Fresenius Medical shares at 12-year low as labor costs weigh on earnings

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Product samples from Fresenius and Fresenius Medical Care are displayed during the company’s annual news conference at their headquarters in Bad Homburg, Germany, February 20, 2019. REUTERS/Kai Pfaffenbach

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July 27 (Reuters) – Shares of kidney dialysis group Fresenius Medical Care (FMC) (FMEG.DE), plunged 7.5% to a 12-year low after cutting its profit outlook due to the cost inflation and personnel shortages in the United States.

In an unscheduled statement on Wednesday evening, the world’s largest provider of dialysis treatment reported a drop in net income in the high teen percentage range this year and withdrew its 2025 targets.

He also said he expected sales growth at the lower end of the previous guidance range.

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Its parent company, German healthcare group Fresenius SE (FREG.DE), said it expected the group’s net profit to decline in the low to mid-single digit percentage range, leading to a its shares fall by 5.6%.

It also expects the group’s sales to grow in a low to mid-single-digit percentage range in 2022, down from its previous forecast of a mid-single-digit percentage range.

Fresenius, which runs dialysis centers and hospitals, manufactures generic drugs and helps plan hospital construction projects, recorded a 5% drop in net profit to 450 million euros (458.96 million dollars) while the group’s revenues increased by 8% to 10.2 billion euros.

FMC said rising costs for staff training, higher turnover rates and the increasing use of contract labor in the United States have driven up costs, in addition to non-wage and non-wage costs. supply chain disruptions which also weighed on revenues.

He said he no longer expects to achieve organic growth in healthcare services revenue in North America this year.

“At the end of the first quarter, we assumed prolonged labor shortages, but we clearly did not expect such a significant and rapid deterioration,” FMC chief financial officer Helen Giza said in a statement. communicated.

“While the company expects many of the factors driving this deterioration in the near-term outlook to be temporary, we don’t believe this will provide as much comfort to investors,” analysts at the brokerage said. Berenberg in a note.

FMC’s net profit fell 33% in the second quarter year-on-year to 147 million euros, despite a 10% increase in revenue in the quarter, preliminary results showed.

The company said new chief executive Carla Kriwet will succeed Rice Powell, who is retiring Oct. 1, ahead of schedule.

In February, parent company Fresenius raised its cost savings target to at least 150 million euros a year after tax, up from a previous target of more than 100 million euros.

Fresenius chief executive Stephan Sturm said this year that FMC could be sold in the longer term, but only if a very attractive price was offered.

It has also sought outside investors to help finance a takeover or merger involving the Helios hospital unit, although Fresenius intends to retain the majority of shares. Read more

Fresenius and FMC were due to release detailed results on August 2.

($1 = 0.9805 euros)

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Reporting by Ludwig Burger and Riham Alkousaa in Berlin Editing by Matthew Lewis and David Gregorio

Our standards: The Thomson Reuters Trust Principles.

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