The Siemens subsidiary is the world market leader in imaging with X-ray, MRT and CT devices.
(Photo: Reuters)
Munich Siemens Healthineers started the new fiscal year with a decline in sales and profits, mainly due to the lower demand for rapid corona tests. On a comparable basis, revenues in the first quarter of the 2022/23 financial year (September 30) fell by 4.5 percent to a good five billion euros, as the company announced on Thursday.
Excluding the rapid test sales, quarterly sales increased by 0.7 percent. The lockdown in China and supply chain delays dampened development.
Adjusted operating profit fell by 28 percent to 647 million euros. This corresponded to a margin of just 12.7 percent after 17.6 percent in the same period of the previous year.
CEO Bernd Montag confirmed the forecast for the full year. Sales should stagnate. If you factor out the special boom with the corona tests, this would be an increase of six to eight percent in the other shops. A slight decline to between EUR 2.00 and EUR 2.20 is expected for adjusted basic earnings per share.
The stock market reacted positively: Healthineers shares rose by almost six percent in a positive Dax environment.
On average, analysts had expected a slight decline in sales to EUR 5.2 billion on a comparable basis for the first quarter. The consensus of estimates for the adjusted operating result was EUR 663 million.
Imaging can continue to grow
The Healthineers pointed out that the core business had gone well. Incoming orders for equipment (equipment) have increased in percentage terms by double digits.
The divisions developed very differently. The imaging division with the X-ray and MRT devices increased sales by a comparable five percent to 2.7 billion euros.
In the diagnostics division, revenues fell by almost a quarter to 1.1 billion euros due to the end of the rapid test boom. In the first quarter of the year, Healthineers only had sales of 63 million euros with Covid-19 antigen tests, after 329 million euros in the same period of the previous year.
At the cancer therapy specialist Varian, sales fell by a comparable 4.5 percent to 770 million euros. The group attributed this to delivery problems at a supplier who had relocated a plant. The problem has now been fixed.
The big European competitor Philips announced earlier this week that it would cut another 6,000 jobs. The Dutch had slipped deep into the red last year because of the costly recall of ventilators.
>> Read about this: Philips wants to become more profitable and is therefore massively cutting jobs
In the final quarter of 2022 – i.e. in the period that Healthineers is now reporting on – Philips was able to increase sales by a comparable three percent to 5.4 billion euros. Operating profit adjusted for special effects rose slightly at Philips in the final quarter to 651 million euros. The Dutch did better than expected.
But Philips gave a rather cautious outlook, especially since order intake fell by eight percent in the fourth quarter. A slow start to the new financial year is expected. However, business will pick up as time goes on. For the year as a whole, Philips intends to slightly increase sales again.
US competitor GE Healthcare, which was spun off from parent GE at the beginning of the year, has more ambitious plans and at the beginning of the week announced organic sales growth of five to seven percent for the current year. The adjusted operating profit margin is expected to increase from 14.5 to up to 15.5 percent.
GE had sales of $18.3 billion last year, and the company grew organically by 13 percent in the year-end quarter, driven by strong demand for imaging processes.
A takeover and the demand for corona tests had boosted the business
Siemens Healthineers had benefited greatly from the demand for rapid tests during the Corona period. In addition, sales grew as a result of the Varian takeover. Healthineers acquired the US cancer therapy specialist for $16 billion in the largest acquisition in Siemens history.
This is one of the reasons why Healthineers was able to increase sales in the 2020/21 financial year by more than 20 percent to EUR 21.7 billion for the first time. Adjusted for portfolio and currency effects, growth was 5.9 percent. The operating result adjusted for special effects rose by 16 percent to 3.7 billion euros. This corresponded to a margin of 16.8 percent.
For the current second quarter of the business year, the Healthineers management expects a strong acceleration in growth, in particular due to catch-up effects at the cancer therapy specialist Varian.
According to management’s expectations, the diagnostics division will hardly be able to make up for the corona-related losses in the first quarter in the coming months. According to CFO Jochen Schmitz, the business segment will probably end up at the lower end of the forecast range for margin and sales in the current financial year. It is therefore becoming more challenging for the group to reach the upper end of its own forecasts.
More: Philips will cut another 6,000 jobs