Fresenius Shares Slide as Group Issues Full-Year Profit Warning
By Scott Kanowsky
Investing.com -- Frankfurt-listed shares in Fresenius (ETR:FREG) slid toward the bottom of the pan-European STOXX 600 after the healthcare group lowered its annual outlook, citing economic headwinds that led to weak quarterly performance at its key dialysis business.
The Germany-based company said it now expects full-year group-wide net income to slide by the low-to-mid single-digit percentage range, down from its previous guidance of an increase in the low-single digits. Sales estimates were also revised to the low-to-mid single-digit percentage range from mid-single digits.
Spurring on this move was a darkening backdrop for Fresenius Medical Care (ETR:FMEG), the provider of products and services for dialysis - the process of flushing out waste and excess fluid from the blood if the kidneys stop working properly.
Fresenius Medical Care, which is a publicly traded entity more than 30% owned by Fresenius, also slashed its 2022 estimates. It said labor shortages and higher wages, along with an uptick in supply costs, "significantly impacted" second quarter trading. Earnings before interest and taxes at the business dipped by 6% at constant currencies during the period, according to preliminary numbers released on Thursday.
Shares in Fresenius Medical Care slumped by more than 11%.
"To the extent possible and foreseeable, we factored these burdens into the guidance we provided in February and May," said Fresenius chief executive Stephan Sturm in a statement. "In the meantime, though, it has become apparent that patient-facing healthcare services in the United States are affected even more heavily, hence also Fresenius Medical Care. It will take fortitude and energy to overcome this particularly challenging phase [...]"
The war in Ukraine, ongoing COVID-19 effects, and a deteriorating global economic climate are expected to cause further supply chain delays and cost inflation as well, Fresenius said.
On a constant currency basis, group-wide total net income slid by 9% to €450M in the second quarter.
Meanwhile, the group also scrapped its medium-term target. Fresenius had expected organic net income at the bottom end of 5% to 9% on sales at the low end of the 4% to 7% range for the 2020-2023 period.
Fresenius will publish full second quarter and first half results on August 2.
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