Breaking News
Get 40% Off 0
👀 Reveal Warren Buffett's stock picks that are beating the S&P 500 by +174.3% Get 40% Off

Fresenius sinks, FMC rises after CEO signals strategy change

Published Feb 22, 2023 10:44
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.
 
FMEG
+0.52%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
FREG
-0.08%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Geoffrey Smith 

Investing.com -- Shares in Fresenius (ETR:FREG) fell the most in five months in Frankfurt on Wednesday, as a gloomy outlook for the coming year, poor results for 2022 and another change of heart on corporate strategy dealt a blow to hopes for a thorough turnaround under its new leadership.

By 04:25 ET (09:25 GMT), Fresenius stock was down 5.1%, at the bottom of a DAX index that was down 0.7%. 

In a statement late on Tuesday, the healthcare company had ditched its long-term policy of continually raising dividends as part of what it called a more "rigorous" financial framework. The 2022 dividend was kept unchanged at 92c.

Fresenius also said earnings before interest and taxes could fall this year by as much as 10%, a reflection of problems that were already evident in a miserable 2022, when its stock price hit a 16-year low. 

Net profit fell 25% last year to €1.37 billion (€1=$1.065), due to "a challenging macroeconomic environment with increased uncertainties, general cost inflation, staff shortage, disruptions in supply chains, and increased energy costs." Most of those factors are expected to continue to act as a drag on earnings this year. The year ended on a particularly weak note, with operating income falling 22% to €352M, well below consensus forecasts. 

Fresenius also signaled it won't be selling down its 32% stake in kidney dialysis specialist Fresenius Medical Care (ETR:FMEG) any time soon, a measure that could have reduced the group's debt burden. Net debt was 3.65 times the group's EBITDA at the end of 2022, compared to a target range of 3-3.5 times.

Instead, Fresenius will change FMC's legal status into a joint stock company and allow it more operational freedom, holding its stake only as a financial investment. FMC stock rose 9.4% in response on Wednesday to its highest in seven months.

The company also intends its Vamed hospital construction unit to operate at arm's length in future, while it concentrates on extracting maximum value from its Helios and Kabi units. Helios is Europe's largest private hospital operator, while Kabi makes generic and biosimilar drugs, clinical nutrition and infusion therapies as well as medical devices and transfusion technology products. 

Fresenius sinks, FMC rises after CEO signals strategy change
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email