Orpea - comment

Orpea will release its full H1 numbers after market close on 28th September, but the preliminary numbers are lower than expected.  Changes in EBITDAR versus prior year is a function of lower Covid related compensation received from various government bodies which has not been compensated by the increase in Occupancy rates.  This accounts for 2/3rd of the difference.  The other third comes from inflationary pressures, mainly foodstuff and especially energy.  This inflationary environment is taking place while tariffs charged to residents remained near stable in the short term.  Energy costs as a % of revenue stood at 2.9% in H1 ’22 versus 1.9% in H1 ’21.  Outlook for H2 is for a similar if not greater decline in margin than experienced in H1, partially due to the additional volatility observed in the energy markets.  

Liquidity remains ok in the short term, with a further €829m available under their syndicated facility plus €1.1bn in cash.