The medical technology group Siemens Healthineers is facing challenges this fiscal year due to upheavals in China's healthcare sector and a weak dollar. Despite these headwinds, CEO Bernd Montag reaffirmed on Thursday in Erlangen the company's outlook that the Siemens subsidiary aims to achieve earnings per share of €2.20 to €2.40 in 2025/26 (ending September), close to last year's level (€2.39). While the Diagnostics laboratory division in China is under pressure due to the introduction of centralized procurement and state-fixed prices in spring 2025, Montag said the other divisions had "demonstrated what they can do" in the first quarter and would likely be able to offset the impact. From October to December, Healthineers' revenue on a comparable basis rose by nearly four percent to €5.40 billion, but after currency effects, this translated to a decline of 1.5 percent. Montag described this as "solid growth," noting that business was strong in North America despite tariffs. Analysts had, on average, expected slightly more. Adjusted earnings before interest and taxes (Ebit) fell by 1.5 percent from October to December to €809 million, but still exceeded expert expectations. Within this, Ebit in Diagnostics plunged by more than three-quarters. The operating profit margin (Ebit margin) remained stable at 15.0 percent. Net profit came in at €456 million, nearly five percent lower than a year earlier. "We had a very good start with higher profit and profitability in our core Imaging and Precision Therapy businesses — and this despite significant headwinds from currency effects and tariffs," Montag summarized. Jefferies analysts, on the other hand, described it as a "slow start, as expected." However, Healthineers has built up a buffer that helps the group achieve its full-year targets. The stock rose 1.7 percent in pre-market trading. ON THE WAY TO THE "NEW NORMAL" Chinese authorities have been battling corruption in the healthcare sector for years, seeking to rein in the influence of intermediaries who often take a cut. The introduction of fixed prices will also lead to a revenue decline in the laboratory division in the current second quarter, which could be even more pronounced than in the first. After that, however, the company will have reached the "new normal," Montag said. Siemens Healthineers will adjust its sales strategy in China. Due to the pressure on the laboratory division, revenue growth from January to March is also expected to fall below the five to six percent that Healthineers still forecasts for the full year. Margins across all divisions are also likely to be below last year's levels in the second quarter. Montag emphasized that the developments in China do not change the company's considerations to potentially divest the diagnostics business in the medium term. (Report by Alexander Hübner. Edited by Olaf Brenner. For inquiries, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)