Siemens Healthineers' imaging business 'super-strong' says Montag

November 07, 2018
by Thomas Dworetzky, Contributing Reporter
Siemens Healthineers expects growing Atellica machine sales and China demand to spur earnings, Bernd Montag told Bloomberg TV in a November 5 telephone interview.

He called the imaging business “super-strong” and said that the first fiscal year for the company had been “very successful.”

He responded to the challenge of tariffs, saying that the company has a “truly global” network of production, with twin factories for many products like MR and CT in Germany and China. The global demand can then determine where things are produced, he explained, advising that at present “we keep our operations both in China and Germany.”

Montag also discussed the success of the company's lab diagnostics solution Atellica, telling Bloomberg that 990 of the systems had been shipped by the end of September – the high side of its target. Of the sales, 35 percent went to new customers.

Plans call for from 3,200 to 3,500 Atellica machines to be in use by the end of the present fiscal year and as many as 7,000 in operation by 2020. Most of the profits on the devices – about 90 percent – come from consumables.

The Healthineers had “strong” sales of its imaging systems, including X-ray, CT, and MR, according to Reuters, with “comparable sales growth of 4 percent in its fourth quarter to 3.7 billion euros.”

China demand was particularly high, with sales up 6 percent.

The $47 million euro initial costs of the IPO hurt Q4 operating profit, which fell 6 percent to 627 million euros for the period ended in September. But once adjusted, earnings were ahead of 651-million-euro estimates at 674 million euros. Forecasts for 2019 sales growth are now put at 4-5 percent, with an adjusted profit margin of 17.5-18.5 percent, according to the news agency.

In August, Siemens Healthineers had begun to look at ways to ease the tariff hits to costs by altering supply routes to ship more of its U.S.-destined goods from European factories rather than Chinese ones, chief financial officer Jochen Schmitz told reporters at the time, according to Reuters.

“This won’t happen without leaving some trace on our results because we have to change logistic chains ... depending on how the situation develops,” he said.

He advised the tariff impact would be low – “a low single-digit-million euro impact on Healthineers’ results this year,” said the news wire.

“When it stays in this range it won’t be a catastrophe, but of course the topic is very, very regrettable because it significantly impairs global trade,” he said.

As of 2017, Healthineers had 23 U.S. plants and sites, with another 17 in Europe, Middle East and Africa, and the Asia-Pacific region housing 11.

In April, Siemens Healthineers installed the first Atellica Solution immunoassay and clinical chemistry analyzers with Aptio Automation in the U.S. at Access Medical Laboratories in Jupiter, Florida.

“They needed a solution that could grow with them as their testing volume increased. Particularly for immunoassay testing, they wanted a system with the capacity to double their testing output,” Joe Amodeo, marketing manager of laboratory diagnostics in North America at Siemens Healthineers, told HCB News. “They were also interested in securing automation for as many testing disciplines as possible. Aptio Automation allows them to automate from beginning to end, not only for their chemistry and immunoassay testing on the Atellica Solution, but also for many other testing needs, including some third-party analyzers.”

Atellica was recently installed at LBM Bioesterel in France, Arcispedale S. Maria Nuova in Italy and Friarage Hospital in the United Kingdom, motivated by its flexibility for automating redundant and complex procedures to simplify testing workflows and to grow patient testing capacity.

The strong performance of Atellica and as well as the the overall strength of the Siemens Healthineers performance is one reason that its shares roared up after its IPO March 15.

The price at the IPO was in the lower half of its guidance range of 26 to 31 euros.

Siemens raised 4.2 billion euros ($5.2 billion) from the offering, Germany's second largest IPO in almost 20 years.

The Healthineers stock closed at 38.10 euros on Nov 7.