Welcome to Revenio Group first half 23 earnings call. My name is Jouni Toijala, and with me, we have here also our CFO, Robin Pulkkinen. Today, we are actually going to run this call in a totally different order, and we are planning to start the call by going through the background for the last week, a negative profit warning, and then moving to the first half results, then highlights from the quarter. Robin is going to go in more detail through the financials plus the shareholder structure, and then we are also going to have, of course, Q&A at the end. The reason for this change in the order is that we got a huge, I mean, really huge, number of calls.
We got a lot of emails and the contacts from private investors, institutional investors, and analysts. Unfortunately, during stock exchange rules, we were not able to have one-on-one interaction last week and earlier this week, as we were in the silent period. This is really the, the reason that why we are a bit changing the order of the normal call today. Let's start with the new guidance, which we issued last week, August 1st. The new guidance is following: Revenio Group's exchange rate-adjusted net sales growth is estimated to be between 1%-5% compared to the previous year, and profitability, excluding non-recurring items, is estimated to remain a good level.
What we changed, so we wanted to give a clear guidance on the net sales growth so that we are not using the adjectives. The guidance is 1%-5% growth for the full year. We didn't touch the profitability part of the guidance at all. If we jump to the reason behind, it's a 2-fold. The first thing is that we started to see slightly, but not too dramatic, weakening demand between the quarter 1 and quarter 2. We slightly flagged it during our Q1 earnings call, as if, if you recall. When we went further down to the Q2, we started to have more hesitation, especially on the optometry side of the business.
There, if, if I need to kind of a pinpoint one, especially among the private equity-funded optometry sector point of view. Then, secondly, we had a pretty big one-off deal, which we closed last year, during the Q3, so part of the deliveries were out, the end of Q3, and then part of the deliveries were out, early Q4 last year. So it's a, it's a one-off EUR 5 million deal for the microperimetry side, for the clinical trials. We actually sold the kind of end-of-life product, which we were thinking that we have a kind of a stock still for 2 to 3 years.
We actually sold the stock in kind of a bit more than two years stock in one go, and that's now out from the from the kind of a sales portfolio, so we have a EUR 5 million gap. When we, when we started the year, so we had a clear visibility that in the normal market conditions, we would be able to catch it up by selling the tonometry and the fundus imaging. We received a lot of questions that, "Is this going to be permanent?
Is this going to be temporary? Our current understanding and the view is that the challenging time is going to be roughly 6 to 9 months, so we based this one with the discussion what we have had with our clients and, and with our distributors. Then just to remind everybody that even if we saw a quite significant slowdown in a demand during the Q2, so we have been able to grow during the first half, so we have been able to grow faster in the unit level and our the emphasis on the unit level. We have been able to grow faster than the tonometer market and faster than the fundus imaging market. I think that's good to remind.
Really wanting to emphasize that on a bigger picture point of view, the macro trends and the long-term outlook is unchanged. The people are getting older, there's more people having a lifestyle-related diseases like diabetes, myopia is increasing. We are going to have a way, way bigger amount of people with eye diseases also in the long run. That's not changed. Let's move to the first half highlights in terms of the numbers. Robin is going to go in detail the Q2. Net sales EUR 45.5 million, it's slightly up from EUR 44.6 million, 2%. If we go back the last year first half, we've got a pretty big tailwind from the USD. Now, now it's actually in a different way.
Robin is going to go through the details in, in, in his part. The operating profit was then EUR 10.8 million, which was actually down from EUR 12.7 million. This is, of course, linking to the... We, we had a EUR 1,800k one-off, but then also links to the scalable business model. When the business is top line is scaling up, so, so it really scales up really well, up from the profit perspective, and then, then, i- in a way, on, on the other side as well. Robin is going to go through the cash flow in detail, but couple of highlights there.
It was EUR 0.1 million compared to EUR 4.4 million last year, significantly down, and that was through to the Italy side taxes and also kind of a pre-taxes, and then also the increased inventory. Robin is going to go this one through in more detail, as I said many times. A couple of highlights for the quarter. First half results, I went already through, so that was a twofolded. Started positively during the Q1, then down on Q2. We went through the kind of forecast on the demand side and so forth, but a couple of other highlights. During the review period, we added couple of new disease detections for the iCare ILLUME.
The iCare ILLUME package includes the iCare DRSplus, then it includes the iCare ILLUME, then it includes the AI. The first expansion on the iCare ILLUME product portfolio was that we added the AMD and glaucoma. From the user perspective, experience is exactly the same than before. End user just presses a button, iCare DRSplus takes 2 images per eye, and then the images are sent wirelessly to iCare ILLUME cloud, and then the AI is going to return a report back. We can do out from these same 2 images per eye, we can now detect the AMD plus the glaucoma as well.
In addition to that one, we also disclosed the AI cooperation with OftAI, so that they are going to integrate their AI algorithm part of the iCare ILLUME platform, they are extremely strong in France, also in Canada, that's a plan for us for the OftAI. Also we added the Quick Measure feature for the iCare IC200, improving the kind of a fastness than the workflow there. We have been working a bit more longer time related to iCare HOME2 in the USA. We have had earlier the reimbursement policy for remote monitoring codes and remote measuring codes, now we are working as well in order to get the reimbursement for the device.
Based on the discussions with the experts and the KOL, that, that, that is looking pretty good, so that there's a need for that one. Of course, in order to get the reimbursement, it's a bit same than the getting the approval from the FDA, so, so it, it might take, take longer time. For this one, we are not expecting to have any progress during this year, and we come back to this one then, then early, early next year. Then, we have also decided that we are going to, to keep the Capital Markets Day, November 23. Invitations are, are going to be sent out shortly. So that's decided internally.
I want to emphasize that we have currently up-to-date growth strategy in place, and then we have good and strong global team who is capable of implementing it. We also renewed the organization, and that seems to be working well, and we are still fine-tuning that one and in the final steps of hiring the new head of the R&D. That's also moving forward. No worries in that sense. There, the house is in order, and really looking forward to then see and hopefully also meet people then in the November CMD. With these words, I would like to give a speech to Robin Pulkkinen.
Thanks, Jouni. Okay, I take the. Here we go. A bit more details on the numbers. Net sales for the second quarter, EUR 22.3 million, down 8.7% year-over-year. FX adjusted decline, 6%. Like Jouni mentioned, first half sales, EUR 45.5 million, up 2%, FX adjusted 4.3%. On the top line, it's important to keep in mind last year was quite exceptional from the FX. The whole year, the FX tailwind was almost EUR 6 million. Also for the first half, the FX impact was almost EUR 3 million last year, and this year is just over EUR 100K. In the second quarter last year, the FX alone was roughly EUR 2 million tailwind.
The gross margin remained healthy throughout the quarter and throughout the beginning of the year. Even though we discussed about the growing faster than the market on the units, but also, it hasn't been kind of cannibalizing our margin, or we haven't been doing tricks there. We've been constantly keeping our margin levels healthy throughout the quarter and the year. The profitability side has come down. We did have incur in the second quarter EUR 827,000 of non-recurring one-time project costs, which have had a negative impact on the EBITDA and the profit and the EBIT. The adjusted operating profit line is probably more comparable if you want to compare apples to apples.
First, second quarter, EUR 5.5 million, down from EUR 7.1 million. It's roughly 22.9% decline, almost 25% EBIT percent, compared to 29.2% last year. For the first half, we're down 8.1%, and the profitability, 25.6% this year, out of revenue, compared to 28.4% last year. Our EPS, EUR 0.122 this year. Last year, Q2, EUR 0.203, and for the first half, EUR 0.281, and last year, EUR 0.379. On the next slide, you can see a bit more trend on the top line. The second quarter, like we've covered, was exceptionally weak in terms of demand.
You can see it also clearly here, falling below the trend line. Kind of looking back in the history, the Q1 typically has been below. Q2 was below in 2020, roughly on the line 2021. Last year, where we are now comparing against the Q2, was actually clearly above the trend line, so we are comparing against very strong Q2 last year. Last year, Q2 grew 30%, profitability grew over 60%. We were not kind of going out with against easy numbers or easy comparables. Of course, it doesn't explain why the numbers were what they are, but the comparables were really, really tough. On the right side, you can see the profitability trends. You can see the EBIT %, also on the line.
We look at the Q2s, a bit further out, you can see Q2 2020, Q2 2021, the EBIT % is roughly around the same area where we are now, at this quarter. Actually last year also here stands out on the profitability, as a quite exceptionally high year, also on the euros, but also on the profitability %. On the cash flow side, on the left half graph here, you can see. Jouni mentioned the Italian taxes. The Italian tax system works is that you're taxed on the profitability of the prior year. If you look at last year in Q2, we didn't pay much tax in Italy.
The reason was that the 2021 result in Italy wasn't very good, so there wasn't much tax payments in the 2022 last year. 2022 as a whole year, last year in Italy was quite profitable. The taxation, what we paid now in Q2 this year is, is the, the kind of the taxes for the last year, which is a big part of it. Also, the taxation for this year is based on last year's profitability, which are also higher. We paid-- the Italian taxes are paid twice a year, in, in kind of Q2 and, and then Q4, in November.
We pay, like, 40% of the pre-tax for this year, and all the taxes that we didn't pay last year, are also paid in Q2, which was the kind of the one biggest item running down the operating cash flow or the cash flow from operations. There is a chance to split those payments out to make this look nicer, but there's extra costs and interests related, so we haven't gone that way. The working capital was also impacted slightly by the increased levels in the inventory. Some of the components have long lead times, and of course, the sales wasn't quite at the level where we expected, but there's kind of no risk of any, any, any, any kind of write-downs or anything in the inventory.
It's all, all good, good, good devices and materials and components that we have in there. The equity ratio is the highest levels what we've seen since the acquisition of CenterVue, it went over 70%. The increase in the net gearing is due to the fact that the dividends for last year went out in early, early Q2. The equity ratio actually increased by 11% from just under 80 to almost EUR 90 million. The shareholders, there's been some changes here. The Finnish ownership actually has bounced back slightly, had been going down for a long time. The U.S. investors has been selling some of their shares.
All the 4 other countries on the right here, you can see, have been increasing their shares. France, Sweden, Denmark, Finland have gone up, and US has gone down in the ownership. The guidance, which Jouni already went through, I'll just read it once again. Revenio Group's exchange rate, adjusted net sales growth is estimated to be between 1% and 5% compared to the previous year, and profitability, excluding non-recurring items, is estimated to remain at a good level. Good. I think we have probably a few questions also.
Yeah, that's it. Thank you, Robin. Let's open the floor for the questions. Please.
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Nikko Ruokangas from SEB. Please go ahead.
Hello, this is Nikko Ruokangas from SEB. I have a couple of questions. First of all, your competitors' reports do not indicate as strong weakening as your guidance downgrade. I know that the portfolios do not completely match, but for example, one of your competitors state that the CapEx demand seems solid from major optical chains in US and Europe. Could you help us, how should we interpret this compared to your comments on dramatically weakness in the market? Then, continuing on that, you told that you grow stronger than the market in H1, both in fundus imaging and tonometers. How do you believe your growth was in Q2 compared to the market?
Hey, thanks, Nico, for the question. Are you able to, to give an insight and the competitor name, so then we are able to understand that this portfolio matching or not?
Well, for example, Topcon states that the optical chain demand seems rather solid.
Yeah. They have slightly different and wider portfolio. I think that's the first thing to know. We have been extremely strong, especially in the UA, the private equity driven optometry markets. I think that's the second. We were really strong last year on that one. Just a kind of a reminder that we compete on, if you think optometry, so we have a fundus imaging and tonometry going on in that one. If you look the overall portfolio perspective, Topcon is having a wider... This is the current thing on that front. You had the second question.
Do you, Robin, wanna give or do insight on that one, which was related to the growing faster than the market?
Yeah, yeah. We haven't opened the second quarter, but probably there are devices that did grow, but there are also ones that didn't. It's hard to... I don't have that data right in front of me right now, but there, there's positives and negatives in there, reds and blacks.
And perhaps building top of that one, so we usually see the market growth rates as a full year basis, because then we know the quarterly fluctuations. Now we looked and put it so that we looked at the first half. I think we are wiser towards the end of the year when we understand the overall demand.
We don't have any market data for this year yet, so all the, the historical references or the references we have in the slides are, are for, for last year.
Yeah, I understand. Thanks. Then you thought that the intraocular pressure sales have returned to pre-COVID levels. Does this mean that the weakening is, is especially in that side, and do you expect them to continue to grow from the, now, the lower levels at, at this couple of percentage level going forward? Does this indicate further downside risk, and does this indicate also that fundus imaging has been growing in, in, in Q2?
If we, if we go back in history, when we look the earlier, earlier this, this month, we looked the market data, we looked the market report. Even during the COVID time, the overall tonometer market has been, in average, growing roughly 2%-3%. If we go as an example and remind the growth numbers, Q2 2021, the top line grew 38%. For us, bottom line, 29%. Last Q2, top line grew 29%, bottom line, 60%. That sentence referring that we grew in the certain quarters on the tonometry side 15 to 20 times than the market, roughly.
Giving a kind of a highlight, and now, now, only the comment is that we are going, going perhaps back more modest growth and not kind of a 10-15 times faster than the market on the tonometry side. That, that's the, the, the reason behind the comment. Do you wanna, Robin, comment or add more flavor on this one?
No
kind of earlier growth rates?
Yeah, yeah, it's definitely totally exceptional growth, and, and the market share went from 27-ish or something to closer to 40 during this time, so, so the market share has been really fast-growing over the last years.
All right. Then you continue this earlier growth- not, not earlier, but, you know, more normal growth rate, but, but also from, from lower levels going forward, I guess. Then, then one last from me at this point. Your guidance indicates that your FX, that you expect FX adjusted sales growth, to improve in H2 compared to Q2. Despite, you know, uncertainties of, and, and of course, this, this one-off item you, you mentioned. Could you open where does this assumption of, of improvement in, in growth rates, based on, and, and what risks do you see in it?
Yeah, it's, it's of course, our, our backlog is not very far, far lasting, so we haven't sold like anything for Q4 yet, basically. so, so it's based on our, our kind of internal discussions within forecast, but we do, we talk quite frequently weekly with the sales team and have an up-to-date forecast how they see the, the deals coming in. there is a quite healthy pipeline, like Jouni mentioned. There are very, very interesting cases in there. so we're kind of quite optimistic that we're able to remain within the guidance for the second half. But of course, there's quite a few uncertainties also in the air. But the biggest challenge is, of course, the, the MAIA microperimeter, which we now don't have a device to sell.
There would be a lot of demand for it, but unfortunately, we won't have a device to sell until sometime next year.
All right. Thanks. That's all from me at this point.
The next question comes from Daniel Lepistö from Danske Bank. Please go ahead.
Hi, it's Daniel Lepistö from Danske Bank, I have a couple of questions. Maybe starting up with the growth guidance and the H2 expectations you, you discussed earlier. If we treat this $5 million microperimeter deal you got last year as through one-off and eliminated it, looking at this new guidance, sort of a comparable basis, it looks to, looks to me like that you're still expecting, like, clearly above market growth for H2. Can you confirm this thinking, and is this sort of reasonable, listening to your quite cautious views on the market conditions right now?
Yes, yes, you've read it right. Yes, we've had quite a few calls with the sales team over the last couple of weeks, and the customers, we are kind of standing behind the guidance and think that it's, it's in the pretty much in the ballpark where we think we should be landing.
All right. maybe continuing on the topic on the, on the sort of, more difficult customer groups like the optometry sector you, you mentioned. Can you remind us on the, on the sort of your exposure to these customers, both in the US market and, and globally?
I, I would start that. The answering that one to kind of divide and perhaps start from the USA. If you look the exposure, we could say that roughly kind of a 50%-55% in the USA come from optometry, from ophthalmology, so we talk OD and MD. Roughly 40%-35% is then on ophthalmology side, and then the remaining then is others. We don't have so detailed split if we go for the other regions because we are working behind the distributors. I think the US part is more or less exactly as I explained.
All of it is not PE-driven, but a big part, they're becoming larger and larger. There has been a kind of a clear trend of PE consolidation in the optometry side.
All right. That, that's very helpful. Maybe going towards the next question on the profitability guidance. Can you give us some indication how wide is this guidance in terms of the sort of a maybe underlying margin expectations? Looking, for example, this, adjusted EBIT margin you did during Q2, is this sort of a good profitability for you, how you, how you verbally guide it?
Yeah, I, I think I can't really say exactly what the spread is, but kind of, typically, our second half has been more profitable than the first half, at least in history. Not promising anything this year yet, but, kind of if the history repeats itself, it hopefully would be higher than the first half.
Okay, so we should be expecting sort of a gradual margin improvement for the rest of the year. Also, are there any initiatives that could help you to sort of protect your margins with now sort of a lower growth expectations for, for the rest of the year?
Yeah, I think the, the profitability is very much around, kind of, kind of dependent on the top line. Any extra million we sell, if we sold $1 million more last quarter, we would have made $700,000 more EBIT. It's quite straightforward, so it's very much driven by the top line.
How have you, have you sort of prepared for any, any sort of initiatives that could be helping if, if things remain sour, maybe, maybe during Q3 and, and, and so on, that where you could adjust maybe to protect the margins and so on to, to the downside?
Yeah, of course, we have been looking, so of course, everything starts from the gross margin, so we see that that remains in good level. Of course, if we go big bucket items, if we go for personal costs and so forth. Money that goes to the R&D, money that goes to the sales. Current kind of a feeling and the guidance and decisions are, of course, we are looking the costs, but there's no plan at this stage to start thinking that should we reduce the investment which is going to R&D. We have a good portfolio of new things coming from tonometers, fundus imaging, new software for perimeters, new microperimeter in a preparation for 2024.
So we play the long game, so there's no plan to cut from the R&D. If we look the personal costs, so of course, we are more careful with the hiring. We hire the replacement hires if somebody departs, and then we do selected hires in selected areas, which are then essential for the forthcoming growth. Of course, we look travel perhaps a bit more carefully and so forth, but in a way, there's no cost-cutting program in place. We of course monitor the situation clearly. This is a long-term game, and we are a product company, so we have to keep the products in good shape and the product portfolio in good shape.
I, I think that's what I want to emphasize. Anything, Robin, to add on, on, on the cost side?
Then the, like if you look at the salary cost, for example, they didn't go up as much as you maybe could have thought of. One big driver, of course, is the variable payments, which are probably gonna be lower this year. So those are the kind of parts in the OpEx that kind of also, kind of live a little bit with the performance of the company.
All right. Excellent. That's, that's all from me. Thank you.
The next question comes from Joni Sandvall from Nordea. Please go ahead.
Yeah, thanks. It's Joni from Nordea. Maybe still a follow-up on, on the guidance. I'm just thinking, how long visibility your sales team has, has on the, on the demand, and, and, maybe also how confident you are currently with this, with this forecast after this first demand slump seen, seen during the Q2?
I, I may perhaps pick up that one, Joni. We are, as Robin said, as of today, we are confident to keep the 1-5% net sales growth. How it in practice goes, we have constant dialogue, or the sales is having constant dialogue with the clients, especially, of course, in the USA, because we work directly. Then our sales works with the distributors and also even we work through the distributors in Europe, Middle East, Africa, LATAM, Canada, and APAC. All these bigger deals which we have in a pipeline, we work together, so the current view is based on that one.
Okay. Okay, thanks. I think we went a bit through on, on product categories, but could you give any additional color on, on geographical sales performance now? At least UK was down, but what about US?
I think Q2 was kind of soft in all regions, pretty much. There wasn't really any one country, US, for example, alone, that was totally underperforming. I think the Q2 was kind of surprisingly weak in all areas, so it wasn't just one area or region.
Okay. Okay. Maybe have you seen any, any changes on the, on the competitive environment or, or, or in the pricing environment now with the... I would think that the component prices are at least coming down.
On... If, if looking the Q2, the players who have been there last year during the Q1, no changes on that front, on the product kind of competitiveness or from the computer competition point of view, no changes on that one. We have heard a couple of cases from certain fundus imaging players that they have quite aggressively they have cut prices, so even ballpark of 20%, 30%. We so far we have been made a decision that we want to keep the healthy cross-matching because it fits the overall engine. If kind of giving a flavor on the profitability side, if we take the non- this one non-recurring cost item out, and we look the EBIT performance.
According to my understanding, if we go and look the competitors, what we have, the EBIT numbers might be double digit, but they don't start with two. We might have competitors that are operating on single digit operating profit. We have been trying to safeguard the cross-matching. Still, I want to remind that even though that the kind of a top line was slightly weak and out from last year, but there's we need to sell quite a lot of devices in order to meet over EUR 20 million quarterly sales.
The regions are like... I mentioned earlier, the regions, so, like, we look at, like, EMEA, there's many countries in there. Of course, within the regions, there are, are good countries and some that are doing poor, not as good. So, so kind of it's, it's not that, not that every country is doing bad. There's, I think more than 10 countries out of top 20 grew double-digit still. Then there's still some bigger countries that are not doing so well, but kind of there's good and bad countries in, in all regions.
Mm-hmm. And good and bad segments.
Mm
think optometry in Germany.
Yeah
... so it, we did record sales ever-
Yeah
... in Germany for optometry.
Yeah.
So-
Just that the regions are such a big large areas for us, that there's a lot of different colors.
Yeah, that's, that's clear. Maybe then, going back, Jouni, you were, you were speaking about the Illume, and, I think we have been speaking about this for 2 quarters now. How the, how the market entry is, is actually proceeding, and, should we expect their, coming supper, support for the imaging sales now in, during the H2?
It's, it's, it's picking up actually really well. If we go back to the iCare ILLUME launch, we launched it more or less exactly a bit more than a year ago. Way more than a year ago, it was April, actually end of April, 2022. We got the first production version out early June 2022, went into pilot. My assumption was that we would be seeing live paying customers Q1 2023. We started to see them Q4 2022, we have been constantly able to grow the device sales plus the iCare ILLUME sales during the first half. There's a quite good pipeline for Europe.
We are going to, for EURETINA , we have the new publication coming from the KOLs, which indicates extremely good performance related to DRS Plus, plus the ILLUME, plus the Thirona AI. That, that's more or less published now, so worthwhile of reading that one through. Also, not with the Thirona, but with the DRS Plus, plus the ILLUME, plus the APAC AI players. There's quite a lot of activity in the APAC as, as well going on. That's going even slightly better than the plan, and that's going to help to... in, in the long run, to scale the recurring revenue, plus sell more DRS Pluses.
Okay, thanks. Last one from me. Any new color on the M&A opportunities in the market?
We're constantly working on them. We've been working on them for, for a long time already with Jouni, so, so not really anything we can disclose here, but kind of it's ongoing, ongoing project for us. Companies are few and far between. Negotiations tend to take a long time, like with Senseye we saw it took two years or so of negotiations. Nothing really to, to comment on the M&A side, other than it's topic that, definitely a topic that is high on the agenda for us.
Okay, thanks. That's all for me.
The next question comes from Pia Rosqvist-Heinsalmi from Carnegie Investment Bank. Please go ahead.
Hi, Robin. This is Pia calling from Carnegie. I'm coming back to the second quarter. Can you still give some more color on the demand by, by segment or product? I mean, what was the demand for tonometers and for imaging devices?
They both grew faster than the market. Kind of I think the, the thing that, that kind of brought the growth number down was the perimetry, microperimetry side of business. The probes, the tonometers, the imaging, all grew. I think the, the challenging part was the, the kind of the, like Jouni mentioned. Of course, the countries that go through distribution channels, we don't have full details on all of those. Kind of the US, especially the PE-driven optometry, which is a big part for us, some of the account orders have gone down significantly compared to last year. I think those are the kind of the biggest holes, we can kind of pinpoint and name the customer even.
I think there are, there are areas that are doing good, but then, then that's a clearly clear area where we have had major challenges in the second quarter.
Okay, the price increases you have flagged for now during the past maybe 18 months, do you have a feeling of that the price increases would hamper your growth opportunities now?
We haven't heard from the sales that we would be losing deals because of pricing. Still we are competitively priced. Some of the competitors actually have been slashing their prices like Jouni mentioned earlier, just to win deals. We haven't gone through that path. I think our, our kind of the iCare DRSplus, for example, is, is highly competitive device, best available in the market. There's no, no other manufacturer that is manufacturing rebound tonometers for the human side. There really hasn't been... the pricing hasn't been an issue on any sales discussions we've had. Like we've had probably 10 calls over the last couple of weeks, and nobody has lately raised pricing as being the problem for, for, for our, our kind of Q2.
Okay. I'm thinking just about the investment, kind of climate. You don't see a, or do you see a risk, now for the coming six to nine months, assuming that the current macroeconomic, maybe softness then continues, that the customers, you know, are even more cautious in ordering these more expensive devices, say, imaging devices, and then continue ordering, tonometers?
Hi, Pia. Jouni here. Maybe I can-
Hi
... I can pick this one, this one up. Based on the discussions, what we have with the clients and, and what we have with the distributors, so, so, there's a lot of different kind of deals in a pipeline. The current view is that even though that the inflation would stick, even though that the higher interest rate continues to stay longer than the current forecast, so in some stage, they just have to, because the older devices are breaking up and more patients are coming. So eventually, you, you, you, you have to do the investments on, on the device side. So, that's, that's the current, that's the current understanding what we have when discussing with the clients and, and, and with our distributors.
All right. Still, I'm sorry if I've missed this, but this non-recurring item of EUR 0.8 million, what does it relate to?
It's a, a clear kind of one-off, nothing to do with the ongoing business, but unfortunately, something that we can't really open in detail what it is at this time.
Okay. Coming back to maybe something that is not that core, but, but still, I think, maybe half a year ago, half, half a year ago, maybe we, we talked about Ventica, and, and you were quite optimistic that, the project is, is moving on, and you have news to tell by the first half of this year. Do you have now some news to share with regards to, Ventica?
Yeah. There, there actually the logic was, which looked pretty promising. Actually work together with a company and build up the package where the Ventica was part of the package, the logic was to fund it and get the funding by the VCs. I, I, I think if going to the overall investment climate at the stage where we, where we are and where we, where we kind of started to enter in end of last year, that's the reason that we have been putting that one in a hold.
The only thing what we do, so we only continue the prepaid clinical studies, so no cost is going on, but we, we have still a couple of clinical studies ongoing with the big hospitals and research institutes related to Ventica. We, we only continue, and it doesn't require resources or, or money from us. That's the current status, unfortunately.
Okay. All right, then finally, to your profit guidance for this year, you talk about, or as you say, you use these adjectives, and talk about the good profitability. Looking now at your profitability for the first half of this year, you had the margin, EBIT margin adjusted of around 25%. Would you describe this as a good level?
I'm not sure if I can say that right now because we haven't been there before, but the full year guidance is good level. Then, like I mentioned earlier, historically, second half has been always better, profitability-wise, than the first half, so.
Hmm. All right, thank you so much. That's all for me now.
The next question comes from Nikko Ruokangas from SEB. Please go ahead.
Hello, this is Nikko Ruokangas from SEB again. I have a couple of additional questions. Before that, sorry for repeating this, but I heard that you said when you answered to Pia that tonometers and fundus imaging both grew in Q2, so, and that the problem was microperimetry. Did I hear right?
That-
or is it?
I was referring to here first half, I said wrong if I said Q2.
Yeah, yeah.
Yeah.
Yeah, yeah. Yeah, yeah. Okay. Can you give a comment on, on Q2 only?
I think we mentioned earlier that we don't have that, that data now we are available. We recommended the first half for the growth now. But there are products that did grow faster and products that didn't grow at the speed of the market, but I don't have the full detail to disclose now.
Yeah. Yeah, understand. Understand. Coming back to my original question. One of your competitors published now a competing rebound tonometers. Have you seen them in, in the market? Does this explain any, any of your kind of downgrade at all? How have you reacted to defense your position, and do you think that this could even increase pressure on your growth rates when, when they enter the US market as well?
I, I may try to answer that one, Nico. If we start now from the product portfolio that Reichert Technologies is having, they have 2, 2 models. First one is the vet. They have been long time in a vet market. Now, it has been coming clear that the product is not really top-notch usable on the vet side because you have a screen, and, and you have to point the tonometer through the screen in order to measure the dog or cat or so forth. I, I, I realized this one when I took our dog to the vet, and they actually measured the IOP with the TONOVET Plus. You, you actually see how it's done.
It's almost impossible to go into the level of the dog and, and kind of appoint the tonometer, the TONOVET, how it's designed to, to use. First part or first answer is for the question is that no impact and no signs that or negative impact on the vet side. On the human side, Reichert has had the freedom to operate in the USA since 2019. They are not in the USA, even if it has been okay to operate there. They have been now coming to Europe based on the input from the sales. We haven't faced them yet in the cases. I'm sure that in the ESCRS, they are going to be active. That's our assumption.
When we lowered the guidance last week, it has nothing to do with the Reichert or the pressure from the Reichert on the tonometry side, I think, to be clear clear on that one. Those are still house in order, and and our product is is competitive on on that front, also on the human side.
All right. Thank you. Understand. Do, do your distributors have any extra inventory, given that the end user demand seems to be softer than, than earlier expected? Does this, this inventory destocking explain any of this weakness in Q2 or, or your expectations for, for H2?
Typically, they don't hold much inventory. They order monthly. Some customers order bi-monthly, some maybe 2, 3 times a year, but those are very few. Those sometimes have a small swing effect between quarters, but mostly, there is not much inventory held, especially in the imaging side. They're so expensive that they don't hold those in the inventory. If there is, there's some inventory for probes and maybe a few tonometers, but basically, typically, they order monthly from us.
All right. This is not explaining factor in, in your outlook. Understand. Then, then, my last question relating to, to your longer term profile. You mentioned that your long-term targets remain unchanged. When do you believe that it would be realistic to, to achieve this accelerated growth you have earlier been talking about again, and, and is this after this 6-9 months period when you expect to enter that, that path again?
That- that's a current view. Then still pointing out to this accelerated growth. If we have been having a average growth rate of roughly 13%, in the last CMD-... We stated that to accelerate from that one to kind of up to 14-15. I think we have been able to keep the promise and then relate it to forthcoming long-term guidance. Currently, the view is that this is temporary hiccup and we are going to back, back on the growth path in 6-9 months. This is, of course, big topic, topic that we are going to discuss in the forthcoming CMD in November. I'm sure this is going to be covered and reviewed then in the CMD.
All right. Thank you, I understand. That's all from me.
The next question comes from Pia Rosqvist-Heinsalmi from Carnegie Investment Bank. Please go ahead.
Yeah, hi, it's Pia here again. Another question, still coming back to understanding the demand by products. Yeah, you underlined that when you talked about volume growth, you referred to the second half. If I try to draw your comments now and, and conclude, is it a specific microperimetry issue that is burdening you in the first half, and particularly in the second quarter?
I, I, I may try to, to pick this one up, and Robin, you, you correct me if, if I'm wrong. If you think now the first half, and, and we, we start from product portfolio in general. We have a fundus imaging, we have a tonometers, we have a perimeters, and then we have microperimeters. If we first start from the first half, and, and what Robin was saying, that during the first half on the tonometer and the fundus imaging, which is the main volume business for us, and... That was growing faster than the market. Tonometers were growing more than this 2%-3%.
Fundus imaging was growing more than this 4.2%, which, which our, and according to our just understanding, are the growth rates for tonometry and, and, and for fundus imaging, if looking the market growth. If we compare to last year, so perimetry was performing worse than last year. If we go for microperimetry, which is now the so-called iCare MAIA and iCare S-MAIA products. We sold last year in this one-off deal, the whole more than 2-year stock out. For this year, we don't have microperimetry products, i.e., iCare MAIA and iCare S-MAIA, in sale at all, because we sold all the stock last year during the Q3. The deliveries were kind of end of the Q3 last year and the beginning of Q4.
The amount of that which is now visible in our numbers, it's EUR 5 million. Of course, we sold more than EUR 5 million throughout the whole year, but not, not, not, not kind of a too much, too much more. Anyway, if we. We, we sold microperimeters also last year, but not, not kind of a huge and significantly. The EUR 5 million as a one-off deal, which we don't have, so that, that, of course, is, is having already some kind of impact for our second half numbers. Anything to add? Did that clarify, Pia, or did I confused you more?
Yep. Yes. Yes, thank you. Thank you.
Good.
Yeah, and my question regarding the inventory, which I think Nikko already... Yeah, Nikko already asked that question. Yeah, so I'm fine. Thank you.
Have any more questions coming?
Seems to be like, no. Thank you for the record long earnings call. Thank you for the excellent questions. We are going to be back then to go through the Q3 results, and then, of course, back on the CMD. Thank you very much, and have a good rest of the summer. Thank you.