Record results in 2010: All financial targets met or exceeded – Positive outlook for 2011

• Sales €16.0 billion,
  +13% at actual rates, +8% in constant currency
• EBIT €2.4 billion,
  +18% at actual rates, +13% in constant currency
• Net income¹ €660 million,
  +28% at actual rates, +23% in constant currency

• Excellent sales and earnings growth in all business segments
• "15/15" mid-term goal exceeded (€15 billion in sales, EBIT margin of 15%)
• 15% dividend increase proposed
• Positive outlook for 2011: Sales growth ≥7%, net income¹ growth 8% to 12% (both in constant currency)
• New mid-term stretch goal: Group net income >€1 billion in 2014

Ulf Mark Schneider, CEO of Fresenius, commented: "2010 was another outstanding year for Fresenius. Our Group achieved record sales and earnings and double-digit earnings growth in all four business segments. We even exceeded our challenging "15/15" mid-term target – Group sales of €15 billion and an EBIT margin of 15% by 2010 – despite the most severe economic slowdown in postwar history. The global demand for high-quality and innovative health care products and services continues to increase. We see further significant growth potential for all our business segments and target Group net income of more than €1 billion in 2014."

 

18th consecutive dividend increase proposed
Based on the excellent financial results, the Management Board will propose to the Supervisory Board a dividend increase of 15% to €0.86 per ordinary share (2009: €0.75). The total dividend distribution is expected to be €140 million.

 

Positive outlook for 2011
Fresenius projects sales growth of ≥7% in constant currency. Net income¹ is expected to increase by 8% to 12% in constant currency. This will result in a 2010/2011 compounded annual net income growth rate of 15% to 17%.

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

The net debt/EBITDA ratio is expected to stay in the range of 2.5 to 3.0.

Strong sales growth in all business segments and regions
Group sales increased by 13% at actual rates and by 8% in constant currency to €15,972 million (2009: €14,164 million). Organic sales growth was 7%. Acquisitions contributed a further 1%. Currency translation had a positive effect of 5%.

Sales growth in the business segments was as follows:

In North America, sales grew by 9% in constant currency. Organic sales growth was 8%. In Europe, sales grew by 7% in constant currency, with organic sales growth contributing 6%. Organic sales growth reached 11% in Latin America and 7% in Asia-Pacific, where the growth rate was impacted by Fresenius Vamed's large prior-year medical supply contracts.

¹ Net income attributable to Fresenius SE & Co. KGaA; adjusted for the effects of mark-to-market accounting of the Mandatory Exchangeable Bonds (MEB) and the Contingent Value Rights (CVR) related to the acquisition of APP Pharmaceuticals. Both are non-cash items.


Excellent earnings growth and strong margin improvement
Group EBITDA increased by 17% at actual rates and by 12% in constant currency to €3,057 million (2009: €2,616 million). Group EBIT increased by 18% at actual rates and by 13% in constant currency to €2,418 million (2009: €2,054 million). The EBIT margin increased to 15.1% (2009: 14.5%). All business segments achieved double-digit earnings growth.
Despite a substantial negative currency effect, Group net interest improved to -€566 million (2009: -€580 million).

The other financial result was -€66 million and includes valuation changes of the fair redemption value of the Mandatory Exchangeable Bonds (MEB) of -€98 million and the Contingent Value Rights (CVR) of €32 million. Both are non-cash items.

The Group tax rate¹ was 32.9% (2009: 31.4%). The tax rate in 2009 was influenced by the revaluation of a tax claim at Fresenius Medical Care.

Noncontrolling interest increased to €583 million (2009: €497 million), of which 93% was attributable to the noncontrolling interest in Fresenius Medical Care.

Group net income² increased by 28% at actual rates and by 23% in constant currency to €660 million (2009: €514 million). Earnings per ordinary share increased by 28% to €4.08. A reconciliation to adjusted earnings according to U.S. GAAP can be found on page 14 of the PDF-File.

Net income³ (including special items) grew to €622 million or €3.85 per ordinary share.


¹ Adjusted for the effect of mark-to-market accounting of the Mandatory Exchangeable Bonds (MEB) related to the acquisition of APP Pharmaceuticals
² Net income attributable to Fresenius SE & Co. KGaA; adjusted for the effects of mark-to-market accounting of the Mandatory Exchangeable Bonds (MEB) and the Contingent Value Rights (CVR) related to the acquisition of APP Pharmaceuticals. Both are non-cash items.
³ Net income attributable to Fresenius SE & Co. KGaA


Continued investments in growth
The Fresenius Group spent €758 million on property, plant and equipment (2009: €671 million) or 4.7% of sales. Acquisition spending was €644 million (2009: €260 million), mainly due to acquisitions at Fresenius Medical Care.

 

Strong cash flow - 12% cash flow margin
Operating cash flow increased by 23% to €1,911 million (2009: €1,553 million), mainly driven by strong earnings growth. The cash flow margin improved to 12.0% (2009: 11.0%). Net capital expenditure was €733 million (2009: €662 million). Free cash flow before acquisitions and dividends increased by 32% to €1,178 million (2009: €891 million). Free cash flow after acquisitions and dividends was €345 million (2009: €389 million).

 

Solid balance sheet structure - Leverage ratio significantly improved
The Fresenius Group's total assets grew by 13% to €23,577 million (Dec. 31, 2009: €20,882 million). In constant currency, the increase was 7%. Current assets increased by 20% at actual rates and by 14% in constant currency to €6,435 million (Dec. 31, 2009: €5,363 million). Non-current assets grew by 10% at actual rates and by 5% in constant currency to €17,142 million (Dec. 31, 2009: €15,519 million).

Total shareholders' equity increased by 18% at actual rates and by 11% in constant currency to €8,844 million (Dec. 31, 2009: €7,491 million). The equity ratio improved to 37.5% (Dec. 31, 2009: 35.9%).

Group debt grew by 6% at actual rates and by 1% in constant currency to €8,784 million (Dec. 31, 2009: €8,299 million). Net debt increased by 2% to €8,015 million (Dec. 31, 2009: €7,879 million). At constant currency, net debt decreased by 3%.

Due to the strong earnings growth and cash flow development, the net debt/EBITDA ratio improved to 2.62 as of December 31, 2010 (Dec. 31, 2009: 3.01). At year-end 2008, following the acquisition of APP Pharmaceuticals, the ratio was 3.64.

 

Number of employees increased
As of December 31, 2010, Fresenius increased the number of its employees by 5% to 137,552 (Dec. 31, 2009: 130,510).


Fresenius Biotech
Fresenius Biotech develops innovative therapies with trifunctional antibodies for the treatment of cancer. In the field of polyclonal antibodies, Fresenius Biotech has successfully marketed ATG-Fresenius S for many years. ATG-Fresenius S is an immunosuppressive agent used to prevent and treat graft rejection following organ transplantation.

Fresenius Biotech reported sales of €26 million in 2010. The immunosuppressive agent ATG contributed €23 million and the trifunctional antibody Removab (catumaxomab) €3 million to sales.

In January 2011, Fresenius Biotech announced a Removab distribution agreement with Swedish Orphan Biovitrum (Sobi). Under the seven-year agreement, Sobi will distribute Removab exclusively in Scandinavia, the Baltics and selected Balkan countries.

So far, Removab has been marketed primarily in Germany and Austria as well as in France.

In 2010, Fresenius Biotech's EBIT was -€32 million (2009: -€44 million). For 2011, Fresenius Biotech expects an EBIT of about -€30 million.


The 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 December 31, 2010, Fresenius Medical Care was treating 214,648 patients in 2,757 dialysis clinics.
 

• Excellent sales and earnings growth continued - EBIT margin increased to 16.0%
• Outlook 2011: Sales of US$12.8 billion to US$13 billion and net income¹ of US$1.035 billion to US$1.055 billion expected

Fresenius Medical Care achieved sales growth of 7% to US$12,053 million (2009: US$11,247 million). Organic growth was 6%, acquisitions contributed a further 1%. There was no meaningful currency translation effect.

Sales in dialysis care increased by 9% to US$9,070 million (2009: US$8,350 million). Dialysis product sales grew by 3% to US$2,983 million (2009: US$2,897 million).

In North America, sales increased by 7% to US$8,130 million (2009: US$7,612 million). Dialysis services revenue increased by 7% to US$7,303 million. Average revenue per treatment for U.S. clinics decreased to US$355 in Q4 2010 compared to US$357 in Q4 2009. Increases in reimbursement were more than offset by reduced utilization of pharmaceuticals. Sales in dialysis products grew by 1% to US$827 million.

Sales outside North America ("International" segment) grew by 8% to US$3,923 million (2009: US$3,635 million). Sales in dialysis care increased by 14% to US$1,767 million. Dialysis product sales grew by 4% to US$2,156 million.

EBIT increased by 10% to US$1,924 million (2009: US$1,756 million) resulting in an excellent EBIT margin of 16.0% (2009: 15.6%).

In North America, the EBIT margin increased to 17.0% (2009: 16.4%) driven by an increase in revenue per treatment as well as the effect of economies of scale. In addition, the EBIT development benefitted from favorable pharmaceutical costs.

In the International segment, the EBIT margin was 17.3% (2009: 17.5%). EBIT margin was impacted by the devaluation of the Venezuelan bolivar and related charges as well as by lower gross profit margins of acquired. This was partially offset by economies of scale and favorable currency effects.

Net income¹ increased by 10% to US$979 million (2009: US$891 million).

In January 2011, Fresenius Medical Care announced the signing of a purchase agreement to acquire International Dialysis Centers (IDC), Euromedic International's dialysis service business. Fresenius Medical Care is taking advantage of this opportunity to expand its activities in the dialysis care market, especially in Eastern Europe, where IDC is the market leader. IDC currently treats over 8,200 hemodialysis patients and operates a total of 70 clinics in nine countries. On completion, the acquired operations will add approximately US$180 million in annual revenue. The purchase price was €485 million. The transaction remains subject to necessary regulatory approvals by the relevant anti-trust authorities and is expected to close in the second quarter of 2011. The transaction was financed through bonds issued in February 2011.

For 2011, Fresenius Medical Care expects revenue to grow to between US$12.8 billion to US$13 billion, corresponding to a growth rate of 6% to 8%. Net income¹ is expected to be between US$1.035 billion and US$1.055 billion, with operating margins forecast to increase by approximately 20 basis points.

For further information, please see Fresenius Medical Care's Investor News at www.fmc-ag.com.

¹ Net income attributable to Fresenius Medical Care AG & Co. KGaA


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.

• Excellent organic sales growth of 12% - EBIT margin increased to 20.1%
• Outlook 2011: Organic sales growth of ~5% on top of challenging 2010 base - EBIT margin >19%

Sales increased by 19% to €3,672 million (2009: €3,086 million). Excellent organic growth accounted for 12%, acquisitions contributed a further 1%. Currency translation had a positive effect of 6%, mainly attributable to the strength of the currencies in North America, Brazil and China against the Euro.

In Europe, sales reached €1,702 million (2009: €1,566 million), driven by 6% organic growth. In North America, sales increased to €975 million (2009: €728 million). Organic sales growth was an exceptional 26%. In the Asia-Pacific region, Fresenius Kabi achieved organic sales growth of 13% to €593 million (2009: €482 million). Sales in Latin America and Africa increased to €402 million (2009: €310 million), organic sales growth was 10%.

EBIT grew by 21% to €737 million (2009: €607 million). The EBIT margin improved to 20.1% (2009: 19.7%), driven by the strong development in North America, where product launches and competitors' supply constraints had a positive effect. EBIT includes €20 million for investments in efficiency improvements outside North America.

Net interest improved to -€279 million (2009: -€302 million).

Net income¹ increased by 47% to €294 million (2009: €200 million).

APP Pharmaceuticals (APP) achieved exceptional sales growth of 29% to US$1,143 million (2009: US$889 million). Adjusted EBITDA² grew by 34% to US$464 million (2009: US$345 million). EBIT increased by 43% to US$391 million (2009: US$273 million). The EBIT margin improved to 34.2% (2009: 30.7%). In addition to the reported APP earnings, Fresenius Kabi generated EBIT contributions from imported IV drugs distributed by APP in North America.

In 2010, APP received seven product approvals from the FDA (U.S. Food and Drug Administration). In addition, Fresenius Kabi Oncology received three FDA approvals.

The APP acquisition is clearly accretive to Group EPS in 2010, in line with our original 2008 expectations.

Operating cash flow of Fresenius Kabi increased by 43% to €567 million (2009: €397 million). The cash flow margin reached 15.4% (2009: 12.9%). Cash flow before acquisitions and dividends grew by 47% to €401 million (2009: €272 million).

Fresenius Kabi achieved outstanding growth in 2010. In 2011, organic sales growth is expected to grow by approximately 5%, taking the 2010/2011 compounded annual growth rate well into the 7 to 10% mid-term guidance range. Fresenius Kabi expects an EBIT margin of more than 19%. Net income for 2011 is expected to surpass 2010 earnings.

For the mid-term, Fresenius Kabi maintains its targets of 7% to 10% organic sales growth and an EBIT margin in the 18% to 20% range.


Special items relating to the acquisition of APP Pharmaceuticals are included in the segment "Corporate/Other".

¹ Net income attributable to Fresenius Kabi AG
² Non-GAAP financial measures - Adjusted EBITDA is a defined term in the indenture governing the Contingent Value Rights (CVRs), however it is not a recognized term under GAAP.



Fresenius Helios
Fresenius Helios is one of the largest private hospital operators in Germany. HELIOS Kliniken Group owns 63 hospitals, including five maximum care hospitals in Berlin-Buch, Erfurt, Krefeld, Schwerin and Wuppertal. HELIOS treats more than 2 million patients per year, thereof ~600,000 inpatients, and operates a total of more than 18,500 beds.

• Strong sales and earnings growth
• Outlook 2011: Organic sales growth of 3% to 5% and EBIT of €250 million to €260 million expected

Sales increased by 4% to €2,520 million (2009: €2,416 million). Organic growth was 5%, mainly driven by an increase in hospital admissions. The divestiture of one acute care hospital as of January 1, 2010 reduced sales growth by 1%.

EBIT grew by 15% to €235 million (2009: €205 million). The EBIT margin improved to 9.3% (2009: 8.5%). Net income¹ increased by 22% to €131 million (2009: €107 million).

As of January 1, 2011, HELIOS consolidates the hospital St. Marienberg in Lower Saxony. With 620 employees and 267 beds, the hospital treats about 12,000 inpatients annually. The hospital generated revenues of about €32 million in 2009.

The 2011 outlook remains positive: Fresenius Helios expects to achieve organic sales growth of 3% to 5%. EBIT is projected to increase to €250 million to €260 million.

As a new mid-term goal, Fresenius Helios targets sales of €3.5 billion by 2015, driven by both organic sales growth and acquisitions.


¹ Net income attributable to HELIOS Kliniken GmbH


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

• Strong sales and earnings growth - Order entry and order backlog with year-end record
• Outlook 2011: Sales and EBIT growth of 5% to 10% expected

Sales increased by 15% to €713 million (2009: €618 million). Organic sales growth reached 15%. Sales in the project business rose by 16% to €487 million (2009: €420 million). Sales in the service business increased by 14% to €226 million (2009: €198 million).

EBIT increased by 14% to €41 million (2009: €36 million). The EBIT margin was 5.8%, achieving the 2009 level. Net income rose to €30 million (2009: €27 million).

The excellent development of order intake and order backlog continued: Order intake in the project business increased by 16% to €625 million (2009: €539 million), reaching a new all-time high. In Q4 2010, order intake was €207 million. A €76 million order was received for a turn-key hospital construction in Gabon. Order backlog increased by 18% to a new year-end record of €801 million (Dec. 31, 2009: €679 million).

In 2011, Fresenius Vamed expects to achieve both sales and EBIT growth between 5% and 10%.

As a new mid-term stretch goal, Fresenius Vamed targets sales of €1 billion by 2014.

¹ Net income attributable to VAMED AG

Analyst Meeting and Audio Webcast
As part of the publication of the results for fiscal year 2010, an analyst meeting will be held at the Fresenius headquarters in Bad Homburg on February 23, 2011 at 1.30 p.m. CET (7.30 a.m. EST). All investors are cordially invited to follow the conference in a live broadcast over the Internet at www.fresenius.com see Investor Relations, Presentations. Following the meeting, a recording of the conference will be available as video-on-demand.