Shares in Fresenius, Fresenius Medical Care Tumble After Preliminary Outlook Statement
February 02 2021 - 4:51AM
Dow Jones News
By Cecilia Butini
Fresenius SE & Co KgaA and Fresenius Medical Care AG &
Co. traded lower at open on Tuesday after they released a
preliminary statement for 2020 with a pessimistic outlook for
2021.
Fresenius said late Monday that it had achieved its sales and
net income guidance for 2020, but expects this year's earnings to
be meaningfully affected by the effects of the coronavirus
pandemic. Fresenius Medical Care, the group's dialysis division,
said it expects a decline of up to 25% in net income in 2021,
before potential restructuring measures and including anticipated
Covid-19 effects.
At 0852 GMT, shares in Fresenius traded 4.7% lower while
Fresenius Medical care was down 12.6%.
According to analysts at Berenberg, Fresenius Medical Care's
expectations on net income seem to be related to Covid-19 and as
that should pass, meaningful effects on long-term earnings for
Fresenius aren't expected.
Should Fresenius Medical Care post 30% lower net income, that
would drive a 5% to 6% reduction in Fresenius's net income and
modestly lower-than-expected earnings for the other businesses,
according to Berenberg.
Fresenius's dialysis division said the severity of illness in
Covid-19 patients with kidney disease resulted in an increased
mortality for those patients throughout 2020. This is expected to
carry over into 2021, the company said.
The revenue impact of higher mortality isn't the only factor to
consider, however, according to Berenberg. Operational leverage
effects should also be taken into account at Fresenius Medical
Care, analysts say.
"Fewer patients mean poorer fixed-cost absorption and also a
knock-on effect on other businesses, such as the pharmacy and
vascular access business, as well as the relatively high-margin
products business. Until such time as volumes normalize, we would
expect these operational leverage effects to persist," says
Berenberg.
Medium targets at Fresenius Medical Care and at Fresenius
weren't revised, though Fresenius said it will give an update on
its medium-term expectations when it publishes 2020 results on Feb
23.
Write to Cecilia Butini at cecilia.butini@wsj.com
(END) Dow Jones Newswires
February 02, 2021 04:36 ET (09:36 GMT)
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