The Siemens subsidiary is growing faster than analysts expected.
(Photo: Reuters)
Munich After a good start to the new fiscal year, optimism is growing at Siemens Healthineers. “The high demand for our rapid antigen tests allows us to raise our outlook for the year as a whole,” said CEO Bernd Montag on Thursday.
In the first quarter of 2021/22 (as of the end of September), the medical technology provider increased sales by 9.5 percent to almost 5.1 billion euros compared to the same period last year. The adjusted operating result (EBIT) improved by a good fifth to 898 million euros. This corresponded to a margin of 17.8 percent.
This also exceeded the expectations of analysts. On average, they had expected sales of EUR 4.9 billion and an adjusted operating result of EUR 829 million.
For the year as a whole, the Siemens offshoot wants to take in around 700 million euros with quick tests. The company had previously expected demand to subside and only 200 million euros.
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As a consequence, Siemens Healthineers now expects a comparable increase in sales of three to five percent for the 2021/22 fiscal year – instead of the previous zero to two percent. For adjusted earnings per share, Healthineers is now forecasting EUR 2.18 to 2.30 instead of EUR 2.08 to 2.20 previously.
The good start was successful despite the challenging environment, said Montag. “This underlines our claim to further accelerate growth and further increase our relevance for global healthcare.”
Healthineers is coping with the shortage of materials better than Philips
Many medical technology providers are currently benefiting from the corona pandemic. But they too are struggling with material shortages and delivery problems. The Dutch competitor Philips had reported that delivery bottlenecks cost the company almost three percent growth last year. What is missing are mainly electronic components.
Philips boss Frans van Houten expects improvement in the next few months. “We hope that the situation will ease in the second half of 2022 and that the challenges will be completely resolved in the coming year,” he said. They are trying to “negotiate longer-term contracts and get manufacturers to give preference to healthcare companies when it comes to delivery because lives are affected.”
In addition, the devices would be partially redesigned. The medical technology manufacturer is trying to use other electronic components that are available on the market. Philips is also still dealing with the aftermath of a ventilator recall.
>> Read about this: Philips CEO Frans van Houten does not expect growth until the summer
Siemens Healthineers is also feeling the effects of the shortage of materials, but is coping better overall. The higher procurement and logistics costs put pressure on the margin in the diagnostics division in particular. However, it grew by a comparable 19.7 percent to almost 1.5 billion euros, mainly because of the rapid test business. Without the corona effect, revenue grew solidly by a good three percent. Imaging increased sales by 5.9 percent to EUR 2.5 billion, Advanced Therapies by 3.3 percent to EUR 437 million. US cancer therapy specialist Varian, which Healthineers acquired for $16 billion, contributed €750 million.
Because of the high demand for corona tests, the Healthineers had already achieved record results last year. In 2020/21, sales increased by a comparable 19 percent to 18 billion euros for the first time. The rapid antigen tests generated revenues of a good one billion euros. Without this special effect, growth would have been around twelve percent.
The Healthineers increased the adjusted operating result (EBIT) by 40 percent to a good 3.1 billion euros in the past financial year. This corresponded to a margin of 17.4 percent. Undiluted earnings per share improved from EUR 1.41 to EUR 1.57.
The Siemens subsidiary is also optimistic in the medium term. With the new “New Ambition” strategy, which was announced last year, the Dax group wants to increase sales by six to eight percent a year in the financial years 2023 to 2025 with future topics such as precision therapy, digitization and the fight against cancer. Adjusted earnings per share are expected to increase by 12 to 15 percent.
More: Philips does not expect growth until the summer.