FRE Fresenius SE & Co KGaA

By Sarah Sloat

Shares in Fresenius SE and Fresenius Medical Care AG tumbled Thursday after the companies lowered guidance for the year due to inflation and U.S. labor shortages.

Dialysis care company Fresenius Medical Care late Wednesday said a worsening economic environment and severe labor shortages in the U.S. hit second-quarter results, prompting it to lower its outlook. Fresenius, which holds about 32% of Fresenius Medical Care's equity, cut its outlook as a result, although its other units are on track with their 2022 targets.

At 0741 GMT, shares in Fresenius Medical Care traded 12% lower at EUR38.65. Fresenius was down 7.4% at EUR25.23.

"The already challenging macroeconomic environment has significantly deteriorated - driving non-wage cost inflation and supply chain disruptions," Fresenius Medical Care said. These will have a strong impact on the rest of the year, it said, and withdrew its 2025 targets, too.

Berenberg analysts Tom Jones and Odysseas Manesiotis said they were anticipating a lowered outlook from Fresenius Medical Care, but were surprised by its magnitude.

"Although the company expects many of the factors behind this deterioration in near-term outlook to be temporary, we do not think this will come as much comfort to investors and would expect the shares to be materially weak this morning," the analysts said in a research note.

Fresenius Medical Care said its second-quarter revenue grew about 1% and after-tax income excluding extraordinary items fell about 7%. In 2022, net income is expected to fall in a high-teens percentage range, compared with previous guidance for growth in a low-to-mid single digit percentage range. It expects revenue to grow at the low end of the low-to-mid single-digit percentage range previously forecast.

Fresenius now expects 2022 sales growth in a low-to-mid single-digit percentage range, compared with a previous forecast for the mid-single digit range. Net income should fall in a low-to-mid single-digit percentage range, compared with a previous forecast for a low-single-digit increase.

Write to Sarah Sloat at sarah.sloat@wsj.com

(END) Dow Jones Newswires

July 28, 2022 04:08 ET (08:08 GMT)

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