As the DAX group announced, it only expects sales growth in the current year, currency-adjusted and before special effects, to be at the lower end of the previously forecast low to mid single-digit percentage range and a decline in consolidated earnings in the high teens percentage range.
Originally, the largest subsidiary of the healthcare group Fresenius wanted to return to profit growth this year and increase both sales and net income in the low to mid single-digit percentage range.
In addition, Fresenius Medical Care withdrew its medium-term target to 2025 due to the uncertainties about the further development of the US labor market and the inflationary environment. This provided for an average annual increase in sales in the mid single-digit percentage range and an average annual increase in consolidated earnings in the high single-digit percentage range.
“At the end of the first quarter, we expected a prolonged labor shortage. However, we could not foresee such a clear and rapid deterioration at the time,” said CFO Helen Giza. FMC continues to evaluate opportunities to accelerate and expand the FME25 transformation program, which is on track with savings of €26 million achieved in the first half of the year.
In the second quarter, sales increased by 10 (currency-adjusted 1) percent to 4.757 billion euros. At EUR 341 million, Fresenius Medical Care AG & Co. KGaA earned 20 (currency-adjusted 27) percent less than in the same period of the previous year. Net income fell by 33 percent (adjusted for currency effects: 39 percent) to EUR 147 million.
As FMC further announced, the start of Carla Kriwet as the new CEO has been brought forward to October 1, 2022. Originally, she was not supposed to take over the post from acting CEO Rice Powell until January 1, 2023.
Fresenius lowers outlook for 2022 after FMC profit warning
The healthcare group Fresenius has lowered its annual forecast in the wake of the profit warning from the dialysis subsidiary FMC. As the Bad Homburg DAX group announced, it now only expects currency-adjusted group sales growth in the low to mid single-digit percentage range and a decline in currency-adjusted group earnings in the low to mid single-digit percentage range for the current year.
So far, Fresenius SE & Co. KGaA had planned for this year a currency-adjusted increase in consolidated sales in the mid-single-digit percentage range and a currency-adjusted increase in consolidated net income in the low-single-digit percentage range. Around a third of the FMC result flows into the consolidated result of Fresenius SE. At the dialysis subsidiary, which is also listed in the DAX, the worsening labor shortage in the USA and the associated sharp rise in personnel costs are having a severe impact.
The sales and earnings forecasts for the other Fresenius business segments remain unchanged for this year.
According to the further information, Fresenius SE also assumes that it will no longer be able to achieve its medium-term group earnings target. For the period 2020 to 2023, this had stated an organic average annual increase in consolidated earnings at the lower end of the range of 5 percent to 9 percent. At the same time, Fresenius specified the medium-term Group sales target for the period 2020 to 2023 to organic average annual sales growth at the lower end of the previously expected range of 4 percent to 7 percent.
In the second quarter, Fresenius reported sales of EUR 10.02 billion, 8 (currency-adjusted 3) percent more than in the corresponding prior-year period. Adjusted EBIT fell by 3 percent, or 9 percent in constant currency, to around EUR 1 billion. Adjusted profit after taxes and third parties decreased by 5 percent (9 percent at constant currency) to 450 million euros.
“As a global healthcare group, we too cannot escape the sometimes massive cost increases, increasing problems in the global supply chains and staff shortages,” said CEO Stephan Sturm. “And in contrast to other sectors, we cannot pass on the associated economic burdens in the short term via price increases.”
FMC crash after forecast cut – Fresenius under pressure
For the shareholders of Fresenius and its dialysis subsidiary FMC, there is still no country in sight. This time, a lowering of the company’s goals provided the next major disappointment. Shares plummeted Thursday. According to stockbrokers, with a view to 2022, the reduction in the forecast itself was less surprising than its extent. Meanwhile, according to a market observer at FMC, the preliminary figures for the second quarter were a little better than expected, but mixed for the parent company.
The Fresenius shares lost 7.97 percent in XETRA trading around midday to EUR 25.07 and were therefore as cheap as they were in the Corona crash in March 2020. They also slipped further below the 200-day line , which is considered an important indicator of long-term price trends. The papers of FMC fared even worse: They, too, are moving further down from the 200-day line and at times lost 12.42 percent to 38.30 euros, which meant the lowest level in more than twelve years. It remains to be seen whether they can stay above the support zone of just under 40 euros from 2007.
A look at the price development since the beginning of the year should not give the shareholders much pleasure: Fresenius has so far posted a minus of 29 percent, while FMC has lost almost a third of its value. The leading German index, the DAX, fell by around 17 percent during this period.
A warning from FMC was obvious, commented a dealer. However, the fact that the medium-term outlook has also been withdrawn should not really help. The forecast cut for the current year itself is not a surprise, but its extent is, added analyst Tom Jones from the private bank Berenberg. David Adlington of the US bank JPMorgan assumes that the dialysis provider’s “substantial profit warning” and the canceled medium-term targets should cause consensus estimates for adjusted earnings per share (EPS) to fall by around 20 percent.
On the other hand, the forecasts for the other Fresenius Group parts – the infusion subsidiary Kabi, the hospital operator Helios and the service provider Vamed – were confirmed. The businesses of Kabi and Helios also developed well in the second quarter, emphasized Christian Ehmann from the analysis house Warburg Research.
By Britta Becks
FRANKFURT (Dow Jones) / (dpa-AFX)
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