Orpea - comment

Never mind its balance sheet woes, we have always struggled with the underlying business and the H1 results underline that. Occupancy rates increasing in all geographical areas (except France where it was down to 83.4% from 84.6%) weren’t enough to absorb the increase in staff costs or other inflationary pressures - mainly food and energy. Staff costs, both from salary increases and catching up on staffing levels, have increased to 67% of revenue, from 63% in H1 22. Other expenses, including food and energy, increased to 20% of revenue from 18%. Combined, this has reduced EBIDAR by 540bps to 13%. 

The main conclusion is summed up by the title of Orpea’s last slide - A multi-year refoundation project. This is a long road back to profitability for Orpea and even when the financial restructuring is completed, it will take significant time to reshape the operations. The 2023 EBITDAR outlook is now expected at the lower end of the range, although cash flow expectation is in line with the Safeguard Plan.