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Fresenius Medical Care cuts jobs as Delta variant takes toll

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FILE PHOTO: Rice Powell, CEO of Fresenius Medical Care, addresses the media during the company's annual news conference at their head quarters in Bad Homburg
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By Milla Nissi

(Reuters) - German dialysis specialist Fresenius Medical Care (FMC) plans to cut costs and up to 5,000 jobs globally - or about 4% of its workforce - as the Delta variant caused another spike in coronavirus-related patient deaths in the third quarter.

FMC had expected the death toll among dialysis patients, who are more susceptible to the virus, to normalise during the second half of the year, but said on Tuesday it now saw a decline in the mortality rate only in the fourth quarter.

"The existence of the Delta variant has caused excess mortality among our patients to rise again in the third quarter," Chief Executive Rice Powell said.

"This means that we must absorb a sizeably larger COVID-19 effect on our business than we projected at the beginning of the year."

The world's largest provider of dialysis treatments aims to reach annual cost cuts of 500 million euros ($580 million) by 2025, as it plans to replace its four regions and some global functions with two divisions: care enablement and care delivery.

Fresenius group, FMC's parent company, had previously announced plans to cut spending by 100 million euros a year in 2021-2025.

FMC maintained its forecast for net income to decline by a high-teens to mid-twenties percentage and sales growth in the low- to mid-single-digits, but warned the numbers would come in the lower end of the ranges.

Fresenius group firmed up its 2021 net income forecast after reporting quarterly results slightly above expectations.

JP Morgan analysts said Fresenius reported "a solid set of results" that should drive the shares today. "However, our concern on outer-year forecasts for FMC leaves us cautious on how much the shares can progress from here."

FMC's shares were up 2.5% at 0857 GMT, while Fresenius rose 4.3%.

($1 = 0.8619 euros)

(Reporting by Milla Nissi and Karol Badohal in Gdansk; Editing by Tomasz Janowski and Mark Potter)

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