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Fresenius cuts fiscal year outlook on rising costs for dialysis business

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Samples of Fresenius and Fresenius Medical Care products are on display at the company’s annual press conference on February 20, 2019, at its headquarters in Bad Homburg, Germany. REUTERS / KaiPfaffenbach

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July 27 (Reuters)-German healthcare group Fresenius SE (FREG.DE) has lowered its full-year earnings outlook due to cost inflation at its kidney dialysis subsidiary Fresenius Medical Care (FMC) (FMEG.DE). , Said late Wednesday.

In an unplanned statement, the Healthcare Group predicts that Group sales will grow in the mid-single-digit rate in 2022, up from the previously forecast mid-single-digit rate. Said that.

The company added that it expects Group net income to decline in the low to medium single-digit percentage range.

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Fresenius, which operates dialysis centers and hospitals, manufactures generic medicines and assists in planning hospital construction projects, reduced its net income by 5% to € 450 million ($ 458.96 million) and group revenue. Reported an increase of 8% to € 10.2 billion.

FMC, the world’s largest provider of dialysis treatment, has also lowered its 2022 earnings outlook and withdrew its 2025 target. We now expect sales to grow at the lower end of the previous forecast range and net income to decline in the high percentage of teens this year.

The FMC said increased staff shortages, increased turnovers and increased reliance on contract labor in the United States pushed costs even higher, in addition to non-wage costs and supply chain disruptions.

This year, he said he can no longer expect to achieve intrinsic revenue growth in North American healthcare services.

In a statement, FMC Chief Financial Officer Helen Giza said, “We envisioned a long-term labor shortage at the end of the first quarter, but apparently expected such a significant and rapid deterioration. I didn’t. “

FMC’s net profit fell 33% year-over-year to € 147 million in the second quarter, while second-quarter revenue increased 10%, but preliminary results are shown. I am.

According to the company, the new CEO, Carla Cliewet, will take over from Rice Powell, who will retire on October 1, earlier than previously planned.

In February, parent company Frezenius raised its cost savings target to at least € 150 million annually after tax. This is an increase from the previous target of over € 100 million.

Stephan Sturm, CEO of Fresenius, said the FMC could only be sold in the long run if a very attractive price was offered.

He was also looking for an outside investor to help fund an acquisition or merger involving Helios, a hospital unit, although Frezenius intends to maintain a majority stake.read more

Both Frezenius and FMC were scheduled to announce detailed results on August 2.

($ 1 = 0.9805 euros)

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Report by Ludwig Burger and Riham Alkousaa in Berlin Edited by Matthew Lewis and David Gregorio

Our Criteria: Thomson Reuters Trust Principles.

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