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Siemens Healthineers lays out cost-cutting strategy ahead of IPO

by Thomas Dworetzky, Contributing Reporter | January 16, 2018
Siemens Healthineers is planning cost-cutting ahead of its scheduled listing on the Frankfort exchange, the company said Tuesday.

Future strategic plans call for structural changes to save about $293.9 million a year – with the impact of these savings beginning to show in 2020.

The company also announced plans to make the most of the shifting landscape in health care.

Siemens Healthineers is “a business well prepared to take advantage of the paradigm shifts in health care," said Michael Sen, chairman of the supervisory board of Siemens Healthineers and member of the Siemens Managing Board also responsible for the company's health care activities. "As a separate listed entity, Siemens Healthineers will have the entrepreneurial flexibility to actively shape its industry with a view to accelerating profitable growth and deliver return. It will also have direct access to the capital market, which will improve its ability to fund investment. Siemens will continue to actively support Siemens Healthineers as a majority shareholder."

The health care entity earned a robust fiscal 2017 revenue of €13.8 billion – over 55 percent of which is recurring, the company added in its statement.

Calling the Healthineers “a truly global innovator with unique scale,” Bernd Montag, CEO of Siemens Healthineers, stressed that given its positioning and global footprint, the organization will be “one of the main long-term beneficiaries of the significant structural growth inherent in our markets.”

The Healthineers revenue, he noted, is balanced globally, with 41 percent from the Americas, 32 percent from the EMEA, and 28 percent from the Asia-Pacific region.

More than 55 percent of its revenue is generated by reagents and consumables as well as services, and is therefore recurring.

In addition, organic annual revenue has grown an average of 4 percent since 2015.

The company added no new details of its planned listing in this latest announcement. Last week, however, Reuters reported that the listing would take place in March, according to unnamed sources.

Given the significant shifts in health care delivery, the company also stated that within its core markets, it anticipates growth of 3 to 5 percent a year from 2016 to 2021.

"We expect our sustained and profitable revenue growth and continued strong cash flow to support our planned dividend policy," stressed Montag.

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