PARIS -French care home company Orpea warned on Monday that its financial performance is expected to worsen in the second half of the year owing to higher costs and a scandal over how it runs its homes, sending its shares down 19%.
Orpea said that its operating profit margin on first-half earnings dropped to 18.5% from 24.9% a year earlier and is likely to fall further in the second half, amplified by soaring energy costs.
This margin decline was partly a result of a substantial reduction in compensation for COVID-19 received in the various countries in which the group operates.
Orpea also faced higher food, energy and wages costs while tariffs charged to patients and residents were little changed, a company statement said.
The company, which faces legal action in France over allegations of mistreatment of elderly residents and embezzlement of public funds, will announce fully audited first-half results on Sept. 28.
The debt-laden group's refinancing plan is proceeding as planned, finance chief Laurent Lemaire told reporters without elaborating.
Orpea said in June that an independent audit had found evidence of financial wrongdoing - including inflated labour expenses and suspicious large payments to third parties - but did not support all allegations against the company.
The group, which overhauled its board of directors and replaced the chairman and chief executive in July, has since said it will reimburse 25.7 million euros in "unduly received" public money.
