(Bloomberg) -- Fresenius SE posted earnings that beat estimates amid strong performance for hospital services in Spain and a focus on cost cuts.
Second-quarter earnings reached €0.81 ($0.88) a share before special items, Fresenius said Wednesday. That exceeded the 47-cent average of analyst estimates. The company confirmed its profit outlook for the year.
After nearly two years of streamlining Fresenius’s once-sprawling portfolio, Chief Executive Officer Michael Sen is looking to drive profits by focusing on what he regards its two most promising businesses: the Kabi intravenous drug unit and the Helios division, which owns and operates hospitals in Europe and Latin America.
Fresenius hopes to win over investors as more of a pure-play health-care services company, getting away from the conglomerate reputation that’s weighed on its stock for years. Last year, Fresenius separated itself from the old kidney-dialysis services division, Fresenius Medical Care AG, though it retains a major stake in that entity. Meanwhile, Fresenius is now in the process of exiting its Vamed hospital management and services business.
Sen’s steps appear to be paying off, with Morgan Stanley analysts praising the “stronger core business” in a July 23 note. The analysts upgraded their rating and raised the price target to €39 from €34.
Operations in Spain helped drive second-quarter organic revenue growth of 6% in the Helios hospital services unit, Fresenius said, with an earnings margin of 11% before interest and taxes. Revenue for Helios Germany rose 3% from a year earlier.
Fresenius shares are up more than 14% so far this year, outperforming Germany’s benchmark DAX index.
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