China Restrictions & Testing Decline Hurt Siemens Healthineers EarningsChina Restrictions & Testing Decline Hurt Siemens Healthineers Earnings
The Erlangen, Germany-based company said it saw a 28% drop in operating profits.
February 6, 2023
Lockdown restrictions in China, supplier issues plaguing Varian, and decline in COVID-19 testing were enough to give Siemens Healthineers earnings a significant thrashing. The Erlangen, Germany-based company said these factors caused a 28% drop in operating profit.
Revenues for the fiscal first quarter came to $5.50 billion, down 4.5% on a comparable basis, which was also below consensus for $5.64 billion.
The company said excluding rapid antigen sales, we saw soft revenue growth of 0.7% in Q1 due to lower diagnostics revenue impacted by lower testing volumes in China and varying revenues being held back by the known supplier issue. Including rapid antigen sales, we recorded a 5% decline of comparable revenue.
Of particular interest is a supplier issue that plagued Varian, a cancer therapy specialist Siemens announced it would acquire in 2020 for $16.4 billion. It was one of the largest deals to occur during the beginning of the pandemic.
“Varian posted a [comp revenue] decline of 4.5% as a result of the held back revenues due to the supplier issue...,”said Jochen Schmitz, Siemens Healthineers CFO, according to a transcript of the call from Seeking Alpha. “This is the same supplier topic that held back performance at Varian in Q4 last fiscal. While, the issue was resolved in course of Q1, it did still lead to substantial parts of Q1 revenues being pushed out into the next quarters, especially in the regions, Asia Pacific Japan, and China.”
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