MUNICH (dpa-AFX) - The end of the Corona wave is currently casting a long shadow over the laboratory industry. The laboratory chain Synlab also continues to struggle with the sharp decline in testing for the virus. In addition, increased prices for energy and fuel, for example, as well as higher labor costs are putting pressure on the results of the SDax company. After an already weak start to the year, Synlab also suffered sharp declines in sales and earnings in the second quarter. Group CEO Mathieu Floreani sees the group on track to meet its annual targets, but expects Covid revenues to fall even more sharply than before.

Nevertheless, the company leader sees Synlab continuing on its successful course. He told journalists on Wednesday that the group has been able to achieve very strong growth so far, apart from the negative special effects. He added that the growth initiative that had been launched had made a solid contribution that had significantly exceeded the expectations of the management board. "In addition, we made great progress in regaining our pre-pandemic productivity levels." Synlab is developing as expected, he stressed in the conference. "We are confident that we will continue to move the group forward."

Shares, already down a fifth since the turn of the year, were trading thinly in the morning. Adjusted sales growth was a tad better than expected, wrote analyst David Adlington of U.S. bank JPMorgan. The lab services provider's profitability was in line with forecasts, he added.

Synlab said it is the market leader in medical diagnostics and specialty testing in Europe. In the meantime, the company has launched a cost-cutting program; according to the company, 21 million euros were saved in the first half of the year. Among other things, the group had divested its activities in Switzerland, and in Mexico all activities were united at one site. The restructuring is still underway: "We are actively pursuing our portfolio management strategy by reassessing our existing businesses at all levels: contracts, activities, customers, regions and countries."

After a brisk buying spree in recent years, the group also recently cut its budget for acquisitions, but says it continues to raise money specifically for promising targets.

In the meantime, the "reduction of Covid 19 capacities" is now almost complete, the Group CEO continued. In the last quarter, Covid tests only brought the company seven million euros in sales, a fraction of the 164 million euros earned in the same period of the previous year. The first two quarters of 2022 were still heavily influenced by the omicron wave of the Corona virus, it said in explanation.

Although Synlab was able to grow by a good four percent away from Covid tests thanks to higher volumes and price increases, overall sales fell by 15 percent year-on-year to around 670 million euros.

The high costs also depressed earnings: earnings before interest, taxes, depreciation and amortization, adjusted for special items, slumped by a third to just under 114 million euros in the three months to June. The bottom line for shareholders was an adjusted profit of just 25 million euros, compared with 93 million euros a year earlier.

Synlab now expects Covid tests to contribute only 40 million euros for the year as a whole, compared with a previously estimated 50 million euros. However, this and the loss of the contribution from the sold Swiss business would be offset by stronger growth in the rest of the business. The Management Board is therefore sticking to the targets it had already lowered in May. Sales are expected to come out at 2.7 billion euros - compared with 3.25 million euros in the previous year. The adjusted operating margin is expected to fall to between 16 and 18 percent; in the second quarter of the year, it was exactly in the middle of the range at 17 percent.

Meanwhile, there was no news on the possible takeover offer from the major shareholder Cinven. Synlab is in active exchange with the financial investor, the management simply said. Cinven had already announced in March that it was considering a takeover bid for the laboratory chain. According to information at the time, this announcement was not initially coordinated with Synlab itself./tav/mne/men