Fresenius SE & Co. KGaA



 


Continued strong sales and net income growth – Fresenius fully confirms 2013 outlook

November 05, 2013
Bad Homburg v.d.H.

Q1-3/2013:

  • Sales: €15.0 billion (+9% in constant currency, +7% at actual rates)
  • EBIT*: €2.2 billion (+1% in constant currency, -1% at actual rates)
  • Net income: €753 million (+12% in constant currency, +10% at actual rates)

 

Ulf Mark Schneider, CEO of Fresenius, said: “Fresenius had yet another outstanding quarter, posting the highest quarterly earnings in the company's history. We also made significant progress regarding the Group’s strategic posture. Our landmark acquisition of 43 hospitals from Rhön-Klinikum AG will enable us to build a hospital network across Germany offering innovative approaches to health care.”



*2013 excluding one-time integration costs of Fenwal Holdings, Inc. (“Fenwal”). 2012 before one-time items.

**Net income attributable to shareholders of Fresenius SE & Co. KGaA. 2013 excluding one-time integration costs of Fenwal. 2012 before one-time items.

 

Group outlook 2013 fully confirmed
Based on the Group’s strong financial results in the first three quarters, Fresenius fully confirms its guidance for 2013. Sales are expected to increase by 7% to 10% and net income* is expected to increase by 11% to 14% (both in constant currency).

The Group plans to invest around 5% of sales in property, plant and equipment.

On September 13, 2013, Fresenius announced the acquisition of 43 hospitals from Rhön-Klinikum AG. The vast majority of the transaction is expected to close by the end of this year. The purchase price of €3.07 billion will be entirely debt-financed. The pro forma Group net debt/EBITDA is expected to temporarily exceed 3.0 in 2013 but remain below 3.5, before returning to the upper end of the 2.5 to 3.0 target range in 2014.


 

*Net income attributable to shareholders of Fresenius SE & Co. KGaA.2013 excluding one-time integration costs of Fenwal (~€50 million pre tax). 2012 before one-time items.   

 

 

Sales growth of 9% in constant currency
Group sales increased by 7% (9% in constant currency) to €15,032 million (Q1-3 2012: €14,100 million). Organic sales growth was 5%. Acquisitions contributed 5%. Divestitures reduced sales growth by 1%. Sales of the business segments developed as follows:

Group sales by region developed as follows:


Organic sales growth was 5% in North America and 2% in Europe. In Latin America (13%) and Africa (27%) organic sales growth was particularly strong. In Asia-Pacific organic sales growth was 6%.

Net income growth of 12% in constant currency
Group EBITDA* grew by 1% (4% in constant currency) to € 2,824 million (Q1-3 2012: €2,786 million). Group EBIT* decreased by 1% to €2,202 million (Q1-3 2012: €2,224 million). In constant currency EBIT increased by 1%. The EBIT margin of 14.6% (Q1-3 2012: 15.8%) was impacted by a margin reduction at Fresenius Medical Care as well as the first-time consolidation of Fenwal. The Q3/2013 Group EBIT margin of 14.9% showed an improvement over H1/2013 (14.5%).

Group net interest decreased to -€449 million (Q1-3 2012:-€480 million), although this figure includes €14 million one-time costs resulting from the early redemption of the Senior Notes originally due in 2016.

The Group tax rate* improved to 28.3% (Q1-3 2012: 30.1%).

Noncontrolling interest was €504 million (Q1-3 2012: €537 million), of which 95% was attributable to the noncontrolling interest in Fresenius Medical Care.

Group net income** increased by 10% (12% in constant currency) to €753 million (Q1-3 2012: €682 million). Earnings per share** increased by 6% to €4.22 (Q1-3 2012: €3.98). The weighted average number of shares outstanding in Q1-3 2013 was 178,455,438 (Q1-3 2012: 171,263,663).

Group net income attributable to shareholders of Fresenius SE & Co. KGaA including one-time integration costs for Fenwal was €727 million or €4.07 per share.

 

*2013 excluding one-time integration costs of Fenwal. 2012 before one-time items.
**Net income attributable to shareholders of Fresenius SE & Co. KGaA. 2013 excluding one-time integration costs of Fenwal. 2012 before one-time items.

 

 

Continued investment in growth
The Fresenius Group spent €676 million on property, plant and equipment (Q1-3 2012: €611 million). Acquisition spending was €442 million (Q1-3 2012: €2,192 million).

Operating cash flow margin of 10.4%
Operating cash flow was €1,566 million (Q1-3 2012: €1,807 million). The decrease relates primarily to a one-time payment by Fresenius Medical Care regarding the amendment of the supply agreement for the iron product Venofer in North America. In Q1-3 2012, the operating cash flow was positively influenced by extraordinary payments on trade accounts receivable. The cash flow margin reached 10.4% (Q1-3 2012: 12.8%). Net capital expenditure increased to €659 million (Q1-3 2012: €564 million). Free cash flow before acquisitions and dividends was €907 million (Q1-3 2012: €1,243 million). Free cash flow after acquisitions and dividends increased to €151 million (Q1-3 2012: -€823 million).

Solid balance sheet structure
The Group’s total assets were €30,678 million (Dec. 31, 2012: €30,664 million), a constant currency increase of 2%. Current assets grew by 1% (4% in constant currency) to €8,188 million (Dec. 31, 2012: €8,113 million). Non-current assets were €22,490 million (Dec. 31, 2012: €22,551 million), a constant currency increase of 2%.

Total shareholders’ equity increased by 1% (4% in constant currency) to €12,903 million (Dec. 31, 2012: €12,758 million). The equity ratio was 42.1% (Dec. 31, 2012: 41.6%).

Group debt was €11,079 million (Dec. 31, 2012: €11,028 million). Net debt was €10,206 million (Dec. 31, 2012: €10,143 million). As of September 30, 2013, the net debt/EBITDA ratio was 2.62 (Dec. 31, 2012: 2.56 ).

 

*Pro forma including Fenwal; before one-time costs (non-financing expenses) related to the takeover offer to Rhön-Klinikum AG shareholders, one-time costs at Fresenius Medical Care and one-time integration costs of Fenwal.
**Pro forma including Damp Group, Liberty Dialysis Holdings, Inc. and Fenwal; before one-time costs (non-financing expenses) related to the takeover offer to Rhön-Klinikum AG shareholders, and one-time costs at Fresenius Medical Care.

 

 

Increased number of employees
As of September 30, 2013, the number of employees increased by 3% to 175,249 (Dec. 31, 2012: 169,324).


Business Segments

Fresenius Medical Care
Fresenius Medical Care is the world’s leading provider of services and products for patients with chronic kidney failure. As of September 30, 2013, Fresenius Medical Care was treating 265,824 patients in 3,225 dialysis clinics.

  • Strong organic sales growth of 5%
  • Excellent operating cash flow margin of 13.5%
  • 2013 guidance confirmed

 

Sales increased by 6% (7% in constant currency) to US$10,743 million (Q1-3 2012: US$10,095 million). Organic sales growth was 5%. Acquisitions contributed 3%, while divestitures reduced sales growth by 1%.

Sales in dialysis services increased by 7% (8% in constant currency) to US$8,235 million (Q1-3 2012: US$7,688 million). Dialysis product sales grew by 4% (4% in constant currency) to US$2,508 million (Q1-3 2012: US$2,407 million).

In North America, sales grew 8% to US$7,099 million (Q1-3 2012: US$6,602 million). Dialysis services sales grew by 8% to US$6,485 million (Q1-3 2012: US$6,007 million). Dialysis product sales increased by 3% to US$614 million (Q1-3 2012: US$595 million).

Sales outside North America (“International” segment) grew by 4% (5% in constant currency) to US$3,619 million (Q1-3 2012: US$3,470 million). Sales in dialysis services increased by 4% to US$ 1,750 million (Q1-3 2012: US$1,680 million). Dialysis product sales grew by 4% to US$1,869 million (Q1-3 2012: US$1,790 million).

EBIT decreased by 4% to US$1,595 million (Q1-3 2012: US$1,659 million).

Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA decreased by 4% to US$761 million (Q1-3 2012*: US$790 million). Net income for Q3 2013 was US$273 million, an increase of 1% compared to Q3 2012.

The operating cash flow of US$1,446 million was below previous year’s US$1,467 million. The decrease relates to a one-time payment regarding the amendment of the supply agreement for the iron product Venofer in North America (US$100 million). The cash flow margin was 13.5% (Q1-3 2012: 14.5%).

Fresenius Medical Care expects revenue to grow to more than US$14.6 billion in 2013. Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA is expected to be between US$1.1 billion and US$1.15 billion in 2013, likely at the low end of that range.

For further information, please see Fresenius Medical Care’s Press Release at www.fmc-ag.com.

 

*Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA; 2012 adjusted for a non-taxable investment gain of US$140 million.

 


Fresenius Kabi
Fresenius Kabi offers infusion therapies, intravenously administered generic drugs and clinical nutrition for seriously and chronically ill patients in the hospital and outpatient environments. The company is also a leading supplier of medical devices and transfusion technology products.

  • 5% organic sales growth, at the upper end of guidance
  • 7% organic sales growth in North America in the first nine months
  • 2013 guidance fully confirmed

 

Sales increased by 11% (14% in constant currency) to € 3,742 million (Q1-3 2012: €3,363 million). Organic sales growth was 5%. Acquisitions contributed 10% sales growth, while divestitures reduced sales growth by 1%. Currency translation had a negative effect of 3% in Q1-3 2013 and of 6% in Q3 2013.

Sales in Europe grew by 5% (organic growth: 2%) to € 1,524 million (Q1-3 2012: €1,449 million). Sales in North America increased by 27% to €1,158 million (Q1-3 2012: €910 million), primarily driven by the consolidation of Fenwal. Organic sales growth was 7%.

In Asia-Pacific sales increased by 7% (organic growth: 6%) to €689 million (Q1-3 2012: €642 million). Sales in Latin America/Africa increased by 2% (organic growth: 8%) to €371 million (Q1-3 2012: €362 million). Growth in Q1-3 2013 comes over a strong
Q1-3/2012 base, posting 10% organic sales growth in North America, 6% in Europe, 15% in Asia-Pacific and 14% in Latin America/Africa.

EBIT* was €695 million (Q1-3 2012: €700 million), an increase of 1% in constant currency. EBIT includes one-time charges of €32 million to remediate manufacturing issues following FDA audits at the Grand Island, USA, and Kalyani, India, facilities. The EBIT margin was 18.6%. Excluding Fenwal, the EBIT margin was 19.6 % (Q1-3 2012: 20.8%). Margin development is fully in line with guidance.

Net income*,** increased by 11% to €367 million (Q1-3 2012: €330 million).

Fresenius Kabi’s operating cash flow was €303 million (Q1-3 2012: €452 million). Last year’s operating cash flow was positively influenced by extraordinary payments on trade accounts receivable. The cash flow margin was 8.1% (Q1-3 2012: 13.4%). Cash flow before acquisitions and dividends was €114 million (Q1-3 2012: €322 million).

The integration of Fenwal progressed as planned with related Q1-Q3 2013 one-time costs of €34 million pre-tax. These costs are reported in the Group Corporate/Other segment.

On October 1, 2013, Fresenius Kabi has started a joint venture with the leading Indonesian pharmaceutical company PT Soho Global Health. The joint venture operates a production plant in Jakarta and primarily manufactures I.V. generic drugs and infusion solutions. In 2012, the joint venture generated sales of more than €40 million (pro forma). Via the joint venture Fresenius Kabi becomes market leader in I.V. generics in Indonesia.

Fresenius Kabi fully confirms its outlook for 2013 and projects sales growth of 12% to 14% in constant currency. Organic sales growth is expected in the range of 3% to 5%.

The company projects an EBIT margin of 19% to 20%* excluding the Fenwal operations and of 18% to 19%* including the Fenwal operations. EBIT in constant currency is expected to exceed 2012 EBIT. The guidance includes one-time charges to remediate manufacturing issues following FDA audits at the Grand Island, USA, and Kalyani, India, facilities. It also includes a gain related to the sale of the respiratory homecare business in France.

 

*Excluding Fenwal integration costs.
**Net income attributable to shareholders of Fresenius Kabi AG.
Fresenius Kabi guidance excludes Fenwal integration costs (~€50 million pre tax); also see Group guidance.


Fresenius Helios
Fresenius Helios is one of the largest private hospital operators in Germany. HELIOS owns 74 hospitals, thereof 51 acute care clinics including six maximum care hospitals in Berlin-Buch, Duisburg, Erfurt, Krefeld, Schwerin and Wuppertal and 23 post-acute care clinics. HELIOS treats more than 2.9 million patients per year, thereof more than 780,000 inpatients, and operates more than 23,000 beds.

  • Acquisition of 43 hospitals from Rhön-Klinikum AG announced
  • 11.1% EBIT margin, up 120 basis points
  • 2013 EBIT now expected in upper half of guidance range

 

Sales increased by 8% to €2,537 million (Q1-3 2012: €2,347 million). Organic sales growth was 4%, acquisitions contributed 5%. Divestitures reduced sales growth by 1%.

EBIT grew by 22% to €282 million (Q1-3 2012: €232 million). The EBIT margin increased to 11.1% (Q1-3 2012: 9.9%).

Net income* increased by 31% to €194 million (Q1-3 2012: €148 million).

Sales of the established hospitals grew by 4% to €2,424 million. EBIT improved by 19% to €279 million. The EBIT margin increased to 11.5% (Q1-3 2012: 10.0%). Sales of the acquired hospitals (consolidation <1 year) were €113 million, EBIT was €3 million.

On September 13, 2013, Fresenius announced the acquisition of 43 hospitals and 15 outpatient facilities from Rhön-Klinikum AG. On the basis of 2013 pro forma financials, the acquisition is expected to add sales of approximately €2 billion and an EBITDA of approximately €250 million. The purchase price of €3.07 billion will be entirely debt-financed. Fresenius expects one-time integration costs of approximately €80 million before tax. Substantial cost synergies totaling approximately €85 million p.a. before tax are expected from 2015 onwards. The acquisition is subject to antitrust approval as well as certain approvals of former municipal owners or current minority shareholders. The vast majority of the transaction is expected to close by the end of this year.

Fresenius Helios fully confirms its outlook for 2013. The company projects organic sales growth of 3% to 5%. EBIT is now expected in the upper half of the €370 to €395 million guidance range.

 

*Net income attributable to shareholders of HELIOS Kliniken GmbH.

 


Fresenius Vamed

 

Fresenius Vamed offers engineering and services for hospitals and other health care facilities.

 

 

  • 18% order intake increase to €380 million
  • 13% organic sales growth
  • 2013 sales growth now expected at upper end of guidance range

 

Sales increased by 22% to €654 million (Q1-3 2012: €536 million). Organic sales growth was 13%, acquisitions contributed 9%. Sales in the project business increased by 16% to €332 million (Q1-3 2012: €285 million). Sales in the service business grew by 28% to €322 million (Q1-3 2012: €251 million).

EBIT grew by 4% to €25 million (Q1-3 2012: €24 million). The EBIT margin reached 3.8% (Q1-3 2012: 4.5%).

Net income* was at previous year’s level of €16 million.

Order intake increased by 18% to €380 million (Q1-3 2012: €322 million). As of September 30, 2013, the company’s order backlog was €1,034 million (Dec. 31, 2012: €987 million).

Fresenius Vamed now expects to achieve sales growth at the upper end of the 8% to 12% guidance range. EBIT growth expectations remain in the range of 5% to 10%.

*Net income attributable to shareholders of Vamed AG.

 

Analyst-/Investor Conference Call
As part of the publication of the results for the first three quarters of 2013, a conference call will be held on November 5, 2013 at 2 p.m. CET (8 a.m. EST). All investors are cordially invited to follow the conference call in a live broadcast via the Internet at www.fresenius.com, see Investor Relations, Presentations. Following the call, a replay of the conference call will be available on our website.



###

Fresenius is a health care group with international operations, providing products and services for dialysis, hospital and outpatient medical care. In 2012, Group sales were €19.3 billion. On September 30, 2013, the Fresenius Group had 175,249 employees worldwide.

For more information visit the Company’s website at www.fresenius.com.

This release contains forward-looking statements that are subject to various risks and uncertainties. Future results could differ materially from those described in these forward-looking statements due to certain factors, e.g. changes in business, economic and competitive conditions, regulatory reforms, results of clinical trials, foreign exchange rate fluctuations, uncertainties in litigation or investigative proceedings, and the availability of financing. Fresenius does not undertake any responsibility to update the forward-looking statements in this release.

Fresenius SE & Co. KGaA
Registered Office: Bad Homburg, Germany
Commercial Register: Amtsgericht Bad Homburg, HRB 11852
Chairman of the Supervisory Board: Dr. Gerd Krick

General Partner: Fresenius Management SE
Registered Office: Bad Homburg, Germany
Commercial Register: Amtsgericht Bad Homburg, HRB 11673
Management Board: Dr. Ulf M. Schneider (Chairman), Dr. Francesco De Meo, Dr. Jürgen Götz, Mats Henriksson, Rice Powell, Stephan Sturm, Dr. Ernst Wastler
Chairman of the Supervisory Board: Dr. Gerd Krick



Text as PDF file

back