be completed is a little bit tough. But the key question is or the key message for you is we have a great and admired position in the Chinese market, and we will do, not going to say whatever it takes, but maybe actually I could say whatever it takes, but we do a lot to ensure that we keep that market access for us. Andreas Pecher: Maybe I can, 1 or 2 things... Operator: Sorry, we cannot hear the question online. Andreas Pecher: Now my mic -- is my microphone on? Justus Wehmer: Yes. Operator: Now it is. Sebastian Frericks: It's not a question. It's still the answer. Andreas Pecher: I'm still answering. So first of all, we're in very good markets. That's clear. We have a great portfolio and this geopolitical topic that is coming up the last couple of years, of course, it's a headwind, but it's not necessarily only a downside, right? Because if you are better reacting towards it than your competition, you do have an advantage. And that's -- just to add that, that's why it's important to also look at the speed, the agility of the organization and make sure that we are focused on the customer and react better. Ultimately, you don't have to be perfect, you just have to be better than your competition. That's our goal, of course, to support all that to make out of this great portfolio in the great market something that's actually beating also the competition. Sebastian Frericks: Falko and then Oliver and Lauren. Falko Friedrichs: It's Falko Friedrichs from Deutsche Bank. My first question is a quick clarification on the wording of the midterm EBITA margin target, is the plan to increase the margin towards the 16% to 20% over the next 3 to 5 years? Or do you plan to be inside this range in 3 to 5 years? My second question is on the phasing of growth and your targeted margin expansion in fiscal year '25, '26. Will this likely be a more back-end loaded year again or rather a little more evenly split? And could you give a first glimpse into how Q1 is shaping up? Justus Wehmer: I can take that. So my perspective is I want to be inside and that's clearly -- so inside the 16% to 20%. And that's clearly the aspiration. And it's, by the way, also in line with the aspiration of the ZEISS Group's perspective to -- you would have probably said it anyways, Andreas, but just to ensure that it's not only you expecting that, it's him also expecting it in his main role, if I may say so, yes? Andreas Pecher: Other role. Justus Wehmer: Yes, in his other role. The back-end loading and the start into the fiscal year, I think we had historically -- and I mean, if you have carefully looked at the Q4 numbers, you have seen that Q4 has been crazy and September has been the craziest of craziness in terms of volume that we have delivered into the markets. And it was simply a culmination of many factors. So not only the typical, let's say, year-end race optimization from sales target achievement motivation, but it's simply also because we had the skewing in the Microsurgery business, which was heavily geared towards the last weeks of the year. However, like always, once you have done this, you kind of fall in a somewhat of a slump and that is what we are actually seeing right now. So I would probably not expect a miraculously wonderful first quarter. And therefore, the back-end loadedness, and I tell you, Falko, I hate it. I wish for once that I go on summer vacation and I can relax and say we have done it, simply doesn't happen. It's always photo finish. And I'm a little bit afraid that you will see that happening this year again. Sebastian Frericks: Oliver? Oliver Metzger: It's Oliver Metzger from ODDO BHF. Three questions. One, first, also a follow-up on Falko's question. On Microsurgery, you had technically a tough year. Now with Q4, you made more positive comments which sound encouraging. Could you just describe whether really you see the worst is over now or we technically have to wait until '27 until your portfolio is -- U.S. is more complete? Second question on China, it's the 25% of sales are still meaningful. Midterm, you target a higher share outside of China. So just as a rough understanding how to go there, do you expect that China as a market will remain challenging also for midterm and therefore just the other markets technically grow normally? Or do you see China turn to a better but simultaneously higher growth outside of China? And the last one is, Justus, focus on innovation with more purpose. If you bring that to a more financial perspective, would you describe your R&D spend just as too high or looking back your R&D productivity as too low? Justus Wehmer: Okay. So Microsurgery, and interrupt me, Oliver, if I don't hit the nail of your questions. So yes, Q4 was very dynamic, and we see the dynamics continuing. Again, as a little recap, you all remember that we had KINEVO and PENTERO brought into the markets in spring of last year, and then we had a software bug, and therefore, we were somewhat stalled for 3 months to have efficient demoing. And for these products, demoing is basically the first step in the conversion from a lead to an order and then ultimately a revenue that we have overcome. The funnels are nicely filled now, and the business management is really upbeat that those 2 products will carry throughout a year. That should see solid growth. And the only caveat is that we need to ensure that the supply chains can keep up. That's -- hopefully, that answers your question. China, I can give a few comments. And Andreas, happy for you to add. I mean, overall, I think this market is going through a transition where you will see much stronger local competitors across the board of the entire portfolio. You have in diagnostics competitors, you have in the implant competitors. And I think it's clearly safe to assume that it's probably only a few years until we will see companies entering the refractive laser business. But beyond your innovation capabilities, let's not forget, especially in the latter businesses that I mentioned, it's your application competence, it's your service, your customer dedication and focus. And if Max was sitting here, he would probably tell you that I think 5 years in a row, the Chinese organization has won the award for the best service whatsoever. So what we have also learned, and in some markets, the hard way, is that you can have a nice product. If the surgeon doesn't get the training and doesn't feel 100% comfortable with the equipment, you will not get to the rate of utilization of the systems and you will not see the consumer business kicking in at the levels that you want to have to have this steady stream of revenues and contribution. So having said that, that means I think we have the infrastructure there, and we have a very good acceptance in the market by our customers. Will that make us bulletproof? No, and we can't get complacent by no means. But I think we are in a pole position, and it's up to us to make use of it. And Andreas? Andreas Pecher: Yes. Maybe I'll just add a couple comments on that. Since in this case it's Carl Zeiss that has the China organization. ZEISS in China has more than 7,000 people. So that's a lot of people and that's a lot of good people. Of course, they're not all working for Meditec. Specific, it's a lot of good people. We're super highly recognized. Before April 1, I started my other role. Before that, I spent a lot of time traveling the world, also spent some time in China and talked to a lot of customers. We're very well recognized in China, outside of China. So we do have this asset. We have very good people. We have the infrastructure to do that, and we have the recognition also of the government to be a company that contributes. So I think it's up to us to do the best out of that. In the end, if you don't play in China, I think can be risky. That's our view. We see that in other businesses as well. Maybe some other industries in Germany have seen that as well. You better be there, you better play there, you better make sure you learn there, you grow there. And then at the same time you grow in the other growth markets which specifically are Southeast Asia and India. That's sort of the next growth markets. And that's, of course, it's a dual strategy, right? Make sure you grow in China, make sure you hold the competition at distance, ideally beat them and then you win in Southeast Asia and in India. Justus Wehmer: On your innovation question, so first of all, I think it's not only investors listening in here, but the transcripts will be read by all our R&D people. And therefore, first of all, I will tell you that we have extremely smart, extremely hardworking and bright people across our R&D organization all over the world. So what we do have, and that's a fact, and this is not a ZEISS-specific problem that we see since corona, let's say, a lower productivity, if you measure it in terms of patent recognition and so on. And there's some trends that you can clearly see that come especially in creative productivity that do not necessarily -- that are not helped by more home office and things like this. That's simply a matter of fact. And this is, I think, where we clearly from our company need to work on to regain that productivity levels. But let me also maybe highlight that it's also management task, and I think you have heard this several times today that we help the teams to focus because if you have people stretched over several projects at the same time you are just losing focus and you're losing productivity. And that is more on management. And that's why some people may not like if we are talking about stopping projects, but I think you will have a return on other projects in the pipeline. Sebastian Frericks: Lauren, please. Lauren Mitchell: Lauren Mitchell from Goldman Sachs here for Richard Felton. I have 2 on OPT and then one sort of more broader question. Firstly, on OPT, just in terms of China refractive, what did China procedures end up sort of year-on-year? Was it sort of in line with the expectation for roughly 2%? And what is baked into your guidance for next year in terms of China procedures? Second question is on VISUMAX. We know you've done sort of roughly 100 units this fiscal year after launching halfway through. Building on that next year and the pricing premium that's associated with SMILE pro and the consumables, how should we think about the contribution to organic growth from that consumables as the utilization of that procedure ramps? And then a longer-term question, Andreas, really appreciate your perspectives and observations on some of the endeavors that maybe haven't paid off and appreciate the transition phase that you spoke to. I think last year when there was sort of changes at the management level of both the ZEISS parent group and of Meditec, there was sort of some hope that maybe there would be sort of scope for more meaningful change perhaps in terms of both costs and portfolio optimization. I know you mentioned something like diagnostics, which, if I'm not mistaken, was loss-making this year. So my question is, in this sort of CEO transition, how should we think about the company's ability to execute on some more meaningful changes within the business in this period? Justus Wehmer: On China refractive, I think we said it actually in the presentation that overall we have seen slight growth in the procedure numbers in China, but really slight, but more meaningful for us is that we have seen, especially in Q4, then now the pickup of the SMILE pro procedures. And that, of course, is carrying higher margins on the procedures. So having said that, the expectations for the fiscal year that just started would be by and large that we -- again, there's no major changes in the global economic environment, no major changes in consumer confidence, but with the investments that have been made in the VISUMAX 800, and Sebastian, correct me if I'm wrong, but I think by the end of the fiscal year we had achieved almost 100 deliveries into the Chinese market. So these lasers are now kicking in as they are being -- as the surgeons are being trained on. So we would basically, if you want to say so, on the total number of procedures, see a qualitative improvement with a higher utilization of the SMILE pro lasers in the field. So that in itself should give us, hopefully, a little bit of tailwind on the margin. But in volume, I'm reluctant here to give you any sort of too positive expectation. Yes, I think I hope I have covered your questions or do you have -- had any specific further question on the VISUMAX 800? Lauren Mitchell: Maybe just on the contribution in terms of utilization, how you see that evolving throughout the year? Justus Wehmer: October, November is not a good measure. We -- I think the numbers were higher utilization in October on the lasers, November, lower utilization. But as I said earlier, the moment of truth is the spring peak. Thank you. Andreas Pecher: Yes. And to answer your more broader question, well, the short answer would be, yes, that's exactly what we want to do to broaden it. That's what actually Max and the whole team were there to do. And I brought some example. One is digital, by integrating that into, where the business is happening means into the SBUs, this will be more meaningful. Means more effective, potentially reducing the R&D cost, but more importantly will be driving the results that ultimately our sales folks need. And then looking at the portfolio diagnostics you brought up is clear. I mean, just putting that up, you see where your stars are. And the other ones, of course, you have to take a look at. And that's clearly a focus to look at and make sure that there's a reason why we have a certain business. And frankly, there are all options on the table. Doesn't mean that you sell or not. Certainly what will be very important, there will be and are already very pointy questions asked to the business to make sure that we have a plan to get the overall portfolio up. And that will also be a means in addition to many others to get us between the 16% and 20% ultimately. Sebastian Frericks: Okay. We'll take one more from -- or 2 more from the room, actually. Maybe we -- yes, let's start with you, Sven, and then go over. And then we'll take some online questions. And afterwards, we do another round in the room, if that's okay for everybody. Sven Kuerten: Sven Kuerten from DZ Bank. Would you say that the margin improvement for next year is exclusively based on Microsurgery? That's first question. And secondly, do you think that at the end of your forecasting period in the midterm, it's possible to come close to the very high historical levels in Microsurgery or is that not on the table any longer? Justus Wehmer: I would actually not entirely bank my hopes for next year on Microsurgery, if I understood your question correctly. As I said before, I still do see in the U.S. market. I just was in touch yesterday with our Head of Sales in the U.S. And as I mentioned earlier, with the MEL 90 approval, where we have not yet really benefited from in the last fiscal year, that certainly could become a good driver for an improvement in ophthalmology next year. The VISUMAX 800, let's not forget, the 100 systems that we ship to China is not the end of the story, so to speak. The Japan market penetration with refractive is actually only starting now. So there is, I think, more than Microsurgery to the entire guidance story baked in. If I understood the second leg of your question correctly, you were referring to when do we see Microsurgery margins hitting plus 20% again. It's obviously mainly a mix question and I am careful here, but I would obviously anticipate for this year an improvement in the Microsurgery margins beyond what we have seen last year simply for the fact that we now have a funnel which is filled and hopefully a better mix over the year than we had last year. So I hope that answers your question. Sebastian Frericks: All right. Yes. Then please go ahead with one more from the room. Wolfgang Lickl: It's Wolfgang Lickl from Apo Asset Management. A very much -- a focus question on refractory business in China on a kind of more long-term view. We are talking a lot about demographic developments, people getting older. I could imagine that means a typical client or patient for a refractory surgery being more young and then we have declining birth rates. So the number of people who could have the service are declining. Maybe we have some increase in penetration, but could that business -- because you are an equipment manufacturer and maybe the installed base is still growing, maybe the amount -- number of treatments is growing, but the additional number of lasers the market needs is declining and then you have a declining business as the equipment manufacturer. What's your opinion? Is this a wrong thinking from my side? Justus Wehmer: You see, first of all, myopia treatment is nothing that is secluded to people between, let's say, 20 and 30. So there is well -- until you are 40, 45 people are going for the treatment. And let's also not think statically about laser vision correction because we are focusing right now on myopia. Why? Because myopia requires a rather -- let's put it this way, a rather slim diagnostical investment. And then the treatment itself is typically not requiring a lot of tailoring to the patient's requirements. Of course, you are measuring the eye and do all the biometrical work, but then you basically program the laser and shoot 2 eyes equally with the same focus and done. What we are not considering is the presbyopic market. And the presbyopic market is basically guys like me, and it's rather younger people here in the room, but many others in more, let's say, my generation who are actually either wearing bifocal lenses, glasses or use other means. And this market is pretty untapped. And why is it untapped? Because if, as a surgeon, you have the choice between going for the bread and butter and basically patient always happy going home and never seeing again business with the myopic treatments versus the presbyopics, which are people where you have to exactly understand what is the visual preference profile of a patient, where people will say, I am a guy who is doing a lot of whatever. I'm a golfer, I want to see my golf ball on 200 yards out there. Therefore, I want to have the focus more in the long range and not in the short range and so on. So there's much more diagnostic work and a more demanding patient. And that has been, if you have the choice between myopia treatment and presbyopia treatment, has been a bit of a, let's say, a hurdle. And I would tell you that I think this presbyopia market is a huge untapped market potential that I still see for China. Andreas Pecher: And just to build on that, having an installed base there, of course, gives you an advantage, right, on the machinery, but also with the relationship with the doctors. That also brings in the diagnostic picture. There is value, of course, of having that. And let me just add another one. It's not only China. Myopia is actually, according to United Nations, one of the largest -- I mean, it's a pandemic, more or less. So there is -- besides opportunities in China, we see a lot of opportunities, specifically also in Asia because that has to do with the setup of the eye of a typical Asian person. Southeast Asia, India, there's other things as well like cataract are very strong. So we do see, besides China opportunities, large opportunities outside already. Sebastian Frericks: Okay, then I think we take a moment of pause in the room. If somebody has a follow-up, we'll take another go at it in just a moment, but I first ask the operator if there are any online questions in the queue. Operator: Yes, there are. Thank you, Sebastian, and thank you very much for the presentation and your time for the questions, Andreas and Justus. We have two raised hands. One is from Jon Unwin, and you can start your microphone, Jon. This takes a moment to unmute. Jon, we will come back to you later. I will go over to Davide Marchesin. Davide Marchesin: I have 4 questions, 2 regarding the last reported quarter and the other 2 regarding the full year guidance. So starting with the last quarter numbers. I see that in Ophthalmology in the quarter, you reported 11.6% EBITA margin. So down sequentially from previous quarter, 13.2%, despite reporting an increase of revenues. I will understand why the margin of this division was down quarter-on-quarter, if there is some specific reason? Second question regarding the quarter regarding the R&D. You reported EUR 92 million R&D, so significantly up from the previous quarters which were running below EUR 80 million. I think the average in the previous quarters was like EUR 78 million. So I want to understand what we should expect going forward. So if the R&D run rate is more like EUR 80 million or more like EUR 90 million? Then regarding the full year guidance, the first question is on the mid-single-digit organic growth. So in the last quarter, you reported organic growth of more than 10%. In the first quarter next year, you will have a very easy year-on-year comp. I want to understand why you are guiding for such a significant slowdown of organic growth if there is some issues you are kind of anticipating in some business or products? And finally, full year guidance on margin, you reported, I would say, a very low margin in Microsurgery. So assuming next year a partial normalization of Microsurgery profitability would explain essentially all the 100 basis points expansion of the margin at the group level so implying essentially a flat operating margin for the Ophthalmology business. So looks like there is some margin of conservativeness in the guidance on the margin evolution. Tell me if maybe I'm missing some elements in terms of the margin evolution. Justus Wehmer: Davide, it's Justus. So I have my go on your first question on Q4. I'll start with the portion on R&D. So you're asking EUR 92 million in the last quarter versus a run rate which was closer to EUR 80 million in the other 3 quarters. It is a little bit of a historical pattern. If you look in the disclosures of previous years, you will see that we somehow always have it somewhat skewed to the last quarter when it comes to the R&D run rate. So therefore, I think nothing peculiar to mention here other than simply that come to end of the fiscal year, everybody is basically getting final bills from consultants and external partners, which are working with R&D. So more importantly, your expectation going forward, EUR 80 million or EUR 90 million you were asking. I pretty much guide you on expecting a rather flattish total R&D expense number for the year to come and the distribution over the 4 quarters is most likely to look similar to what you have seen this year. You were asking on OPT EBITA level in Q4 and why it was down. Frankly spoken, I would refer or open it to Sebastian to chime in. But I think there is a little bit of mixture or mix effect because the last quarter for OPT and so it was this year is typically a very strong device quarter and especially in the U.S. And you have seen that we had good growth in the U.S. last year. And in the U.S., it's mainly a diagnostical business and then the high portion, especially once we have such a strong Q4 of diagnostical products in the mix are actually somewhat margin diluting. But Sebastian, anything to add that would be worth mentioning? Sebastian Frericks: Maybe 2 details just to add but what -- the product mix indeed is the main reason in the fourth quarter, also there was an increasing impact of U.S. tariffs because we did have the price increase on July 1 and then second step in August once we knew that it was going to be actually the 15% and not the 10% but because of the 2 to 3 months order time, the backlog time, these prices did not kick in yet economically for us in the fourth quarter. So we -- this took some margin out of our microscope business, in particular, and the Ophthalmology division. And lastly, there was about a EUR 2.5 million, let's say, onetime or special impact in terms of scrapping of some therapeutic laser parts. I'm hesitant to call it a complete one-timer because these things can happen every now and then but we need to clean up a topic there with that impact of EUR 2.5 million. So these taken together contributed to the weaker margin in the fourth quarter and the stocking pattern for refractive typically benefits Q3 a bit more than Q4. Justus Wehmer: Yes. Thank you. And then your question on the guidance, asking why we are guiding single digit and after the strong Q4. I mean, again, Q4 is always strongest quarter in the year, and therefore we shouldn't basically simply linearly then continue with the same growth rate. But just to bring our own guidance into perspective, I think we clearly have seen from public data, from competitors' data that the ophthalmic market growth is more seen now in the neighborhood of depending on the currency, around 3% and 3.5%. So with our guidance, we are, therefore, basically saying we are maintaining the -- our market share, growing with the market or even slightly beyond. And that is pretty much in line with what we have always guided in many, many years. And then you said if MCS is recovering to a normal year, why don't we have then more margin expansion on other businesses? I mean, I think we allude to it in our presentation that there's an NVBP in China and that has nothing to do with the IOL license topic that I mentioned. But there's an NVBP ahead and that will certainly be putting, again, pressure on prices for our IOLs in China. I think, as I said, there's uncertainty on the question on how is the American market developing in light of this Section 232 and potentially even higher tariffs on products that are coming or that are being imported. And there's, therefore, a little bit of carefulness in our guidance that is indicating that maintaining margin levels in this environment may already be somewhat challenging. So I think that's, in a nutshell, the answer. Sebastian Frericks: Okay. So moderator, could we take another try with Jon from Barclays. He's dialed in through the phone, so maybe if there's a way to unmute the phone. As a backup, I have the questions here, and I can read them out in case there continue to be problems. Operator: Thank you very much. That would be nice, Sebastian, because questions via telephone cannot be submitted. We apologize for any inconvenience. Sebastian Frericks: Yes, no problem at all. I read them then. So first question from Jon. Can you confirm that you exited the year with 70% -- 72% product mix in China SMILE versus LASIK? Is that also the right split to think about for the new year, but that of this -- out of the 72%, a higher proportion will be SMILE pro? That's the first one. The second one on Microsurgery, a bit similar to the question that Davide asked. What is your growth expectation for MCS next year? And how much of that is already in the backlog? And then on margins, is the Q4 level the right level also for the full year '26 to think about? And the final one, on the digital business, has putting the digital business unit into the SBUs resulted in cost savings in R&D yet? How should we think about R&D expense year-over-year? Justus Wehmer: Okay. Thank you. So first question on the share between SMILE and LASIK. And again, I assume this refers directly to China. Yes, I would confirm that we have seen the bottoming out of the shift from SMILE to LASIK. And therefore, I think the assumption of 70%, 72% mix is probably the right one. And as I mentioned earlier, now the key is to drive up the SMILE pro portion within that 70-something percent. MCS growth expectation, I think I can keep that rather short. We do expect here up to a mid-single-digit growth rate for next year. Then profitability of Q4 level, right, for next year. I'd say potentially, yes, with -- on the -- and that's why we mentioned the risks and the upsides on it, provided that we are not hit too hard with additional exchange rate issues, and we said there is a risk. Right now, the trends are clearly not in favor of the euro. And you all know that with a high export rate of our products, the currency can make a big difference. But assuming exchange rates are somewhat milder in their development then I think a Q4 level or slightly better is probably not the wrong assumption. And R&D expense I think I answered before, I'd say, as a ratio, you should expect it to rather go sidewards. Sebastian Frericks: Okay, so I pause for a moment. Just any questions in the room? Yes, Volker, please, and then Richard. Volker Stoll: Yes, I have a question regarding the Japanese market. We saw the yen heavily declining in the last 5 years and you mentioned that you want to enter the market with more refractive activities. How should we think about the pricing capability with this exchange rates? And is it then a growth market for the coming years? Justus Wehmer: I would start with the statement that ZEISS has maybe in Japan an evenly strong -- potentially even stronger brand reputation than in China or in many other places. So that gives us some hope that even though we do see this exchange rate weakness of the yen versus the euro, but that the market perception for our products being at a premium price, that this is not putting us completely out of business there. And then secondly, let's not underestimate that in the Japanese market for our product portfolio you can argue why didn't you do that prior. But at some point, we are also opportunistically acting. And if you have a great business in China, you are wondering how many millions do I spend on registrations in other countries. But we do feel that there's an underserved market in Japan and that there's an opportunity and that we are obviously with our refractive lasers always have some opportunities to bundle and do the pricing a little bit smart so that the cash flow for the clinic is optimized. Andreas Pecher: Maybe add a little bit to Japan on the brand and then also on this market, specifically for Med. ZEISS was already in Japan well before Nikon was founded. I heard one reason why Nikon was founded was because ZEISS was there and the Japanese government realized the importance of having optical know-how. By the way, the most favorite binocular of the admiral of the Japanese Navy back then was ZEISS binocular. So there's quite a brand recognition in Japan that certainly helps us. And then just to add what you said, specifically, if you look at the laser market in Japan, there had been some issues many years ago, don't know exactly when they were not involving us, but involving others. So I think that can be an additional advantage for us that we have actually a solution that is perceived as safe. And so we see a good potential there. Sebastian Frericks: Okay. Then, Richard, and then we'll do another stab at online questions. Richard Hombach: Richard Hombach from Bernstein asking on behalf of Susannah Ludwig. So the first question, on the localization of products, could you confirm what products are currently made in China, what you're considering shifting, and what the time line to implement the shift would be? Would there be any cost benefit once manufacturing has shifted? Second question, in the 12.5% EBITA margin guidance, what is the assumption on the incremental impact from tariffs? Is there a net headwind? Or are tariffs offset by price increases? Justus Wehmer: Okay. I'll start with the second part. At this point in time, we are expecting tariffs to stay where they are and therefore offset by the price increases that we have gone through last year. Clearly, especially referring here to the U.S. and we have three price increase rounds in the U.S. had and the last one just became effective, I think, in October. So therefore, yes, at this point in time, our guidance assumes basically neutral impact of tariffs. On localization, what do we produce today already in China? We produce in China IOLs. We produce in China some of our ophthalmic microscopes. No, sorry, I correct myself on our surgical microscopes, PENTERO, yes, correct. And in terms of what do we think we want to shift and until when? Frankly spoken, I'm not going to disclose here what we are going to shift. Our competitors would love to know that. And therefore, I leave it here. And how long it's going to take? Again, is, of course, a function of the question what ultimately we decide to do, but you can know or you know we do have both a consumable factory which is brand new and very capable in terms of the local competencies. And we do have for how many years in Suzhou, the assembly and so for probably 30 years or so, at least as long as I'm with the company, which is more than 20 years, we do have an assembly where we have a really -- a very capable team that know our products across the ZEISS portfolio. So that certainly can be used. Andreas Pecher: I think it's -- in the end, we have the receiving team. I talked about it before. Overall, the group level, more than 7,000 people in China. It's a decision to do things and then we do it. Justus Wehmer: Yes. The registration part, however, and that, of course, everybody who knows our business, that is most likely the trickier one. But then again, since we are not talking about having to basically build from scratch, but can basically integrate it in existing facilities, that will make registration somewhat easier. But again, that is the big caution -- the piece of caution here that, of course, we have to undergo. Sebastian Frericks: Okay. I think there might be more online questions. Can we take a look at the queue again, please? Operator: There are two more online questions. It's David Adlington's turn. David Adlington: Can you hear me? Justus Wehmer: Yes. David Adlington: Perfect. Great. Most of my questions have been asked, but maybe a slightly bigger picture question and a follow-up. Just given the challenges of the last couple of years, has that changed the way that you built up the guidance for this year? And then following on from that, what have you assumed in your guidance for Chinese VBP? Have you assumed that your new product will be approved in time for the tender or not? Justus Wehmer: David, I'll take the question. Yes, for the NVBP, we -- yes, indeed, we have assumed that we have the registration for that lens, number one. And the reason being, let me make that comment, we are already in the final leg of the registration and there is -- the regulations by NMPA clearly define the time frame until then the approval has to be given, and that is 60 working days. And therefore, we know that by the latest, at the end of the 60 working days, we will have that registration. So it's not completely, how should I say, naive that we assume that if the tender comes out in spring as we have as a working assumption that we then will have the registration for that product. On the bigger picture, you said with our history and experience, whether the guidance is reflecting some of it. A bit of a nasty question, yes. So let me answer it this way. I don't want to convey to you that this is a completely derisk guidance here and that, in fact, we are much more optimistic and that's not the case to make that very clear. And I took the time deliberately to talk about the risks and the headwinds that we see there. But I also will tell you that in the last 4 years, I twice had to disclose profit warnings. And I very well remember the conferences after our profit warnings, and they do not rank among the most beautiful days in my life. So I want to keep it to the minimum to come back and disappoint all of you another time, although no promises that I can make here. It all depends more on external factors, I think, than on internal factors. But if that helps you to calibrate the guidance, then yes, hopefully, it does. Operator: We will move on to Graham Doyle. Graham Doyle: Hopefully, you can hear this. Justus Wehmer: Yes, we hear you well, Graham. Graham Doyle: Sorry, it's a new system for me. Okay, so just one question. Again, it's on the guidance, Justus. So it kind of follows up on Dave's question and to your last comments. The last few years have been tricky because there's been a number of heads and tailwinds and so it's been hard to kind of forecast and largely H2 weighted. Now I'm just looking at the numbers, you've done like mid-250s of EBITA this year. The guidance implies EUR 290 million, so that's EUR 35 million. There's a EUR 15 million to EUR 20 million on my numbers headwind from FX. And then we've got this China scrappage thing, which may be difficult in terms of the comp of like EUR 10 million. So on that basis, and I know there's tailwinds, but it's like EUR 65 million of incremental EBITA to get to where we're going. What of that's in your control? You just talked about external factors, but what's actually in your control to get us there? It's a big number. Justus Wehmer: Thank you, Graham. So your mathematics are, of course, correct. What do we have in our hands? I said to start with that MCS clearly with basically rejuvenated portfolio and the KINEVO funnel nicely filled is clearly helping us. You also have seen that we start with a much better order backlog than what we had a year ago. Number two, we -- although we are obviously cautious on the situation in China, but we also felt that considering that everything is, in terms of the economic environment, not really much different this year than what it was in the last 6 months that we were actually in that market environment, delivering almost 100 lasers into the Chinese market, at least as an indication, certainly was rather on the higher end of our expectations given the circumstances. And therefore, there could obviously be with a higher SMILE pro penetration in the market, there could be a little bit of a tailwind out of that. And as you know, that tailwind can be material. So that could obviously compensate for some of the headwinds. And last but not least, the NVBP, I think we could prove that we have been acting pretty reasonably intelligent in the first tender, and we actually intend to do that again. And therefore, it's very early to talk about the result of a tender that still needs to come in. But at least, I'd argue, yes, there will be price pressure again. But we have also seen, and we said it 2 years ago to you all that it actually could also boost the market share and give us more market presence. And so from that perspective, maybe there's also a little bit of potential there. So that is some of the thoughts that I can share with you at this point in time. Sebastian Frericks: May I add one comment, Graham, on your question on how to treat the scrap risk. We have not taken that decision yet. If it's the case that we get the reregistration done in time and we fully participate normally in the VBP and we then may end up depending on the analysis happening right now in negotiations with the external distributors of having to scrap some old product, we may classify it as a nonrecurring item in the sense of the adjusted EBITA. So it may not count towards the guidance. But we cannot tell you this for sure. I think we will know by Q2 -- sorry, by the Q1 report, we will know for sure how we treat it. So just to make that clear for all the analysts. Graham Doyle: Maybe just going back on that, Sebastian, so you would have sold, call it, EUR 10 million last year, which you may scrap now. But the point is regardless, you won't sell it. It's unlikely you'll sell it in fiscal '26 if it's not registered, right? So that will be a EUR 10 million kind of headwind. That's more what I mean... Sebastian Frericks: Exactly. The revenue impact that is clear. That is not a nonrecurring item. It's just if we basically move to a new product within the year and then we have to scrap parts of the old product. In that case, it may be -- we will break it down precisely by the time we have done the work and have the exact number. So these two things have indeed to be separated. I have one more from Jon in writing or 2 more actually from Jon. The first one, I think we didn't quite fully answer it is, can you confirm if R&D expenses will be flat on a euro million basis or as a percentage of sales this fiscal year? The second one, which price cut are you assuming for the IOL VBP in, a, premium; and b, monofocal category? Justus Wehmer: R&D, I was referring to percentage as a ratio of revenue with the statement that I made. And for IOL, again, it's obviously a bit of guessing here at this point in time. What experience tells you is that for many of those tenders that happened in other medical fields of consumables, I think the strongest hit was typically the first tender and then it kind of -- tender by tender, it softened out somewhat. And I think that is probably the answer to your question without knowing, of course, who is going to participate and with what sort of tactics. But at least our expectation is, yes, there will be a hit, but we would see it or expect it to be lower than what we have seen with the first tender just by, as I said, by the experience that we have seen for other consumables. Sebastian Frericks: Okay. Do we have any more online questions? Or if not, we go back to the room for the last chat follow-ups. Operator: Thank you very much. No, we don't have any online raised hands. Sebastian Frericks: Okay. Looking at the room, don't know if you're ready for lunch yet if there's any follow-up? Okay. Then I think that concludes the Q&A session. Thank you, Andreas, Justus for -- and thank you for all for the discussion, also to those attending online. And yes, we'll stay around a little bit longer, Justus and the IR team for -- to have -- we'll invite you to have lunch out here in the hallway. And thanks again for joining us and the IR team is also available for questions and calls in the next days, of course. So looking forward to keeping in touch. And for those who we may not speak again, wish you a nice pre-Christmas period and then a very restful break and looking forward to continuing our meetings and talks next year. Justus Wehmer: Thank you. Andreas Pecher: Thank you.
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