Fresenius SE: First half 2008 - Strong financial results

• Sales: € 5.7 billion, +2 % at actual rates, +9 % in constant currency
• EBIT: € 781 million, +0 % at actual rates, +8 % in constant currency

• Net income: € 212 million, +9 % at actual rates, +14 % in constant currency
• Excellent sales and earnings growth in constant currency
• Strong financial results in all business segments with high organic sales growth
• All business segments fully on track to achieve full-year guidance

Compared to the preliminary figures announced on July 17, 2008, Group EBIT improved by € 1 million to € 781 million and net income by € 1 million to € 212 million.

Outlook for 2008 confirmed
Based on the Group's excellent financial results in the first half Fresenius fully confirms its positive outlook for 2008: Group sales are expected to grow by 8 to 10 % in constant currency. Net income is expected to increase by 10 to 15 % in constant currency. All business segments are expected to contribute to this growth.

Sales growth of 9 % in constant currency
Group sales increased by 9 % in constant currency and by 2 % at actual rates to € 5,710 million (H1 2007: € 5,592 million). Organic sales growth was 6 %. Acquisitions contributed a further 4 %. Divestitures reduced sales growth by 1 %. Currency translation had a negative impact of 7 %. This is mainly attributable to the average US dollar rate depreciating 15 % against the euro in the first half of 2008 compared to previous year's period.

Sales growth in the business segments was as follows:

In Europe sales grew by 15 % in constant currency with organic sales growth of 8 %. In North America constant currency and organic sales growth were each 3 %. Strong organic growth rates were achieved in the emerging markets reaching 14 % in Asia-Pacific and 16 % in Latin America.

Strong earnings growth
Group EBITDA increased by 10 % in constant currency and by 2 % at actual rates to € 998 million (H1 2007: € 977 million). Group operating income (EBIT) grew by 8 % in constant currency to € 781 million (H1 2007: € 780 million). At actual rates EBIT was on previous year's level. The Group's EBIT margin was 13.7 % (H1 2007: 13.9 %).

Group net interest improved to € -167 million (H1 2007: € -185 million) mainly due to lower average interest rates of Fresenius Medical Care's debt and currency translation effects.

The Group tax rate was 34.9 % (H1 2007: 36.0 %).

Minority interest increased slightly to € 188 million (H1 2007: € 186 million), of which 93 % was attributable to the minority interest in Fresenius Medical Care.

Group net income grew by 14 % in constant currency and by 9 % at actual rates to € 212 million (H1 2007: € 195 million). Earnings per ordinary share increased to € 1.36 and earnings per preference share increased to € 1.37 (H1 2007: ordinary share € 1.26, preference share € 1.27). This represents an increase of 8 % for both share classes.

Continued investments in growth
Fresenius Group spent € 332 million for property, plant and equipment and intangible assets (H1 2007: € 302 million). Acquisition spending was € 292 million (H1 2007: € 223 million).


Sustainable cash flow development
Operating cash flow decreased to € 481 million (H1 2007: € 553 million) due to the higher working capital requirements. The cash flow margin was 8.4 % (H1 2007: 9.9 %). Cash flow before acquisitions and dividends was € 149 million (H1 2007: € 258 million) mainly due to net capital expenditure increasing to € 332 million (H1 2007: € 295 million). Free cash flow after net acquisitions (€ 224 million) and dividends (€ 218 million) was € -293 million (H1 2007: € -94 million).


Solid balance sheet
Fresenius Group's total assets increased by 5 % in constant currency and by 1 % at actual rates to € 15,491 million (December 31, 2007: € 15,324 million). Current assets increased by 8 % in constant currency and by 5 % at actual rates to € 4,505 million (December 31, 2007: € 4,291 million). Non-current assets were € 10,986 million (December 31, 2007: € 11,033 million).

Shareholders' equity including minority interest increased by 4 % in constant currency to € 6,073 million (December 31, 2007: € 6,059 million). The equity ratio (including minority interest) was 39.2 % (December 31, 2007: 39.5 %).

Group debt increased by 2 % at actual rates to € 5,805 million (December 31, 2007: € 5,699 million). In constant currency, Group debt increased by 5 %. As of June 30, 2008, the net debt/EBITDA ratio was 2.7 (December 31, 2007: 2.6).


Number of employees increased
As of June 30, 2008, Fresenius increased the number of its employees by 3 % to 117,453 (December 31, 2007: 114,181). The growth was mainly attributable to Fresenius Kabi and Fresenius Medical Care.



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.

Studies with the antibodies Removab® and Rexomun® in various indications are ongoing in Europe and the US.

Orphan Drug Designation was achieved in Switzerland for the antibody Removab in the indications malignant ascites, gastric cancer and ovarian cancer. The Swiss Agency for therapeutic products (Swiss Medic) grants the Orphan Drug Designation to medicinal products used for rare, life-threatening or chronic diseases that affect no more than five in every 10,000 people in Switzerland and for which no sufficient effective treatment exists.

The registration process for Removab in Europe in the indication malignant ascites is proceeding according to plan. Fresenius Biotech dispatched the marketing authorization application to the European Medicines Agency (EMEA) in December 2007.

Fresenius Biotech's EBIT was € -20 million (H1 2007: € -20 million). For 2008, Fresenius Biotech expects an EBIT of approximately € -50 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 June 30, 2008, Fresenius Medical Care was treating 179,340 patients in 2,318 dialysis clinics.

• Strong growth in all regions
• Outlook 2008 fully confirmed

Fresenius Medical Care achieved sales growth of 10 % to US$ 5,177 million (H1 2007: US$ 4,725 million). Organic growth was 6 %. Currency translation effects had a positive impact of 4 %. Sales in dialysis care increased by 6 % to US$ 3,769 million (H1 2007: US$ 3,556 million). In dialysis products sales grew by 20 % to US$ 1,408 million (H1 2007: US$ 1,169 million).

In North America sales increased by 3 % to US$ 3,382 million (H1 2007: US$ 3,297 million). Dialysis services revenue increased by 2 % to US$ 3,028 million. Average revenue per treatment in the US was US$ 327 in the second quarter of 2008 (Q2 2007: US$ 327). In the first quarter of 2008, average revenue per treatment in the US was US$ 326. The sequential improvement in the revenue per treatment was due to an increase in EPO utilization. Sales outside North America ("International" segment) grew by 26 % (12 % in constant currency) to US$ 1,795 million (H1 2007: US$ 1,428 million). Strong sales growth in constant currency was achieved in Asia-Pacific (+11 %), Europe (+12 %) and Latin America (+16 %).

EBIT rose by 8 % to US$ 818 million (H1 2007: US$ 756 million) resulting in an EBIT margin of 15.8 % (H1 2007: 16.0 %). This development mainly reflected higher research and development expenses. Reduced reimbursement rates for EPO and lower utilization of EPO as well as start-up cost for new clinics were offset by increases in underlying reimbursement rates, cost containment and continued strong performance of renal products including PhosLo.

Net income increased by 17 % to US$ 397 million (H1 2007: US$ 339 million).

For 2008, Fresenius Medical Care confirms its outlook and expects to achieve revenue of more than US$ 10.4 billion, an increase of more than 7 %. Net income is projected to be between US$ 805 million and US$ 825 million, an increase of 12 % to 15 %.

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


Fresenius Kabi
Fresenius Kabi offers infusion therapies and clinical nutrition for seriously and chronically ill patients in the hospital and out-patient environments. The company is also a leading provider of transfusion technology products.

• Excellent organic growth of 10 %
• Outlook 2008 fully confirmed

Fresenius Kabi increased sales by 14 % to € 1,121 million (H1 2007: € 986 million). Organic sales growth was 10 %. Net acquisitions contributed a further 7 % to sales. Currency translation effects had a negative impact of 3 %. This was mainly due to the depreciation of currencies in Great Britain, South Africa and China. Organic sales growth in Europe (excluding Germany) was 7 %. In Germany organic sales growth was 2 %. In the Asia-Pacific region Fresenius Kabi again achieved significant organic sales growth of 27 %. Organic sales growth in Latin America was 9 % and in other regions 11 %.

EBIT grew by 14 % to € 181 million (H1 2007: € 159 million). The EBIT margin was 16.1 % (H1 2007: 16.1 %). Net income grew by 11 % to € 97 million (H1 2007: € 87 million).
Fresenius Kabi fully confirms the outlook for 2008: The company targets sales growth in constant currency of 12 to 15 %. Further, Fresenius Kabi forecasts an EBIT margin of around 16.5 %.

On July 7, 2008, Fresenius SE announced that Fresenius Kabi has signed definitive agreements to acquire APP Pharmaceuticals, Inc. APP is a leading manufacturer of intravenously administered generic drugs (I.V. generics) in North America. The acquisition is an important step in Fresenius Kabi's growth strategy. Through the acquisition of APP, Fresenius Kabi enters the U.S. pharmaceuticals market and achieves a leading position in the global I.V. generics market. This North American platform provides further attractive growth opportunities for Fresenius Kabi's existing product portfolio.


Fresenius Helios
Fresenius Helios is one of the largest private hospital operators in Germany. The HELIOS Kliniken Group owns 60 hospitals, including five maximum care hospitals in Berlin-Buch, Erfurt, Krefeld, Schwerin and Wuppertal. HELIOS treats about 500,000 inpatients per year at its clinics and has a total of approximately 17,500 beds.

• Excellent sales and earnings growth
• Outlook 2008 fully confirmed

Fresenius Helios increased sales by 17 % to € 1,040 million (H1 2007: € 890 million). Acquisitions contributed 11 % to overall sales growth. Organic growth was strong at 5 %*. This performance was driven by the significant growth in hospital admissions compared to the same period last year.

The integration of the HELIOS clinics Krefeld and Hüls made significant progress in the second quarter. The strong increase in hospital admissions of about 9 % in the first half of 2008 compared to the first half of 2007 reflects the operating progress achieved. The new Krefeld hospital construction plans were finalized in May 2008, setting the stage for an efficient state-of-the art facility.

EBIT grew strongly by 22 % to € 83 million (H1 2007: € 68 million) due to the very good financial performance of the established clinics. The EBIT margin increased to 8.0 % (H1 2007: 7.6 %). Net income improved by 42 % to € 37 million (H1 2007: € 26 million).

Sales at the established clinics rose by 5 %* to € 945 million. EBIT improved by 31 % to € 89 million. The EBIT margin was 9.4 % (H1 2007: 7.6 %). The acquired clinics (consolidation < 1 year) achieved sales of € 95 million and an EBIT of € -6 million.

Fresenius Helios fully confirms its outlook for 2008: The company expects to achieve sales of more than € 2,050 million. EBIT is projected to increase to € 160 to 170 million, including the negative contribution from the HELIOS clinics Krefeld and Hüls.

*growth rate on a like for like basis


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

• Strong sales growth of 11 %; order intake doubled
• Outlook 2008 fully confirmed

In the first half of 2008, Fresenius Vamed achieved sales growth of 11 % to € 177 million (H1 2007: € 160 million). Acquisitions contributed 4 % to sales growth whereas divestitures had a negative impact of 4 %. Sales in the project business rose by 14 % to € 99 million (H1 2007: € 87 million). Sales in the service business improved by 7 % to € 78 million (H1 2007: € 73 million). Organic sales growth was 11 %.

EBIT was € 9 million (H1 2007: € 9 million). The EBIT margin was 5.1 % (H1 2007: 5.6 %). Net income increased by 13 % to € 9 million (H1 2007: € 8 million).

Order intake in the project business doubled to € 170 million (H1 2007: € 84 million). In the second quarter of 2008, an order of approximately € 25 million contributed to this growth. The order consists of the extension of a hospital in Oberndorf near Salzburg, Austria. Furthermore, Fresenius Vamed received their first order from Sri Lanka with a volume of about € 8 million regarding the supply of medical technical equipment for 25 hospitals. Order backlog as of June 30, 2008 was € 573 million, an increase of 12 % (December 31, 2007: € 510 million).

Fresenius Vamed fully confirms its outlook for 2008 and expects to grow both sales and EBIT by 5 to 10 %.


Analyst Conference Call and Audio Webcast

As part of the publication of the results for the first half and the second quarter of 2008, a conference call will be held on July 30, 2008 at 2.00 p.m. CEDT (8.00 a.m. EDT). You are cordially invited to follow the conference call in a live broadcast over the Internet at www.fresenius.com / Investor Relations / Presentations. Following the call, a recording will be available.