May 4, 2005
Fresenius Medical Care Reports First Quarter 2005 Results; Solid Start into the Year 2005
Summary First Quarter 2005:
- Net Revenue : $ 1,609 million, + 10%
- Operating income (EBIT): $ 220 million, + 11%
- Net incombe: $ 107 million, + 18%
- Operating Cash Flow: $ 138 million, - 19%
- Free Cash Flow: $ 98 million, - 25%
Fresenius Medical Care AG ("the Company") (Frankfurt Stock Exchange: FME, FME3) (NYSE: FMS, FMS-p), the world's largest provider of Dialysis Products and Services, today announced the results for the first quarter 2005.
Revenue
Total revenue for the first quarter 2005 increased by 10% (9% at constant currency) to $1,609 million. Total organic revenue growth worldwide was 7%. Consolidation resulting from FIN 46R interpretation added 2% to the revenue growth. Dialysis Care revenue grew by 10% to $1,162 million (9% at constant currency) in the first quarter of 2005. Dialysis Product revenue increased by 11% to $447 million (7% at constant currency) in the same period.
North America revenue increased by 9% to $1,088 million, compared to $1,003 million in the same period last year. Dialysis Care revenue increased by 8% to $968 million. The average revenue per treatment for the U.S. clinics increased by 2.5% to $293 in the first quarter 2005 (Q1 2004: $286). Same-store treatment growth was 3.8%. Dialysis Product revenue increased by 16% to $120 million.
International revenue was $521 million, up 14% from the first quarter of 2004 (8% at constant currency). Dialysis Care revenue reached $194 million, an increase of 22% (16% at constant currency). Dialysis Product revenue increased by 10% to $327 million (4% at constant currency).
Earnings
Operating income (EBIT) increased by 11% to $220 million resulting in an operating margin of 13.7% (Q1 2004: 13.6%).
Compared with the first quarter 2004, the operating margin in North America remained nearly unchanged at 13.4%. On a comparable basis (excluding FIN 46R consolidations) the operating margin in North America was at 13.7% compared to 13.5% in the first quarter 2004. In our International segment the margin increased by 20 basis points to 15.8% compared to the first quarter in the previous year.
Group net interest expenses decreased by 9% to $42 million, compared to $47 million last year. This positive development was mainly attributable to a lower debt level in combination with lower interest rates.
Income tax expense was $70 million versus $60 million in the first quarter 2004, reflecting an effective tax rate of 39.2% compared to 39.4% in the first quarter of last year.
Net income in the first quarter 2005 was $ 107 million, an increase of 18%. Earnings per share (EPS) in the first quarter 2005 rose by 18% to $1.11 per ordinary share ($0.37 per ADS), compared to $0.94 ($0.31 per ADS) in the first quarter of 2004. The weighted average number of shares outstanding was approximately 96.3 million.
Cash Flow
In the first quarter of 2005, the Company generated $138 million in net cash from operations compared to $171 million last year. The decrease was mainly due to higher income tax payments in North America.
A total of $40 million (net of disposals) was spent for capital expenditures. This resulted in a Free Cash Flow before acquisitions of $98 million compared to $130 million in the first quarter of 2004. The Free Cash Flow performance was driven by the increase in net income. The days sales outstanding (DSO) remained unchanged at 84 days in the first quarter 2005 compared to the fourth quarter 2004. Compared with the first quarter of the previous year DSO were reduced by 2 days.
A total of $22 million in cash was spent for acquisitions. The Free Cash Flow after acquisitions decreased by 13% to $76 million compared to $88 million last year.
For a complete overview of the first quarter 2005, please refer to the appendix.
Patients - Clinics - Treatments
At the end of the first quarter 2005, Fresenius Medical Care served about 125,900 patients worldwide which represents an increase of 5%. North America provided dialysis treatments for ~87,000 patients (+4%) and the International segment for ~38,900 patients (+6%).
As of March 31, 2005, the Company operated a total of 1,630 clinics worldwide (1,140 clinics/+2% in North America and 490 clinics/+8% International).
Fresenius Medical Care AG performed approximately 4.72 million treatments, which represents an increase of 3% year over year. North America accounted for 3.25 million treatments (+3%) and the International segment for 1.47 million (+5%).
Outlook 2005
For the year 2005, the Company confirms its outlook before the impact of the Renal Care Group acquisition. The Company expects a revenue growth at constant currency between six and nine percent and net income growth in the low double-digit range.
Ben Lipps, Chief Executive Officer of Fresenius Medical Care, commented: "Our results for the first quarter 2005 show a solid start for the year. We are pleased that all regions and business segments grew at or above market. Revenue growth in Europe and North America evidenced continued strong momentum. With this solid foundation we have initiated plans to increase our investments in the core dialysis business to assure strong financial growth."
Webcast of Press Conference
Fresenius Medical Care will also host a Press Conference on May 04, 2005 at 12am CET at its headquarters in Bad Homburg. The Company invites journalists to listen to the live video webcast of the meeting at the Company's website www.fmc-ag.com. A replay will be available shortly after the meeting.
Fresenius Medical Care AG is the world's largest, integrated provider of products and services for individuals undergoing dialysis because of chronic kidney failure, a condition that affects more than 1,300,000 individuals worldwide. Through its network of approximately 1,630 dialysis clinics in North America, Europe, Latin America, Asia-Pacific and Africa, Fresenius Medical Care provides Dialysis Treatment to approximately 125,900 patients around the globe. Fresenius Medical Care is also the world's leading provider of Dialysis Products such as hemodialysis machines, dialyzers and related disposable products. For more information about Fresenius Medical Care, visit the Company's website at www.fmc-ag.com.
This release contains forward-looking statements that are subject to various risks and uncertainties. Actual results could differ materially from those described in these forward-looking statements due to certain factors, including changes in business, economic and competitive conditions, regulatory reforms, foreign exchange rate fluctuations, uncertainties in litigation or investigative proceedings, and the availability of financing. These and other risks and uncertainties are detailed in Fresenius Medical Care AG's reports filed with the U.S. Securities and Exchange Commission. Fresenius Medical Care AG does not undertake any responsibility to update the forward-looking statements in this release.
Fresenius Medical Care AG
Statement of Earnings see pdf-file