The end of the authorities’ action is expected
Siemens Healthineers hopes for a revival in China
February 1, 2024, 4:31 p.m
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Siemens Healthineers sees itself on track after the end of the first quarter. Things are going especially well for daughter Varian. On the other hand, there is room for improvement in China business. Due to official actions, customers held back there. But an end to the dry spell seems to be in sight.
The medical technology group Siemens Healthineers is countering the uncertainty among customers in China. “We got off to a good start in the new financial year,” said CEO Bernd Montag, satisfied with the first quarter of 2023/24. But business in China, which was sluggish during the Corona crisis, is recovering only slowly because the government fought against corruption in the healthcare industry. “We are below our potential in China,” said CFO Jochen Schmitz.
However, Montag expects that customers’ ordering behavior will now recover after the investigations. “Order intake is likely to pick up again after the Chinese New Year.” He sees the Siemens subsidiary on track to meet its forecasts.
In the current second quarter, the goals will be approached from the bottom up in most divisions, said Schmitz. Only the diagnostics business, which is in the middle of converting to the new generation of laboratory lines, will achieve the targeted sales and margin targets from January to March.
Cancer medicine subsidiary Varian is the driving force
For the year as a whole, Siemens Healthineers is sticking to its forecasts: sales are expected to grow by 4.5 to 6.5 percent on a comparable basis – i.e. without the loss of business with rapid corona tests. Adjusted earnings per share are expected to be between 2.10 and 2.30 euros per share as planned, despite the China effect and a growing exchange rate headwind.
In the first quarter from October to the end of December, the cancer medicine subsidiary Varian was the driving force with sales growth of 23 percent and an increase in operating earnings of 30 percent. The most expensive acquisition in the company’s history is paying off. The imaging division (CT, MRI and X-ray), however, had to make compromises in terms of returns, but remains by far the largest profit generator.
Overall, Siemens Healthineers met analysts’ expectations in the first quarter. Sales rose on a comparable basis by 5.7 percent to 5.2 billion euros, and adjusted earnings before interest and taxes (EBIT) rose by eight percent to 742 million euros. However, the net profit stood at 432 million euros.