• Sales: € 1.7 billion
  + 7 % currency-adjusted, - 7 % at current exchange rates
   
• EBIT: € 194 million
  + 2 % currency-adjusted, - 11 % at current exchange rates
   
• Net income: € 36 million
  + 46 % currency-adjusted, + 29 % at current exchange rates

The development of the Fresenius Group in the 1st quarter 2003 was substantially affected by the changes in the exchange rates in the currency translation. On the basis of constant exchange rates, Fresenius increased sales by 7 % in the 1st quarter 2003. However, due to exchange rate effects, especially of the US dollar/euro, sales in the 1st quarter 2003 amounting to € 1,729 million at current exchange rates were 7 % lower than the figure for the previous year. The Fresenius Group achieved an operating profit (EBIT) of 2 % at constant exchange rates. At current exchange rates, EBIT was 11 % lower than in the same period of the previous year. Net income of the Fresenius Group rose by 46 % currency-adjusted (at current exchange rates: 29 %).


Group outlook on year-end 2003
The Group confirms its forecast made in February for the year as a whole and anticipates an altogether positive development for the 2003 financial year. At 2002 exchange rates, a high single-digit sales increase rate is expected. In view of the weak economic development and the increasing cost pressure in the health systems, this is an ambitious target. Earnings are also expected to further increase at constant exchange rates: the growth rate in net income is expected to be higher than that of sales.


Sales
As a result of the exchange rates, consolidated sales of the Fresenius Group decreased by 7 % in the first quarter to € 1,729 million (Q1/2002: € 1,854 million). Organic growth amounted to 4 %. Acquisitions contributed 3 % to this growth. The changes in exchange rates had a negative impact of 14 % on sales development. Especially the 22.4 % weaker US dollar compared to the previous year's quarter and the weakening of the Argentinian peso compared to the euro had negative effects on sales in the currency translation.

The regions with the strongest sales of the Group are still North America with 51 % and Europe with 38 % of total sales, followed by Asia-Pacific with 7 % and Latin America and other regions with a total of 4 %. In all Fresenius' important markets, the Group succeeded in increasing sales at constant exchange rates. We should like to emphasize that despite the continuing difficult economic situation in Argentina and Brazil sales in Latin America increased by 30 % at constant exchange rates.

The breakdown of sales by business segment has shifted to the advantage of Fresenius Kabi and Fresenius ProServe compared to the previous year's quarter. Due to the currency translation effect of the US dollar to the euro the sales contribution of Fresenius Medical Care in the first quarter 2003 was 70 %.

Earnings
The exchange rate effects were also reflected in the earnings of the Fresenius Group: Calculated at constant exchange rates, consolidated earnings before interest, income taxes, depreciation and amortization (EBITDA) increased by 2 % compared to the figure for the previous year. At current exchange rates EBITDA amounted to € 271 million in the 1st quarter 2003, 11 % below previous year's figure of € 303 million. Consolidated EBIT also increased by 2 % at constant exchange rates. On the basis of current exchange rates consolidated EBIT in the 1st quarter 2003, € 194 million, was also 11 % below the previous year's figure of € 217 million. Earnings development in the 1st quarter 2003 was marked by the lower EBIT contribution of Fresenius Medical Care, which was - 3 % compared to the same period of the previous year on a US dollar basis.

The particularly strong increase in EBIT of Fresenius Kabi (84 % compared to the previous year) had a positive impact. The EBIT contribution of Fresenius Kabi is the result of the successful implementation of the restructuring measures in 2001 and 2002. Fresenius ProServe increased its operating profit by 50 % over the previous year.

Balance of interest decreased to € - 64 million in the 1st quarter 2003 compared to the same period of the previous year and was positively influenced by currency effects from the conversion of the US dollar to the euro, since a high proportion of bank loans is in the United States.

As the following table shows, balance of interest and following figures of the statement of income of the previous year have been adjusted, since US GAAP rule SFAS No. 145 stipulates that as of 1.1.2003, the majority of earnings and losses from the early redemption of financial liabilities is no longer classified as extraordinary. This rule also concerns the expenses amounting to € 22 million before taxes (€ 13 million after taxes and related minority interests amounting to € 8 million) for the early redemption in 2002 of trust preferred securities of Fresenius Medical Care due in 2006. Accordingly, the following table shows the development of the previous year's statement of income:

The tax ratio amounted to 39.2 % in the period under report (Q1/2002: 37.9 %).

Minority interests fell to € 43 million, following € 49 million in the 1st quarter 2002. This drop is also a result of the strong exchange rate effects. 95 % of minority interests concern Fresenius Medical Care.

Fresenius increased consolidated net income by 29 % from € 28 million in the 1st quarter 2002 to € 36 million in the 1st quarter 2003. At constant exchange rates, the increase would have amounted to 46 %. Without adjustment of the previous year's figures to take into account the extraordinary expenses, net income would have increased by 9 % (currency-adjusted: 24 %).

Earnings per ordinary share amounted to € 0.87 following € 0.67 in the same period of the previous year, and earnings per preference share amounted to € 0.88 following
€ 0.68 in the previous year; an increase of 29 % (currency-adjusted: 46 %). Without adjusting the previous year's figures for the extraordinary expenses, earnings per ordinary share for the previous year was € 0.79 and earnings per preference share € 0.80; this corresponds to a plus of 10 % in the 1st quarter 2003 (currency-adjusted: 26 %).


Capital expenditure
Fresenius invested € 88 million in the 1st quarter 2003. This is € 12 million less than in the same period of the previous year when the investment volume was € 100 million.

Of the total capital expenditure of the period under report, 64 % was invested in tangible and intangible assets and 36 % in acquisitions. Investments in tangible and intangible assets dropped by 32 % to € 56 million compared to the same period of the previous year. Cash used for acquisitions increased from € 18 million in the 1st quarter 2002 to € 32 million in the period under report. This increase is solely due to the comparatively low investment volume in the same period of the previous year.

Acquisitions in the 1st quarter 2003 mainly concerned the acquisition of dialysis clinics by Fresenius Medical Care. Investments in tangible assets were chiefly in the founding and equipping of dialysis clinics, especially in the United States, in expanding and modernising existing clinics and in the further expansion and optimisation of production plants.

Looking at the breakdown by business sector, Fresenius Medical Care spent 83 % of the total investment volume, followed by Fresenius Kabi with 10 %. By region, 42 % of the total amount was invested in Europe, 49 % in North America and with a total of 9 % in the regions Asia-Pacific and Latin America.


Cash flow
The consolidated cash flow statement again showed a good development. The operating cash flow and the free cash flow showed high growth rates. The operating cash flow amounted to € 137 million in the period under report (Q1/2002: € 80 million). This corresponds to an increase of 71 % and is largely due to the further improvement in receivables management. The operating cash flow fully covered the financing requirements resulting from investment activities before acquisitions. The free cash flow before acquisitions and dividends also improved significantly and rose from € 3 million in the same period of the previous year to € 83 million in the 1st quarter 2003. This resulted from the considerably lower investment volume; cash used for investments in the Group amounted to € 56 million and cash received from the disposal of tangible assets amounted to € 2 million. The free cash flow after acquisitions and dividends, € 57 million, was positive.


Asset and equity structure
Balance sheet total of the Group changed only slightly compared to 31.12.2002, by 1 % to € 8,964 million (31.12.2002: € 8,915 million). This is largely due to the US$ 133 million reduction in the receivable securitization programme of Fresenius Medical Care to US$ 312 million, which is reflected in a corresponding increase in accounts receivable.

The liabilities side of the balance sheet shows an almost unchanged shareholders' equity including minority interests of – 1 % to € 3,348 million (31.12.2002: € 3,369 million). This drop resulted from the change in exchange rates; at constant exchange rates, an increase of 2 % would have resulted. Equity ratio including minority interests fell slightly from 37.8 % as at 31.12.2002 to 37.3 % at the end of the reporting period.

The liabilities of the Group from bank loans, Eurobonds, commercial papers and trust preferred securities amounted to € 3,337 million on 31.3.2003 (31.12.2002: € 3,283 million). The increase resulted from Fresenius Medical Care utilising credit lines in order to reduce the receivable securitization programme. An opposite effect had the changed exchange rates in the translation of the US dollar loans into euros.

Debt of the Group including liabilities from the receivable securitization programme of Fresenius Medical Care were reduced from € 3,707 million as at 31.12.2002 to € 3,624 million on 31.3.2003.

The key ratio net debt/EBITDA remained unchanged at 3.0 on 31.3.2003 compared to the end of the 2002 financial year.


Employees
On 31.3.2003, the Fresenius Group had 64,806 employees all over the world. This was around 2 % or 1,168 people more than at the end of 2002.



The Business Segments

Fresenius Medical Care

Fresenius Medical Care AG is the world's leading provider of products and services for patients with chronic kidney failure.

In the 1st quarter 2003, Fresenius Medical Care increased sales by 10 % to US$ 1,299 million (previous year: US$ 1,187 million). 72 % of these sales were achieved in North America and 28 % outside North America.

The dialysis care business generated 73 % of sales, and dialysis products 27 %. Sales of dialysis products increased by 16 % to US$ 355 million (Q1/2002: US$ 305 million). The dialysis care business grew by 7 % to US$ 944 million (Q1/2002: US$ 881 million). The main reason for this growth was the increased number of dialysis treatments: Altogether, Fresenius Medical Care performed 4.2 million treatments in the reporting period, 9 % more than in the same period of the previous year. As at 31.3.2003, Fresenius Medical Care treated around 114,300 patients in 1,500 dialysis clinics, 7 % more than in the same period of the previous year.

Operating profit (EBIT) of Fresenius Medical Care in the 1st quarter 2003 was US$ 169 million. EBIT of the same period of the previous year amounted to US$ 174 million including a one-time benefit of US$ 6.3 million. Before this one-time item, EBIT of the 1st quarter 2002 was 168 US$. Earnings of the 1st quarter 2003 were affected particularly by the Middle East crisis, the difficult economic conditions in various countries of Latin America and the continued price pressure in Central Europe.

Net income of Fresenius Medical Care increased by 10 % to US$ 70 million. Without adjusting the previous year's figures by the extraordinary expenses caused by the early redemption of trust preferred securities, net income would have decreased by 7 %.

For further information – please see the Fresenius Medical Care Investor News (www.fmc-ag.com).

The weakness of the dollar means that sales of Fresenius Medical Care amounting to US$ 1,299 million after conversion into euros were 11 % lower than the figure for the previous year. Currency translation caused EBIT to decrease by 21 % to € 157 million (previous year: € 198 million).



Fresenius Kabi

The portfolio of Fresenius Kabi focuses on the nutrition and infusion therapy of patients in the hospital, many of whom are seriously ill, and in ambulatory care, as well as on infusion and transfusion technology.

In the 1st quarter 2003, Fresenius Kabi recorded sales of € 355 million, the same as in the previous year (€ 354 million). This is almost solely the result of currency translation effects. The organic growth of Fresenius Kabi was 7 % in the reporting period and thus within the framework of our defined target of 6 to 7 % for 2003 as a whole. The development of sales was significantly affected by currency effects (- 6 percentage points). Furthermore, disinvestments (the sale of the company ProReha effective August 1, 2002) reduced sales by – 1 percentage point.

The hospital business achieved € 284 million, 80 % of total sales (Q1/2002: € 279 million including transfusion and infusion technology), the Ambulatory Care business
€ 71 million (Q1/2002: € 75 million), 20 % of total sales.

Fresenius Kabi achieved an EBIT of € 35 million in the 1st quarter 2003, significantly higher than the previous year's figure of € 19 million. Thus, Fresenius Kabi achieved an EBIT margin of 9.9 % in the 1st quarter 2003, a significant increase compared to the 1st quarter 2002 (5.4 %). This also substantially exceeded the EBIT margin of the whole 2002 financial year (6.7 %).

The measures to increase efficiency which have been successfully implemented chiefly in the production facilities, particularly in the Uppsala, Sweden, facility, had a positive impact on earnings for the 1st quarter 2003. The measures implemented will continue to make a substantial contribution to the future earnings development of Fresenius Kabi.

Fresenius Kabi has an excellent position in its markets. In the growth countries of the region Asia-Pacific, Fresenius Kabi again achieved double-digit organic growth in the 1st quarter 2003. In Europe, Fresenius Kabi continued its solid growth despite the strong cost pressure in the health systems, which mainly makes itself felt in Germany.

* The previous year's figures have been adjusted to include the newly-assigned activities of the business segment Fresenius HemoCare (transfusion and infusion technology) effective January 1, 2003.
 

Fresenius ProServe

Fresenius ProServe offers services for the international health care systems. The range of services includes hospital management, the planning and construction of hospitals as well as of pharmaceutical and medical-technical production plants.

Fresenius ProServe succeeded in increasing sales by 11 % in the 1st quarter 2003 to € 166 million (Q1/2002: € 149 million). The company generated sales of € 140 million in the healthcare business, a plus of 18 % over the same period of the previous year (Q1/2002: € 119 million). Sales of services increased by 29 % to € 116 million (Q1/2002: € 90 million). The increase was largely driven by the consolidation for the first time of newly-acquired hospitals (mainly Klinikum Rhein-Sieg in Siegburg). Sales of the project business (€ 24 million) as well as of the pharma industry business (€ 26 million) were lower than the previous year (project business Q1/2002: € 29 million and pharma industry business Q1/2002: € 30 million) due to delays in the invoicing of projects in the 1st quarter, which is traditionally a weak period.

Orders received relating to the project business of Fresenius ProServe dropped to € 66 million (Q1/2002: € 94 million), a result of delays in the closing of projects. Orders on hand were nearly unchanged at € 422 million (31.12.2002: € 424 million).

Fresenius ProServe significantly improved EBIT in the period under report, from € 4 million in the 1st quarter 2002 to € 6 million in the 1st quarter 2003.



Note:
The full quarterly report including notes will be available in the middle of May on our website www.fresenius-ag.com under Investor Relations / Publications.

For your information, you can find figures on the subsequent quarters of 2002 on page 12 of this Investor News. These figures have been adjusted for:

• the extraordinary expenses resulting from the early redemption of trust preferred securities of Fresenius Medical Care
• the newly-assigned activities of the business segment Fresenius HemoCare, effective January 1, 2003.

• Sales: € 3.46 billion
  + 5 % at constant currency, - 8 % at current exchange rates
• EBIT: € 390 million
  + 7 % at constant currency, - 7 % at current exchange rates
• Net income: € 70 million
  + 45 % at constant currency, + 27 % at current exchange rates

• Exchange rates affect sales and earnings
• Operating cash flow and free cash flow at record level
• Continued margin improvements at Fresenius Medical Care
• Operating improvement at Fresenius Kabi
• Program initiated to reduce costs and increase profitability at Fresenius ProServe

In the first half of 2003 the Fresenius Health Care Group was substantially impacted by exchange rate fluctuations in the currency translation. At constant currency, sales increased 5 % in the first half of 2003. At current rates sales decreased 8 % to € 3,456 million mainly due to the strengthening of the euro against the dollar. Operating income (EBIT) increased 7 % at constant currency. At current rates, EBIT was 7 % lower than in the same period of 2002. Net income of the Fresenius Group grew 27 %, 45 % at constant currency.


Group outlook on year-end 2003
In the first half of 2003, health care systems were affected by cost-cutting, delayed investments and price pressure. The Fresenius Group showed positive results despite this difficult environment. With 5 % sales growth in the first half of 2003, the Group now anticipates a mid single-digit revenue growth rate at constant currency for the full year 2003.

The Fresenius ProServe business segment initiated a program at Wittgensteiner Kliniken AG to reduce costs and increase profitability. With these measures Fresenius ProServe is overcoming at an early stage challenges in the German health care system, and is supporting its strong position in the German hospital market. The expected one-time expenses of this program are € 25 million (see also page 8).

Before these one-time expenses, the Managing Board maintains its forecast that at constant currency, net income will increase at a double-digit rate. This increase will be mainly driven by the good performance of Fresenius Medical Care and Fresenius Kabi. After these one-time expenses, net income at constant currency will remain at previous year's level.


Sales
Sales of the Fresenius Group decreased by 8 % in the first half of 2003 to € 3,456 million (first half 2002: € 3,749 million) due to exchange rate fluctuations. Organic growth was 3 %. Acquisitions contributed 2 % to this growth. Exchange rates had a 13 % negative impact on sales development. On average the 23 % weaker US dollar and 33 % weaker Argentinian peso had a negative impact on sales due to currency translation.

The region with the strongest sales was North America with 51 %, followed by Europe with 38 %. Asia-Pacific had 7 % and Latin America and other regions a total of 4 %. In almost all the regions the Group increased sales at constant currency. Even with the continuing difficult economic climate in Latin America, sales increased by 29 % at constant currency.

Fresenius Kabi and Fresenius ProServe increased their sales contribution compared to the first half of 2002. Due to the weaker US dollar the sales contribution of Fresenius Medical Care in the first half of 2003 was 70 %.

 

Earnings
The stronger euro was also reflected in the earnings of the Fresenius Group. At constant currency, earnings before interest, income taxes, depreciation and amortization (EBITDA) increased by 5 % compared to the previous year. At current rates EBITDA was € 543 million in the first half of 2003, 8 % below previous year's € 592 million. EBIT increased 7 % at constant currency. At current rates, EBIT of € 390 million in the first half of 2003 was 7 % below previous year's € 420 million.

The 87 % increase in EBIT of Fresenius Kabi had a positive impact on group earnings. This increase is the result of the successful implementation of restructuring measures in 2001 and 2002 and the strong operating performance.

Net interest decreased to € -125 million in the first half of 2003 from € -165 million in the first half of 2002.

In the following table the previous year's income statement has been adjusted according to Statement of Financial Accounting Standards No. 145 which stipulates that as of January 1, 2003 the gains and losses from the early redemption of financial instruments are no longer classified as extraordinary. This rule requires the reclassification of € 22 million of expenses before taxes (€ 13 million after taxes and related minority interests of € 8 million) for the early redemption of Fresenius Medical Care's trust preferred securities which were to come due in 2006.

The decrease of net interest is mainly due to changes in US GAAP. Further, net interest was positively influenced by the translation of US dollar to the euro, since a large portion of Fresenius Medical Care's bank loans are in US dollars.

The tax ratio was 39.2 % in the first half of 2003 compared to 38.0 % in the first half of 2002.

Minority interests decreased to € 91 million from € 103 million in the first half of 2002. This is a result of exchange rate effects. 93 % of minority interests involve Fresenius Medical Care.

Fresenius increased net income considerably. It grew 27 % from € 55 million in the first half of 2002 to € 70 million in the first half of 2003. At constant currency the increase was 45 %.

Earnings per ordinary share were € 1.70, up from € 1.33 in the same period of 2002. Earnings per preference share were € 1.72, up from € 1.35 in 2002. This was an increase of 28 % and 27 %, respectively (at constant currency: 46 % and 45 %).


Capital expenditure and acquisitions
Fresenius spent € 157 million in the first half of 2003 for capital expenditure and acquisitions. This is a reduction of 39 % compared to € 257 million in the first half of 2002 and was in line with Company planning. In 2001 and 2002 Fresenius made significant investments in increased capacity of production plants and further market expansion.

Of the total investments, 72 % was for capital expenditure, 28 % was for acquisitions. Capital expenditure was € 113 million, 39 % below the first half of 2002. Acquisitions were € 44 million in the first half of 2003 compared to € 72 million in the first half of 2002.

Acquisitions in the first half of 2003 were mainly dialysis clinics purchased by Fresenius Medical Care. Capital expenditure was mainly used for opening and equipping new dialysis clinics, especially in the United States, for expanding and modernising existing clinics and for the further expansion and optimization of production plants.

49 % of capital expenditure was made in Europe, 41 % in North America and 10 % elsewhere.


Cash flow
The Fresenius Group's operating cash flow and free cash flow were at record levels. Operating cash flow was € 311 million in the first half of 2003 (first half 2002: € 296 million). This 5 % increase is mainly due to continued improvement in receivables management. The free cash flow before acquisitions and dividends also improved and rose by 35 % to a record figure of € 208 million (first half 2002: € 154 million). This increase resulted from a lower investment volume of € 103 million (first half 2002: € 142 million). After net cash used for acquisitions of € 38 million and dividends of € 107 million Fresenius achieved an excellent free cash flow of € 63 million (first half 2002: € -6 million).


Asset and equity structure
Balance sheet total of the Group was € 8,867 million, a decrease of € 48 million (1 %) compared to December 31, 2002 (€ 8,915 million). This is solely due to currency effects. At constant currency balance sheet total increased 4 % over the previous year. This was mainly due to the reduction in the receivables securitization program of Fresenius Medical Care from US$ 445 million to US$ 249 million which led to a corresponding increase in accounts receivable.

Shareholders' equity including minority interests was € 3,217 million at June 30, 2003 compared to € 3,369 million as at December 31, 2002. This was a result of exchange rate fluctuations; at constant currency there was an increase of 2 %. Equity ratio including minority interests was 36.3 % at June 30, 2003 compared to 37.8 % as at December 31, 2002.

Liabilities from bank loans, Eurobonds, commercial paper and trust preferred securities were € 3,339 million on June 30, 2003. (December 31, 2002: € 3,283 million). This increase was the result of Fresenius Medical Care using existing credit lines to reduce the receivables securitization program. US dollar exchange rate fluctuations had an opposite effect.

Debt, including liabilities from the receivables securitization program of Fresenius Medical Care decreased from € 3,707 million as at December 31, 2002 to € 3,557 million on June 30, 2003.

The key ratio net debt/EBITDA was unchanged at 3.0 on June 30, 2003, the same as at the end of 2002.


Employees
On 30.6.2003, the Fresenius Group had 65,626 employees worldwide. This was around 3 % or 1,988 people more than at the end of 2002.


Fresenius Biotechnology
In biotechnology, Fresenius is active in the field of immune and cell therapies. Various clinical trials for the immunotherapeutical treatment of cancer are currently being carried out. The results of a phase I/II study for treatment of ovarian cancer patients with symptomatic ascites are to be presented at the European Cancer Conference (ECCO) in September.



The Business Segments

Fresenius Medical Care

Fresenius Medical Care AG is the world's leading provider of products and services for patients with chronic kidney failure.

In the first half of 2003, Fresenius Medical Care increased sales 9 % to US$ 2,666 million (previous year: US$ 2,441 million). 71 % of sales were achieved in North America, 29 % elsewhere. At constant currency, Fresenius Medical Care increased sales 5 % in the first half of 2003.

Dialysis care business contributed 72 % to sales and dialysis products 28 %. Sales of dialysis products increased 15 % to US$ 743 million (first half 2002: US$ 648 million). The dialysis care business grew 7 % to US$ 1,922 million (first half 2002: US$ 1,793 million). The main source of growth was the increased number of dialysis treatments. Fresenius Medical Care performed approximately 8.7 million treatments in the first half of 2003, an increase of 9 % year over year. As at June 30, 2003, Fresenius Medical Care provided treatment to around 115,800 patients in 1,510 dialysis clinics, 7 % more than in the first half of 2002.

EBIT of Fresenius Medical Care in the first half of 2003 increased 2 % to US$ 353 million. Net income increased 8 % to US$ 149 million.
For the year 2003, Fresenius Medical Care reconfirms its outlook and expects mid single digit revenue growth (in constant currency) and net income growth in the high single digit to low double digits range. As mentioned in the first quarter of 2003 Fresenius Medical Care expects to achieve net income growth for the full year 2003 near the lower end within the predicted range due to the increased risks and unpredictability.

Fresenius Medical Care's US dollar sales of US$ 2,666 million were € 2,413 million after conversion into euros. This is a decrease of 11 % compared to previous year's € 2,718 million. EBIT decreased 17 % to€ 319 million (first half 2002: € 383 million) due to currency translation.

For further information please see the Fresenius Medical Care Investor News www.fmc-ag.com.  


Fresenius Kabi

The portfolio of Fresenius Kabi focuses on the nutrition and infusion therapy of patients in the hospital, many of whom are seriously ill, and in ambulatory care, as well as on infusion and transfusion technology.

In the first half of 2003, Fresenius Kabi's sales were € 718 million, substantially the same as in the previous year (€ 717 million). This is the result of currency translation effects of  -6%. The organic growth of Fresenius Kabi increased 7 %. This is fully in line with our expected growth of 6 to 7 % for 2003 as a whole. Furthermore, divestments (the sale of the company ProReha effective August 1, 2002) reduced sales by 1 percentage point.

The hospital business had € 574 million in sales, which was 80 % of total sales (first half 2002: € 568 million). The Ambulatory Care business had sales of € 145 million (first half 2002: € 149 million), which was 20 % of total sales.

Fresenius Kabi achieved an EBIT of € 71 million in the first half of 2003 compared to the previous year's figure of € 38 million. Fresenius Kabi achieved an EBIT margin of 9.9 % in the first half 2003 compared to 5.3 % in the first half of 2002. This also exceeds the EBIT margin for 2002 as a whole (6.7 %).

Our restructuring of production facilities, particularly in Uppsala, Sweden, and the good operating performance had a positive impact on earnings in the first half of 2003. These measures will continue to contribute to the future earnings growth of Fresenius Kabi.

In the important European market, the Company achieved a single-digit growth rate. In all other regions, Fresenius Kabi achieved double-digit organic growth in the first half of 2003.

For the full year 2003, Fresenius Kabi expects to achieve an organic growth of 6 to 7 %. EBIT of the second half of 2003 is expected to be in the range of the first half of the year.

* The previous year's figures have been adjusted to include the newly-assigned activities of the business segment Fresenius HemoCare (transfusion and infusion technology) effective January 1, 2003.


Fresenius ProServe

Fresenius ProServe offers services for the international health care systems. The range of services includes hospital management, the planning and construction of hospitals as well as of pharmaceutical and medical-technical production plants.

Fresenius ProServe increased sales 5 % to € 336 million in the first half of 2003 (first half 2002: € 321 million). 85 % of sales were from the Healthcare business, 15 % from the Pharma Industry business. Sales were € 287 million in the Healthcare business, an increase of 12 % (first half 2002: € 256 million). Sales were € 49 million in the Pharma Industry business compared to € 65 million in the previous year due to a general investment caution of the pharma industry and delays in project handling.

In the Healthcare business, sales generated by services increased 31 % to € 239 million (first half 2002: € 183 million). This was driven by the consolidation of newly-acquired hospitals (mainly Klinikum Rhein-Sieg in Siegburg). Project sales in the healthcare business were € 48 million compared to € 73 million in the first half of 2002 due to delays in project handling.

Fresenius ProServe's EBIT in the first half of 2003 was € 10 million compared to € 8 million in 2002. However, Fresenius ProServe did not achieve its earnings target for the second quarter. This is mainly due to the hospital management business in Germany. The bed utilization rate declined to 81 % compared to 85 % for the same period of the previous year. In addition, delays in the project business had an impact on earnings.

A major study of Wittgensteiner Kliniken AG, which is part of Fresenius ProServe, was completed in July 2003. This study shows that in addition to the measures carried out in the past one and a half years, there is additional potential to reduce costs and increase efficiency. Fresenius ProServe expects to fully utilize this potential and create a solid basis for Wittgensteiner Kliniken to achieve sustainable growth. The implementation of the measures, including further staff reductions, will result in one-time expenses of € 25 million before tax. It is expected that Wittgensteiner Kliniken will achieve annual cost savings of € 20 - 25 million which will become fully effective in the 2005 financial year.

Assuming a reserve is created for the one-time expenses in 2003, Fresenius ProServe expects, that it will have a single-digit negative EBIT for the full year 2003. Sales for 2003 are expected to increase to approximately € 800 million.

These measures will significantly strengthen the position of Wittgensteiner Kliniken in the German hospital market.


Note: The full quarterly and half-year report including notes will be available in the middle of August on our website www.fresenius-ag.com under Investor Relations / Publications.

The Fresenius Health Care Group has successfully completed a phase I/II study with the new trifunctional antibody removab®. This antibody was used to treat late-stage ovarian cancer patients with symptomatic ascites, which is an accumulation of fluid in the abdominal cavity caused by tumor cells. The study is the world's first completed trial with a trifunctional antibody.

This phase I/II study was designed to identify potential side effects associated with removab® therapy, to evaluate potential dosing schedules and to obtain first indications regarding efficacy. Results of the completed study demonstrate that the antibody is well tolerated at various doses. Four or five very small doses of the antibody were infused into the patient's abdominal cavity over a period of less than two weeks. The most frequent side effects observed in the trial were increased temperature and nausea. In addition, initial indications observed from this study suggest that removab® is efficacious in killing tumor cells in the ascites fluid and thus prevents the re-accumulation of fluid. All patients responded to the therapy. 22 of 23 patients who previously suffered from ascites were ascites-free on day 37, the last day of the study. A significant decrease in the number of tumor cells detected in the ascites fluid was observed in all patients in the study. The average number of tumor cells detected per one million cells in ascites fluid decreased from 540,000 prior to treatment to 39 following the last infusion.

The head of the clinical trial, Prof. Dr. Rainer Kimmig from The University Hospital of Essen, presented the results of the study yesterday (22.9.) at the European Cancer Conference (ECCO) in Copenhagen. In total, 23 ovarian cancer patients with malignant ascites were treated. Prior to entering the Phase I/II study, all patients had suffered one or more relapses following surgical tumor resection, with consequent tumor development in the abdominal cavity. In most cases, patients had previously undergone one or more courses of chemotherapy. The adhesion molecule EpCAM, the target of the removab® antibody, had been detected on the surface of tumor cells in the abdominal cavity fluid of all patients participating in the study. Production of EpCAM, which is also present in healthy cells, is significantly increased in approximately 90 per cent of ovarian cancer patients. EpCAM can thus be targeted for tumor cell recognition and induction of tumor-specific killing.

Due to the encouraging results of the phase I/II study, Fresenius Biotech is planning to launch two further studies in December 2003 and February 2004. The first study is designed to test the efficacy of the antibody with regard to ovarian cancer metastases and thus increase life expectancy. The second trial will investigate the efficacy of the antibody against ascites in other malignancies.

Assuming successful completion of clinical trials and following consultation with regulatory officials, Fresenius plans potential market launch of removab® in Europe in 2007.

Background information

Trifunctional antibodies
The trifunctional antibodies developed and produced by TRION Pharma, a Fresenius partner, are proteins which specifically bind cancer cells to two different immune cells of the immune system, T-cells and macrophages, thus triggering a process that effectively kills tumor cells. The goal of scientists and clinicians is to eradicate those tumor cells that may still be present in the body following surgical resection of the tumor, preventing the development of ascites or metastases and extending patient survival.

Ascites
Ascites, an accumulation of body fluid in the abdominal cavity, is painful and severely impairs a patient's quality of life. Up to 89 per cent of final-stage ovarian cancer patients develop ascites. Existing palliative treatment methods are unsatisfactory: Puncturing the abdominal cavity (paracentesis) and draining the fluid provides rapid but short-lived relief to the patients. In addition, paracentesis causes patients to lose valuable endogenous proteins. Another approach is to infuse chemotherapeutic agents into the abdominal cavity. This method is not generally accepted due to the severe side effects and limited clinical benefits.

Phase I/II Studies
Phase I studies are aimed at determining the dose and side effects, while phase II studies test the efficacy of the drug treatment.

• Sales: € 5.25 billion
  + 6 % at constant currency, - 5 % at actual exchange rates
   
• EBIT: € 590 million
  + 8 % at constant currency, - 4 % at actual ex-change rates
   
• Net income: € 105 million
  + 38 % at constant currency, + 24 % at actual exchange rates

• Operating cash flow and free cash flow at record levels
• Fresenius Medical Care: strong margin improvement in Q3
• Fresenius Kabi: Strong organic growth and positive earnings development
• Fresenius ProServe: further measures to improve profitability
• Reported figures impacted by exchange rate fluctuations

In the first nine months of 2003 the results of the Fresenius Group were significantly impacted by exchange rate fluctuations in the currency translation. At constant currency, sales increased 6 % for the first nine months of 2003. At actual rates, sales decreased 5 %. Operating income (EBIT) increased 8 % at constant currency and
decreased 4 % at actual rates. Net income grew significantly at both constant currency and actual rates (+38 % and +24 % respectively).


Group outlook for the full year 2003
In the first nine months the health care systems were affected by postponed investments, cost-cutting measures and price pressure. In this difficult environment,
Fresenius Group achieved further significant improvements in sales and earnings at constant currency. For the full-year 2003 expectations for a mid single digit sales growth remain unchanged.

The largest business segments, Fresenius Medical Care and Fresenius Kabi, both performed very well during the first nine months of 2003. The Group expects this trend to continue in the fourth quarter. Fresenius ProServe's performance during the third quarter 2003 was marked by declining bed utilization rates in the German hospitals, project delays and a general investment caution of the pharma industry. Fresenius ProServe plans to focus its business operations to improve profitability. In addition to the restructuring program initiated in the second quarter for Wittgensteiner Kliniken AG (WKA), Fresenius ProServe will take measures in the current year to reorganize its health care project and Pharma Industry businesses.
The Managing Board maintains its forecast that, at constant currency and before one-time expenses for the WKA program and the reorganization of the health care project and Pharma Industry businesses, the Group's net income will increase at a double-digit rate. Forecast is based on the continued strong performance of Fresenius
Medical Care and Fresenius Kabi. After one-time expenses, it is expected that net income at constant currency will show a high single to low double digit rate decrease compared to previous year.


Sales
In the first nine months of 2003, Fresenius Group increased sales at constant currency 6 %. Organic growth was 4 %. Acquisitions contributed 2 %. At actual rates,
consolidated sales of € 5,254 million were 5 % lower than previous year's figure (Q1-3/2002: € 5,552 million). Exchange rates fluctuations had a 11 % negative impact on sales, mainly due to the 20 % weaker US dollar.

In all regions, Fresenius expanded its business successfully and increased sales at constant currency. The strongest sales were in North America with 50 % and Europe with 38 % of total sales. Asia-Pacific had 7 %, Latin America 4 % and other regions a total of 1 %. Despite the continuously difficult economic climate in Latin America, sales showed a significant growth of 31 % at constant currency.

Sales contribution of the business segments:

 

Fresenius Medical Care's reduced proportion of sales is mainly a result of currency translation effects.

Earnings
At constant currency, earnings before interest, income taxes, depreciation and amortization (EBITDA) increased 5 % compared to previous year. Currency translation effects also had a negative impact on Group earnings. At actual rates, EBITDA for the first nine months of 2003 was € 825 million, 6 % below previous year's € 874 million. EBIT increased 8 % at constant currency but decreased 4 % at actual rates to € 590 million (Q1-3/2002: € 617 million).

Fresenius Kabi contributed the largest share to the EBIT increase (+ € 42 million or +65 % compared to previous year). This is thanks to the successful implementation of restructuring measures in 2001 and 2002 and a strong operating performance in the regions.

Net interest expense for the first nine months of 2003 improved to € -186 million compared to € -230 million for the same period in 2002.

In the following table previous year's consolidated statement of income has been adjusted according to Statement of Financial Accounting Standards No. 145 which stipulates that, as of January 1, 2003, the gains and losses from the early redemption of financial instruments are no longer classified as extraordinary. This rule requires the reclassification of € 21 million of expenses before taxes (€ 13 million after taxes and related minority interests of € 8 million) for the early redemption of Fresenius Medical Care's trust preferred securities in February 2002 which were to come due in 2006.

The decrease in net interest expense is equally attributable to the change in US GAAP and to currency translation effects of US dollar into euro, since a large portion of Fresenius Medical Care's bank loans are in US dollars.

The effective tax rate for the first nine month of 2003 was 39.1 % (Q1-3/2002: 38.5 %).

Minority interests decreased to € 141 million from € 153 million for the first nine months of 2002, solely due to exchange rate effects. 96 % of minority interests relate to Fresenius Medical Care.

Net income increased 24 % to € 105 million, compared to € 85 million for the first nine months of 2002. At constant currency, the increase was with 38 % even more significant.

Earnings per ordinary share were € 2.55, up from € 2.06 in the same period of 2002. Earnings per preference share were € 2.57, up from € 2.08 in 2002. This was an increase of 24 % (at constant currency: 38 %).


Capital expenditure and acquisitions
Fresenius spent € 247 million in the first nine months of 2003 on capital expenditure and acquisitions. (Q1-3/2002: € 393 million). This reduction was in line with Company planning. In 2001 and 2002 Fresenius made significant investments to increase the capacity of production plants and further market expansion.

73 % of total investments was for capital expenditure, 27 % was for acquisitions.
Capital expenditure was € 180 million, 36 % less than in the same period of 2002.
Acquisitions were € 67 million compared to € 110 million in the first nine month of 2002.

Acquisitions related mainly to the purchase of dialysis clinics by Fresenius Medical Care. Capital expenditure was mainly used to equip new dialysis clinics, to expand and modernize existing clinics and to expand and optimize production plants.

Fresenius invested 55 % in Europe, 36 % in North America and 9 % in other regions.


Cash flow
Operating cash flow and free cash flow for the first nine months of 2003 were at record levels. Operating cash flow increased 11 % to € 565 million (Q1-3/2002: € 507 million). This excellent figure resulted from improved receivables management. Free cash flow before acquisitions and dividends increased 47 % to € 399 million (Q1-3/2002: € 272 million). This increase was also due to the significantly lower investment volume of € 166 million (Q1-3/2002: € 235 million). Free cash flow after acquisitions (€ 61 million) and dividends (€ 114 million) tripled to € 224 million (Q1-3/2002: € 72 million). In the third quarter 2003, operating cash flow was € 254 million (Q3 2002: € 211 million) and free cash flow before acquisitions and dividends was € 191 million (Q3 2002: € 118 million), again record levels for a third quarter.


Asset, liability and equity structure
Balance sheet total of the Group was € 8,817 million, a decrease of € 98 million (1 %) compared to December 31, 2002 (€ 8,915 million). This was due to currency effects. At constant currency, balance sheet total increased by 5 %.

Shareholders' equity (including minority interests) was € 3,264 million as of September 30, 2003 compared to € 3,369 million as of December 31, 2002, a decrease of 3 % or € 105 million due to currency translation effects. At constant currency there was an increase of 4 %. Equity ratio (including minority interests) was 37.0 % as of September 30, 2003 compared to 37.8 % as of December 31, 2002.

Bank loans, Eurobonds, commercial paper and trust preferred securities were € 3,181 million as of September 30, 2003 compared to € 3,283 million as of December 31, 2002. The reduction was due to currency translation effects, partially offset by reduction in Fresenius Medical Care's receivables securitization program.

Debt, including liabilities from the receivables securitization program of Fresenius Medical Care decreased from € 3,707 million as of December 31, 2002 to € 3,335
million as of September 30, 2003. The reduction was almost equally achieved from the strong free cash flow as well as currency translation effects.

The key ratio net debt/EBITDA improved substantially as of September 30, 2003 to 2.8 (December 31, 2002: 3.0). The Group is therefore well on track to achieve its target of 2.5 in 2005.


Employees
As of September 30, 2003, Fresenius Group had 65,941 employees worldwide. This was 4 % or 2,303 people more than at the end of 2002.



The Business Segments

Fresenius Medical Care
Fresenius Medical Care AG is the world's leading provider of products and services for patients with chronic kidney failure. As of September 30, 2003, Fresenius Medical Care provided treatment to around 117,600 patients in 1,540 dialysis clinics, 7 % more than at the same date last year.

Fresenius Medical Care increased sales for the first nine months of 2003 by 9 % to US$ 4,075 million (Q1-3/2002: US$ 3,726 million). At constant currency, the increase was 6 %. Fresenius Medical Care had 70 % of sales in North America and 30 % elsewhere.
Both, dialysis products and dialysis care had increased sales. Sales of dialysis products increased 14 % to US$ 1,134 million (Q1-3/2002: US$ 991 million). The international business in particular showed strong growth rates. The number of dialysis treatments increased 9 % to 13.2 million, increasing sales by 8 % to US$ 2,941 million (Q1-3/2002: US$ 2,735 million). Dialysis care sales and dialysis products sales were 72 % and 28 % of sales respectively.

Fresenius Medical Care improved EBIT 8 % to US$ 550 million (Q1-3/2002: US$ 511 million). Net income increased 14 % to US$ 237 million.
For the year 2003, Fresenius Medical Care confirms its outlook and expects mid single digit revenue growth (in constant currency) and net income growth in the high single digit to low double digit range. As mentioned in the first quarter of 2003, Fresenius Medical Care expects to achieve net income growth for the full year 2003 near the lower end within the predicted range.
As a result of the weaker US dollar against the euro, Fresenius Medical Care's sales of US$ 4,075 million (€ 3,665 million) were 9 % lower than the € 4,018 million recorded in the first nine months of 2002 after conversion to euros. EBIT decreased 10 % to € 494 million (Q1-3/2002: € 551 million), also due to currency translation effects.

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


Fresenius Kabi
Fresenius Kabi focuses on nutrition and infusion therapy of patients, many of whom are seriously ill, in hospital and the ambulatory environment, as well as on infusion and transfusion technology.

Fresenius Kabi's sales for the first nine months of 2003 were € 1,082 million, 1 % above the level of € 1,068 million recorded in the same period last year. Currency translation had a negative impact of –5 % on sales. Fresenius Kabi achieved strong organic sales growth of 7%, in line with the full-year target. Divestments (the sale of the company ProReha effective August 1, 2002) reduced sales by –1 % percentage point.

The hospital business generated sales of € 865 million (Q1-3/2002: € 843 million; +3 %). The Ambulatory Care business had sales of € 217 million (Q1-3/2002: € 225 million).

EBIT for the first nine months of 2003 increased to € 107 million, well ahead of previous year's figure of € 65 million. The EBIT margin for the first nine months of 2003 was 9.9 %, well above the margin achieved in the same period last year (6.1 %). Next to the good development in the operating business, cost optimization measures had a positive impact on earnings. These improvements will continue to make a significant contribution to future earnings growth.

This positive development is based on the sustainable success of Fresenius Kabi's products in the European, Asian-Pacific and Latin American markets. In Europe, Fresenius Kabi was able to achieve a good 4 % organic sales growth despite cost saving measures and price pressure in the first nine months of 2003. In other, strong growing regions, Fresenius Kabi achieved double-digit organic growth rates.

For the full year 2003, Fresenius Kabi confirms its outlook of achieving organic sales growth of 6 to 7 %. EBIT for the full year 2003 is expected to be in the range of € 140 million.

 

* The previous year's figures have been adjusted to include the newly-assigned activities of the business segment Fresenius HemoCare (transfusion and infusion technology) effective January 1, 2003.

 

Fresenius ProServe
Fresenius ProServe offers services for the international healthcare systems. The range of services includes hospital management, the planning and construction of hospitals as well as of pharmaceutical and medical-technical production plants.

Fresenius ProServe increased sales 11 % to € 526 million for the first nine months of 2003 (Q1-3/2002: € 475 million). The Healthcare and Pharma Industry businesses achieved 86 % and 14 % of sales respectively.

Healthcare sales grew by 20 % to € 452 million (Q1-3/2002: € 377 million). Sales generated by services increased 30 % to € 361 million (Q1-3/2002: € 277 million). This was mainly due to the first-time consolidation of newly-acquired hospitals (mainly Klinikum Rhein-Sieg in Siegburg). Healthcare sales from project business, at € 91 million, were 10 % lower than in the same period last year (Q1-3/2002: € 100 million) due to project delays. Pharma Industry sales of € 74 million were 24 % lower than in the same period last year due to a general investment caution of the pharma industry.

Fresenius ProServe's EBIT for the first nine months of 2003 was € 5 million, after one-time expenses of € 8 million (Q1-3/2002: 16 million). The company announced in August 2003 a program at WKA to reduce costs and improve profitability. The program has been implemented in line with plan.
A bed utilization rate of 80 % in the third quarter 2003, compared to one of 81% in the last quarter, shows that bed utilization in acute and post-acute hospitals has not yet seen a turnaround. In addition, delayed project business orders had a negative impact on quarterly earnings.

A primary task is to improve Fresenius ProServe's profitability. In addition to the WKA program, further reorganization measures are currently being taken for the health care project and Pharma Industry businesses and will be implemented during the current year. This includes focusing Pharma Industry business regionally on selected key markets and the related closure of business sites. In addition, the ProServe subsidiary hospitalia international, which is active in the hospital project business such as the subsidiary VAMED, will operate in future under the umbrella of VAMED. This will lead to advantages from a joint market approach and from cost savings in administration. The reorganization will lead to one-time expenses of approximately € 15 million, mainly in connection with the write-down of the carrying amount of assets. These expenses will incur in 2003.

For the full year 2003, Fresenius ProServe expects EBIT before one-time expenses to be in the range of € 15 million. After one-time expenses, Fresenius ProServe anticipates that it will report a negative EBIT of approximately € 20 million.



Note: The full quarterly report including notes will be available from mid November on our website www.fresenius-ag.com under Investor Relations / Publications.

Fresenius will exercise the call option for its 5.5% Senior Notes due 2016 (ISIN: XS0240919372, WKN: A0GMAY). The aggregate principal amount of €650 million will be redeemed on February 7, 2013 at a price of 100.916% plus accrued and unpaid interest.

The redemption will be financed initially by utilizing existing credit lines, and from the end of June by drawings under the Senior Secured Credit Agreement arranged in December 2012. At current rates, this will result in annual interest savings of approximately €20 million. For 2013, these savings will be partially offset by one-time expenses of around €14 million in connection with the early redemption.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA OR JAPAN.

 

---

 

Fresenius intends to issue €500 million of senior unsecured notes with a maturity of 7 years.

The proceeds will be used to refinance the €500 million 5.0% senior notes due January 2013 (ISIN: XS0240918218, WKN: A0GMAX). Given the currently favorable market conditions, Fresenius expects to reduce its interest expense as a result of the refinancing.

Fresenius Finance B.V., a wholly owned subsidiary of Fresenius SE & Co. KGaA, will issue and offer the senior notes through a private placement to institutional investors.

Fresenius has applied to the Luxembourg Stock Exchange to admit the senior notes to trading on its regulated market.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA OR JAPAN.

---

Fresenius successfully placed €500 million of senior unsecured notes. The notes have a coupon of 2.875%, a maturity of seven years and were issued at par. The proceeds will be used to refinance the €500 million senior notes due January 2013. The offering was extremely well received by investors and substantially oversubscribed.

Fresenius Finance B.V, a wholly owned subsidiary of Fresenius SE & Co. KGaA, issued and offered the senior notes through a private placement to institutional investors. Fresenius has applied to the Luxembourg Stock Exchange to admit the senior notes to trading on its regulated market.

Fiscal year 2012:
• Sales¹ €19.3 billion (+18% at actual rates, +13% in constant currency)
• EBIT² €3.1 billion (+20% at actual rates, +14% in constant currency)
• Net income³ €938 million (+22% at actual rates, +17% in constant currency)
• 16% dividend increase to €1.10 per share proposed

 

Positive Group outlook for 2013:
• Sales growth of 7% to 10% in constant currency
• Net income growth of 7% to 12% in constant currency
• Fresenius expects to reach 2014 Group net income target of more than €1 billion one year ahead of plan⁴.

Ulf Mark Schneider, CEO of Fresenius, said: "Fresenius has a proven track record of dynamic growth, with an eightfold increase in net income over the last decade. In its centennial year, our growth story continued with new records for sales and earnings. We saw strong organic growth, double-digit earnings increases and significant acquisitions in all our business segments. The pursuit of medical progress with affordable high-quality products and services and helping seriously ill people is at the heart of everything we do. We will continue to pursue this goal as we enter our second century with confidence and commitment."

¹ 2011 sales were adjusted according to a U.S. GAAP accounting change. The sales adjustment of -€161 million solely relates to Fresenius Medical Care North America.² 2012 adjusted for one-time costs of €6 million (non-financing expenses) related to the offer to RHÖN-KLINIKUM AG shareholders and other one-time costs of €86 million at Fresenius Medical Care.³ Net income attributable to shareholders of Fresenius SE & Co. KGaA – adjusted for a non-taxable investment gain of €34 million and other one-time costs of €17 million at Fresenius Medical Care and for one-time costs of €29 million related to the offer to RHÖN-KLINIKUM AG shareholders. 2011 adjusted for the effects of mark-to-market accounting of the Mandatory Exchangeable Bonds and the Contingent Value Rights.⁴ Net income attributable to shareholders of Fresenius SE & Co. KGaA; 2013 adjusted for one-time integration costs of Fenwal, Inc. (~€ 50 million pre tax); 2012 adjusted as per footnote 3

New Dividend Policy

The Management Board will propose to the Supervisory Board a dividend of €1.10 per share (2011: €0.95). The total dividend distribution is expected to be €196 million. This marks our 20th consecutive dividend increase.

The 16% increase reflects our new dividend policy, which aligns dividend with earnings per share growth (before special items) and broadly maintains a pay-out ratio of 20% to 25%.

 

Positive Group outlook 2013

For 2013, Fresenius projects sales growth of 7% to 10% in constant currency. Net income¹ is expected to increase by 7% to 12% in constant currency.

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

The net debt/EBITDA ratio is projected to be at the lower end of the targeted range of 2.5 to 3.0 by the end of 2013.  

¹ Net income attributable to shareholders of Fresenius SE & Co. KGaA; 2013 adjusted for one-time integration costs of Fenwal, Inc.  (~€ 50 million pre tax); 2012 adjusted for a non-taxable investment gain and other one-time costs at Fresenius Medical Care as well as for one-time costs related to the offer to RHÖN-KLINIKUM AG shareholders.

 

Continued strong sales growth

Group sales increased by 18% (constant currency: 13%) to €19,290 million (2011¹: €16,361 million), fully in line with the June 2012 guidance increase. Organic sales growth was 6%. Acquisitions contributed a further 8%. Divestitures reduced sales growth by 1%. Currency translation had a positive effect of 5%. This is mainly attributable to the strengthening of the U.S. dollar against the euro by an average of 8% in 2012 compared to the previous year.

Sales in the business segments developed as follows:

Organic sales growth was 5% in North America and 4% in Europe. In Asia-Pacific organic sales growth reached 12%. In Latin America organic sales growth was 22%, driving sales to more than €1 billion for the first time. The sales decrease in Africa was due to the volatility in Fresenius Vamed's project business.

¹ 2011 sales were adjusted according to a U.S. GAAP accounting change. The sales adjustment of -€161 million solely relates to Fresenius Medical Care North America

Excellent earnings growth

Group EBITDA¹ grew by 19% (constant currency: 13%) to €3,851 million (2011: €3,237 million). Group EBIT¹ increased by 20% (constant currency: 14%) to €3,075 million (2011: €2,563 million). The EBIT margin improved by 20 basis points to 15.9% (2011: 15.7%).

Group net interest was -€666 million (2011: -€531 million), primarily driven by higher incremental debt due to acquisition financing and currency translation effects. Interest expense in the fourth quarter included a special charge related to the early refinancing of the Company's Credit Agreement.

The other financial result of -€35 million comprises one-time costs related to the offer to RHÖN-KLINIKUM AG shareholders, primarily related to financing commitments.

The Group tax rate² improved to 29.1% (2011: 30.7%).

Noncontrolling interest increased to €769 million (2011: €638 million), of which 92% was attributable to the noncontrolling interest in Fresenius Medical Care.

Group net income³ increased by 22% (constant currency: 17%) to €938 million (2011: €770 million). Earnings per share³ improved by 15% to €5.42 (2011: €4.73). The average number of shares increased to approx. 173 million in 2012, primarily due to capital increase in May.

A reconciliation to adjusted earnings according to U.S. GAAP can be found on page 16 of this Investor News.

Group net income attributable to shareholders of Fresenius SE & Co. KGaA was €926 million or €5.35 per share including the non-taxable investment gain and other one-time costs at Fresenius Medical Care as well as one-time costs related to the offer to RHÖN-KLINIKUM AG shareholders.

¹ Adjusted for one-time costs of €6 million (non-financing expenses) related to the offer to RHÖN-KLINIKUM AG shareholders and other one-time costs of €86 million at Fresenius Medical Care.² Adjusted for the non-taxable investment gain and one-time costs at Fresenius Medical Care and for one-time costs related to the offer to RHÖN-KLINIKUM AG shareholders. 2011 adjusted for the effects of mark-to-market accounting of the Mandatory Exchangeable Bonds and the Contingent Value Rights.³ Net income attributable to shareholders of Fresenius SE & Co. KGaA – adjusted for a non-taxable investment gain of €34 million and other one-time costs of €17 million at Fresenius Medical Care and for one-time costs of €29 million related to the offer to RHÖN-KLINIKUM AG shareholders. 2011 adjusted for the effects of mark-to-market accounting of the Mandatory Exchangeable Bonds and the Contingent Value Rights.

 

Continued investment in growth

The Fresenius Group spent €1,007 million on property, plant and equipment (2011: €783 million). Acquisition spending was €3,172 million (2011: €1,612 million). This relates primarily to the acquisitions of Liberty Dialysis Holdings, Inc., Damp Group and Fenwal Holdings, Inc.

Excellent cash flow development

Operating cash flow increased by 44% to €2,438 million (2011: €1,689 million).

This was mainly driven by strong earnings growth and tight working capital management, especially regarding trade accounts receivable. The cash flow margin improved to 12.6% (2011: 10.3%). Net capital expenditure was €952 million (2011: €758 million).

Free cash flow before acquisitions and dividends increased by 60% to €1,486 million (2011: €931 million). Free cash flow after acquisitions and dividends was -€1,259 million (2011: -€748 million).

 

Solid balance sheet structure

The Group's total assets increased by 17% (constant currency: 18%) to €30,664 million (Dec. 31, 2011: €26,321 million). Current assets grew by 13% to €8,113 million (Dec. 31, 2011: €7,151 million). Non-current assets increased by 18% to €22,551 million (Dec. 31, 2011: €19,170 million), mainly due to acquisitions.

Total shareholders' equity increased by 21% to €12,758 million (Dec. 31, 2011: €10,577 million), mainly due to the excellent earnings development and the capital increase from May 2012. The equity ratio was 41.6% (Dec. 31, 2011: 40.2%).

Group debt grew by 13% to €11,028 million (Dec. 31, 2011: €9,799 million), due to acquisition financing. Net debt increased by 11% to €10,143 million (Dec. 31, 2011: €9,164 million). As of December 31, 2012, the net debt/EBITDA ratio¹ was 2.56 (Dec. 31, 2011: 2.83).

¹ Pro forma including Damp Group, Liberty Dialysis Holdings, Inc. and Fenwal Holding, Inc., adjusted for one-time costs of €6 million (non-financing expenses) related to the offer to RHÖN-KLINIKUM AG shareholders, and one-time costs of €86 million at Fresenius Medical Care.

 

Number of employees increases

As of December 31, 2012, the Fresenius Group increased the number of its employees by 13% to 169,324 (Dec. 31, 2011: 149,351), mainly due to acquisitions.

 

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's sales increased by 14% to €34.9 million (2011: €30.7 million).

Removab sales grew by 3% to €4.1 million (2011: €4.0 million). ATG Fresenius S sales increased by 15% to €30.8 million (2011: €26.7 million). Fresenius Biotech's EBIT was -€26 million (2011: -€30 million).

In December 2012, Fresenius announced the decision to discontinue its Fresenius Biotech subsidiary. The Company is in talks with several parties about a sale of Fresenius Biotech, while simultaneously assessing the equally viable option of continuing the immunosuppressive drug ATG-Fresenius S within the Fresenius Group. ATG-Fresenius S has been well established in the hospital market for decades, and is consistently profitable. Fresenius will divest the trifunctional antibody Removab (catumaxomab) business. Withdrawing from Removab will have a positive effect on Group earnings starting in 2013.

 

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, 2012, Fresenius Medical Care was treating 257,916 patients in 3,160 dialysis clinics.

• Strong sales growth of 10% and EBIT growth of 12%
• Excellent operating cash flow margin of 14.8%
• Outlook 2013: sales >US$14.6 billion; net income in the range of US$1.1 billion and US$1.2 billion

Sales increased by 10% to US$13,800 million (2011¹: US$12,571 million). Organic sales growth was 5%. Acquisitions contributed a further 8%. Divestitures reduced sales growth by 1%. Currency translation had a negative effect of 2%.

Sales in dialysis services increased by 13% (constant currency: 15%) to US$10,492 million (2011: US$9,283 million). Dialysis product sales grew by 1% (constant currency: 5%) to US$3,308 million (2011: US$3,288 million).

In North America sales grew by 14% to US$9,031 million (2011: US$7,926 million). Dialysis services sales grew by 16% to US$8,230 million (2011: US$7,113 million). Average revenue per treatment in the United States was US$355 (2011: US$348). Dialysis product sales were US$801 million (2011: US$813 million).

Sales outside North America ("International" segment) grew by 2% (constant currency: 9%) to US$4,740 million (2011: US$4,628 million). Sales in dialysis services increased by 4% (constant currency: 11%) to US$2,262 million (2011: US$2,170 million). Dialysis product sales grew by 1% to US$ 2,478 million (2011: US$2,458 million) at actual rates. In constant currency, dialysis product sales grew by 7%.

¹ 2011 sales were adjusted according to a U.S. GAAP accounting change. The sales adjustment of -US$224 million solely relates to Fresenius Medical Care North America.

² 2012 adjusted for other one-time costs of US$110 million related to the amendment of the agreement for Venofer and a donation to the American Society of Nephrology.

³ Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA; 2012 adjusted for a non-taxable investment gain of US$140 million and other one-time costs of US$71 million as per footnote 2

 

EBIT¹ increased by 12% to US$2,329 million (2011: US$2,075 million), partially due to special collection efforts for dialysis services performed in prior years. The EBIT margin increased to 16.9% (2011: 16.5%) primarily due to the improved EBIT margin in North America of 19.0% (2011: 18.1%). In the International segment the EBIT margin was 17.1% (2011: 17.4%).

Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA increased by 11% to US$1,187 million (2011: US$1,071 million). This includes a non-taxable investment gain of US$140 million related to the acquisition of Liberty Dialysis Holdings, Inc., including its 51% stake in Renal Advantage Partners, LLC (RAI), as well as other one-time costs of US$71 million after tax. The latter comprises the effects regarding the amendment of the agreement for Venofer and a donation to the American Society of Nephrology. Excluding these effects, net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA increased by 4% to US$1,118 million.

The operating cash flow increased by 41% to US$2,039 million (2011: US$1,446 million) , driven by ongoing excellent receivables management and including other one-time costs of US$71 million after tax. The cash flow margin improved to 14.8% (2011: 11.5%).

For 2013, Fresenius Medical Care expects sales to grow to more than US$14.6 billion. Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA is expected to be between US$1.1 billion and US$1.2 billion.

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

¹ 2012 adjusted for other one-time costs of US$110 million related to amendment of the agreement for Venofer and a donation to the American Society of Nephrology.

 

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 9%

• EBIT margin of 20.6% at all-time high – exceeding outlook

• Outlook 2013: Sales growth of 12% to 14% in constant currency;

EBIT margin of 19% to 20% excl. Fenwal and 18% to 19% incl. Fenwal

Sales increased by 15% to €4,539 million (2011: €3,964 million). Organic sales growth was 9%. Currency translation had an effect of 5%. Acquisitions contributed a further 1%.

Sales in North America increased by 23% to €1,236 million (2011: €1,002 million). Excellent organic growth of 11% was mainly supported by product launches and continued competitor supply constraints. In Europe sales grew by 7% (organic growth: 6%) to €1,953 million (2011: €1,826 million). In Asia-Pacific sales increased by 23% (organic growth: 13%) to €863 million (2011: €702 million). Sales in Latin America and Africa increased by 12% (organic growth: 14%) to €487 million (2011: €434 million).

EBIT grew by 16% to €934 million (2011: €803 million). EBIT growth was driven in particular by excellent earnings growth in North America and in emerging markets. The EBIT margin increased by 30 basis points to 20.6% (2011: 20.3%).

Net income¹ increased by 25% to €444 million (2011: €354 million).

¹ Net income attributable to shareholders of Fresenius Kabi AG

Fresenius Kabi's operating cash flow increased by 29% to €596 million (2011: €462 million). Incoming payments of overdue trade accounts receivable contributed to the strong increase. The cash flow margin reached 13.1% (2011: 11.7%). Cash flow before acquisitions und dividends increased to €357 million (2011: €289 million).

In December 2012, Fresenius Kabi successfully closed the acquisition of Fenwal Holdings, Inc.

Over the last three years, Fresenius Kabi achieved outstanding organic sales growth with CAGR of 10%, reaching the very top of its 7% to 10% mid-term target range. In 2013, Fresenius Kabi expects further significant growth supported by the full-year consolidation of Fenwal and continued organic growth in emerging markets and Europe. In North America, we expect the I.V. drug supply constraints to alleviate and competitors to re-enter the U.S. market for Propofol. Fresenius Kabi has been sole supplier for Propofol in the United States. since the end of March 2012. For 2013, Fresenius Kabi 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 Fenwal and of 18% to 19% including Fenwal. EBIT in constant currency is expected to exceed 2012 EBIT. The guidance includes expected one-time charges to remediate manufacturing issues following recent 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.

For the mid-term, Fresenius Kabi targets annual organic sales growth of 7% to 10% and an EBIT margin in the range of 18% to 21%. By 2015, the company expects sales to reach approx. €6 billion and EBIT to reach more than €1.1 billion.

Fresenius Kabi guidance adjusted for one-time integration costs of Fenwal, Inc. (~€50 million pre tax); also see Group guidance

 

Fresenius Helios

Fresenius Helios is on of the largest private hospital operators in Germany. HELIOS owns 72 hospitals, including six maximum care hospitals in Berlin-Buch, Duisburg, Erfurt, Krefeld, Schwerin and Wuppertal. HELIOS treats more than 2.9 million patients per year, thereof more than 770,000 inpatients, and operates more than 23,000 beds.

• Organic sales growth of 5% – at upper end of guidance

• EBIT of €322 million – exceeding outlook

• Outlook 2013: Organic sales growth of 3% to 5%; EBIT in the range of €360 to €380 million

Sales increased by 20% to €3,200 million (2011: €2,665 million). Organic sales growth was 5%, while acquisitions contributed 17% to sales growth. Divestitures reduced sales growth by 2%.

EBIT grew by 19% to €322 million (2011: €270 million). The EBIT margin was at previous year's level of 10.1% despite the consolidation of Damp Group and Duisburg.

Net income¹ increased by 25% to €203 million (2011: €163 million).

Sales of the established hospitals grew by 5% to €2,743 million. EBIT improved by 18% to €321 million. The EBIT margin increased to 11.7% (2011: 10.3%). Sales of the acquired hospitals (consolidation ≤1 year) were €457 million, EBIT was €1 million. Restructuring of these hospitals is on track.

In November 2012, Fresenius Helios announced that it had agreed to acquire a hospital in North-Rhine Westphalia with 2011 sales of approximately €20 million. HELIOS anticipates closing of the transaction at the end of the first or at the beginning of the second quarter 2013.

For 2013, Fresenius Helios expects to achieve organic sales growth of 3% to 5%. EBIT is projected to increase to between €360 million and €380 million.

¹ Net income attributable to shareholders of HELIOS Kliniken GmbH

Fresenius Helios targets sales of €4 billion to €4.25 billion by 2015, driven by organic growth and acquisitions.

One-time costs relating to the offer to the shareholders of RHÖN-KLINIKUM AG are included in the segment "Corporate/Other".

 

Fresenius Vamed

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

• Strong sales growth of 15% and EBIT growth of 16% - significantly exceeding outlook

• Order intake at all-time high

• Outlook 2013: Sales growth of 8% to 12%; EBIT growth of 5% to 10%

Sales increased by 15% to €846 million (2011: €737 million). Organic sales growth was 5%, acquisitions contributed a further 10% to sales growth. Sales in the project business increased by 2% to €506 million (2011: €494 million). Sales in the service business grew by 40% to €340 million (2011: €243 million). Acquisitions contributed 29% due to the acquisition of H.C. Hospital Consulting in Italy and the transfer of HELIOS' post-acute care clinic Zihlschlacht in Switzerland. Organic sales growth in the service business reached 11%.

EBIT improved by 16% to €51 million (2011: €44 million). The EBIT margin remained at the previous year's level of 6.0%. Net income¹ was €35 million (2011: €34 million).

Order intake increased by 9% to €657 million (2011: €604 million). In the fourth quarter, order intake rose to a quarterly all-time high of €335 million. This includes two contracts for the construction of health care facilities in Africa with a total order volume of €157 million. As of December 31, 2012, Fresenius Vamed's order backlog was at an all-time high of €987 million (Dec. 31, 2011: €845 million).

In 2013, Fresenius Vamed expects to achieve sales growth of 8% to 12%. EBIT is projected to increase by 5% to 10%.

Fresenius Vamed targets sales of €1 billion by 2014.

¹ Net income attributable to shareholders of VAMED AG

 

Analyst Meeting and Audio Webcast

As part of the publication of the results for fiscal year 2012, an analyst meeting will be held at the Fresenius headquarters in Bad Homburg on February 26, 2013 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.

 

Q1/2013:

 

• Sales €4.9 billion (+11% at actual rates, +12% in constant currency)
• EBIT¹ €696 million (+5% at actual rates, +6% in constant currency)
• Net income² €224 million (+12% at actual rates, +12% in constant currency)

 

Ulf Mark Schneider, CEO of Fresenius, said: "Fresenius is off to an excellent start in 2013. We improved on last year's outstanding sales and earnings and had the best first quarter in the Company's history. Fresenius Kabi and Fresenius Helios recorded particularly strong growth. Our first-quarter performance puts us on track to meet our goals for the full year 2013 and to exceed €1 billion in Group net income for the first time."

¹ 2013 adjusted for one-time integration costs of Fenwal Holdings, Inc. ("Fenwal") of €7 million

² Net income attributable to shareholders of Fresenius SE & Co. KGaA; 2013 adjusted for one-time integration costs of Fenwal of €5 million after tax; 2012 adjusted for an non-taxable investment gain of €30 million at Fresenius Medical Care

 

Group outlook 2013 fully confirmed

Based on the Group's performance in the first quarter, Fresenius fully confirms its full-year guidance. For 2013, Fresenius expects sales to increase by 7% to 10% and net income¹ to increase by 7% to 12%, both in constant currency.

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

The net debt/EBITDA ratio is projected to be at the lower end of the targeted range of 2.5 to 3.0 by the end of 2013.

 

Excellent sales growth

Group sales increased by 11% (12% in constant currency) to €4,890 million (Q1/2012: €4,419 million). Organic sales growth was 5%. Acquisitions contributed a further 8%. Divestitures reduced sales growth by 1%.

Sales in the business segments developed as follows:

Organic sales growth was 6% in North America and 3% in Europe. In Latin America (15%) and Africa (24%) organic sales growth was particularly strong. In Asia-Pacific organic sales growth was 6%.

¹ Net income attributable to shareholders of Fresenius SE & Co. KGaA; 2013 adjusted for one-time integration costs of Fenwal (~€50 million pre tax); 2012 adjusted for a non-taxable investment gain and certain one-time costs at Fresenius Medical Care as well as for one-time costs related to the offer to RHÖN-KLINIKUM AG shareholders

 

Continued strong earnings growth
Group EBITDA¹ grew by 7% (8% in constant currency) to €898 million (Q1/2012: €838 million). Group EBIT1 increased by 5% (6% in constant currency) to €696 million (Q1/2012: €661 million). The EBIT margin was 14.2% (Q1/2012: 15.0%).

Group net interest was -€163 million (Q1/2012: -€147 million), including €14 million one-time costs resulting from the early redemption of the Senior Notes originally due 2016.

The Group tax rate² improved to 29.1% (Q1/2012: 30.4%).

Noncontrolling interest was €154 million (Q1/2012: €158 million), of which 94% was attributable to the noncontrolling interest in Fresenius Medical Care.

Group net income³ increased by 12% (12% in constant currency) to €224 million (Q1/2012: €200 million). Earnings per share³ increased by 2% to €1.26 (Q1/2012: €1.23). As of March 31, 2013, Fresenius had 178,271,131 shares outstanding (March 31, 2012: 163,334,670).

Group net income attributable to shareholders of Fresenius SE & Co. KGaA including one-time integration costs for Fenwal was €219 million or €1.23 per share.

¹ 2013 adjusted for one-time integration costs of Fenwal of €7 million² 2013 adjusted for one-time integration costs of Fenwal; 2012 adjusted for a non-taxable investment gain at Fresenius Medical Care³ Net income attributable to shareholders of Fresenius SE & Co. KGaA; 2013 adjusted for one-time integration costs of Fenwal of €5 million after tax; 2012 adjusted for a non-taxable investment gain of €30 million at Fresenius Medical Care

 

Continued investment in growth

The Fresenius Group spent €179 million on property, plant and equipment (Q1/2012: €151 million). Acquisition spending was €79 million (Q1/2012: €1,927 million).

Continued strong operating cash flow
Operating cash flow was €444 million (Q1/2012: €538 million). The cash flow margin reached 9.1% (Q1/2012: 12.2%). Net capital expenditure increased to €188 million (Q1/2012: €152 million). Free cash flow before acquisitions and dividends was €256 million (Q1/2012: €386 million). Free cash flow after acquisitions and dividends increased to €229 million (Q1/2012: -€1,096 million).

 

Solid balance sheet structure
The Group's total assets increased by 2% (flat in constant currency) to €31,311 million (Dec. 31, 2012: €30,664 million). Current assets grew by 2% to €8,267 million (Dec. 31, 2012: €8,113 million). Non-current assets increased by 2% to €23,044 million (Dec. 31, 2012: €22,551 million).

Total shareholders' equity increased by 4% to €13,298 million (Dec. 31, 2012: €12,758 million). The equity ratio increased to 42.5% (Dec. 31, 2012: 41.6%).

Group debt was €11,024 million (Dec. 31, 2012: €11,028 million). Net debt was €10,174 million (Dec. 31, 2012: €10,143 million). As of March 31, 2013, the net debt/EBITDA ratio was 2.57¹ (Dec. 31, 2012: 2.56²).

¹ Pro forma including Fenwal; adjusted for one-time costs of €6 million (non-financing expenses) related to the offer to RHÖN-KLINIKUM AG shareholders; adjusted for one-time costs of €86 million at Fresenius Medical Care and one-time integration costs of Fenwal of €7 million² Pro forma including Damp Group, Liberty Dialysis Holdings, Inc. and Fenwal, adjusted for one-time costs of €6 million (non-financing expenses) related to the offer to RHÖN-KLINIKUM AG shareholders, and one-time costs of €86 million at Fresenius Medical Care

 

Number of employees increases

As of March 31, 2013, the Fresenius Group increased the number of its employees by 1% to 171,764 (Dec. 31, 2012: 169,324), mainly due to acquisitions.

 

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's sales increased by 2% to €8.3 million (Q1/2012: €8.1 million). Removab sales were €0.7 million (Q1/2012: €1.1 million). ATG Fresenius S sales increased by 9% to €7.6 million (Q1/2012: €7.0 million). Fresenius Biotech's EBIT was -€3 million (Q1/2012: -€6 million).

In December 2012, Fresenius announced the decision to discontinue its Fresenius Biotech subsidiary. The Company is in talks with several parties about a sale of Fresenius Biotech, while simultaneously assessing the equally viable option of continuing the immunosuppressive drug ATG-Fresenius S within the Fresenius Group. ATG-Fresenius S has been well established in the hospital market for decades, and is consistently profitable. Fresenius will divest the trifunctional antibody Removab (catumaxomab) business. Withdrawing from Removab will have a positive effect on Group earnings starting in 2013.

  

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 March 31, 2013, Fresenius Medical Care was treating 261,648 patients in 3,180 dialysis clinics.

• Strong growth in dialysis services
• One-time effects drive slight EBIT decrease
• 2013 outlook confirmed

Sales increased by 7% (7% in constant currency) to US$3,464 million (Q1/2012: US$3,249 million). Organic sales growth was 4%. Acquisitions contributed a further 4%. Divestitures reduced sales by 1%.

Sales in dialysis services increased by 8% (9% in constant currency) to US$2,678 million (Q1/2012: US$2,478 million). Dialysis product sales grew by 2% (2% in constant currency) to US$786 million (Q1/2012: US$771 million).

In North America sales grew 9% to US$2,287 million (Q1/2012: US$2,105 million). Dialysis services sales grew by 10% to US$2,104 million (Q1/2012: US$1,918 million), although the quarter had two dialysis days less. Average revenue per treatment for US services increased to US$359 (Q1/2012: US$353). Dialysis product sales were US$183 million (Q1 2012: US$187 million).

Sales outside North America ("International" segment) grew by 3% (4% in constant currency) to US$1,169 million (Q1/2012: US$1,136 million). Sales in dialysis services increased by 3% to US$574 million (Q1/2012: US$560 million). Dialysis product sales grew by 3% to US$595 million (Q1/2012: US$576 million).

EBIT decreased by 2% to US$493 million (Q1/2012: US$503 million). The EBIT margin was 14.2% (Q1/2012: 15.5%). The operating margin for North America decreased from 16.5% to 16.1%, impacted by higher personnel expenses and two dialysis days less as compared to the first quarter 2012. The operating margin in the International segment decreased from 17.2% to 15.7%, mainly due to special charges related to the devaluation of the Venezuelan Bolivar.

Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA decreased by 8% to US$225 million (Q1/2012¹: US$244 million).

The operating cash flow decreased by 34% to US$315 million (Q1/2012 US$481 million. The cash flow margin was 9.1% (Q1/2012: 14.8%).

The company 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$1.2 billion in 2013. As previously disclosed, the range of the net income guidance considers the U.S. government reversing the effect of sequestration for the calendar year. If this takes place it represents approximately US$45 million in net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA. It is possible that the U.S. government may modify all or a portion of this but the likelihood of this diminishes as the year progresses.

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

¹ Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA; Q1/2012 adjusted for a non-taxable investment gain of US$127 million related to the acquisition of Liberty Holdings, Inc.

 

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.

• Strong organic sales growth of 7%
• EBIT margin of 18.8% (incl. Fenwal) at upper end of guidance
• 2013 outlook fully confirmed

Sales increased by 15% (17% in constant currency) to €1,260 million (Q1/2012: €1,092 million). Organic sales growth was 7%, well above the full year guidance of 3% to 5%. Acquisitions contributed 11%, while divestitures reduced sales by 1%.

Sales in Europe grew by 6% (organic growth: 2%) to €517 million (Q1/2012: €487 million). Sales in North America increased by 37% to €401 million (Q1/2012: €292 million), primarily driven by the first-time consolidation of Fenwal. Strong organic growth of 14% was mainly supported by product launches and competitors facing continued supply constraints. In Asia-Pacific sales increased by 12% (organic growth: 9%) to €223 million (Q1/2012: €199 million). Sales in Latin America/Africa increased by 4% (organic growth: 9%) to €119 million (Q1/2012: €114 million). Growth in the first quarter 2013 compares to an exceptionally strong Q1/2012 base, posting 8% organic sales growth in Europe, 20% in Asia-Pacific and 15% in Latin America/Africa.

EBIT grew by 10% to €237 million (Q1/2012: €215 million), driven in particular by excellent earnings growth in North America. The EBIT margin of 18.8% was at the upper end of full-year guidance. Excluding Fenwal, the EBIT margin was 20.0% (Q1/2012: 19.7%).

The first quarter 2013 includes provisions built for expected one-time charges to remediate manufacturing issues following FDA audits at the Grand Island, USA, and Kalyani, India, facilities. These slightly exceed the gain resulting from the sale of the respiratory homecare business in France.

Net income¹ increased by 21% to €119 million (Q1/2012: €98 million).

Fresenius Kabi's operating cash flow increased by 42% to €132 million (Q1/2012: €93 million). The cash flow margin increased to 10.5% (Q1/2012: 8.5%). Cash flow before acquisitions and dividends improved to €76 million (Q1/2012: €57 million).

The integration of Fenwal progressed as planned with related first quarter costs of €7 million pre-tax.

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 Fenwal and of 18% to 19% including Fenwal. EBIT in constant currency is expected to exceed 2012 EBIT. The guidance includes expected 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.

¹ Net income attributable to shareholders of Fresenius Kabi AGFresenius Kabi guidance adjusted for one-time integration costs of Fenwal (~€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.

• Strong organic sales growth of 5% at the upper end of guidance
• EBIT margin increase by 70 basis points to 10.3%
• 2013 outlook fully confirmed

Sales increased by 18% to €841 million (Q1/2012: €710 million). Organic sales growth was 5%, acquisitions contributed 14%. Divestitures reduced sales growth by 1%.

EBIT grew by 28% to €87 million (Q1/2012: €68 million). The EBIT margin improved by 70 basis points to 10.3% (Q1/2012: 9.6%).

Net income increased by 37% to €56 million (Q1/2012: €41 million).

Sales of the established hospitals grew by 5% to €739 million. EBIT improved by 20% to €83 million. The EBIT margin increased to 11.2% (Q1/2012: 9.8%). Sales of the acquired hospitals (consolidation <1 year) were €102 million, EBIT was €4 million.

In April 2013, Fresenius Helios completed the acquisition of the hospital in Wipperfuerth, North-Rhine Westphalia, announced in November 2012. The hospital was consolidated as of January 1, 2013. 2011 sales were €20 million.

Fresenius Helios fully confirms its outlook for 2013. The company projects organic sales growth of 3% to 5% and EBIT in the range of €360 million to €380 million.

¹ Adjusted for post-acute care clinic Zihlschlacht transferred to Fresenius Vamed

² Net income attributable to shareholders of HELIOS Kliniken GmbH

 

Fresenius Vamed

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

• Excellent organic sales growth of 10%
• EBIT in line with expectations
• 2013 outlook fully confirmed

Sales increased by 23% to €184 million (Q1/2012: €149 million). Organic sales growth was 10%, acquisitions contributed a further 13%. Sales in the project business increased by 6% to €82 million (Q1/2012: €77 million). Sales in the service business grew by 42% to €102 million (Q1/2012: €72 million).

EBIT was €5 million (Q1/2012: €5 million). The EBIT margin reached 2.7% (Q1/2012: 3.4%).

Net income² was €3 million (Q1/2012: €4 million).

Order intake was €93 million (Q1/2012: €104 million), including a €48 million turnkey project for a diagnostic center in Russia. As of March 31, 2013, Fresenius Vamed's order backlog was €998 million (Dec. 31, 2012: €987 million).

Fresenius Vamed fully confirms its outlook for 2013 and expects to achieve sales growth of 8% to 12%. EBIT growth is projected in the range of 5% to 10%.

¹ Adjusted for post-acute care clinic Zihlschlacht² Net income attributable to shareholders of Vamed AG

 

Analyst-/Investor Conference Call

As part of the publication of the results for the first quarter of 2013, a conference call will be held on April 30, 2013 at 2 p.m. CEST (8 a.m. EDT). 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 has sold Fresenius Biotech to the Fuhrer family, owners of Neopharm, Israel's second-largest pharmaceutical company. The transaction was closed June 28 and includes both products Removab and ATG-Fresenius S.

In December 2012, Fresenius had announced to focus on its four established business segments Fresenius Medical Care, Fresenius Kabi, Fresenius Helios and Fresenius Vamed, which offer significant growth opportunities.

Ulf Mark Schneider, CEO of Fresenius, said: "The divestiture underlines our strong commitment to focused growth in our four core business segments. We are delighted that our biotechnology business will be in the capable hands of Neopharm, a company with entrepreneurial vision and an outstanding track record in the healthcare field."

David Fuhrer, Chairman and CEO of Neopharm, said: "The acquisition represents a cornerstone in our strategic objective to transform Neopharm Group into a multinational fully-integrated bio-pharmaceutical company. Our objective is to establish Fresenius Biotech as an independent, rapidly-growing, innovative global player which is committed to bring hope to patients suffering from rare, life-threatening diseases."

The parties agreed not to disclose financial details of the transaction. The sale of Fresenius Biotech will have a positive effect on Group earnings starting July 2013.