The dialysis specialist is reducing jobs worldwide.
(Photo: dapd)
Frankfurt The ongoing corona pandemic is affecting the Dax Group Fresenius longer and more than expected. The dialysis subsidiary Fresenius Medical Care, which is also listed in the Dax and accounts for around half of the business, is particularly badly affected: Due to the spread of the delta variant and the increasing number of infections, a disproportionately large number of dialysis patients continue to die from the consequences of a corona infection, such as that Company announced on Tuesday when it released its quarterly results. The company expects earnings to decline by around 25 percent this year.
In order to get back on course for profitable growth, Fresenius Medical will significantly simplify its business model and cut 5,000 jobs. Overall, FMC employs more than 125,000 people worldwide. The realignment plan was announced months ago: CEO Rice Powell will sustainably improve value creation and make the company more agile overall. So far, FMC has been divided into regions, with the US accounting for around 70 percent of total sales.
In the future, FMC will only operate with two global segments. The global health services business, which accounts for around 80 percent of sales, is combined in the Care Delivery segment. The previously decentralized product business, which accounts for around 20 percent of total sales, is combined in the Care Enablement segment.
The advantage of this structure is a reduced organizational complexity with faster and shorter decision-making paths and faster new product launches, according to the company. With the implementation of the new global operating model, Fresenius Medical Care expects to reduce its annual costs by 500 million euros by 2025. The global transformation program will be managed by Chief Financial Officer Helen Giza, who will also take on the role of Chief Transformation Officer.
Top jobs of the day
Find the best jobs now and
be notified by email.
The plans were well received on the stock exchange, and the shares of FMC and Fresenius made significant gains in the pre-market segment.
Less profit than last year
In the third quarter, FMC grew by one percent to EUR 4.4 million in sales due to the effects of the corona pandemic. The result fell by 23 percent to 273 million euros. FMC now only expects to be able to reach the lower end of its annual forecast: the result should be around 25 percent below the previous year’s figure after adjustment for currency effects, while sales will increase in the low single-digit percentage range.
The parent company Fresenius will be slowed down significantly by the development of its dialysis subsidiary this year. However, since the other divisions developed better than expected in some cases in the third quarter and the company is making good progress with its efficiency program, Fresenius boss Stephan Sturm now expects to be able to reach the upper end of the forecast given so far in terms of sales and profit.
According to this, sales from the most recent 36.2 billion euros are expected to increase in the mid-single-digit percentage range, and the consolidated profit of around 1.8 billion euros in 2020 is expected to grow by a low single-digit percent. Both values have been adjusted for currency and special effects such as costs for the efficiency program. By 2023, Fresenius aims to save around 100 million euros per year in costs across all corporate divisions by 2023.
In the third quarter, Fresenius was able to increase its sales by a total of five percent to 9.3 billion euros. The group result increased by two percent to 435 million euros, partly due to the good business development of the drug division Kabi.
Fresenius also expects further burdens in Q4
Fresenius also expects further burdens from the corona pandemic in the end of the year. A rapidly increasing number of Covid-19 cases as well as the further spread of virus mutations and stagnating vaccination progress could possibly affect the forecast for the current financial year, it is said. The Dax Group also expects headwinds from cost inflation, among other things from rising raw material and transport prices, higher energy costs and bottlenecks in the supply chains.
More: That is how credible the Dax climbers are from the point of view of consumers