Poor performance in China hurts Siemens Healthineers

Gdansk — German health technology company Siemens Healthineers reported second-quarter revenue growth slightly below consensus expectations on Tuesday, as it was hurt by declining revenue in China.

Revenue in the second quarter reached €5.44bn, compared with analyst expectations of €5.48bn, according to a consensus compiled by Vara Research.

Adjusted earnings before interest and taxes (ebit) came in at €822m, increasing by 8% year on year.

The company, which was spun out from industrial giant Siemens in 2018, provides technology in the healthcare sector, including in the fields of laboratory and care diagnostics, therapeutic imaging and molecular medicine.

The subsidiary grew in its two largest markets, the Americas and Europe, the Middle East and Africa (EMEA), with a 5% and 8% comparable revenue change, respectively.

But revenue in China fell 14%, with the company citing temporarily delayed customer orders in preceding quarters and the comparison to an outstanding prior-year quarter.

Siemens Healthineers has been grappling with a Chinese anticorruption campaign targeting the bribing of doctors in drug and medical equipment sales, which began in July 2023.

In its Imaging unit specifically, the company said it saw very strong comparable growth in EMEA and strong growth in the Americas, but a revenue decline in China in the low double-digit percentage. The segment saw a 2.6% comparable revenue rise, down from 13% the year prior.

“We assume that Imaging will end the financial year in the lower half of the sales and margin assumptions,” CFO Jochen Schmitz said in a media call, adding that expectations of accelerated development in the second half of the year remained unchanged.

For the third quarter, Siemens Healthineers said it anticipated a good revenue trend, in the upper half of its 5%-7% yearly guidance, excluding antigen tests.

The company confirmed its targets, including year-on-year revenue growth between 4.5% and 6.5%, or between 5% and 7% excluding revenue from rapid Covid-19 antigen tests.

Siemens Healthineers, however, raised guidance for its diagnostics unit’s adjusted ebit margin to between 4% and 6%, from a previously expected range of 2.5% to 4.5%.

The diagnostics unit, which encompasses its laboratory testing and includes the now-ended Covid-19 test business, is currently transitioning away from old laboratory devices and focusing on its “Atellica” platforms.

It reported that the unit’s new generation of laboratory lines was growing at double-digit rates.

Reuters