Orpea Expects Delay in Turnaround of Operating Performance

Shares in Orpea have experienced a decline following the company's announcement of an estimated one-year delay in its turnaround of operating performance. At 09:14 GMT on Monday, shares were down 3.5% at EUR1.01, reaching a low of EUR0.98 earlier.

Revised Target for Earnings and Margin

Orpea, a French residential care company, now anticipates achieving its earnings before interest, taxes, depreciation, amortisation, and restructuring target of 1.2 billion euros ($1.29 billion) in 2026 instead of the previously expected 2025. The company attributes this delay to a higher ratio of personnel costs to revenue, resulting in a revised margin of 19%, down from the previous 20%.

Factors Impacting Projections

In October, Orpea adjusted its projections for the current year due to high inflation and price adjustments. For 2023, the company estimates its Ebitdar to range between EUR705 million and EUR750 million, with an expectation for it to come out around EUR710 million.

Capital Increases and Future Viability

Orpea plans to launch the first of three capital increases in the near future, pending approval. The company expressed confidence that by 2025-26, its financing capacity will be restored, allowing it to refinance outstanding loans with its main banking partners and ensure long-term viability.

Positive Third Quarter Results

In addition to the announcement regarding delayed turnaround estimates, Orpea also shared its positive results for the third quarter. The company reported a 10% organic revenue increase to EUR1.3 billion, driven by both an increase in average occupancy rates and price adjustments.