Siemens Healthineers' Q1 profit falls 12% on costs related to Atellica diagnostic analysers

Headline results for the first quarter:

Revenue

€3.6 billion ($4 billion)

+8.7%

Profit

€304 million ($336 million)

-12%

Note: All changes are versus the prior-year period unless otherwise stated

What the company said:

"We started the new fiscal year…with a growth-intensive first quarter," remarked CEO Bernd Montag, but "profitability was held back by temporary effects," including a temporary decline in imaging and an anticipated weak margin performance in diagnostics.

The company explained that the diagnostic segment was "mainly burdened by higher ramp-up costs related to Atellica Solution, following the shipment of more than 600 analysers in the fourth quarter of fiscal year 2019."

However, Montag said the company's largest Atellica order, which was announced on Monday, with Quest Diagnostics agreeing to purchase up to 120 analysers, would translate into additional annual sales of €40 million ($44 million) to €50 million ($55 million) over 10 years.

Other results:

  • Imaging segment sales: €2.2 billion ($2.4 billion), up 9.9%, driven by x-ray products, molecular imaging and magnetic resonance, with significant growth in the EMEA and Asia/Australia regions, while sales in the Americas "declined slightly" after strong growth in the prior-year quarter
  • Diagnostics segment sales: €1 billion ($1.1 billion), up 5.1%, with significant growth in China, and "slight increases" in the EMEA and Americas 
  • Advanced therapies segment sales: €404 million ($446 million), up 13.7%, driven by significant equipment growth in all regions

Looking ahead:

Siemens Healthineers reaffirmed that for fiscal 2020, comparable revenue growth is expected to be in the range of 5% to 6% year-on-year, while earnings per share are forecast to be 6% to 12% above the level of fiscal 2019, when the figure was €1.70 ($1.88) per share.

What analysts said:

Credit Suisse analysts noted that while the Atellica challenges had been known, weak imaging margins posed a new concern. "The slow start to the year will leave an overhang of a guidance reduction later on in the year given the implied catch up on margins/[earnings per share] growth for the remaining quarters," the analysts said.

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