The Health Transformation
Management Institute
Joaquim Cardoso MSc*
Chief Strategy Officer, Research and Editor
November 9, 2022
*MSc from London Business School — MIT Sloan Masters Program
Source: Reuters
Executive Summary:
What is going on?
- Siemens Healthineers is to restructure its diagnostics division in the hope of making around 300 million euros ($301.71 million) in savings by 2025
- It said it would spend a similar amount on the overhaul, although those costs would be one-off, while the savings will recur.
- Full-year net income rose by 18% to 2.05 billion euros, partly as a result of lucrative business with COVID-19 tests.
What are the sources of the cost transformation?
- After the introduction of its Atellica laboratory system, older systems — most of them acquisitions — are to be taken off the market sooner than previously planned to simplify the portfolio.
- The CEO said the restructuring would mean less focus on certain locations for the diagnostics division, with fewer staff required in some areas.
- Sources from within the company said the plan involves cutting jobs and abandoning certain locations.
What are the forecasts for the financial results?
- Siemens Healthineers also said it was lowering its targets for the laboratory division, with comparable sales growth of 3%-5% per year until 2025, rather than 4–6% previously
- The adjusted return on sales before interest and taxes (EBIT margin) is seen at 8%-12% by 2025 instead of a previously hoped-for 15%.
ORIGINAL PUBLICATION
Siemens Healthineers announces diagnostics division overhaul
Reuters
BERLIN, Nov 8
Siemens Healthineers (SHLG.DE) is to restructure its diagnostics division in the hope of making around 300 million euros ($301.71 million) in savings by 2025, …
… the U.S.-German medical device maker said upon announcing its fiscal 2022 results on Wednesday.
It said it would spend a similar amount on the overhaul, although those costs would be one-off, while the savings will recur.
Shares in Siemens Healthineers were up almost 2% by 1126 GMT following the announcement.
After the introduction of its Atellica laboratory system, older systems — most of them acquisitions — are to be taken off the market sooner than previously planned to simplify the portfolio.
After the introduction of its Atellica laboratory system, older systems — most of them acquisitions — are to be taken off the market sooner than previously planned to simplify the portfolio.
For the fiscal year that started in October, Healthineers has budgeted costs of 150 million to 200 million euros for the restructuring, a presentation to shareholders shows.
Up to 2025, the overhaul is expected to cost between 350 million and 450 million euros, Chief Executive Bernd Montag said in Erlangen on Wednesday.
He said the restructuring would mean less focus on certain locations for the diagnostics division, with fewer staff required in some areas.
Sources from within the company said the plan involves cutting jobs and abandoning certain locations.
He said the restructuring would mean less focus on certain locations for the diagnostics division, with fewer staff required in some areas.
Sources from within the company said the plan involves cutting jobs and abandoning certain locations.
Siemens Healthineers also said it was lowering its targets for the laboratory division, with comparable sales growth of 3%-5% per year until 2025, rather than 4–6% previously.
The adjusted return on sales before interest and taxes (EBIT margin) is seen at 8%-12% by 2025 instead of a previously hoped-for 15%.
Siemens Healthineers also said it was lowering its targets for the laboratory division, with comparable sales growth of 3%-5% per year until 2025, rather than 4–6% previously.
The adjusted return on sales before interest and taxes (EBIT margin) is seen at 8%-12% by 2025 instead of a previously hoped-for 15%.
The group targets adjusted basic earnings per share of between 2 euros and 2.20 euros for fiscal 2023.
During fiscal 2022, it achieved comparable revenue growth of 5.9% at around 21.7 billion euros.
This compared with a targeted range of 5.5% to 7.5% and analysts’ average estimate of 21.5 billion euros in revenue.
Full-year net income rose by 18% to 2.05 billion euros, partly as a result of lucrative business with COVID-19 tests.
The company proposed a 10 cent dividend increase to 0.95 euros. ($1 = 0.9943 euros)
Originally published at https://www.reuters.com on November 9, 2022.
Reporting by Alexander Huebner and Rachel More,
Editing by Barbara Lewis, Kirsten Donovan,
@ Reuters
Chief Executive Bernd Montag, Siemens Healthineers
