In the face of trouble, a champ always hangs tough. The well-known medical device juggernaut Siemens Healthineers (ETR:SHLG), of U.S. and German origins, has done just that. Despite an unpleasant surprise this past quarter, the company managed to keep its year’s forecast on track. The unpleasant surprise? A slip in operating profit owing to snags at Varian, their cancer treatment ace in the hole.
The third-quarter earnings didn’t exactly sing a cheerful tune. Adjusted profits fell off the cliff by 3%, settling at a cool 740 million euros ($812.59 million). That’s shy of the anticipated 773 million euros, leaving the financial forecasters a tad red-faced.
Talk about a rough start to the day. Siemens’ shares tumbled down 5.3% in early Frankfurt trade following the bitter results.
Despite the hiccups, it wasn’t all doom and gloom. Quarterly revenue flexed some muscle with a 3.6% bump. Major props go to the Imaging and Advanced Therapies segments, which beefed up the total to a respectable 5.1 billion euros. Keeping pace with the analyst’s projections, net income also shot up by almost a quarter, thanks to a friendly tax rate.
COVID-19 rapid antigen testing business aside, the quarter saw a healthy 10.1% revenue growth. So, not too shabby!
The head honcho, CEO Bernd Montag, brushed off the setbacks, touting a “rocking quarter of strong growth.” He reassured the world that the company was still on track to hit the sweet spot of its full-year revenue forecast.
Unfortunately, Siemens had to pull back a smidge on Varian’s profit outlook due to “a speed bump in outbound logistics.” The U.S. division responsible for devices and software in cancer treatment dipped to 14-15% from the initial 16-18%.
But fret not, says CFO Jochen Schmitz. The delivery hiccups will be a thing of the past by the fourth quarter. On a brighter note, Varian has been on a roll with a steady flow of orders.
However, it’s not all sunshine and roses at Varian. The company’s profit took a 33% hit this quarter, shrinking to 102 million euros. The margin also lost ground, dropping 6 percentage points to 12.1%.
In the shadow of these disappointments, Jefferies chimed in saying the weak order intake and Varian’s stumbles overshadowed “a home run in Imaging and a fair play in Diagnostics.”
Demand for tests slipped, giving the Diagnostics segment a 20.1% hit in comparable revenue. However, excluding tests, it managed to scrape together a 2.0% rise. Meanwhile, the Imaging segment boasted a robust comparable revenue growth of 15.2% for the quarter.
($1 = 0.9084 euros) Keep the faith, folks!
