Problems at the Fresenius Medical Care subsidiary in North America have resulted in a profit warning for the health care group.
(Photo: Fresenius)
The difficult US business burdens the dialysis group Fresenius Medical Care (FMC) and subsequently its parent company Fresenius even more than feared. All other areas, in particular the service provider Vamed, were also affected by the difficult macroeconomic environment, Fresenius announced on Sunday.
The Dax group based in Bad Homburg referred to inflation-related cost increases, staff shortages and disruptions in the supply chains, which also affect patient behavior. Fresenius and FMC again lowered their profit targets for 2022. That doesn’t come as a complete surprise, analysts had thought it possible.
Contrary to previous expectations, the effects of improvement measures in healthcare services in North America have been delayed due to the difficult environment, FMC said. Carla Kriwet, who has been running the company since the beginning of October, is therefore expecting a drop in consolidated earnings in the high teens to mid-twenties percentage range for 2022.
So far, a drop in the high teens percentage range had been on the plan. These targets are currency adjusted and before special items.
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Despite revenue growth of 15 percent to €5.1 billion in the third quarter, FMC’s net income fell 16 percent year-on-year to €230 million. Before special effects, the result fell by 17 percent to 231 million euros.
Weak euro prevents even greater drop in profits
The operating profit adjusted for special effects fell by eight percent to 470 million euros. And the company still benefited significantly from the weak euro against the US dollar, without the effects of which there would only have been a small increase in sales and an even more significant drop in profits.
Against this background, Fresenius CEO Michael Sen now expects a decline in currency-adjusted net income of around ten percent for 2022, after a previously announced minus in the low to mid single-digit percentage range.
In the third quarter of the year, Fresenius sales grew by twelve percent to 10.46 billion euros. Excluding positive exchange rate effects, it would have been an increase of five percent. Adjusted for special items, earnings before interest and taxes fell by nine percent to 949 million euros, or minus 17 percent after currency adjustments. And consolidated earnings before special items fell by 15 percent (currency-adjusted minus 22) to 371 million euros.
Like Kriwet at FMC, Sen took over the management of Fresenius in early October. He should lead the health group and largest private hospital operator in Germany out of the permanent crisis.
More: “Mr. Sen can’t do magic” – What investors expect from the new management at Fresenius and FMC