Siemens Healthineers confirms outlook despite problems at Varian

3:34 am Wednesday, August 02nd, 2023

(Reuters) -U.S.-German medical device maker Siemens Healthineers on Wednesday confirmed its outlook for the year despite an unexpected drop in quarterly operating profit amid delivery delays at cancer treatment specialist Varian.

Adjusted earnings before interest and taxes (EBIT) fell 3% to 740 million euros ($812.59 million) in the third quarter, below the 773 million euros expected by analysts according to a consensus provided by the company.

Shares were down 5.3% in Frankfurt early trade after the results.

Revenue in the quarter gained 3.6% on a comparable basis, helped by growth in the Imaging and Advanced Therapies segments, to 5.1 billion euros, in line with analysts’ expectations. Net income was nearly a quarter higher than the prior-year period thanks to a low tax rate.

Excluding the COVID-19 rapid antigen test business, comparable revenue growth was 10.1% for the April-June quarter.

Chief Executive Bernd Montag spoke of a “a quarter of strong growth” and told journalists that the company would hit the upper end of its full-year forecast of comparable revenue change of between -1% and 1%.

However, Siemens Healthineers lowered its profit margin outlook for Varian due to “temporary challenges in outbound logistics” at its U.S. maker of devices and software for treating cancer to 14-15% from a previous 16-18%.

Delivery problems will be solved in the fourth quarter, said Chief Financial Officer Jochen Schmitz, adding that order intake at Varian has been consistently high.

For the quarter, Varian’s profit dropped by nearly a third, to 102 million euros, with the margin also falling by 6 percentage points to 12.1% from the same period last year.

Jefferies said a weak order intake and Varian figures overshadowed “a strong performance in Imaging and a decent Diagnostics print.”

Falling test demand hit the Diagnostics segment, whose revenue fell 20.1% on a comparable basis, but rose by 2.0% when excluding tests, while the Imaging segment posted broad-based comparable revenue growth of 15.2% for the quarter.

($1 = 0.9084 euros)

(Reporting by Miranda Murray and Alexander Huebner, Editing by Rachel More and Sharon Singleton)