H1/2013:

• Sales €10.0 billion (+8% at actual rates, +9% in constant currency)
• EBIT¹ €1.4 billion (+1% at actual rates, +2% in constant currency)
• Net income² €482 million (+11% at actual rates, +12% in constant currency)

Ulf Mark Schneider, CEO of Fresenius, said: "The first-half results underline that our broad geographic presence and well-diversified business contribute to the company's success in a challenging environment. We are expanding our footprint in fast-growing emerging markets and work on promising growth initiatives. We remain highly confident of our company's growth prospects and raise 2013 Group earnings guidance."

¹ 2013 excluding one-time integration costs of Fenwal Holdings, Inc. ("Fenwal"). 2012 before one-time items.

² Net income attributable to shareholders of Fresenius SE & Co. KGaA; 2013 excluding one-time integration costs of Fenwal. 2012 before one-time items.

2013 Group earnings guidance raised

Based on the Group's positive growth prospects for the second half of 2013, Fresenius raises its full-year earnings guidance. The company now expects net income¹ to increase by 11% to 14% in constant currency. Previously, Fresenius expected net income growth of 7% to 12% in constant currency. The company fully confirms its sales guidance. Sales are expected to increase by 7% to 10% 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.

¹ Net income attributable to shareholders of Fresenius SE & Co. KGaA; 2013 excluding one-time integration costs of Fenwal (~ €50 million pre tax). 2012 before one-time items.

Sales growth of 9% in constant currency

Group sales increased by 8% (9% in constant currency) to €9,987 million (H1/2012: €9,236 million). Organic sales growth was 5%. Acquisitions contributed 5%. Divestitures reduced sales growth by 1%. Sales in the business segments developed as follows:

Organic sales growth was 5% in North America and 2% in Europe. In Latin America (13%) and Africa (30%) organic sales growth was particularly strong. In Asia-Pacific organic sales growth was 7%.

 

  

Net income growth of 12% in constant currency

Group EBITDA¹ grew by 3% (4% in constant currency) to €1,860 million (H1/2012: €1,806 million). Group EBIT¹ increased by 1% (2% in constant currency) to €1,448 million (H1/2012: €1,440 million). The EBIT margin of 14.5% (H1/2012: 15.6%) was impacted by a margin reduction at Fresenius Medical Care as well as the first-time consolidation of Fenwal. However, Q2/2013 margin of 14.8% already showed a distinct improvement over Q1/2013 (14.2%).

Group net interest remained at last year's level of -€313 million, including €14 million one-time costs resulting from the early redemption of the Senior Notes originally due 2016.

The Group tax rate¹ improved to 28.5% (H1/2012: 30.8%).

Noncontrolling interest was €330 million (H1/2012: €346 million), of which 94% was attributable to the noncontrolling interest in Fresenius Medical Care.

Group net income² increased by 11% (12% in constant currency) to €482 million (H1/2012: €434 million). Earnings per share2 increased by 5% to €2.70 (H1/2012: €2.58). In H1/2013, the weighted average number of shares outstanding was 178,306,694 (H1/2012: 167,986,059).

Group net income attributable to shareholders of Fresenius SE & Co. KGaA including one-time integration costs for Fenwal was €462 million or €2.59 per share.

¹ 2013 excluding one-time integration costs of Fenwal; 2012 before one-time items.

² Net income attributable to shareholders of Fresenius SE & Co. KGaA; 2013 excluding one-time integration costs of Fenwal. 2012 before one-time items.

 

 

 

 

Continued investment in growth

The Fresenius Group spent €425 million on property, plant and equipment (H1/2012: €388 million). Acquisition spending was €150 million (H1/2012: €2,097 million).

 

 

 

 

Cash flow development

Operating cash flow was €947 million (H1/2012: €1,136 million). The decrease relates primarily to a one-time payment by Fresenius Medical Care regarding the amendment of the supply agreement for the iron product Venofer in North America. In H1/2012, the operating cash flow was positively influenced by extraordinary payments on trade accounts receivable. The cash flow margin reached 9.5% (H1/2012: 12.3%). Net capital expenditure increased to €416 million (H1/2012: €358 million).

Free cash flow before acquisitions and dividends was €531 million (H1/2012: €778 million). Free cash flow after acquisitions and dividends increased to €92 million (H1/2012: -€1,154 million).

Solid balance sheet structure

The Group's total assets increased by 1% (1% in constant currency) to €30,973 million (Dec. 31, 2012: €30,664 million). Current assets grew by 2% to €8,257 million (Dec. 31, 2012: €8,113 million). Non-current assets increased by 1% to €22,716 million (Dec. 31, 2012: €22,551 million).

Total shareholders' equity increased by 2% to €12,955 million (Dec. 31, 2012: €12,758 million). The equity ratio was 41.8% (Dec. 31, 2012: 41.6%).

Group debt was €11,204 million (Dec. 31, 2012: €11,028 million). Net debt was €10,362 million (Dec. 31, 2012: €10,143 million). As of June 30, 2013, the net debt/EBITDA ratio was 2.63¹ (Dec. 31, 2012: 2.56²).

Number of employees increases

As of June 30, 2013, the Fresenius Group increased the number of its employees by 2% to 173,325 (Dec. 31, 2012: 169,324).

Fresenius Biotech

Fresenius Biotech's sales were €16.6 million (H1/2012: €16.6 million). The EBIT was -€6 million (H1/2012: -€11 million).

With effect of 28 June 2013, Fresenius sold Fresenius Biotech to the Fuhrer family, owners of Neopharm, Israel's second-largest pharmaceutical company. The transaction resulted in a negligible book gain and will have a positive effect on Group earnings, as the projected H2/2013 EBIT loss of ~€10 million will now not materialize.

¹ Pro forma including Fenwal; before one-time costs (non-financing expenses) related to the takeover offer to RHÖN-KLINIKUM AG shareholders, one-time costs at Fresenius Medical Care and one-time integration costs of Fenwal.

² Pro forma including Damp Group, Liberty Dialysis Holdings, Inc. and Fenwal; before one-time costs (non-financing expenses) related to the takeover offer to RHÖN-KLINIKUM AG shareholders, and one-time costs at Fresenius Medical Care.

 

Business Segments

Fresenius Medical Care

Fresenius Medical Care is the world's leading provider of services and products for patients with chronic kidney failure. As of June 30, 2013, Fresenius Medical Care was treating 264,290 patients in 3,212 dialysis clinics.

• Strong organic sales growth of 5%
• Excellent operating cash flow margin of 11.9%
• 2013 guidance confirmed

Sales increased by 6% (6% in constant currency) to US$7,076 million (H1/2012: US$6,677 million). Organic sales growth was 5%. Acquisitions contributed a further 3%. Divestitures reduced sales growth by 2%.

Sales in dialysis services increased by 7% (7% in constant currency) to US$5,421 million (H1/2012: US$5,082 million). Dialysis product sales grew by 4% (4% in constant currency) to US$1,655 million (H1/2012: US$1,594 million).

In North America, sales grew 7% to US$4,663 million (H1/2012: US$4,353 million). Dialysis services sales grew by 8% to US$4,261 million (H1/2012: US$3,960 million). Dialysis product sales increased by 2% to US$402 million (H1 2012: US$393 million).

Sales outside North America ("International" segment) grew by 4% (5% in constant currency) to US$2,397 million (H1/2012: US$2,307 million). Sales in dialysis services increased by 3% to US$1,161 million (H1/2012: US$1,122 million). Dialysis product sales grew by 4% to US$1,236 million (H1/2012: US$1,185 million).

EBIT decreased by 5% to US$1,038 million (H1/2012: US$1,092 million).

Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA decreased by 6% to US$488 million (H1/2012¹: US$520 million).

The operating cash flow was US$841 million (H1/2012: US$932 million). The reduction relates to an one-time payment regarding the amendment of the agreement for the iron product Venofer in North America (US$100 million). The cash flow margin was 11.9% (H1/2012: 14.0%).

Fresenius Medical Care expects revenue to grow to more than US$14.6 billion in 2013. In April 2013 general budget cuts in the U.S. (sequestration) were effectively introduced. The company does not assume that these will be revised this year. Therefore, the net income guidance range has been confirmed and has been substantiated for the potential impact from sequestration on the company's business performance. Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA is expected to be between US$1.1 billion and US$1.15 billion in 2013.

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; 2012 adjusted for a non-taxable investment gain of US$140 million.

Fresenius Kabi

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

• Organic sales growth of 4% on the back of strong H1/12
• EBIT margin excluding Fenwal at the upper end of guidance
• 2013 guidance fully confirmed

Sales increased by 13% (14% in constant currency) to €2,519 million (H1/2012: €2,234 million). Organic sales growth was 4%. Acquisitions contributed 11%, while divestitures reduced sales growth by 1%.

Sales in Europe grew by 6% (organic growth: 2%) to €1,030 million (H1/2012: €974 million). Sales in North America increased by 29% to €784 million (H1/2012: €609 million), primarily driven by the consolidation of Fenwal. Organic growth was 6%. In Asia-Pacific sales increased by 10% (organic growth: 6%) to €456 million (H1/2012: €415 million). Sales in Latin America/Africa increased by 6% (organic growth: 9%) to €249 million (H1/2012: €236 million). Growth in H1/2013 comes over an exceptionally strong H1/2012 base, posting 9% organic sales growth in North America, 6% in Europe, 15% in Asia-Pacific and 14% in Latin America/Africa.

EBIT¹ grew by 4% to €469 million (H1/2012: €452 million). EBIT includes one-time charges of €24 million to remediate manufacturing issues following FDA audits at the Grand Island, USA, and Kalyani, India, facilities. The EBIT margin was 18.6%. Excluding Fenwal, the EBIT margin of 19.8% (H1/2012: 20.2%) was at the upper end of the full-year guidance.

Net income² increased by 15% to €242 million (H1/2012: €210 million).

Fresenius Kabi's operating cash flow was €238 million (H1/2012: €288 million). Last year's operating cash flow was positively influenced by extraordinary payments on trade accounts receivable. The cash flow margin was 9.4% (H1/2012: 12.9%). Cash flow before acquisitions and dividends was €120 million (H1/2012: €199 million).

The integration of Fenwal progressed as planned with related one-time costs of €27 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 Excluding Fenwal integration costs.

² Net income attributable to shareholders of Fresenius Kabi AG.

Fresenius Kabi guidance excludes Fenwal integration costs (~€50 million pre tax); also see Group guidance.

Fresenius Helios

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

• Strong organic sales growth of 5%
• EBIT margin up 80 basis points to 10.6%
• 2013 earnings guidance raised – EBIT between €370 million and €395 million

Sales increased by 11% to €1,695 million (H1/2012: €1,525 million). Organic sales growth was 5%, acquisitions contributed 7%. Divestitures reduced sales growth by 1%.

EBIT grew by 19% to €179 million (H1/2012: €150 million). The EBIT margin increased to 10.6% (H1/2012: 9.8%).

Net income² increased by 31% to €119 million (H1/2012: €91 million).

Sales of the established hospitals grew by 5% to €1,588 million. EBIT improved by 15% to €175 million. The EBIT margin increased to 11.0% (H1/2012: 10.0%). Sales of the acquired hospitals (consolidation <1 year) were €107 million, EBIT was €4 million.

Fresenius Helios raises its 2013 full-year guidance to reflect the additional funding for German hospitals that will have a positive effect starting in August, 2013. The company now projects EBIT of €370 million to €395 million. Previously, it expected to reach an EBIT of €360 million to €380 million. Fresenius Helios fully confirms its sales outlook and projects organic sales growth of 3% to 5%.

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 12% at upper end of guidance
• Largest single turnkey project order in company history received
• 2013 guidance fully confirmed

Sales increased by 21% to €421 million (H1/2012: €348 million). Organic sales growth was 12%, acquisitions contributed 9%. Sales in the project business increased by 13% to €208 million (H1/2012: €184 million). Sales in the service business grew by 30% to €213 million (H1/2012: €164 million).

EBIT was €15 million (H1/2012: €14 million). The EBIT margin reached 3.6% (H1/2012: 4.0%).

Net income² was €9 million (H1/2012: €10 million).

Order intake increased to €311 million (H1/2012: €156 million). Fresenius Vamed received the largest single order in its history for a turnkey construction of an acute-care hospital in Austria, with a total volume of €173 million. As of June 30, 2013, the company's order backlog was €1,089 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 Zihlschlacht transferred from Fresenius Helios to Fresenius Vamed.

² Net income attributable to shareholders of Vamed AG.

Analyst-/Investor Conference Call

As part of the publication of the results for the first half of 2013, a conference call will be held on July 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 Kabi has formed a joint venture with PT Soho Global Health, a leading Indonesian pharmaceutical company, acquiring a 51 percent stake in its PT Ethica Industri Farmasi (EIP) subsidiary. This joint venture will focus on I.V. generic drugs and infusion solutions, and make Fresenius Kabi the market leader in I.V. generics in Indonesia.

Founded in 1946, EIP was the first manufacturer of injectable drugs in Indonesia. The company has a broad product portfolio and extensive experience and expertise in the production and marketing of generic drugs in the Indonesian market. EIP operates a production plant in Jakarta. The product portfolio of the future joint venture generated sales of more than €40 million last year.

Demand for health care in Indonesia has been growing steadily and is expected to accelerate in the coming years due to the implementation of a universal health care program, starting in 2014. As a result, almost the entire Indonesian population, about 245 million, is set to have access to modern health care by 2019¹, with the country's pharmaceutical market expected to double to €7.1 billion by 2018². The joint venture therefore provides an attractive platform for Fresenius Kabi's future growth in one of the fastest-growing emerging economies in Southeast Asia.

"Entering the joint venture brings us valuable local manufacturing capabilities and a strong market presence to provide patients and health care professionals in Indonesia with immediate access to high quality, affordable drugs," said Mats Henriksson, Chairman of the Management Board of Fresenius Kabi. "At the same time, we will establish a strong hub for further expanding our business in the Southeast Asian region. Our partner has many years of experience and a very good reputation serving the Indonesian health care market."

Tan Eng Liang, President Commissioner of PT Soho Global Health, said: "We are excited to be cooperating with Fresenius Kabi, because of the perfect fit between the companies. This joint venture gives us the possibility of strengthening our leading position in our home market as well as capturing the growth opportunities in the region in a fast and sustainable way. Together, we can boost the product pipeline with numerous launches in 2014 and beyond."

The parties agreed not to disclose the purchase price. Closing of the transaction is expected in the third quarter of 2013.

¹ Source: Ministry of Health, Republic of Indonesia, 2012
² IMS Market Prognosis Sep 2012, Dataview Date © IMS HEALTH

The acquisition will create substantial cost and growth synergies and make Fresenius Helios the largest private hospital operator in Europe, with 117 hospitals across Germany and nearly €5.5 billion* in sales.

Fresenius Helios has signed a binding agreement to purchase the majority of Rhön-Klinikum AG's hospitals, acquiring 43 hospitals with a total of approximately 11,800 beds as well as 15 outpatient facilities. On the basis of 2013 pro forma financials, the acquisition is expected to add sales of approximately €2 billion and an EBITDA of approximately €250 million.

The University Hospital Giessen and Marburg, the hospitals in Bad Neustadt (including the Rhön-Klinikum AG headquarters), Bad Berka and Frankfurt/Oder will remain with Rhön-Klinikum AG.

The acquisition will enable Fresenius Helios to significantly expand its hospital operations. By extending its presence across the country, Fresenius Helios will bring the majority of the German population within an hour's drive of a HELIOS hospital. With this platform, Fresenius Helios aims to develop innovative, integrated care offerings.

Fresenius Helios and Rhön-Klinikum AG are planning to enter into a cooperation agreement covering Rhön-Klinikum AG's remaining hospitals. These hospitals will become part of a network offering innovative care models across Germany. Public, non-profit and other private hospitals are welcome to join this network.

Ulf Mark Schneider, CEO of Fresenius, said: "This compelling transaction provides a unique opportunity to create a nationwide hospital network and to establish Europe's largest private hospital operator. The clinics we are acquiring from Rhön-Klinikum are a perfect strategic and geographic fit with Helios' existing portfolio and will allow us to develop innovative approaches to health care. We are looking forward to working with the employees of the newly acquired clinics to advance our joint commitment to high-quality patient care."

"With the support of the Supervisory Board, we have made a ground-breaking and at the same time extraordinarily sustainable decision. Through its critical mass, the ‘new Rhön' is well positioned to deliver significant additional medical and economic growth," said Dr. Dr. Martin Siebert, CEO of Rhön-Klinikum AG. "We are starting from a stable earnings position and believe that this can be considerably increased. The ‘new Rhön' with its unique structure and offering will be even more attractive in the future."

The acquisition will create substantial cost synergies totalling approximately €85 million before tax from 2015 onwards. These synergies will be achieved, for instance, by bundling procurement. Mid-term, Fresenius Helios expects the newly acquired hospital portfolio to reach the upper half of the 12-15% EBIT-margin range according to its hospital development plan.

The purchase price of €3.07 billion will be entirely debt-financed. Under the transaction, Fresenius will not assume any financial debt of Rhön-Klinikum AG. Group net debt/EBITDA is expected to temporarily exceed 3.0 in 2013* but remain below 3.5, before returning to the upper end of the 2.5 to 3.0 target range in 2014.

Fresenius expects one-time costs of approximately €80 million before tax. The Company expects the acquisition to be accretive to earnings per share in the first year after closing, excluding one-time costs, and clearly accretive from the second year onwards including one-time costs.

The acquisition is subject to antitrust approval as well as certain approvals of former municipal owners or current minority shareholders. The vast majority of the transaction is expected to close by the end of this year.

*Pro forma 2013

Conference Call
More information about the acquisition will be provided during a conference call to be held today at 4.00 p.m. CEDT / 10.00 a.m. EDT. All investors are cordially invited to follow the conference call in a live broadcast over the Internet at www.fresenius.com / Investor Relations / Presentations. A replay of the call will be available on our website shortly after the call.

Fresenius Kabi has started the joint venture announced in August with the leading Indonesian pharmaceutical company PT Soho Global Health (SGH) by completing the acquisition of a 51 percent stake in PT Ethica Industri Farmasi, a subsidiary of SGH, on October 1, 2013.

The joint venture operates a production plant in Jakarta and primarily manufactures I.V. generic drugs and infusion solutions. In 2012, the product portfolio of the new joint venture generated sales of more than €40 million.

The joint venture makes Fresenius Kabi the market leader in I.V. generics in Indonesia, and provides an attractive platform for future growth in one of the fastest-growing emerging economies in Southeast Asia.

The parties agreed not to disclose the purchase price.

Q1-3/2013:

• Sales €15.0 billion (+9% in constant currency, +7% at actual rates)
• EBIT¹ €2.2 billion, (+1% in constant currency, -1% at actual rates)
• Net income² €753 million (+12% in constant currency, +10% at actual rates)

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

¹ 2013 excluding one-time integration costs of Fenwal Holdings, Inc. ("Fenwal"). 2012 before one-time items.

² Net income attributable to shareholders of Fresenius SE & Co. KGaA. 2013 excluding one-time integration costs of Fenwal. 2012 before one-time items.

 

Group outlook 2013 fully confirmed

Based on the Group's strong financial results in the first three quarters, Fresenius fully confirms its guidance for 2013. Sales are expected to increase by 7% to 10% and net income¹ is expected to increase by 11% to 14% (both in constant currency).

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

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

 

Sales growth of 9% in constant currency

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

Group sales by region developed as follows:

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

¹ Net income attributable to shareholders of Fresenius SE & Co. KGaA. 2013 excluding one-time integration costs of Fenwal (~€50 million pre tax). 2012 before one-time items.

 

Net income growth of 12% in constant currency

Group EBITDA¹ grew by 1% (4% in constant currency) to € 2,824 million (Q1-3 2012: €2,786 million). Group EBIT¹ decreased by 1% to €2,202 million (Q1-3 2012: €2,224 million). In constant currency EBIT increased by 1%. The EBIT margin of 14.6% (Q1-3 2012: 15.8%) was impacted by a margin reduction at Fresenius Medical Care as well as the first-time consolidation of Fenwal. The Q3/2013 Group EBIT margin of 14.9% showed an improvement over H1/2013 (14.5%).

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

The Group tax rate¹ improved to 28.3% (Q1-3 2012: 30.1%).

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

Group net income² increased by 10% (12% in constant currency) to €753 million (Q1-3 2012: €682 million). Earnings per share² increased by 6% to €4.22 (Q1-3 2012: €3.98). The weighted average number of shares outstanding in Q1-3 2013 was 178,455,438 (Q1-3 2012: 171,263,663).

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

¹ 2013 excluding one-time integration costs of Fenwal. 2012 before one-time items.

² Net income attributable to shareholders of Fresenius SE & Co. KGaA. 2013 excluding one-time integration costs of Fenwal. 2012 before one-time items.

 

Continued investment in growth

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

Operating cash flow margin of 10.4%

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

 

Solid balance sheet structure

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

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

Group debt was €11,079 million (Dec. 31, 2012: €11,028 million). Net debt was €10,206 million (Dec. 31, 2012: €10,143 million). As of September 30, 2013, the net debt/EBITDA ratio was 2.62¹ (Dec. 31, 2012: 2.56² ).

 

Increased number of employees

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

¹ Pro forma including Fenwal; before one-time costs (non-financing expenses) related to the takeover offer to Rhön-Klinikum AG shareholders, one-time costs at Fresenius Medical Care and one-time integration costs of Fenwal.

² Pro forma including Damp Group, Liberty Dialysis Holdings, Inc. and Fenwal; before one-time costs (non-financing expenses) related to the takeover offer to Rhön-Klinikum AG shareholders, and one-time costs at Fresenius Medical Care.

 

Business Segments

Fresenius Medical Care

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

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

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

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

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

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

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

Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA decreased by 4% to US$761 million (Q1-3 2012¹: US$790 million). Net income for Q3 2013 was US$273 million, an increase of 1% compared to Q3 2012.

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

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

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

¹ Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA; 2012 adjusted for a non-taxable investment gain of US$140 million.

 

Fresenius Kabi

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

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

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

Sales in Europe grew by 5% (organic growth: 2%) to € 1,524 million (Q1-3 2012: €1,449 million). Sales in North America increased by 27% to €1,158 million (Q1-3 2012: €910 million), primarily driven by the consolidation of Fenwal. Organic sales growth was 7%. In Asia-Pacific sales increased by 7% (organic growth: 6%) to €689 million (Q1-3 2012: €642 million). Sales in Latin America/Africa increased by 2% (organic growth: 8%) to €371 million (Q1-3 2012: €362 million). Growth in Q1-3 2013 comes over a strong Q1-3/2012 base, posting 10% organic sales growth in North America, 6% in Europe, 15% in Asia-Pacific and 14% in Latin America/Africa.

EBIT¹ was €695 million (Q1-3 2012: €700 million), an increase of 1% in constant currency. EBIT includes one-time charges of €32 million to remediate manufacturing issues following FDA audits at the Grand Island, USA, and Kalyani, India, facilities. The EBIT margin was 18.6%. Excluding Fenwal, the EBIT margin was 19.6 % (Q1-3 2012: 20.8%). Margin development is fully in line with guidance.

Net income^1,2 increased by 11% to €367 million (Q1-3 2012: €330 million).

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

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

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

Fresenius Kabi fully confirms its outlook for 2013 and projects sales growth of 12% to 14% in constant currency. Organic sales growth is expected in the range of 3% to 5%. The company projects an EBIT margin of 19% to 20%³ excluding the Fenwal operations and of 18% to 19%³ including the Fenwal operations. EBIT in constant currency is expected to exceed 2012 EBIT. The guidance includes one-time charges to remediate manufacturing issues following FDA audits at the Grand Island, USA, and Kalyani, India, facilities. It also includes a gain related to the sale of the respiratory homecare business in France.

¹ Excluding Fenwal integration costs. ² Net income attributable to shareholders of Fresenius Kabi AG.³ Excluding Fenwal integration costs.

Fresenius Kabi guidance excludes Fenwal integration costs (~€50 million pre tax); also see Group guidance.

 

Fresenius Helios

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

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

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

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

Net income¹ increased by 31% to €194 million (Q1-3 2012: €148 million).

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

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

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

¹ Net income attributable to shareholders of HELIOS Kliniken GmbH.

 

Fresenius Vamed

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

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

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

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

Net income¹ was at previous year's level of €16 million.

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

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

¹ Net income attributable to shareholders of Vamed AG.

 

Analyst-/Investor Conference Call

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

Fresenius Helios will join Rhön-Klinikum AG in defending against the lawsuit filed by B. Braun Melsungen AG on November 21, 2013, which seeks to void the agreement between Fresenius Helios and Rhön-Klinikum on the sale of 43 hospitals and 15 outpatient facilities.

The lawsuit is without merit: the Management and Supervisory Boards of Rhön-Klinikum were in full compliance with all relevant laws when they entered into the purchase agreement. Approval of the sale by a general meeting of shareholders is not required. Separate legal opinions, which were obtained independently by Rhön-Klinikum and Fresenius before the contract was signed, confirmed this unanimously.

Ulf Mark Schneider, CEO of Fresenius, said: "We believe the lawsuit has no merit, and we will fully support Rhön-Klinikum in defending against it. We still want to resolve this matter amicably. But for that to happen, all the parties concerned must be ready to accept a reasonable solution."

The lawsuit by B. Braun has no suspensive effect on the transaction, which will be completed as soon as approval is received from Germany's Federal Cartel Office.

Fresenius, Asklepios and B. Braun have settled their dispute over Fresenius Helios' purchase of 43 hospitals and 15 outpatient facilities from Rhön-Klinikum AG. At the same time, they have reached agreement on their future relationships.

B. Braun and Asklepios agree to maintain neutrality toward the sale and to refrain from taking any action against it. The lawsuit opposing the transaction will be withdrawn by B. Braun.

Fresenius Helios is entering into a non-exclusive long-term supply agreement with B. Braun. Fresenius Kabi will not be given preference as a supplier.

Asklepios will join Fresenius Helios and Rhön-Klinikum as a founding partner in the planned hospital network, with Fresenius Helios making a one-time, €5 million payment to Asklepios to support its entry into the network. Completion of the network agreement is subject to antitrust approval.

B. Braun has increased its stake in Rhön-Klinikum AG to 15.08 percent. Asklepios and Fresenius will retain their individual stakes of approximately 5 percent each in Rhön-Klinikum AG.

Ulf Mark Schneider, CEO of Fresenius; Dr. Bernard gr. Broermann, founder and sole shareholder of Asklepios, and Prof. Dr. Ludwig-Georg Braun, Chairman of the Supervisory Board of B. Braun, said in a joint statement: "For many years now, our companies have contributed significantly to the provision of high-quality and efficient health care in Germany. Our differences over the last two years have overshadowed these important contributions in the eyes of the public, which gives us even more reason to welcome today's agreement. It underlines our interest in maintaining open competition in the German healthcare product and services markets and enables each company to achieve its own goals while strengthening the public's confidence in high-quality, private health care. We will compete on the basis of mutual respect, always putting the patient at the center of everything we do."

Fresenius Helios and Rhön-Klinikum AG are well under way to finalizing the purchase of 43 hospitals and 15 outpatient facilities. Fresenius Helios expects to receive antitrust approval and to close the major part of the transaction in the first quarter of 2014. The parties have adjusted the contract accordingly.

Fresenius still expects the acquisition to be accretive to earnings per share in the first twelve months after closing, excluding one-time costs¹. The acquisition is expected to be clearly accretive from the second year onwards including one-time costs.

¹ The one-time costs are approximately €80 million before tax.

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

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Fresenius intends to issue a total of €750 million of senior unsecured notes with maturities of 5 and 7 years as a further step to fund the announced acquisition of hospitals from Rhön Klinikum AG.

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 will apply 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

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Fresenius successfully placed €750 million of senior unsecured notes.

The 300 million tranche due 2019 has a coupon of 2.375% and was issued at a price of 99.647%. The yield of 2.45% represents a spread of 118 basis points over the 5-year swap rate. The €450 million tranche due 2021 has a coupon of 3.00% and was issued at a price of 98.751%. The yield of 3.20% represents a spread of 150 basis points over the 7-year swap rate, virtually identical with Fresenius‘ last comparable issue from January 2013.

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.