Q4 insights: Siemens Healthineers, a market leader in diagnostic imaging, has posted quarterly revenue of €6 billion for the first time. The result, which beat the €5.8 billion analyst consensus, was driven by growth in Siemens Healthineers’ imaging unit, its largest business. Unit sales grew 17.3%, or 8.1% on a comparable basis, driven by demand for magnetic resonance imaging and computed tomography machines.
“Overall, the Siemens Healthineers team achieved excellent results in the fourth quarter and successfully concluded another fiscal year despite very difficult conditions. A continuous increase in order intake strengthens our confidence for the 2023 fiscal year,” CEO Bernd Montag said in a statement.
Diagnostics restructuring: Healthineers, the world‘s third largest medical technology firm by revenue, is revamping its diagnostics unit after concluding that “external headwinds [are] outweighing operational improvements.” In a presentation to investors and analysts on Wednesday, management listed inflation, logistical constraints, shortages and costs, the delay of its CI1900 clinical chemistry and immunoassay testing system, and missing revenues because of COVID-19 lockdowns as challenges faced by the unit.
Those problems led Healthineers, which is about 75%-owned by German engineering giant Siemens AG, to cut its annual comparable sales growth target through 2025 to 3% to 5%, down from 4% to 6% under its prior forecast. In response, Healthineers plans to simplify its portfolio, reduce the complexity of its organization and run a leaner R&D group. The changes will result in €300 million of “cost out measures” by 2025.
Price increases: Fast-rising costs initially outpaced the company’s ability to pass on the extra spending to its customers. That is changing. Management told investors that “market adaptive pricing mechanisms” are working. Equipment order pricing measures flipped price erosion to price accretion in the second half of the year, and further gains are forecast for 2023.
Healthineers expects sequential margin improvements throughout the coming financial year, with the pace accelerating in the second half of 2023 “due to orders rolling into revenues within ~3 to 18 months.”
Forecast for 2023: The company expects comparable revenue growth of between -1% and 1% next year. Excluding COVID-19 antigen test sales, the forecast represents growth of 6% to 8%. Adjusted basic earnings per share are forecast to fall from the €2.29 delivered in 2022 to between €2.00 and €2.20.
Shares of Siemens Healthineers rose 4.58%, or 2.15 euros, to 49.14 euros in afternoon trading in Frankfurt.
