Medical gear maker Getinge beats profit expectations, shares jump
Updates share reaction in paragraph 2, adds CEO, CFO comments in paragraphs 5, 9, 11
By Greta Rosen Fondahn and Elsa Ohlen
April 22 (Reuters) -Medical equipment maker Getinge GETIb.ST reported a smaller than expected drop in first-quarter core profit on Monday, as new orders offset the costs of resolving prolonged problems with its product packaging and heart products.
The news sent the shares up 6% in afternoon trade in Stockholm, outperforming the wider index .OMXS30 and on track for their biggest intra-session jump in more than a year.
Its quarterly earnings before interest, tax and amortisation (EBITA), adjusted for items affecting comparability, fell 13.4% from a year earlier to 842 million Swedish crowns ($77 million), but exceeded a consensus of 770 million cited by J.P.Morgan.
Getinge has struggled to resolve quality problems with sterile packaging of products for heart-lung support systems and with its heart pumps that have squeezed its margins and knocked its shares since the second quarter last year.
The work to resolve those challenges will continue to affect Getinge this year, though it has made some progress on the packaging issue, CEO Mattias Perjos told Reuters.
The company said it had submitted a CE certificate application at the end of the first quarter for a new kind of packaging for a heart-lung therapy product. It also expects to submit an application for a second product soon, without giving specific timing.
"I am convinced that we have thus come much closer to a final solution to these challenges," Perjos said in a statement.
Work to improve quality in its Acute Care Therapies unit, which makes heart and intensive care products, cost Getinge around 800 million crowns last year.
Costs for quality improvements in 2024 are expected to be roughly half of those incurred last year, CFO Agneta Palmer said in a call with analysts.
Getinge's orders grew by 2.5% organically in the first three months of 2024, after falling for three consecutive quarters.
The underlying market is positive for Getinge, with investments in hospital equipment on the rise globally, Perjos said. That should have a positive impact on orders, although China remains a drag, he added.
($1 = 10.9025 Swedish crowns)
Reporting by Greta Rosen Fondahn and Elsa Ohlen in Gdansk; Editing by Milla Nissi, Barbara Lewis and Emelia Sithole-Matarise
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