Dräger expects significant recovery in business development in the second half of 2022

• Order intake in the first half of the year significantly above prior-year level and own expectations
• Significant decline in net sales and earnings as expected
• Full-year forecast confirmed

Lübeck—Drägerwerk AG & Co. KGaA has increased its order intake in the first six months of 2022 by 8.9 percent (net of currency effects) to EUR 1,647.6 million (6 months 2021: EUR 1,477.4 million), thus significantly exceeding its own expectations. Net sales and earnings, on the other hand, declined significantly as expected. Net sales fell by
22.2 percent (net of currency effects) to EUR 1,302.4 million (6 months 2021: EUR 1,633.4 million) compared to the record figure of the previous year, which had been boosted by the COVID-19 pandemic. Earnings before interest and taxes (EBIT) amounted to EUR -111.7 million (6 months 2021: EUR 209.2 million). The EBIT margin was -8.6 percent (6 months 2021: 12.8 percent). For the second half of the year, Dräger expects a significant recovery in business development and therefore confirms the forecast for 2022.

“Our ›Technology for Life‹ remains in demand even in turbulent times,” says Stefan Dräger, Chairman of the Executive Board of Drägerwerk Verwaltungs AG. “Our order intake in the first half of the year was significantly above the prior-year level and our expectations—and this despite the fact that demand in this period is traditionally weaker than in the second half of the year and our business with Corona-related products has normalized.”

Strong order intake, but slow sales recognition
The 8.9 percent increase in order intake (net of currency effects) was driven primarily by significantly higher customer demand in Europe, but order intake also increased significantly in the Africa, Asia and Australia region. In nominal terms, order intake recorded growth of 11.5 percent.

Limited availability of intermediate products and the lockdown in China hampered the recognition of net sales from the high order intake. In addition, demand for Corona-related products, such as ventilators and respiratory protection masks, which had still contributed significantly to net sales until the end of 2021, declined as expected in the first half of 2022. As a result of these developments, net sales in the first six months of 2022 were 22.2 percent below the record figure of the previous year (net of currency effects). In nominal terms, net sales decreased by 20.3 percent.

Both segments with significantly higher demand
In the medical division, order intake rose by 5.9 percent (net of currency effects) in the first half of 2022. In the safety division, it increased by 13.8 percent (net of currency effects). Dräger benefited from its broad range of products in both segments: products for hospital infrastructure, such as ceiling supply units and surgical lights, anesthesia machines, respiratory and personal protection products, and gas detection technology were in particular demand. By contrast, net sales in both segments declined significantly, as expected. The medical division recorded a decrease of 26.9 percent (net of currency effects) and the safety division a decline of 14.0 percent (net of currency effects).

Earnings under pressure
Earnings development in the first half of 2022 was impacted in particular by the decline in net sales and the lower gross profit margin. At 40.4 percent, the gross profit margin was significantly below the level of the previous year (6 months 2021: 49.1 percent), impacted by the comparatively poorer product mix, partly due to the lower share of sales by ventilators and FFP masks. In addition, higher costs for the purchase of electronic components and logistics also contributed to the lower margin. Earnings after taxes totaled EUR -77.9 million (6 months 2021: EUR 139.8 million).

Business development in the second quarter
In the second quarter of 2022, order intake increased by 7.6 percent year on year (net of currency effects). Growth was driven by Europe and the Africa, Asia and Australia region. The medical division recorded a slight increase of 1.3 percent (net of currency effects) and the safety division a significant increase of 18.1 percent (net of currency effects). Dräger's net sales decreased by 24.7 percent (net of currency effects). The gross profit margin was 38.6 percent (second quarter 2021: 46.3 percent). EBIT was EUR -76.6 million (second quarter 2021: EUR 80.3 million). The EBIT margin amounted to -11.7 percent (second quarter 2021: 9.5 percent).

Significant recovery in business development expected in the second half of the year
For the second half of the year, Dräger expects a significant recovery in business development. “Our look ahead remains confident despite all the challenges: our order backlog is high, and we expect the delivery situation to ease in the second half of the year. This should give us tailwind to achieve our annual targets,” says Stefan Dräger.

Against this backdrop, Dräger continues to expect a decline in net sales of between -5.0 and -9.0 percent (net of currency effects) and an EBIT margin of between 1.0 and 4.0 percent for the full year. At the same time, Dräger still considers it likely that the lower end of the range will be reached. The forecast is made on the assumption that the economic environment will not deteriorate any further and, in particular, that the supply situation will ease in the second half of the year.

Further information is available in the financial report at www.draeger.com.

Disclaimer
This press release contains statements on the future development of Dräger Group. These forward-looking statements are based on the current expectations, presumptions, and forecasts of the Executive Board as well as the information available to date. They were compiled to the best of the company’s knowledge. Dräger does not provide any warranty nor assume any responsibility for the future developments and results described above. These are dependent on a number of factors. They entail various risks and contingencies outside of the company’s influence and are based on assumptions which could prove to be incorrect. Dräger does not assume any responsibility for updating the forward-looking statements contained in this report. This does not infringe any legal stipulations on the adjustment of forecasts. Please go to Investor Relations / Definitions of financial indicators at www.draeger.com for information on alternative performance measures used.