An Earnings Report Sparks a Bull-Bear Battle! Zeiss Medical's 'Profit Redemption' Faces Market Backlash

Special Plastics Vision learned that within 24 hours of releasing its first-half results for fiscal 2026, German medical technology giant Carl Zeiss Meditec AG (hereinafter “Zeiss”) saw its stock price undergo a roller-coaster reversal: on May 12, the day its earnings report was released, the stock surged 8.81%; the next day (May 13), it fell by more than 11% intraday, nearly erasing all of the previous day’s gains.

This sharp “double kill” of both bulls and bears reflects the capital market’s deep divide over the century-old optics company’s current difficulties and future path forward. According to the financial report, from October 2025 to March 2026, ZEISS Group’s overall revenue fell 5.7% year on year to €991 million, while gross profit declined to €490.5 million, with a gross margin of 49.5%. Even more concerning to investors was the sharp deterioration in profitability: adjusted EBITA plunged 46% year on year to €60.5 million, while unadjusted EBITA tumbled 66% to €39 million, corresponding to an unadjusted EBITA margin of just 3.9%, far below its historical normal level.

The company explained that exchange rate fluctuations, an unfavorable product mix, and three one-time expenses totaling over 23 million euros have collectively led to a severe erosion of profit margins. Among these, a 13.1 million euro impairment loss was recognized due to the termination of the acquisition of the Infinite Vision Optics (IVO) project; the bifocal intraocular lens business was halted and a cost of 6.1 million euros was recognized due to changes in regulatory policies in China; and there was also a legal litigation expense of 4.3 million euros.

Ophthalmology operations are under the greatest pressure, with China becoming the eye of the storm.

As Carl Zeiss Meditec’s core pillar, the ophthalmology business contributed 76% of total revenue, but it also faces the most severe challenges. In the first half of the fiscal year, ophthalmology revenue fell 6.7% to EUR 754 million, with equipment revenue down 5.1% and consumables revenue down 7.1%. The company specifically noted that a decline in revenue from bifocal intraocular lenses in the Chinese market, coupled with a one-off EUR 6.1 million expense accrual, created a “double squeeze” on the business. However, the company disclosed that an alternative bifocal intraocular lens has already received registration approval in China and is expected to be relisted in the next round of volume-based procurement tenders, though pricing and allocation will depend entirely on the tender outcome.

By comparison, the microsurgery business showed relative resilience. This segment accounted for 24% of total revenue, with revenue down only 2.1% year-on-year to €237 million. Equipment sales declined 3.6%, while consumables sales grew 1.8% against the trend.

Regional temperature differences: EMEA is the only region with growth, while Asia Pacific and Americas are declining across the board.

From a global regional perspective, the performance was highly divergent. The EMEA region (Europe, the Middle East, and Africa) was the only bright spot, accounting for 35% of total revenue and delivering positive growth of 4.8% to €346 million. In the Americas, which accounted for 25% of revenue, income fell by 11.1% to €247 million; in Asia-Pacific, the largest region by revenue share at 40%, revenue declined by 10.0% to €398 million, with markets in China, Japan, South Korea, and Southeast Asia all weakening. Notably, China accounted for 21% of Asia-Pacific revenue, but no market in the region was spared.

To this end, Zeiss announced that it will optimize its supply chain, discontinue slow-selling products, and relocate part of its business to countries with better cost efficiency. At the same time, the company plans to expand its production capacity in China. CFO Justus Wimmer explained that the move is intended to “improve the cost structure, enhance profitability, and create room for investment in growth and innovation.”

“ProfitUp” Transformation Plan: Up to 1,000 Layoffs, Aiming to Restore Growth by 2029

Facing internal and external pressures, ZEISS management has launched the “ProfitUp” plan, centered on profit improvement, as part of a broader three-phase strategic roadmap. The plan includes: global organizational restructuring, expected to affect nearly one-sixth of the global workforce, or up to 1,000 jobs; a renewed focus on strategic priorities, with some products to be divested or phased out; enhanced commercial execution to accelerate revenue growth; optimization of the production network and supply chain procurement negotiations; allocation of high-priority R&D projects to the most efficient locations; and a renewed review of cost items such as labor and materials.

Andreas Pecher, CEO of Zeiss and interim CEO of Zeiss Medical, acknowledged: "These decisions are painful, but they are unavoidable to ensure our continued competitiveness and long-term success."

Management has set clear targets: by fiscal year 2028/29, to restore at least mid-single-digit organic revenue growth, achieve a profit improvement of more than €200 million, and bring the adjusted EBITA margin back to above 15%. The long-term goal is to restore the EBITA margin to its previous target range of 16%–20%.

Market response is polarized, and the mid-term test will be execution ability.

Although the restructuring blueprint briefly lifted the share price, the sharp drop the next day showed that investors still have doubts about the gap between short-term performance and long-term goals. Several analysts pointed out that the current reported EBITA margin of only 3.9% reflects that the company’s business is at a cyclical low, while the medium-term target only highlights the current weakness.

Since 2021, Carl Zeiss Meditec’s share price has fallen by more than half. For this technology giant—with nearly 180 years of optical expertise, a history of providing optical systems for the Apollo moon landing program, and the distinction of launching the world’s first surgical microscope—the current path to “profit redemption” is not merely about repairing the numbers in its financial statements, but a long-term test of strategic resolve and execution depth.