AMSTERDAM: Siemens Healthineers on Monday flagged problems at its diagnostics business and toned down expectations for its Atellica blood and urine testing machines, adding that the head of the division would leave the company.
The German health technology firm is pinning its hopes on the Atellica machine to turn around its In-Vitro diagnostics business which lags market leader Roche, but lengthy installation times at large and complex laboratories have dragged down profit in the division.
“We are facing challenges in the diagnostics business,” Chief Executive Bernd Montag said.
“We are tackling these issues resolutely and are focusing with our outstanding Atellica Solution Platform vigorously on improving growth and earnings strength,” Healthineers said.
Montag will take on responsibility for the diagnostics business as current head Michael Reitermann will leave the company at the end of September, it said.
Healthineers said it expects to ship about 1,800 Atellica machines this year, down from a previous estimate of 2,200-2,500, while upgrades to the system have led to higher costs in the third quarter.
The company in May said measures to improve the roll-out of its new blood and urine testing machines were bearing fruit, and shipments went up to 450 machines in the third quarter from 410 in the previous three months.
But while orders from Europe and Asia were on track, the U.S. market lagged expectations, Healthineers said, and profits at the unit were pressured by higher costs.
Overall, strong sales of medical imaging equipment helped Healthineers post better-than-expected quarterly revenue and earnings growth.
Net profit surged 20% to 353 million euros ($392.75 million) in April-June, beating analysts’ average expectations of 328 million euros.
The profit margin dropped from 16% to 15.2% but the company maintained its outlook for a 17.5-18.5% profit margin in its 2019 fiscal year, with 4-5% sales growth.
Comparable sales growth was 6% in the third quarter, also beating market expectations.