MUNICH (dpa-AFX) - Laboratory specialist Synlab has revised its 2023 targets downward due to lower demand and lower prices for its Corona tests. Accordingly, the decline in sales and operating profit, which was already in prospect, is likely to be even steeper than previously suspected. As a result, Europe's largest laboratory services provider also plans to drastically reduce its planned budget for acquisitions. The disappointed investors sent the share on a downward slide on Tuesday.

Shortly after the start of trading, the share, which is listed on the small cap index SDax, fell by 17.6 percent. The share had already lost considerable ground last year in line with the waning Corona tailwind. At just 8.48 euros, the share price is now far below the issue price of 18 euros at the time of the IPO in April 2021 - seven months later, the share price reached its previous high of 25 euros, but thereafter it continued to fall.

According to analyst David Adlington from the US investment bank JPMorgan, there is no significant reason to buy the share for the time being following the profit warning. In the short term, he expects the share price to fall by more than 15 percent. Synlab has lowered its previous sales forecast for 2023 by ten percent, and on the earnings side by as much as 30 percent, which could result in corresponding cuts in market expectations, the industry expert wrote in an initial reaction to Synlab's announcements.

The board is now forecasting revenue of 2.7 billion euros for 2023. That is a tenth less than previously expected, as the company announced in Munich on Monday evening after the stock market closed. Of this, only 16 to 18 percent should remain as adjusted earnings before interest, taxes, depreciation and amortization (Ebitda margin). Previously, the board had expected two percentage points more at both ends of the margin range.

"In January 2023, we saw lower Covid 19 test volumes. In addition, Covid-19 PCR prices have already fallen or are expected to fall in some of our key markets," commented group CEO Mathieu Floreani, according to the statement. As a result, he said, the full-year guidance had to be adjusted.

For the current year, the board is also significantly cutting its money for potential acquisitions. The original budget of 200 million euros has been roughly halved, it said. In this way, the company wants to take countermeasures and try to reach the productivity of the pre-Corona level.

Last year, sales and operating profit were already in decline. For 2022, based on preliminary figures, Synlab earned about 3.25 billion euros, down about 13.6 percent from the previous year.

However, sales of Corona tests were already down significantly last year: While Synlab still generated around EUR 1.6 billion with its Covid products in 2021, this figure was only around half last year. Falling demand was particularly noticeable in the second half of the year, with the price of a PCR test falling noticeably in the final quarter. Outside of the Corona business, however, Synlab was able to make gains, with organic growth here amounting to six percent, the report continued.

For 2022, the group achieved an adjusted operating margin (adjusted Ebitda margin) of around 23 percent, compared to 32.1 percent in the previous year. This was due in part to one-time costs mainly from the Corona segment in the fourth quarter, it said. The margin was thus below management's targets, while sales came out slightly better than targeted. The fact that the margin was not even worse was thanks in part to savings of 25 billion euros already made by Synlab last year./tav/ngu/mne/tih