(Reuters) – Orpea said on Wednesday it expected annual operating profit to be at the bottom of the range announced in July, citing an increase in costs that had not been fully absorbed by price increases.
“We generally have an inflationary environment which continues to impact us, both on personnel costs and on other expenses, whether energy, food, or even medical products whose prices have risen very, very sharply,” said the nursing home group during a phone call with the press.
The group also highlighted its limited ability to increase its prices to compensate for the increase in charges, citing an overall highly regulated environment, both in France and internationally, leaving little room for maneuver to modify prices.
Orpea is now targeting earnings before interest, taxes, depreciation, amortization and rental costs (Ebitdar) at the lower end of the range of 705 to 750 million euros, announced in July.
The group recorded an Ebidtar of 336 million euros for the first half of 2023, compared to 427 million euros in the same period last year.
The occupancy rate saw an overall improvement during the half-year, with the exception of France, where Orpea is still affected by an unfavorable reputational context, the company said.
Orpea is the subject of legal proceedings in France, in particular for accusations of failures in the care of its residents.
(Reporting by Diana Mandiá and Federica Mileo, by Stéphanie Hamel, edited by Kate Entringer)
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