After the corona boom: Drägerwerk expects special charges and less sales – shares in double digits

At the medical and safety technology provider Drägerwerk, the expected relapse from the corona boom last year is likely to be even stronger than feared.

The SDAX-listed company surprisingly announced on Tuesday evening in Lübeck that the revenue will probably be between 3 and 3.1 billion euros in 2022. Analysts had so far a turnover of 3.13 billion euros on the slip. In the 2020 financial year, Drägerwerk had earned 3.4 billion euros. Investors didn’t like the outlook at all, the preferred share fell by up to 15 percent on Wednesday. Currently, XETRA trading is still 11.11 percent down to 60.00 euros.

Unlike many other stocks from the medical technology sector, the share could not benefit greatly from the Corona crisis – it looked like this at the beginning. At the end of March last year, for example, the paper had risen to as much as 108.50 euros due to the hope of good business around the pandemic. But the euphoria was quickly over and the course fell back significantly.

Since the outbreak of the pandemic, the price has risen by just under ten percent, which is less than the SDAX and, above all, significantly less than other parts of the industry. For example, the shares of Carl Zeiss Meditec, Eckert & Ziegler, Sartorius and Siemens Healthineers increased between 60 and 130 percent in the period.

The company justified the decline in the balance sheet with a falling demand for masks and new rules for corona test certificates, which already drained the result in the current quarter. In addition, like other companies, Dräger is struggling with increased purchase prices for raw materials and intermediate products and higher costs for logistics and transport. Therefore, in the coming year, only one to four percent of sales are likely to remain as earnings before interest and taxes (EBIT) at Dräger, the statement said. In 2020 the value was still 11.6 percent.

Analyst Eggert Kuls from the investment bank Warburg Research wrote in an initial reaction that the one-time costs weighed on the medical technology company’s outlook for 2021 and that the margin outlook for the coming year is rather weak. After a two-year corona-related boom, profit margins are likely to fall back to the levels of 2018 and 2019 in 2022, which is worse than expected. The expert wants to revise his profit expectations as soon as he speaks with the company.

Since the outbreak of the pandemic, the company had benefited from strong demand for critical care equipment, including the major ventilators. In the Corona year 2020, sales increased by 22.5 percent to 3.4 billion euros. For 2021, management continues to expect a currency-adjusted sales decline of two to six percent and an operating margin (EBIT) of between eight and eleven percent.

“In the past few weeks, the demand for products in connection with the corona pandemic has weakened noticeably,” it was said to justify. This trend will continue in 2022. According to the Management Board, Dräger is likely to grow again from 2023 and then achieve higher profitability again.

For the time being, however, the end of the special boom for face-to-face masks and the new 3G rules for interiors and events are hitting the bottom line. The production capacities for masks created because of the pandemic would no longer be required on this scale, it said. In addition, video-monitored corona self-tests are no longer recognized for compliance with the 3G rules, so that production for the Dräger COVID-19 Home Test will be discontinued until further notice.

As a result, Dräger expects a total of around 30 million euros in special charges that will be posted in the fourth quarter of this year. This depresses the operating result. The operating margin is therefore likely to be at the lower end of the target range of eight to eleven percent for the full year 2021, the company wrote.


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