Orpea: Overwhelmed by falling profitability, Orpea dives back into the stock market

Orpea: Overwhelmed by falling profitability, Orpea dives back into the stock market

(BFM Bourse) – The nursing home operator has posted preliminary half-year results with deteriorating profitability, due in particular to inflation in energy prices. The group warned that their second-half margin could be even smaller.

Although his image has been permanently tarnished since the publication at the beginning of the year of the book. the gravediggers of the journalist Víctor Castanet, Orpea also sees the operation disintegrate.

The action of the operator of residences for the elderly shows a new warning shot this Monday, the title plummeting 20% ​​to 16.65 euros, to new historical lows. For the whole of 2022, the value yields more than 80%, which is obviously the worst performance of the SBF 120.

The violent reaction of the market is due to the sharp drop in profitability recorded by Orpea, which published part of its half-year results on Monday. The Ebitdar margin -that is, the result before interest charges, depreciation, amortization and before rents- stood at 18.5% against 24.9% in the first six months of 2021, a drop of 6.4 points , according to preliminary and unaudited data. The Ebitdar in absolute value has not been communicated.

“Operating performance” is “in free fall,” sums up Invest Securities. According to the company, two-thirds of this drop is due to “substantial reductions” in state aid in the face of Covid-19 as well as the “recognition in the first half of 2021 of significant quantities of specific products not renewed in 2022”. “. .

An even worse second half

The third third is linked to the inflation of the costs of society, in particular food and energy. Thus, the share of energy expenditure in relation to billing went from 1.9% in the first half of 2021 to 2.9% in the first six months of 2022.

In addition, Orpea claims to have carried out “a more active recruitment policy, more specifically in France” while the labor market remains under stress. In concrete terms, the group had to accept higher hiring costs, particularly in the interim, which weighed on profitability.

Beyond this half-staff first half margin-wise, the company warned that profitability is at risk of falling further in the second half of the year. “The group believes that the decline in the financial performance of activities observed in the first half of 2022 compared to the first half of 2021 will continue in the second half and could, if necessary, be amplified by the additional volatility recently observed in the energy markets,” warned the company. “In this context, and depending on the recovery of the occupancy rate, the Ebitdar margin rate for the second half of 2022 could then be lower than the level of the first half of 2022,” he concluded.

“Profitability will be even lower in the second half, while the effect of aid cuts due to Covid-19 will be less significant,” says a financial intermediary. “In general, all analysts will have to drastically cut their estimates for the 2022 financial year, the numbers for which will not really be good,” he continues.

Impairments of more than 170 million euros

Orpea will publish its full and audited results on September 28 after the market closes. This will make it possible to know whether the group has recorded a loss or a gain in the period and, above all, to know the total impact of non-current items. On this last point, Orpea indicated that it is currently performing asset impairment tests. “Based on the information in its possession, the company estimates to date that the deterioration that could occur would be between 170 and 220 million euros,” he announced.

The operator of residences for the elderly will present a “transformation plan” in the autumn that is currently being drawn up. This plan should allow a return to “restored practices in a sustainable way”, explained the general manager of the company, Philippe Charrier, quoted by AFP.

“There is a risk of not having a catalyst before the presentation of this plan”, fears the financial intermediary quoted above.

Since the media-political storm in which it fell at the beginning of the year, Orpea has fired its former CEO, Yves Le Masne, replaced interim by former president Philippe Charrier and then by Laurent Guillot. His board of directors has been profoundly renewed with the arrival of the former head of the SNCF, Guillaume Pepy, to his presidency.

Following the accusations of ill-treatment contained in the gravediggersThe group also commissioned an independent audit of two firms, Grant Thornton and Alvarez & Marsal, the results of which confirmed several flaws, particularly in human resource management, but ruled out the existence of a rationing system for food provided to residents. .

The audit also pointed out ineligible or excessive amounts declared to the authorities for the use of public funds. At the end of August, Orpea undertook to return just under 26 million euros in public aid received unduly. .

In France, the justice opened a preliminary investigation in April for institutional mistreatment and economic crimes, following a government report.

Julien Marion – ©2022 BFM Bourse

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