• Sales € 7.9 billion,
  + 8 % at actual rates and in constant currency
• EBIT € 969 million,
  + 15 % at actual rates , + 14 % in constant currency
• Net income € 222 million,
  + 32 % at actual rates, + 31 % in constant currency

• Strong sales and earnings growth at Fresenius Medical Care
• Excellent business performance and EBIT margin increase to 13.9 % at Fresenius Kabi
• Fresenius ProServe within expectations; order intake in project business +40 %
• Strong sales and earnings growth expected for 2006

Dividend increase proposed
2005 was a very successful year for Fresenius. Based on the Group's excellent financial results, for the 13th consecutive year the Management Board will propose to the Supervisory Board a dividend increase to € 1.48 per ordinary share (2004: € 1.35) and € 1.51 per preference share (2004: € 1.38). As the 9.4 million new shares from the capital increase in December 2005 are fully entitled to the 2005 dividend, the total dividend distribution will be € 75.8 million (2004: € 55.9 million).


Positive Group outlook for 2006
For 2006, Fresenius expects to achieve sales growth of about 30 % to approximately € 10.5 billion including Renal Care Group and an organic growth of 5-6 %.

Net income is projected to grow by more than 30 % in constant currency. The net income guidance already includes an amount of approx. € 30 million (after tax) associated with expected one-time expenses for the integration of Renal Care Group and the refinancing of debt as well as for costs related to the change of accounting principles for stock options. Due to the higher number of shares issued in December 2005, earnings per share are projected to increase by approximately 10 % in constant currency.

Investments in property, plant and equipment and intangible assets are projected to increase to approximately € 550 - 600 million.


Strong organic sales growth
In 2005, Group sales increased 8 % to € 7,889 million (2004: € 7,271 million). Organic growth contributed 7 % and acquisitions 2 %. Divestments had a -1 % effect on sales. Currency translation had hardly any impact.

Remarkable sales growth of 8 % was achieved each in our main markets North America and Europe. Latin America with sales growth of 30 % and Africa with 16 % performed strongly. In Asia-Pacific, Fresenius Medical Care and particularly Fresenius Kabi achieved an excellent sales increase. Sales of Fresenius ProServe, however, decreased due to the lower project volume in this region.

Sales contribution of the three business segments:

Excellent earnings growth
EBITDA increased 11 % to € 1,289 million (2004: € 1,160 million). Group EBIT rose 15 % at actual rates and 14 % in constant currency to € 969 million (2004: € 845 million). The Group EBIT margin improved to 12.3 % (2004: 11.6 %).

Group net interest improved to € -203 million (2004: € -209 million) primarily as a result of a lower debt level in combination with lower interest rates from various refinancing measures.

The tax rate for 2005 was 38.9 % (2004: 39.8 %).

Minority interest was € 246 million (2004: € 215 million). 96 % was attributable to the minority interest of Fresenius Medical Care.

Group net income grew significantly by 32 % at actual rates and by 31 % in constant currency to € 222 million (2004: € 168 million). Key growth drivers were the excellent operating results of Fresenius Medical Care and Fresenius Kabi as well as reduced financing costs and a lower tax rate.

Earnings per ordinary share rose to € 5.28 (2004: € 4.08) while earnings per preference share rose to € 5.31 (2004: € 4.11). This is an increase of 29 % for both share classes. The average number of shares grew to 41.88 million primarily due to the capital increase.


Investments at record level
Total Group investments increased to € 2.25 billion (2004: € 421 million). € 1.89 billion was spent on acquisitions (2004: € 113 million), including € 1.5 billion for HELIOS. € 353 million was spent for property, plant and equipment and intangible assets (2004: € 308 million).


Solid cash flow performance
Fresenius achieved a good operating cash flow of € 780 million (2004: € 851 million). Key drivers were the significant improvement in earnings whereas income tax payments of Fresenius Medical Care for prior years had a negative effect. Cash flow before acquisitions and dividends was € 449 million (2004: € 565 million). Dividends of € 132 million and about 20 % of the 2005 acquisitions (net) were financed through cash flow. The balance was financed through bank debt and the capital increase.


Solid balance sheet structure
Total assets increased 42 % to € 11,594 million (December 31, 2004: € 8,188 million). In constant currency, total assets grew 33 %. The substantial increase in assets is acquisition-related, mainly due to the HELIOS acquisition. Current assets increased 28 % to € 3,531 million (December 31, 2004: € 2,755 million). In constant currency, current assets grew 21 %. Non-current assets were € 8,063 million (2004: € 5,433 million), a constant currency increase of 39 %. This was primarily due to an increase in goodwill.

Group debt increased 28 % to € 3,502 million (December 31, 2004: € 2,735 million) due to acquisition financing. In constant currency, the increase was 24 %.

Including HELIOS's EBITDA contribution the net debt/EBITDA ratio was 2.3 (December 31, 2004: 2.2).

Shareholders' equity including minority interest was € 5,130 million, a 40 % constant-currency increase (December 31, 2004: € 3,347 million). This was due to the excellent earnings development and the proceeds from the capital increase. The equity ratio including minority interest improved to 44.2 % (December 31, 2004: 40.9 %).


Employee numbers continue to grow
As of December 31, 2005, the Group had 91,971 employees worldwide (December 31, 2004: 68,494). The increase of 23,477 employees is principally due to the acquisition of HELIOS.


Fresenius Biotech
Fresenius Biotech develops innovative therapies with trifunctional antibodies for the treatment of cancer as well as cell therapies for the treatment of the immune system. 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.

In the field of the trifunctional antibody therapies for the treatment of cancer, Fresenius Biotech expects results from the clinical study for ovarian cancer in the first half of 2006. The results from the malignant ascites and malignant pleural effusion studies are expected in the second half of 2006. Following the positive results from two phase I studies for the treatment of peritoneal carcinomatosis and breast cancer, phase II studies for the treatment of gastric cancer and breast cancer are being prepared.

In 2005, Fresenius Biotech's EBIT was € -40.6 million (2004: € -28 million). This development was within our expectations and is a result of the increased research and development spending. For 2006, Fresenius Biotech‘s EBIT is expected to be in the range of € -45 to -50 million, largely due to the expanded clinical study program.


The Business Segments

Fresenius Medical Care
Fresenius Medical Care is the world's leading provider of products and services for patients with chronic kidney failure. As of December 31, 2005, Fresenius Medical Care was serving approximately 131,450 patients (+6 %) in 1,680 dialysis clinics (+4 %). The company delivered about 19.7 million treatments in 2005 (+5 %).
 

• Strong sales and earnings growth continued

• Transformation into KGaA and conversion of preference shares successfully completed

• Closing of the Renal Care Group (RCG) acquisition expected in 1st quarter of 2006

Fresenius Medical Care achieved sales growth of 9 % to US$ 6,772 million (2004: US$ 6,228 million). In constant currency, sales rose 8 %. Organic growth was 7 %.

In North America, Fresenius Medical Care achieved a sales increase of 8 % to US$ 4,577 million (2004: US$ 4,248 million). Sales outside North America ("International") showed an even stronger growth of 11 % to US$ 2,195 million (2004: US$ 1,980 million).

Sales in dialysis care increased 8 % to US$ 4,867 million (2004: US$ 4,501 million). In dialysis products, Fresenius Medical Care achieved sales growth of 10 % to US$ 1,905 million (2004: US$ 1,727 million).

EBIT rose 10 % to US$ 939 million (2004: US$ 852 million) and the EBIT margin was 13.9 % (2004: 13.7 %). This figure includes one-time costs of US$ 22 million associated with the transformation of Fresenius Medical Care's legal form into a KGaA and related legal fees and costs concerning the settlement of shareholder litigation. Net income including one-time costs grew by 13 % to US$ 455 million in 2005 (2004: US$ 402 million).

For the full year 2006, Fresenius Medical Care expects revenue growth at constant currencies of approximately 25 % on a pro forma basis, giving effect to the RCG merger as compared to 2005 reported revenues. Pro forma amounts assume consolidation of RCG's operations into Fresenius Medical Care for the full twelve months of 2006. For the full year 2006, Fresenius Medical Care expects to report revenue of more than US$ 8 billion.

Fresenius Medical Care's projected net income growth on a pro forma basis for 2006 is expected to be between 10 and 15 %, based on the US$ 472 million net income excluding one-time costs, achieved in 2005.

Guidance provided by the Fresenius Medical Care does not take into effect any expected one-time items and the change of accounting principle for stock options - SFAS 123(R) in the fiscal year 2006. Fresenius Medical Care expects the after tax impact of the one-time items and SFAS 123(R) to be around US$ 50 million.

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


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

• Excellent EBIT margin of 13.9 % achieved – guidance exceeded

• Strong organic growth of 7 %

• Outlook 2006: significant growth in sales and earnings expected

Fresenius Kabi's sales rose 13 % to € 1,681 million (2004: € 1,491 million). The company achieved excellent organic growth of 7 %. Acquisitions, primarily Labesfal, contributed 5 % to sales. Divestments had a -1 % effect on sales. Currency translation added 2 % to growth. Constant currency growth of 11 % exceeded the company's earlier guidance.

Sales in Europe (excluding Germany) increased 15 % with acquisitions making a significant contribution. Sales in Germany rose 1 %. Fresenius Kabi continued to grow exceptionally outside of Europe and achieved sales growth of 17 % in Asia-Pacific, 28 % in Latin America and 13 % in Africa.

Fresenius Kabi achieved a new record EBIT with a 33 % increase to € 234 million (2004: € 176 million). The EBIT margin improved by 210 basis points to 13.9 % (2004: 11.8 %). Key drivers were the strong sales growth, further cost optimization and improved efficiency, especially in production.

Fresenius Kabi expects the positive development to continue in 2006. Sales are expected to increase about 10 % in constant currency. The Asia-Pacific and Latin America regions are projected to continue their growth pattern. The first-time consolidation of Clinico and Pharmatel will also have a positive effect on sales. Pharmatel is an Australian company, in which Fresenius Kabi increased its stake from 25.1 % to 50.1 % at the beginning of 2006. The projected sales growth combined with cost optimizations will result in a significant earnings improvement in 2006. Fresenius Kabi's EBIT-margin is projected to increase to 14.5 - 15.0 %.


Fresenius ProServe
Fresenius ProServe offers services for the international health care sector including hospital operations, technical management and hospital planning and construction as well as planning and construction of pharmaceutical and medical-technical production sites.
 

^*incl. HELIOS

• Acquisition of HELIOS Kliniken successfully closed

• 2005 sales and earnings within expectations

• Outlook 2006: Further positive development expected

In 2005, Fresenius ProServe achieved sales of € 809 million (2004: € 813 million). On a comparable basis (excluding the nursing home business sold in 2004 and the discontinued international hospital management business), sales rose 5 %, within the company's guidance of 5-8 %. Sales growth of 2 % to € 350 million was achieved in the hospital operations business (Wittgensteiner Kliniken). In the hospital engineering and services business (VAMED), sales rose by 7 % to € 377 million. In the pharmaceutical engineering and services business (Pharmaplan), order intake improved and resulted in a sales increase of 4 % to € 82 million.

EBIT was € 20 million (2004: € 9 million; before one-time expenses: € 17 million), in line with the company's expectations.

Order intake and order backlog at the project business developed very positively: Order intake increased 40 % to € 341 million (2004: € 244 million). Order backlog rose 7 % to € 360 million (December 31, 2004: € 335 million).

The acquisition of HELIOS was completed at the end of 2005. The company was consolidated as of December 31, 2005 in the Group's balance sheet.

HELIOS developed positively in 2005 and met its communicated targets. Sales reached € 1,200 million. EBIT was € 105 million, the EBIT margin therefore 8.8 %. Net income amounted to € 67 million. The figures are in accordance with US-GAAP as followed by the Fresenius Group. In 2004, HELIOS had prepared its financial statements according to International Finance Reporting Standards (2004 IFRS: sales € 1,161 million, EBIT € 95 million, net income € 66 million).

Through the acquisition of HELIOS, Fresenius ProServe has become a strong third business segment within the Fresenius Group. Including HELIOS for the full 2005 financial year, sales at Fresenius ProServe were € 2,009 million and EBIT € 125 million.

For 2006, Fresenius ProServe expects an organic sales growth of 1 to 3 % based on 2005 sales of € 2,009 million. Projected EBIT will be between € 140 million and € 150 million.


Video Webcast
As part of the publication of our 2005 results, an analyst conference will be held on February 22, 2006 at 1:30 p.m. CET (7.30 a.m. EST). We invite all investors to follow the live video broadcast of the conference over the Internet at www.fresenius-ag.com / Investor Relations / Presentations. Following the conference, a recording of the conference will be available as video-on-demand.

Annual report
The 2005 Annual Report will be available on March 20, 2006 on the Internet at www.fresenius-ag.com / Investor Relations / Publications.

• Sales: Euro 2.4 billion, + 34 % at actual rates,+ 27 % in constant currency
• EBIT: Euro 291 million, + 37 % at actual rates , + 31 % in constant currency
• Net income: Euro 65 million, + 41 % at actual rates, + 35 % in constant currency

• All business segments above budget
• Excellent business performance at Fresenius Medical Care
• Record sales and earnings at Fresenius Kabi
• Fresenius ProServe with good earnings development in all segments
• Overproportional share of expected one-time expenses already included in the first quarter 2006

Group outlook for 2006 confirmed
Based on the strong financial results for the first quarter, Fresenius fully confirms its positive outlook for 2006 and expects an increase of about 30 % in Group sales to approximately Euro 10.5 billion.

Net income is projected to grow by more than 30 % in constant currency. The net income guidance already includes an amount of approximately Euro 30 million (after tax) associated with expected one-time expenses as well as with expenses related to the stock option accounting change.

Investments in property, plant and equipment and intangible assets are projected to increase to approximately Euro 550 to 600 million.

Strong organic sales growth
In the first quarter 2006, Group sales increased by 34 % to Euro 2,388 million (Q1 2005: Euro 1,787 million). Organic growth was excellent, contributing 9 % to revenue growth. Acquisitions contributed 18 %, in particular due to the first-time consolidation of HELIOS Kliniken in the income statement. Currency translation effects contributed by 7 % to revenue growth.

Remarkable sales growth of 9 % in constant currency was achieved in North America. In Europe, sales rose significantly due to the first-time consolidation of HELIOS Kliniken. Organic growth was 7 %. Additionally, excellent growth rates were achieved in the emerging markets, with constant-currency sales up 27 % in Asia-Pacific, 26 % in Latin America and 16 % in Africa.
 

 Sales contribution of the three business segments:

Fresenius ProServe's increased sales contribution is the result of the first-time consolidation of HELIOS Kliniken.

Strong earnings growth
EBITDA increased by 33 % in actual rates or 27 % in constant currency to Euro 377 million (Q1 2005: Euro 284 million). Group EBIT rose 37 % at actual rates and 31 % in constant currency to Euro 291 million (Q1 2005: Euro 212 million). All business segments achieved an excellent EBIT growth. The Group EBIT margin improved to 12.2 % (Q1 2005: 11.9 %).

Group net interest was Euro -84 million (Q1 2005: -47 million). This includes one-time expenses of Euro 25 million associated with the refinancing of Group debt.

The tax rate for the first quarter of 2006 was 36.7 % (Q1 2005: 39.4 %).

Minority interest was Euro 66 million (Q1 2005: Euro 54 million). 93 % was attributable to the minority interest of Fresenius Medical Care.

Group net income grew significantly by 41 % at actual rates and 35 % in constant currency to Euro 65 million (Q1 2005: Euro 46 million). This result includes one-time expenses of approximately Euro 13 million primarily for the refinancing of debt as well as for expenses related to the stock option accounting change.

Earnings per ordinary share rose to Euro 1.28 (Q1 2005: Euro 1.11) while earnings per preference share rose to Euro 1.29 (Q1 2005: Euro 1.12). This is an increase of 15 % for both share classes (9 % in constant currency). Primarily due to the capital increase in December 2005 the average number of shares grew to 50,785,222.

Investments
Due to the acquisition of Renal Care Group, Group investments in the first quarter of 2006 increased to Euro 3.39 billion (Q1 2005: Euro 229 million). Euro 3.29 million was spent on acquisitions (Q1 2005: Euro 181 million). Euro 100 million was spent for property, plant and equipment and intangible assets (Q1 2005: Euro 48 million).

Cash flow
Operating cash flow increased by 11 % to Euro 186 million (Q1 2005: Euro 168 million). Key drivers were the significant improvement in earnings whereas the increase in working capital due to business expansion had a negative effect. Cash flow before acquisitions and dividends was Euro 91 million (Q1 2005: Euro 126 million). The acquisition of Renal Care Group was financed through bank debt.

Solid balance sheet structure
Total assets increased by 35 % to Euro 15,687 million (December 31, 2005: Euro 11,594 million). In constant currency, total assets grew 37 %. The substantial increase in assets is mainly related to the Renal Care Group acquisition which was consolidated in the balance sheet for the first time as of March 31, 2006. Current assets increased 28 % to Euro 4,506 million (December 31, 2005: Euro 3,531 million). Non-current assets were Euro 11,181 million (Q1 2005: Euro 8,063 million), an increase of 39 %. This was primarily due to an increase in goodwill.

Group debt increased to Euro 6,657 million (December 31, 2005: Euro 3,502 million) due to financing of the Renal Care Group acquisition.

Including Renal Care Group's EBITDA contribution the net debt/EBITDA ratio was 3.5 (December 31, 2005: 2.3).

Shareholders' equity including minority interest was Euro 5,546 million, 8 % above the figure of Euro 5,130 million as of December 31, 2005. This was due to the very good earnings development and the first-time consolidation of the Renal Care Group. As a result of the financing of the Renal Care Group acquisition the equity ratio (including minority interests) decreased to 35.4 % (December 31, 2005: 44.2 %).

Employee numbers exceeds 100,000
As of March 31, 2006, the Group had 100,934 employees worldwide (December 31, 2005: 91,971). The increase of 8,963 employees is principally due to the acquisition of the Renal Care Group.

Fresenius Biotech
Fresenius Biotech develops innovative therapies with trifunctional antibodies for the treatment of cancer as well as cell therapies for the treatment of the immune system. 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 has successfully continued its clinical study program: In the field of the trifunctional antibody therapies for the treatment of cancer, Fresenius Biotech expects results from the ovarian cancer study in June 2006. The results from the malignant ascites study are expected at the end of this year.

A phase II study on malignant ascites has started in the US as planned. The U.S. Food and Drug Administration (FDA) granted Fast Track Status in the approval process for this indication. The Fast Track process provides a particularly close working relationship with the FDA in order to accelerate the development and approval of pharmaceuticals to treat potentially fatal diseases for which adequate therapies are not yet available.

A phase II study on breast cancer has started in March 2006. About 40 patients will be included in the trial. A phase II study for the treatment of gastric cancer with approximately 50 patients is scheduled to begin mid-2006.

For the full year 2006, Fresenius Biotech continues to expect an EBIT in the range of Euro -45 to -50 million, largely due to the expanded clinical study program.

The Business Segments

Fresenius Medical Care
Fresenius Medical Care is the world's leading provider of products and services for patients with chronic kidney failure. As of March 31, 2006, Fresenius Medical Care (incl. Renal Care Group and after divestitures) was serving approximately 158,700 patients in 2,045 dialysis clinics.
 

^* before one-time expenses and expenses related to the stock option accounting change

• Excellent sales and earnings growth
• Renal Care Group acquisition successfully completed at the end of March 2006
• Outlook confirmed

Fresenius Medical Care achieved sales growth of 9 % to US$ 1,747 million (Q1 2005: US$ 1,609 million). In North America, Fresenius Medical Care increased sales by 10 % to US$ 1,194 million (Q1 2005: US$ 1,088 million). Sales outside North America ("International") grew by 6 % (12 % in constant currency) to US$ 553 million (Q1 2005: US$ 521 million). Sales in dialysis care increased by 9 % to US$ 1,273 million (Q1 2005: US$ 1,162 million). In dialysis products, Fresenius Medical Care achieved sales growth of 11 % in constant currency to US$ 474 million (Q1 2005: US$ 447 million).

Net income increased by 8 % to US$ 116 million (Q1 2005: US$ 107 million). Net income includes US$ 11 million of costs for the stock option accounting change and for one-time expenses related to the change of the company's legal form and the refinancing of Fresenius Medical Care debt. Excluding the above one-time expenses net income was up 18 % to US$ 127 million.

For the year 2006, Fresenius Medical Care confirms its outlook and expects to report revenue of more than US$ 8 billion. The company expects reported net income for 2006 to be between US$ 515 million and US$ 535 million. Guidance provided by the company does not take into effect any expected one-time items and the stock option accounting change - SFAS 123(R) in the fiscal year 2006. Fresenius Medical Care expects the after tax impact of the one-time items and SFAS 123(R) to be around US$ 60 million for the full year 2006.

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


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

• Strong organic sales growth in all regions
• Excellent EBIT growth and further margin improvement achieved
• Outlook for 2006 confirmed

Fresenius Kabi's sales increased by 17 % to Euro 466 million (Q1 2005: Euro 398 million). The company achieved strong organic growth of 9 %, partially supported by an increased number of working days compared to the first quarter of 2005. Acquisitions, primarily Clinico and the first-time consolidation of Pharmatel, contributed 5 % to sales. Currency translation added 3 % to growth.

Sales in Europe (excluding Germany) increased by 10 % in constant currency. Sales in Germany rose 6 %. Fresenius Kabi continued to grow exceptionally outside of Europe and achieved a constant-currency sales growth of 38 % in Asia-Pacific, 25 % in Latin America and 40 % in Africa.

Fresenius Kabi showed an excellent performance at the EBIT level, with an increase of 31 % to Euro 68 million (Q1 2005: Euro 52 million). The EBIT margin improved to 14.6 %, which is fully in line with the forecast for the full year. Net profit rose to Euro 26 million versus Euro 24 million in Q1 2005. This includes one-time expenses of Euro 8 million for the redemption of the 2003 Eurobond.

Fresenius Kabi confirms its outlook for the full year 2006: Sales are expected to increase about 10 % in constant currency due to strong organic sales growth and the first-time consolidation of Clinico and Pharmatel. Cost reductions in production combined with the projected sales growth will result in a significant earnings improvement in 2006. Fresenius Kabi's EBIT-margin is projected to increase to 14.5 to 15.0 %.

Fresenius ProServe
Fresenius ProServe is a leading German hospital operator with more than 50 hospitals. Moreover, the company offers engineering and services for hospitals and other health care facilities as well as for the pharmaceutical industry.
  

• Sales and earnings get off to a good start in all segments
• Business performance fully in line with forecast
• Outlook for 2006 confirmed

In the first quarter of 2006, Fresenius ProServe achieved excellent financial results. Sales grew by 1 % to Euro 476 million (Q1 2005: incl. HELIOS Kliniken: Euro 469 million; as reported: Euro 171 million). Organic growth was 3 %.

EBIT increased by 11 % to Euro 30 million (Q1 2005: incl. HELIOS Kliniken: Euro 27 million, as reported: Euro 3 million;).

For greater transparency we are reporting sales and EBIT of the hospital operations business and the engineering & services business separately in future. The hospital operations business comprises the HELIOS Kliniken Group including Wittgensteiner Kliniken. The engineering & services business covers the activities of VAMED and Pharmaplan.

Sales in hospital operations (HELIOS Kliniken incl. Wittgensteiner Kliniken) were at previous year's level with Euro 383 million. Organic growth was 2 %. EBIT increased to Euro 27 million in Q1 2006. The EBIT margin improved to 7.0 % (Q1 2005 incl. HELIOS Kliniken: Euro 25 million, EBIT margin: 6.5 %).

In March 2006, HELIOS Kliniken has agreed to acquire a majority stake in HUMAINE Kliniken GmbH. HUMAINE operates six acute and post acute care hospitals with a total of 1,850 beds, thereof 1,530 in the acute care area. The group achieved sales of Euro 197 million and operating profit (EBIT) of Euro 14 million. The transaction is expected to be completed in mid-2006. The acquisition of HUMAINE will be accretive to Fresenius Group's earnings per share in the fiscal year 2006.

Sales in the engineering & services business (VAMED, Pharmaplan) increased by 8 % to Euro 93 million (Q1 2005: Euro 86 million). EBIT was up 67 % to Euro 5 million (Q1 2005: Euro 3 million). Order intake and order backlog continued to develop very positively: Order intake increased by 40 % to Euro 66 million in Q1 2006 (Q1 2005: Euro 47 million). Order backlog rose 2 % to Euro 367 million as of March 31, 2006 (Q1 2005: Euro 360 million).

For the full year 2006 Fresenius ProServe expects sales growth of 1 to 3 % before acquisitions, based on 2005 revenues including HELIOS of Euro 2,009 million. EBIT is forecast to rise to Euro 140 to150 million (2005 incl. HELIOS: Euro 125 million).

Conference Call
As part of the publication of our results of the first quarter 2006, a conference call will be held on May 3, 2006 at 2.00 p.m. CEDT (8.00 a.m. EDT). We invite all investors to follow the conference call over the Internet under Investor Relations / Presentations. Following the conference, a recording of the call will be available as video-on-demand.

Quarterly report
The report for the first quarter 2006 will be available on May 15, 2006 on the Internet at www.fresenius-ag.com / Investor Relations / Publications.

• Sales € 5.1 billion, + 37 % at actual rates, + 34 % in constant currency
• EBIT € 681 million, + 50 % at actual rates, + 46 % in constant currency
• Net income € 140 million, + 39 % at actual rates, + 36 % in constant currency

• Fresenius Medical Care with strong sales and earnings growth
• Fresenius Kabi in the second quarter with EBIT margin record of more than 15 %
• Fresenius ProServe fully on track
• Integration of Renal Care Group progressing well; integration of HELIOS/WKA completed

 
Group outlook 2006: Sales and earnings forecast raised
Given the Company's strong performance in the first half, Fresenius raises its full-year 2006 sales and earnings outlook. Group sales are now expected to increase by approximately 35 % in constant currency to about € 10.7 billion. Net income is projected to grow by about 40 % in constant currency. The net income guidance already includes an amount of approximately € 27 million (after tax) associated with expected one-time expenses as well as expenses related to the stock option accounting change. Previously, the Company had expected net income growth to exceed 30 %. Earnings per share are now projected to increase by approximately 15 % in constant currency. Previously, earnings per share growth of around 10 % had been projected.

Sales – Strong growth continues
Group sales increased by 37 % to € 5,078 million (H1 2005: € 3,702 million). Excellent organic growth contributed 9 % to revenue growth. Acquisitions, in particular the first-time consolidation of Renal Care Group and HELIOS Kliniken in the income statement, contributed 25 %. Currency translation effects added 3 % to sales growth.

In North America, sales grew significantly due to the first-time consolidation of Renal Care Group. In addition, organic growth was excellent with 8 %. In Europe, the substantial sales increase was driven by the first-time consolidation of HELIOS Kliniken. However, underlying organic growth came in at a very good rate of 7 %. Excellent growth rates were achieved in the emerging markets, with organic growth of 24 % in Asia-Pacific and 19 % each in Latin America and Africa.

 

Sales contribution of the three business segments:

Fresenius ProServe's increased sales contribution is the result of the consolidation of HELIOS Kliniken.


Strong earnings growth
Group EBIT increased by 50 % at actual rates and by 46 % in constant currency to € 681 million (H1 2005: € 453 million). The growth was driven by the successful operating performance of all business segments as well as the first-time consolidation of Renal Care Group and HELIOS Kliniken. EBIT includes a gain of € 32 million from the divestitures of dialysis clinics in the USA. The sale was a condition of the US Federal Trade Commission for the approval of the Renal Care Group acquisition. EBIT also includes a total of € 11 million one-time expenses and expenses related to the stock option accounting change.

Primarily, given the debt financing of the Renal Care Group acquisition, Group net interest increased to € -194 million (H1 2005: -97 million). This number however also includes one-time expenses of € 30 million associated with the refinancing of Group debt.

The tax rate was 41.9 % (H1 2005: 39.3 %). It was substantially influenced by the tax expense associated with the divestitures of the dialysis clinics in the USA. As the goodwill attributable to the divested clinics is not considered for tax purposes, the sale resulted in a loss of € 2 million after tax. Excluding this effect the tax rate was 36.9 %.

Minority interest was € 143 million (H1 2005: € 115 million). 94 % was attributable to the minority interest of Fresenius Medical Care.

Group net income grew by 39 % at actual rates and by 36 % in constant currency to € 140 million (H1 2005: € 101 million). This result includes one-time expenses of € 19 million, primarily for the refinancing of debt as well as for expenses related to the stock option accounting change. Thus, approximately 70 % of the expected one-time expenses for the full-year 2006 are already included in the Group net income.

Earnings per ordinary share rose to € 2.75 (H1 2005: € 2.46) while earnings per preference share rose to € 2.77 (H1 2005: € 2.48). This is an increase of 12 % for both share classes (9 % in constant currency). The average number of shares grew to 50,852,320 mainly due to the share issue in December 2005.

Investments
Fresenius Group spent € 225 million for property, plant and equipment and intangible assets (H1 2005: € 115 million). Acquisition spending increased to € 3,408 million due to the acquisition of Renal Care Group (H1 2005: € 227 million).

Cash flow
Operating cash flow increased by 17 % to € 385 million (H1 2005: € 329 million). The key driver was the significant improvement in earnings whereas the tax expense associated with the divestitures of the dialysis clinics had a negative effect. Cash flow before acquisitions and dividends was € 172 million (H1 2005: € 224 million). The acquisition of Renal Care Group was financed through bank debt.

Solid balance sheet structure
Total assets increased by 28 % to € 14,831 million (December 31, 2005: € 11,594 million). In constant currency, total assets grew 34 %. The substantial increase is mainly related to the Renal Care Group acquisition which was consolidated in the balance sheet for the first time as of March 31, 2006. Current assets increased by 10 % to € 3,871 million (December 31, 2005: € 3,531 million). Non-current assets were € 10,960 million (H1 2005: € 8,063 million), an increase of 36 %. This was primarily due to the goodwill resulting from the Renal Care Group acquisition.

Group debt increased to € 6,154 million (December 31, 2005: € 3,502 million) due to financing of the Renal Care Group acquisition.

As of June 30, 2006, the net debt/EBITDA ratio was 3.3 (December 31, 2005: 2.3).

Shareholders' equity including minority interest grew 5 % to € 5,380 million (December 31, 2005: € 5,130 million), driven by the very good earnings development. Given the debt financing of the Renal Care Group acquisition, the equity ratio (including minority interests) decreased to 36.3 % (December 31, 2005: 44.2 %).

Employees
As of June 30, 2006, the Group had 100,196 employees worldwide (December 31, 2005: 91,971). The increase of 8,225 employees is primarily due to the acquisition of Renal Care Group.

Fresenius Biotech
Fresenius Biotech develops innovative therapies with trifunctional antibodies for the treatment of cancer as well as cell therapies for the treatment of the immune system. 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 has successfully continued its clinical study program. The company reported encouraging results of a phase IIa study with the trifunctional antibody removab^® in the treatment of ovarian cancer patients. Based on these results, Fresenius Biotech is planning to start a European phase II study for this indication in the second half of 2006.

A phase II study on breast cancer started in March 2006. About 40 patients will be included in the trial. A phase II study for the treatment of gastric cancer with approximately 50 patients started in June 2006. The results from the malignant ascites phase II/III study are expected at the end of this year.

For the full year 2006, Fresenius Biotech continues to expect an EBIT in the range of € -45 to -50 million, largely due to the higher expenses for expanded clinical study program.


The Business Segments

Fresenius Medical Care
Fresenius Medical Care is the world's leading provider of products and services for patients with chronic kidney failure. As of June 30, 2006, Fresenius Medical Care (incl. Renal Care Group and after divestitures) was serving 161,675 patients in 2,078 dialysis clinics.
 

^* before one-time expenses, expenses related to the stock option accounting change and the effect of the FTC-related clinic divestitures in the USA

 

• Strong sales and earnings growth in all regions
• Renal Care Group integration well under way and on track
• Outlook for 2006 upgraded

Fresenius Medical Care achieved strong sales growth of 19 % to US$ 3,912 million (H1 2005: US$ 3,283 million). This was driven by both the excellent operating performance and the first-time consolidation of Renal Care Group in the income statement. Organic growth reached 9 %. Sales in dialysis care increased by 24 % to US$ 2,924 million (H1 2005: US$ 2,363 million). In dialysis products, Fresenius Medical Care achieved sales of 988 million US$ (H1 2005: US$ 920 million), an increase of 7 % (10 % in constant currency).

In North America, Fresenius Medical Care increased sales by 24 % to US$ 2,754 million (H1 2005: US$ 2,215 million). Organic growth reached 8 %. Sales outside North America ("International") grew by 8 % (12 % in constant currency) to US$ 1,158 million (H1 2005: US$ 1,068 million).

Net income increased by 10 % to US$ 246 million (H1 2005: US$ 223 million). This result includes one-time expenses of US$ 20 million primarily for the refinancing of Fresenius Medical Care debt, for expenses related to the stock option accounting change as well as for the after-tax loss on the divestitures of dialysis clinics in the USA. Excluding the above effects net income was up 19 % to US$ 266 million.

Based on the strong performance in the first half of 2006, Fresenius Medical Care upgrades its guidance for the full year 2006. After expecting to report a revenue of about US$ 8.1 billion, the company now expects a revenue for 2006 of about US$ 8.3 billion.

Fresenius Medical Care also upgrades its outlook for reported net income for 2006. After expecting a net income between US$ 515 million and US$ 535 million, the company now expects to report a net income of at least US$ 542 million, which represents an increase of at least 15% over the 2005 level.

In order to show the underlying performance of Fresenius Medical Care, the guidance provided does not take into effect any expected one-time items and the stock option accounting change. After previously assuming the after-tax impact of one-time items and the stock option accounting change to be about US$ 60 million Fresenius Medical Care now expects this impact to be about US$ 40 million for the full year 2006.

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

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

• Strong organic sales growth of 8 %
• Record EBIT margin of more than 15 % in the second quarter
• Sales and earnings outlook for 2006 raised

Fresenius Kabi's sales increased by 15 % to € 937 million (H1 2005: € 818 million). The company achieved strong organic growth of 8 %. Acquisitions, primarily Clinico and the first-time consolidation of Pharmatel, contributed 4 % to sales. Currency translation added a further 3 %.

Sales in Europe (excluding Germany) increased by 9 %, in Germany by 5 %.
Fresenius Kabi did extremely well in the emerging markets outside Europe and achieved sales growth of 44 % in Asia-Pacific, 36 % in Latin America and 25 % in the other regions. Organic growth in the regions outside Europe was well into the double digits.

Fresenius Kabi showed an excellent performance at the EBIT level, with an increase of 26 % to € 139 million (H1 2005: € 110 million). The EBIT margin improved by 140 basis points to 14.8 % (H1 2005: 13.4 %). In the second quarter, the EBIT margin reached a new record level of 15.1 %. Net profit rose by 18 % to € 60 million (H1 2005: € 51 million). This already includes one-time expenses of € 11 million for the early redemption of the 2003 Eurobond.

Based on the excellent performance in the first half, Fresenius Kabi raises its EBIT margin outlook for the full year 2006 from previously 14.5-15.0 % to now >15 %. The company now expects sales growth of 11 to 12 % in constant currency. Previously, growth of around 10 % had been projected.

Fresenius ProServe
Fresenius ProServe is a leading German hospital operator with more than 50 facilities. Moreover, the company offers engineering and services for hospitals and other health care facilities as well as for the pharmaceutical industry.
 

• Very good performance in hospital operations
• Strong order intake in the engineering & services businesses
• Outlook for 2006 fully confirmed

Fresenius ProServe achieved excellent financial results. Sales grew by 3 % to € 974 million (H1 2005 incl. HELIOS Kliniken: € 942 million). Organic growth amounted to 4 %. On a comparable basis, EBIT increased by 15 % to € 62 million (H1 2005 incl. HELIOS Kliniken: € 54 million).

Sales in hospital operations (HELIOS Kliniken Group) amounted to € 767 million (H1 2005: € 765 million). Organic growth was 2 %. EBIT increased to € 56 million, the EBIT margin improved to 7.3 % (H1 2005 incl. HELIOS Kliniken: € 48 million and 6.3 %). The integration of WKA into HELIOS Kliniken Group was successfully completed. The focus is now on continued efficiency improvements at the WKA clinics and on further growth through privatization in the German hospital market.

Sales in the engineering and services business (VAMED, Pharmaplan) increased 17 % to € 207 million (H1 2005: € 177 million). EBIT rose 50 % to € 9 million (H1 2005: € 6 million). Order intake and order backlog continued to develop very positively. Order intake increased by 19 % to € 185 million (H1 2005: € 156 million). Order backlog rose 14 % to € 409 million as of June 30, 2006 (December 31, 2005: € 360 million).

In March 2006, HELIOS Kliniken agreed to acquire HUMAINE Kliniken GmbH. HUMAINE operates six acute and post-acute care hospitals with a total of 1,850 beds. The transaction is expected to be completed in the third quarter. The acquisition of HUMAINE will be accretive to Fresenius Group's earnings per share in the fiscal year 2006 already.

Fresenius ProServe confirms its 2006 full-year outlook and expects revenue growth of 1 to 3 % before acquisitions, based on 2005 revenues including HELIOS of € 2,009 million. EBIT is forecast to rise to € 140 to 150 million (2005 incl. HELIOS: € 125 million).

Video Webcast
As part of the publication of our results for the first half of 2006, an analyst conference will be held at the Fresenius headquarters in Bad Homburg on August 3, 2006 at 1:30 p.m. CEDT (7.30 a.m. EDT). All investors are cordially invited to follow the conference in a live broadcast over the Internet at www.fresenius-ag.com / Investor Relations / Presentations. Following the meeting, a recording of the conference will be available as video-on-demand.

Quarterly report
The report for the first half and the second quarter of 2006 will be available on August 14, 2006 on the Internet at www.fresenius-ag.com / Investor Relations / Financial Reports / Quarterly Reports.

• Sales € 7.8 billion, + 37 % at actual rates, + 36 % in constant currency
• EBIT € 1.1 billion, + 51 % at actual rates, + 49 % in constant currency
• Net income € 233 million, + 45 % at actual rates, + 43 % in constant currency

• Fresenius Medical Care with excellent performance
• Fresenius Kabi with new record EBIT margin in the third quarter
• Fresenius ProServe sales and earnings fully on track
• Group EBIT for the first time exceeds one billion Euro mark

 

 

Group outlook 2006: Earnings forecast raised
Based on the Company's strong financial results in the third quarter, Fresenius raises its full-year 2006 earnings outlook. Net income is now projected to grow by 40 to 45 % in constant currency. This guidance already includes an amount of approximately € 28 million (after tax) associated with expected one-time expenses as well as expenses related to the stock option accounting change. Previously, the Company had expected net income growth of approximately 40 %. Group sales are expected to increase to more than € 10.7 billion.

Sales growth across all business segments and regions
Group sales increased by 37 % to € 7,843 million (Q1-3 2005: € 5,712 million). Excellent organic growth contributed 9 %. Acquisitions, in particular Renal Care Group and HELIOS Kliniken, added 28 %. Divestitures had a -1 % effect on sales. Currency translation effects contributed 1 % to sales growth.

In North America, sales grew significantly due to the Renal Care Group consolidation and an excellent organic growth rate of 8 %. In Europe, the substantial sales increase was mainly driven by the consolidation of HELIOS Kliniken. Organic growth in Europe was 5 %. Excellent growth rates were achieved in the emerging markets with organic growth of 25 % in Asia-Pacific, 20 % in Latin America and 18 % in Africa.

Sales contribution of the three business segments:

Fresenius ProServe's increased sales contribution is the result of the consolidation of HELIOS Kliniken.

Strong earnings growth
Group EBIT increased by 51 % at actual rates and by 49 % in constant currency to € 1,060 million (Q1-3 2005: € 703 million) exceeding the one billion Euro mark for the first time. EBIT includes a gain of € 32 million from the divestitures of dialysis clinics in the USA. The sale was a condition of the US Federal Trade Commission for the approval of the Renal Care Group acquisition. EBIT also includes a total of € 20 million for one-time expenses, mainly for the integration of Renal Care Group as well as for expenses related to the stock option accounting change.

Group net interest was € -295 million, primarily as a result of the debt financing of the Renal Care Group acquisition (Q1-3 2005: € -146 million). Net interest however also includes one-time expenses of € 30 million associated with the early refinancing of Group debt.

The tax rate was 40.9 % (Q1-3 2005: 39.3 %). It was substantially influenced by the tax expense associated with the divestiture of the dialysis clinics in the USA as the goodwill attributable to the divested clinics is not considered for tax purposes. Excluding this effect the tax rate was 37.8 %.

Minority interest was € 219 million (Q1-3 2005: € 177 million). Thereof, 93 % was attributable to the minority interest in Fresenius Medical Care.

Group net income grew strongly by 45 % at actual rates and by 43 % in constant currency to € 233 million (Q1-3 2005: € 161 million). This includes a total of € 22 million for one-time expenses, primarily for the early refinancing of debt, as well as for expenses related to the stock option accounting change.

Earnings per ordinary share were € 4.56 (Q1-3 2005: € 3.92) while earnings per preference share were € 4.58 (Q1-3 2005: € 3.94). This is an increase of 16 % for both share classes (15 % in constant currency). The average number of shares grew to 50.9 million, mainly due to the share issue in December 2005.

Investments
Fresenius Group spent € 374 million for property, plant and equipment and intangible assets (Q1-3 2005: € 196 million). Acquisition spending increased to € 3,537 million (Q1-3 2005: € 264 million) mainly due to the acquisition of Renal Care Group.

Cash flow
Operating cash flow was € 588 million (Q1-3 2005: € 592 million). The strong earnings improvement was offset by net tax payments and other payments related to the divestiture of dialysis clinics and the RCG acquisition as well as by an US tax payment for the years 2000 and 2001. Cash flow before acquisitions and dividends was € 228 million (Q1-3 2005: € 412 million). The acquisition of Renal Care Group was financed through bank debt.

Solid balance sheet structure
Total assets increased by 31 % to € 15,194 million (December 31, 2005: € 11,594 million). In constant currency total assets grew by 36 %. The substantial increase is mainly related to the consolidation of the Renal Care Group. This acquisition was closed effective March 31, 2006. Current assets increased by 15 % to € 4,076 million (December 31, 2005: € 3,531 million). Non-current assets were € 11,118 million (December 31, 2005: € 8,063 million), an increase of 38 %, primarily due to the goodwill resulting from the Renal Care Group acquisition.

Group debt increased to € 6,136 million (December 31, 2005: € 3,502 million) due to the financing of the Renal Care Group acquisition.

As of September 30, 2006, the net debt/EBITDA ratio further improved to 3.2 (March 31, 2006: 3.5; December 31, 2005: 2.3).

Shareholders' equity including minority interest grew 9 % to € 5,583 million (December 31, 2005: € 5,130 million), driven by the very good earnings development. Given the debt financing of the Renal Care Group acquisition, the equity ratio (including minority interest) decreased to 36.7 % (December 31, 2005: 44.2 %).

Employees
As of September 30, 2006, the Group had 104,179 employees worldwide (December 31, 2005: 91,971). The increase of 12,208 employees is primarily due to the acquisition of the Renal Care Group.

Fresenius Biotech
Fresenius Biotech develops innovative therapies with trifunctional antibodies for the treatment of cancer as well as cell therapies for the treatment of the immune system. 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 has successfully continued its clinical study program: A phase II study on breast cancer started in March 2006. A phase II study for the treatment of gastric cancer started in June 2006. A phase II study on ovarian cancer is planned to start in the first half of 2007. The results from the pivotal malignant ascites phase II/III study are expected by the end of this year.

For the full year 2006, Fresenius Biotech expects an EBIT of approximately € -45 million. Previously, an EBIT in the range of € -45 to -50 million was expected. The amount largely relates to expenses for the clinical study program. In the first nine months of 2006 EBIT at Fresenius Biotech was € -30 million.


The Business Segments

Fresenius Medical Care

Fresenius Medical Care is the world's leading provider of products and services for patients with chronic kidney failure. As of September 30, 2006, Fresenius Medical Care was serving 161,433 patients in 2,085 dialysis clinics.

^* before one-time expenses, expenses related to the stock option accounting change and the effect of the FTC-related clinic divestitures in the USA; excluding 2005 one-time expenses

• Excellent sales and earnings growth in all regions
• Integration of Renal Care Group fully on track
• Outlook for 2006 upgraded

Fresenius Medical Care achieved strong sales growth of 23 % to US$ 6,147 million (Q1-3 2005: US$ 4,999 million). This was driven by both the excellent organic growth of 10 % and the consolidation of the Renal Care Group. Sales in dialysis care increased by 28 % to US$ 4,628 million (Q1-3 2005: US$ 3,610 million). In dialysis products, Fresenius Medical Care achieved sales of US$ 1,519 million (Q1-3 2005: US$ 1,389 million), an increase of 9 % (10 % in constant currency).

In North America, Fresenius Medical Care increased sales by 29 % to US$ 4,367 million (Q1-3 2005: US$ 3,383 million). Organic growth was excellent with 9 %. Sales outside North America ("International") grew by 10 % (11 % in constant currency) to US$ 1,780 million (Q1-3 2005: US$ 1,616 million).

Net income increased by 13 % to US$ 385 million (Q1-3 2005: US$ 339 million). This result includes one-time expenses of US$ 27 million primarily for the refinancing of Fresenius Medical Care debt and the Renal Care Group integration, for expenses related to the stock option accounting change as well as for the after-tax loss on the divestiture of dialysis clinics in the USA. Excluding the above effects and adjusted by one-time expenses in the previous year, net income was up 20 % to US$ 412 million.

Based on the strong performance in the third quarter of 2006, Fresenius Medical Care upgrades its guidance for the full year 2006. After expecting to report net revenue of about US$ 8.3 billion, Fresenius Medical Care now expects net revenue for 2006 of about US$ 8.4 billion.

Fresenius Medical Care also upgrades its outlook for net income for 2006. After expecting a net income of at least US$ 542 million, the company now expects a net income of at least US$ 557 million, representing an increase of at least 18 % over the corresponding level in 2005.

In order to show the underlying performance of Fresenius Medical Care on a basis comparable with the prior year, the guidance does not take into effect any expected one-time items and the stock option accounting change in the fiscal year 2006. Fresenius Medical Care expects the after tax impact of the one-time items and the stock option accounting change to be about US$ 44 million for the full year 2006.

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


Fresenius Kabi

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

• Strong sales and earnings growth continues
• Filaxis acquisition strengthens i.v. drug portfolio
• Earnings outlook for 2006 raised

Fresenius Kabi's sales increased by 13 % to € 1,404 million (Q1-3 2005: € 1,239 million). The company achieved strong organic growth of 8 %. Acquisitions, primarily Clinico and Australian Pharmatel, contributed 4 % to sales. Currency translation effects contributed 1 % to growth.

Sales in Europe (excluding Germany) increased by 8 %, in Germany by 4 %. Fresenius Kabi continued its exceptional growth outside Europe and achieved sales growth of 44 % in Asia-Pacific, 31 % in Latin America and 21 % in the other regions. Organic growth in the regions outside Europe was again well into the double digits.

Fresenius Kabi showed an even stronger performance at the EBIT level, with an increase of 25 % to € 213 million (Q1-3 2005: € 170 million). The EBIT margin improved to 15.2 % (Q1-3 2005: 13.7 %). In the third quarter, the EBIT margin reached a new record level of 15.8 %. Net profit rose by 25 % to € 101 million (Q1-3 2005: € 81 million). This already includes one-time expenses of € 11 million for the early redemption of the 2003 Euro Bond.

In September 2006, Fresenius Kabi signed an agreement to acquire 100 % of the shares of Filaxis. This Argentinean company based in Buenos Aires specializes in the development, production and distribution of intravenously administered generic drugs for cancer treatment (cytostatics) and markets its comprehensive product portfolio primarily in Latin America. In 2005 the company achieved sales of approximately € 12 million. The Filaxis acquisition strengthens Fresenius Kabi's portfolio of intravenously administered generic drugs by adding oncology products. Once the respective registration processes are finalized, the Filaxis products will also be marketed outside Latin America through Fresenius Kabi's existing sales and distribution organization. The acquisition still has to be approved by the local antitrust authorities.

Based on its excellent performance in the third quarter, Fresenius Kabi raises its full year 2006 earnings outlook and now expects an EBIT margin in the range of 15.0 to 15.5 %. The company confirms its sales outlook and continues to expect an increase of 11 to 12 % in constant currency.


Fresenius ProServe

Fresenius ProServe is a leading German hospital operator with 56 facilities. Moreover, the company offers engineering and services for hospitals and other health care facilities as well as for the pharmaceutical industry.

• Good operating performance in the hospital operations business
• Strong order intake in the engineering and services business
• Outlook confirmed – Full-year 2006 expected to be at the top end of guidance

Fresenius ProServe's sales grew by 6 % to € 1,526 million (Q1-3 2005 incl. HELIOS Kliniken: € 1,442 million). Organic growth was 3 %. On a comparable basis, EBIT increased by 21 % to € 105 million (Q1-3 2005 incl. HELIOS Kliniken: € 87 million).

Sales in hospital operations (HELIOS Kliniken Group) increased by 5 % to € 1,204 million (Q1-3 2005 incl. HELIOS Kliniken : € 1,152 million). The growth is mainly attributable to the acquisition of HUMAINE Kliniken, which was consolidated as from July 1, 2006. Organic growth was 2 %. EBIT increased to € 94 million, the EBIT margin improved to 7.8 % (Q1-3 2005 incl. HELIOS Kliniken: € 79 million and 6.8 %).

Sales in the engineering and services business (VAMED, Pharmaplan) increased 11 % to € 322 million (Q1-3 2005: € 290 million). EBIT rose to € 14 million (Q1-3 2005: € 9 million). Order intake and order backlog continued to develop very positively. Order intake increased by 22 % to € 291 million (Q1-3 2005: € 239 million). Order backlog rose 21 % to € 437 million as of September 30, 2006 (December 31, 2005: € 360 million).

Fresenius ProServe confirms its outlook but now expects the full-year 2006 to be at the top end of guidance. Guidance calls for revenues to increase by 1 to 3 % before acquisitions (based on 2005 revenues including HELIOS Kliniken of € 2,009 million) and EBIT to rise to € 140 to 150 million (2005 incl. HELIOS Kliniken: € 125 million).

Video Webcast
As part of the publication of our results for the first nine months of 2006, an analyst conference will be held at the Fresenius headquarters in Bad Homburg on October 31, 2006 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-ag.com / Investor Relations / Presentations. Following the meeting, a recording of the conference will be available as video-on-demand.

• Sales: € 7.27 billion, + 8 % constant currency, + 3 % at actual exchange rates
   
• EBIT: € 845 million, + 15 % constant currency, + 8 % at actual exchange rates
   
• Net Income: € 168 million, + 55 % constant currency, + 46 % at actual exchange rates
   
• Strong sales and earnings growth at Fresenius Medical Care
• Excellent business development and significantly improved EBIT margin at Fresenius Kabi
• Fresenius ProServe within expectations
• Strong sales and earnings growth expected for 2005

 

 

Dividend increase proposed
2004 was a very successful year for Fresenius. Based on the Group's excellent financial results, the Management Board will propose to the Supervisory Board a 10 % dividend increase to € 1.35 per ordinary share (2003: € 1.23) and € 1.38 per preference share (2003: € 1.26). This will mark the 12th consecutive year of a dividend increase. The total dividend distribution will be € 55.9 million (2003: € 51.0 million).

Positive Group outlook for 2005
For 2005, Fresenius expects a constant currency sales increase of 6 to 9 %. Net income is projected to grow by 15 to 20 % in constant currency. All business segments are expected to contribute to this increase.

Fresenius is planning to invest in growth in 2005: Investments in property, plant and equipment and intangible assets are projected to increase to approximately € 400 - 450 million; acquisition spending is planned to grow to about € 400 million.

Strong organic sales growth
In 2004, Group sales increased 8 % in constant currency. Organic growth was 6 %, while acquisitions contributed 2 % to the increase in sales. Currency translation effects had an impact of -5 %. At actual exchange rates, sales were € 7,271 million, 3 % above last year's figure of € 7,064 million.

In Europe, sales increased 4 % despite cost cutting measures in the health care sector and price pressure in Germany. North America performed strongly with sales growing 9 % in constant currency. Asia-Pacific, Latin America and Africa achieved double-digit constant currency growth rates.

 

 

 



Excellent earnings growth
Fresenius achieved excellent earnings growth rates: EBITDA rose 11 % in constant currency and 5 % at actual exchange rates to € 1,160 million (2003: € 1,106 million). EBIT rose 15 % in constant currency and 8 % at actual exchange rates to € 845 million (2003: € 781 million). The EBIT margin improved from 11.1 % in 2003 to 11.6 % in 2004.

Net interest expense continued to improve to € -209 million, € 40 million below last year's € -249 million due to a lower debt level as well as enhanced terms. Currency translation effects also had a favorable impact of € 11 million.

In 2004, the tax rate decreased to 39.8 %. The tax rate of 41.9 % in 2003 was mainly due to one-time expenses at Fresenius ProServe.

Minority interests rose to € 215 million (2003: € 194 million). Minority shareholders in Fresenius Medical Care account for 95 % of minority interests.

Net income rose 55 % in constant currency and 46 % at actual exchange rates to € 168 million (2003: € 115 million). Operating income growth at Fresenius Medical Care and Fresenius Kabi was the key driver of this increase. In addition, lower one-time expenses at Fresenius ProServe as well as lower Group interest expenses had a positive impact. Excluding the one-time expenses at Fresenius ProServe in 2003 and 2004 Group net income increased 25 % in constant currency and 18 % at actual exchange rates.

Earnings per ordinary share were € 4.08 from € 2.79 in 2003. Earnings per preference share were € 4.11 (2003: € 2.82). This is an increase of 46 %.
 

Investments on target
In 2004, Fresenius invested € 421 million (2003: € 430 million). Investments for property, plant and equipment and intangible assets decreased to € 308 million (2003: € 339 million) and acquisitions increased to € 113 million (2003: € 91 million).

44 % of the total investments were made both in Europe and North America, 7 % in the Asia-Pacific region and 5 % in Latin America and Africa.
 

Record cash flow
Operating and free cash flow reached new records in 2004: Operating cash flow rose 10 % to € 851 million (2003: € 776 million), mainly due to Group net income growth and improved working capital management. The operating cash flow margin rose to 11.7 % of sales up from 11.0 % in 2003, an increase of 70 basis points. Free cash flow before acquisitions and dividends increased 24 % to € 565 million (2003: € 454 million). After acquisitions and dividends free cash flow rose 31 % to € 353 million (2003: € 269 million) despite increased spending on acquisitions (€ -90 million, net) and dividends (€ -122 million).
 

Solid balance sheet
Total assets decreased 2 % to € 8,188 million (December 31, 2003: € 8,347 million). In constant currency, assets grew by 2 %. Current assets were € 2,755 million (December 31, 2003: € 2,744 million). In constant currency, current assets rose 3 %, primarily driven by the induction of Fresenius Medical Care's receivables securitization program.

Group debt decreased € 413 million to € 2,735 million as of December 31, 2004 (€ 2,824 million in constant currency) compared to € 3,148 million as of December 31, 2003. These figures include liabilities related to the receivables securitization program.

The key ratio net debt/EBITDA improved significantly to 2.2 on December 31, 2004, as a consequence of both EBITDA growth and debt reduction on the back of the excellent cash flow development (December 31, 2003: 2.7).

Shareholders' equity including minority interests rose 4 % to € 3,347 million compared to € 3,214 million on December 31, 2003 (constant currency: +9 %). The equity ratio including minority interests improved to 40.9 % (December 31, 2003: 38.5 %).

 

Number of employees slightly increased
As of December 31, 2004, Fresenius had 68,494 employees worldwide, an increase of 3 % (December 31, 2003: 66,264).
 

 

Fresenius Biotech
Fresenius Biotech develops innovative therapies with trifunctional antibodies for the treatment of cancer as well as cell therapies for the treatment of the immune system. 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 suppress graft rejection following an organ transplantation.

In cancer therapy, final results are available of a phase I study to determine dosage, safety and tolerability of the antibody removab^® in peritoneal carcinomatosis as well as from a phase I study for the treatment of breast cancer using the antibody rexomun^®. The clinical results of the final reports will be published at the 41st ASCO (American Society of Clinical Oncology) Annual Meeting in May 2005. Based on the encouraging results Fresenius Biotech is planning a phase II study for the treatment of breast cancer and a phase II study for the treatment of gastric cancer.

Preliminary results are available for a phase I/II cell therapy study that investigated the treatment of patients with end-stage HIV infection. The results show that the therapy is well tolerated and safe. The clinical development program is planned to continue in the current year.

In 2004, Fresenius Biotech's EBIT was € -28 million (2003: € -19 million). The EBIT development was within our expectations and is a result of the increased research and development spending. For 2005, Fresenius Biotech‘s EBIT is expected to be in the range of € -35 million to € -40 million, largely due to the expanded clinical study program.

The business segments

Fresenius Medical Care
Fresenius Medical Care is the world's largest provider of products and services for patients with chronic kidney failure. As of December 31, 2004, Fresenius Medical Care treated about 124,400 patients (+4 %) in 1,610 dialysis clinics (+3 %), the number of treatments rose by 5 % to about 18.8 million.

• Strong growth in sales and earnings
   
• Excellent sales development in dialysis care in North America and in dialysis products and dialysis care in the international segment
   
• Outlook for 2005: significant growth in sales and earnings

Fresenius Medical Care achieved excellent sales growth in 2004 of 13 % to $ 6,228 million (2003: $ 5.528 million). In constant currency, sales rose 10 %. Organic sales growth was 6 %.

In North America, the company's biggest market, Fresenius Medical Care posted exceptionally good performance as sales rose 9 % to $ 4,216 million (2003: $ 3,855 million). Dialysis care sales grew 11 % to $ 3,795 million. Fresenius Medical Care performed about 12.9 million dialysis treatments in 2004, 4 % more than in the previous year. Sales of dialysis products (including sales to our own dialysis clinics) increased 1 % to $ 793 million.

Sales outside North America (the "International" segment) rose 20 % (constant currency: 11 %) to $ 2,012 million (2003: $ 1,673 million). Sales of dialysis products (including sales to our own dialysis clinics) increased 16 % to $ 1,450 million. Dialysis care sales grew 28 % to $ 706 million. In the international segment, Fresenius Medical Care operates 480 dialysis clinics. The Company performed 5.9 million dialysis treatments (+8 %).

Fresenius Medical Care significantly improved earnings in 2004. EBIT increased 13 % to $ 852 million (2003: $ 757 million), the operating margin was 13.7 %. On a comparable basis (excl. the new accounting regulation FIN 46R) the operating margin would have been 13.8 % (2003: 13.7 %). Net income increased 21 % to $ 402 million.

For the year 2005, Fresenius Medical Care expects currency-adjusted sales growth between 6 and 9 % and net income growth in the low double-digit range.

 

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

 

 

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

 

 

• Profitability significantly increased; EBIT margin of 11.8 % achieved in 2004
   
• Good organic growth of 5 %; continued double-digit growth in developing markets
   
• Outlook for 2005: significant growth in earnings expected

Sales at Fresenius Kabi rose 2 % to € 1,491 million in 2004 (2003: € 1,463 million). The company achieved a good organic sales increase of 5 %. Currency translation reduced sales by 1 %, divestments by 2 %. Sales in Europe were impacted by a 6 % decrease in Germany due to cost cuts and price pressure in the health care sector. Outside of Germany, Fresenius Kabi showed an excellent performance in Europe with organic growth of 6 %. Outstanding sales growth was achieved in the Asia-Pacific and Latin America regions posting organic increases of 22 % and 11 %, respectively.

In 2004, Fresenius Kabi reached new records in earnings. EBIT rose 20 % to € 176 million (2003: € 147 million). Besides the good progress made in international markets, cost optimization and efficiency increases, especially in production, had a positive effect. The EBIT margin was 11.8 %, an increase of 180 basis points over 10.0 % of the previous year.

Fresenius Kabi foresees continued momentum for 2005. Sales are expected to increase by about 10 % in constant currency including the Labesfal acquisition. The Asia-Pacific and Latin America regions are projected to continue their growth pattern. In parallel, Fresenius Kabi expects further optimize its cost base. As a consequence of both developments, the company is confident to post yet another significant earnings growth in 2005. The EBIT margin including the Labesfal acquisition is projected to increase to ≥ 13 %.
 

Fresenius ProServe

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

• Earnings within expectations
   
• Organic sales growth of 10 % achieved
   
• Strategic reorientation and clear focus on core activities
   
• Outlook for 2005: continued improvement in earnings

Fresenius ProServe simplified its organizational structure in 2004 and focused on three core activities: hospital management in Germany (Wittgensteiner Kliniken), hospital engineering and services (VAMED) and engineering and services for the pharmaceutical industry (Pharmaplan). The Company divested its nursing home activities and closed its international hospital management activities. Efforts to improve earnings at Wittgensteiner Kliniken were continued according to plan.

Fresenius ProServe increased sales in 2004 to € 813 million (2003: € 742 million). The increase in sales was solely achieved through organic growth and resulted from the positive development of the hospital engineering and services business.

EBIT at Fresenius ProServe was € 9 million (2003: € -19 million), including one-time expenses of € 8 million before taxes (2003: € 34 million). Excluding one-time expenses, Fresenius ProServe achieved an EBIT of € 17 million (2003: € 15 million).

Order intake at the project businesses of VAMED and Pharmaplan was € 244 million in 2004 (2003: € 278 million). This decrease is mainly due to delayed closing of contracts as well as a continued investment caution in the pharmaceutical industry.

Fresenius ProServe expects continued earnings improvement in 2005. Projected EBIT will be between € 20 million and € 25 million. Organic sales growth is expected to be in the range of 5 to 8 % resulting mainly from the hospital engineering and services business.


Video Webcast
As part of the publication of our 2004 results, an analyst conference will be held on February 24, 2005 at 1:30 p.m. CET. We sincerely invite all investors to follow the live video broadcast of the conference over the Internet at www.fresenius-ag.com /Investor Relations / Presentations. Following the conference, a recording of the conference will be available as video-on-demand.


Annual report
The 2004 Annual Report will be available at the end of March 2005 on the Internet at www.fresenius-ag.com / Investor Relations / Publications.

First quarter 2005:
Excellent start for Fresenius Group into fiscal year 2005

 

• Sales € 1.79 billion, + 6 % in constant currency, + 4 % at actual rates
   
• EBIT € 212 million, + 10 % in constant currency, + 8 % at actual rates
   
• Net income € 46 million, + 21 % in constant currency, + 18 % at actual rates

• Strong sales and earnings growth at Fresenius Medical Care, in particular in North America and Europe
   
• Significant EBIT margin increase at Fresenius Kabi; return to positive sales growth in Germany accomplished
   
• Earnings improvement at Fresenius ProServe

Fresenius Medical Care to acquire Renal Care Group, Inc.

• Excellent strategic and geographic fit to Fresenius Medical Care's US operations
   
• On a combined basis more than 156,000 patients in over 2,000 dialysis clinics world-wide
   
• Anticipated neutral to slightly earnings accretive in 2006 and clearly accretive in 2007 and thereafter

Fresenius Medical Care to propose conversion of preference shares into ordinary shares in combination with a change of the company's legal form into a KGaA

 

• Strategic step that increases the financial flexibility of Fresenius Medical Care to exploit future growth opportunities
   
• Move toward a single share class will improve trading liquidity and the overall attractiveness of the ordinary shares
   
• Fresenius AG retains management control and continues to fully consolidate Fresenius Medical Care in its financial statements

First quarter 2005:
Excellent start for Fresenius Group into fiscal year 2005


2005 Group outlook confirmed
Based on the excellent business performance in the first quarter, Fresenius confirms its positive 2005 full-year outlook before the impact of the Renal Care Group acquisition. Fresenius expects a constant-currency sales increase of 6 to 9 %. Net income is projected to grow by 15 to 20 % in constant currency. All business segments are expected to contribute to this increase.


Sustained sales growth
In the first quarter of 2005, group sales increased 6 % in constant currency. Organic growth contributed 4 % and acquisitions 3 % to this increase. Currency translation effects had a -2 % and disinvestments a -1 % effect on sales. At actual rates, sales were € 1,787 million, an increase of 4 % (Q1 2004: € 1,720 million).

Excellent constant-currency sales growth was achieved in North America (+8 %), in Latin America (+22 %) and in Africa (+53 %). Asia-Pacific had excellent sales growth for Fresenius Kabi offset by Fresenius ProServe's low project volume in this region compared to 2004.

Sales contribution of the three business segments:

 

Strong earnings growth
Fresenius achieved excellent growth rates in earnings: EBITDA rose 8 % in constant currency and 6 % at actual rates to € 284 million (Q1 2004: € 269 million). EBIT rose 10 % in constant currency and 8 % at actual rates to € 212 million (Q1 2004: € 197 million). The EBIT margin further improved to 11.9 % in the first quarter 2005 (Q1 2004: 11.5 %).

Net interest expense improved to € -47 million (Q1 2004: € -52 million) due to a lower debt level compared to the first quarter of 2004 in combination with lower interest rates and minor currency translation effects.

The tax rate for the first quarter of 2005 was 39.4 % (Q1 2004: 40.0 %), in line with the full-year expectation of 39 to 40 %.

Minority interest increased to € 54 million (Q1 2004: € 48 million). Minority shareholders in Fresenius Medical Care accounted for 96 % of minority interests.

Net income rose 21 % in constant currency and 18 % at actual rates to € 46 million (Q1 2004: € 39 million). EBIT growth at Fresenius Medical Care and Fresenius Kabi as well as lower interest expenses were key drivers for this increase.

Earnings per ordinary share were € 1.11 (Q1 2004: € 0.94). Earnings per preference share were € 1.12 (Q1 2004: € 0.95). EPS increased by 18 % for both share classes.


Investments on target
Group investments in the first quarter of 2005 were € 229 million. As expected, this was a significant increase from the same period of the previous year (Q1 2004: € 89 million). € 48 million was spent for property, plant and equipment and intangible assets (Q1 2004: € 48 million) and € 181 million for acquisitions (Q1 2004: € 41 million).


Solid cash flow performance
Operating cash flow decreased 8 % to € 168 million (Q1 2004: € 182 million) despite the excellent quarterly earnings. This was mainly due to higher income tax payments of Fresenius Medical Care in North America. Free cash flow before acquisitions was € 126 million (Q1 2005: € 136 million). Free cash flow after acquisitions and dividends was € -9 million (Q1 2004: € 98 million).


Solid balance sheet structure
Total assets increased 5 % to € 8,625 million (December 31, 2004: € 8,188 million). In constant currency, total assets grew by 3 %. Current assets increased 7 % to € 2,939 million, mainly due to acquisitions (December 31, 2004: € 2,755 million). In constant currency current assets rose 5 %.

Group debt rose 3 % to € 2,813 million as of March 31, 2005, primarily as a result of acquisitions. (December 31, 2004: € 2,735 million). In constant currency the increase was 1 %.

Based on the positive EBITDA development, the ratio net debt/EBITDA remained almost unchanged at 2.3 as of March 31, 2005 despite the increased debt level (December 31, 2004: 2.2).

Shareholders' equity including minority interests rose 7 % to € 3,565 million compared to € 3,347 million on December 31, 2004. The equity ratio including minority interest improved to 41.3 % (December 31, 2004: 40.9 %).


Employee numbers continue to grow
As of March 31, 2005, the Group had 69,874 employees worldwide, an increase of 2 % (December 31, 2004: 68,494).


Fresenius Biotech
Fresenius Biotech develops innovative therapies with trifunctional antibodies for the treatment of cancer as well as cell therapies for the treatment of the immune system. 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 suppress graft rejection following an organ transplantation.

In the field of cancer treatment, the final results of two Phase I studies will be presented on May 17, 2005 during the 41st Annual Meeting of the American Society of Clinical Oncology (ASCO):

• the use of the antibody removab^® in peritoneal carcinomatosis and
• the use of the antibody rexomun^® in breast cancer.

A Phase II study for the treatment of breast cancer and a phase II study for the treatment of gastric cancer are now in preparation following the encouraging results. The studies are scheduled to commence at the end of 2005.

For 2005, Fresenius Biotech continues to expect an EBIT in the range of € -35 to € -40 million, largely due to the expanded clinical study program.


The Business Segments

Fresenius Medical Care
Fresenius Medical Care is the world's leading provider of products and services for patients with chronic kidney failure. As of March 31, 2005, Fresenius Medical Care treated about 125,900 patients (+5 %) in 1,630 dialysis clinics (+4 %).

• Excellent growth in sales and earnings continued
   
• Successful business performance in North America and Europe
   
• 2005 outlook confirmed

Fresenius Medical Care achieved excellent sales growth of 10 % to US$ 1,609 million in the first quarter of 2005 (Q1 2004: US$ 1,459 million). In constant currency, sales rose 9 %. Organic sales growth was 7 %.

In North America Fresenius Medical Care increased revenues by 9 % to US$ 1,088 million (Q1 2004: US$ 1,003 million). Sales outside North America (the "International" segment) rose 14 % (in constant currency: 8 %) to US$ 521 million (Q1 2004: US$ 456 million) mainly due to the very positive business performance in Europe.

Sales in dialysis care rose 10 % to US$ 1,162 million (Q1 2004: US$ 1,058 million). In the first quarter of 2005, Fresenius Medical Care performed about 4.72 million dialysis treatments, an increase of 3 %. This includes 3.25 million treatments in North America (+3 %) and 1.47 million outside North America (+5 %). In dialysis products, Fresenius Medical Care achieved sales growth of 11 % to US$ 447 million (Q1 2004: US$ 401 million).

Fresenius Medical Care's EBIT increased by 11 % to US$ 220 million (Q1 2004: US$ 198 million), the EBIT margin was 13.7 %. Net income increased 18 % to US$ 107 million in the first quarter of 2005.

For the year 2005, Fresenius Medical Care confirms its outlook before the impact of the Renal Care Group acquisition. The company expects a revenue growth at constant currency between 6 and 9 % and net income growth in the low double-digit range.

For more information, see Fresenius Medical Care Investor News at www.fmc-ag.com.  


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

• Profitability significantly increased; EBIT margin of 13.1 % achieved
   
• Positive sales performance in Germany
   
• 2005 outlook confirmed

The acquisition of the Portuguese company Labesfal announced in early January was successfully closed in the first quarter of 2005. Labesfal manufactures and markets intravenously administered drugs (I.V. drugs). The company is consolidated in the financial statements of Fresenius Kabi as of January 1, 2005.

Sales at Fresenius Kabi rose 10 % in the first quarter of 2005 to € 398 million (Q1 2004: € 362 million). The company achieved good organic growth of 5 %. Acquisitions, mainly Labesfal, contributed 5 % to sales. Currency translation effects increased sales by 1 %, divestitures had a -1 % effect.

The development in the German market was positive. Fresenius Kabi was able to increase sales by 2 % after a decrease of 5 % in the first quarter 2004 which was a result of health care reform. Sales in the rest of Europe rose 12 %, mainly due to acquisitions. The Asian-Pacific region posted strong organic growth of 14 %.

Earnings developed positively in the first quarter of 2005. EBIT rose 27 % to € 52 million (Q1 2004: € 41 million). The EBIT margin was 13.1 % in the first quarter of 2005, an increase of 180 basis points compared to the first quarter of 2004 (11.3 %) and 90 basis points compared to the fourth quarter of 2004 (12.2 %).

Fresenius Kabi confirms its outlook for 2005. Including the Labesfal acquisition, constant-currency sales are expected to increase by about 10 % and the EBIT margin is projected to increase to >13 %.


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

• Earnings improvement accomplished
   
• Decline in sales due to restrained order situation in project business
   
• 2005 outlook confirmed

Fresenius ProServe achieved sales in the first quarter of 2005 of € 171 million(Q1 2004: € 199 million). On a comparable basis (excluding the nursing home business sold in 2004 and the discontinued international hospital management business), the sales decrease would have been 10 %.This decrease mainly resulted from the delayed closing of projects in the hospital engineering and services business (VAMED). Continued investment caution of the pharmaceutical industry led to lower sales in pharmaceutical engineering and services (Pharmaplan). Sales in the hospital management business met expectations (Wittgensteiner Kliniken).

In the first quarter of 2005, Fresenius ProServe increased EBIT to € 3 million (Q1 2004: € 1 million; before one-time expenses: € 2 million).

Order intake in the first quarter of 2005 was € 47 million (Q1 2004: € 70 million). For the full year 2005, Fresenius ProServe expects order intake to increase compared to 2004. The bulk of new orders is expected to be acquired in the third and fourth quarters of 2005.

Fresenius ProServe confirms its outlook for 2005 and expects an EBIT between € 20 and € 25 million. Organic sales growth is expected to be in the range of 5 to 8 %.


Fresenius Medical Care to acquire Renal Care Group, Inc.
Fresenius Medical Care today announced that it has entered into a definitive agreement to acquire Renal Care Group, Inc., (NYSE: RCI), Nashville, Tennessee, for a price of US$ 48.00 per share in cash. The total net consideration for the acquisition of all outstanding shares of Renal Care Group is US$ 3.5 billion, which will be all-debt financed. The acquisition is anticipated to be neutral to slightly accretive to earnings in 2006 and clearly accretive to earnings in 2007 and thereafter.

Renal Care Group is a fast-growing, highly profitable dialysis service provider that will be an attractive complement to Fresenius Medical Care's US business. In 2004, Renal Care Group's revenue was approx. US$ 1.35 billion with an EBIT of US$ 254 million, net income was US$ 122 million. As of March 31, 2005, Renal Care Group owned more than 425 dialysis clinics and served over 30,400 patients. Through the combination with Renal Care Group, Fresenius Medical Care will be well positioned to create additional growth potential for its dialysis product business and will provide opportunities to successfully leverage its cost leadership position in dialysis products and services.

Fresenius Medical Care plans to finance the acquisition primarily through an extension of its senior credit agreement. The existing US$ 1.2 billion credit agreement will be replaced by a US$ 5.0 billion senior credit facility. Financing commitments have been received from Bank of America and Deutsche Bank, and are subject to customary conditions.

The transaction is subject to the approval of Renal Care Group's shareholders and other customary closing conditions, including the expiration of the waiting period under the Hart-Scott Rodino Antitrust Improvements Act.

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

Fresenius Medical Care to propose conversion of preference shares into ordinary shares in combination with a change of the company's legal form into a KGaA
Fresenius Medical Care further announced its intention to offer the holders of the company's approx. 26.4 million preference shares the opportunity to convert these into ordinary shares. The preference shareholders who participate in this program pay a "premium" of € 12.25 per share for the conversion. Furthermore, the company will ask its ordinary shareholders to approve a change of the legal form from an "Aktiengesellschaft" (AG) to a "Kommanditgesellschaft auf Aktien" (KGaA).

As part of the transformation of legal form, a subsidiary of Fresenius AG in the legal form of an "Aktiengesellschaft" (stock corporation under German law) will be established as general partner of the Fresenius Medical Care AG & Co. KGaA. The Management Board of the general partner – which will be identical with the current Management Board of Fresenius Medical Care – will assume the management of Fresenius Medical Care. As long as Fresenius AG maintains ownership of more than 25 % of the share capital of the company, Fresenius AG will retain its current controlling position and fully consolidate the company in its financial statements.

The proposed change in the legal form of Fresenius Medical Care will allow to continue the high standards of corporate governance and transparency as today.

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


Live video webcast of the Analyst Meeting
Instead of a Conference Call only, Fresenius AG and Fresenius Medical Care will host an Analyst Meeting on May 4, 2005 at the headquarters in Bad Homburg, Germany.

The Fresenius Medical Care Analyst Meeting will be at 2.30pm CET / 8.30am EDT.
The live video webcast of the meeting at Fresenius Medical Care's website can be followed at www.fmc-ag.com in the "Investor Relations" section.

The Fresenius AG Analyst Meeting will be at 4.30pm CET / 10.30am EDT.
The live video webcast of the meeting at Fresenius AG's website can be followed at www.fresenius-ag.com in the "Investor Relations / Presentations" section.

A replay of both webcasts will be available shortly after each meeting.


Quarterly report
The complete quarterly report from the first quarter 2005 will be available beginning on May 13, 2005 on the Internet at www.fresenius-ag.com / Investor Relations / Publications.

• Sales: € 3.70 billion, + 6 % in constant currency, + 4 % at actual rates
   
• EBIT: € 453 million, + 12 % in constant currency, + 10 % at actual rates
   
• Net incombe: € 101 million, + 28 % in constant currency, + 26 % at actual rates

 

• Strong sales and earnings growth at Fresenius Medical Care; driven by continued gains in North America and Europe
   
• Fresenius Kabi achieves new record in EBIT margin; very good sales development in all regions
   
• Fresenius ProServe improves earnings and achieves good order intake

2005 Group outlook raised
Based on these excellent results Fresenius raises its full-year outlook (before the acquisition of Renal Care Group by Fresenius Medical Care) and now expects net income growth of 20 to 25 % in constant currency. Previously, the Company expected 15 to 20 % net income growth. The projection for sales growth in constant currency remains at 6 to 9 %. All business segments are expected to achieve sales and earnings growth.

Sustained sales growth
In the first half of 2005, Group sales increased 6 % in constant currency. Organic growth contributed 5 % and acquisitions 2 % to this increase. Currency translation had a -2 % and divestments a -1 % effect on sales. Sales were € 3,702 million, an increase of 4 % at actual rates (H1 2004: € 3,553 million).

Strong constant-currency sales growth was achieved in North America (+7 %), in Latin America (+19 %) and in Africa (+44 %). In Asia-Pacific, Fresenius Kabi achieved an excellent sales growth. The lower project volume at Fresenius ProServe primarily impacted the sales development in this region.

 

Sales contribution of the three business segments:

 

Strong earnings growth
EBITDA increased 9 % in constant currency and 7 % at actual rates to € 604 million (H1 2004: € 564 million). Group EBIT rose 12 % in constant currency and 10 % at actual rates to € 453 million (H1 2004: € 412 million). The Group EBIT margin further improved to 12.2 % in the first half of 2005 (H1 2004: 11.6 %).

Group net interest expense was € -97 million in the first half of 2005 (H1 2004: € -104 million). This improvement was mainly the result of a lower debt level compared to the first half of 2004 in combination with lower interest rates and currency translation effects. The tax rate for the first half of 2005 was 39.3 % (H1 2004: 40.6 %), in line with the full-year expectation of 39 to 40 %.

Minority interest increased to € 115 million (H1 2004: € 103 million) mainly due to the strong earnings development of Fresenius Medical Care, which accounts for 96 % of minority interest.

Group net income grew strongly by 28 % in constant currency and 26 % at actual rates to € 101 million (H1 2004: € 80 million). Excellent operating results of Fresenius Medical Care and Fresenius Kabi, lower interest expenses and a slightly lower tax rate contributed to this increase.

Earnings per ordinary share were € 2.46 (H1 2004: € 1.95). Earnings per preference share were € 2.48 (H1 2004: € 1.97). EPS increased 26 % for both share classes.

Investments considerably increased
In the first half of 2005, Group investments doubled to € 342 million (H1 2004: €172 million). This significant increase was mainly driven by acquisitions at Fresenius Kabi. € 115 million was spent for property, plant and equipment and intangible assets (H1 2004: € 111 million) and € 227 million for acquisitions (H1 2004: € 61 million).

Solid cash flow performance
Operating cash flow was slightly lower than in the previous year at € 329 million (H1 2004: € 340 million) despite the excellent earnings development. This was mainly due to higher income tax payments of Fresenius Medical Care in North America. Free cash flow before acquisitions and dividends was € 224 million (H1 2004: € 239 million). Free cash flow after acquisitions (€ 182 million) and dividends (€ 127 million) was € -85 million (H1 2004: € 67 million).

Solid balance sheet structure
Total assets increased 10 % to € 9,045 million (December 31, 2004: € 8,188 million). In constant currency, total assets grew 3 %. Current assets increased 12 % to € 3,090 million (December 31, 2004: € 2,755 million). In constant currency, current assets grew 6 %. This increase was driven by acquisitions and growth of operations.

Group debt rose 9 % to € 2,993 million as of June 30, 2005 (December 31, 2004: € 2,735 million). In constant currency, debt grew 5 % and was driven by acquisitions.

The net debt/EBITDA ratio was 2.4 as of June 30, 2005 (December 31, 2004: 2.2). The positive EBITDA increase partially offset the higher debt level.

Shareholders' equity including minority interest rose 11 % to € 3,721 million compared to € 3,347 million on December 31, 2004. The equity ratio including minority interest improved to 41.1 % (December 31, 2004: 40.9 %).

Employee numbers continue to grow
As of June 30, 2005, the Group had 71,109 employees worldwide, an increase of 4 % (December 31, 2004: 68,494).

Fresenius Biotech
Fresenius Biotech develops innovative therapies with trifunctional antibodies for the treatment of cancer as well as cell therapies for the treatment of the immune system. 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.

In the field of antibody therapies, two phase II studies are in preparation to investigate the treatment of gastric cancer and breast cancer following positive results from two phase I studies for the treatment of peritoneal carcinomatosis and breast cancer. Current studies for malignant ascites, malignant pleural effusion and ovarian cancer are continuing according to plan.

For 2005, Fresenius Biotech continues to expect an EBIT in the range of € -35 to € -40 million, largely due to the expanded clinical study program.

The Business Segments

Fresenius Medical Care
Fresenius Medical Care is the world's leading provider of products and services for patients with chronic kidney failure. As of June 30 2005, Fresenius Medical Care was serving approximately 128,200 patients (+4 %) in 1,645 dialysis clinics (+3 %).

• Strong sales and earnings growth continued
   
• North America and Europe once again key sales and earnings drivers
   
• 2005 net income outlook raised

In the first half of 2005, Fresenius Medical Care achieved sales growth of 9 % to US$ 3,283 million (H1 2004: US$ 3,011 million). In constant currency, sales rose 7 %. Organic growth was 6 %.
In North America Fresenius Medical Care achieved a strong sales increase of 7 % to US$ 2,215 million (H1 2004: US$ 2,063 million). Sales outside North America ("International") rose 13 % to US$ 1,068 million (H1 2004: US$ 948 million) mainly because of the very good development of the European business.
Sales in dialysis care increased 8 % to US$ 2,363 million (H1 2004: US$ 2,185 million). In the first half of 2005, Fresenius Medical Care delivered approximately 9.6 million dialysis treatments, an increase of 4 % over the same period in the previous year. North America accounted for 6.6 million treatments (+3 %) and the International segment for 3.0 million treatments (+5 %). Fresenius Medical Care achieved sales growth in dialysis products of 11 % to US$ 920 million (H1 2004: US$ 826 million).

EBIT rose 11 % to US$ 458 million (H1 2004: US$ 411 million) and the EBIT margin was 14.0 % (H1 2004: 13.6 %). Net income at Fresenius Medical Care grew to US$ 223 million in the first half of 2005, an increase of 17 %.

Based on its strong performance in the first half of 2005, Fresenius Medical Care now expects net income growth to be between 12 and 15 %. Previously, the company anticipated net income growth for 2005 to be in the low double-digit range. This guidance does not take into effect the impact of the Renal Care Group acquisition or the expected one-time costs of around US$ 10 million for the full year 2005 in connection with the transformation of Fresenius Medical Care's legal form, or the conversion of the preference shares into ordinary shares. Top-line revenue growth at constant currency should remain between 6 and 9%.

For further information, please see Fresenius Medical Care's Press release.

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

• Earnings target exceeded: new record EBIT margin of 13.8 % in the second quarter of 2005
   
• Excellent organic growth of 6 % in the first half of 2005
   
• 2005 earnings outlook raised

In the first half of 2005, sales at Fresenius Kabi rose 11 % to € 818 million (H1 2004: € 738 million). The company achieved an excellent organic growth of 6 %. Acquisitions, primarily the Portuguese company Labesfal, contributed 5 % to sales. Currency translation added 1 % to sales growth. Divestments had a -1 % effect on sales.

Sales in Germany rose 2 %. Sales in Europe (excluding Germany) increased 13 %. Acquisitions contributed significantly to this growth. Fresenius Kabi continued to grow at double-digit rates outside of Europe: The Asia-Pacific region showed strong organic growth with an increase of 16 % and Latin America posted organic sales growth of 13 %.

Fresenius Kabi significantly increased earnings. EBIT rose 29 % in the first half of 2005 to € 110 million (H1 2004: € 85 million). The EBIT margin was 13.4 %, an increase of 190 basis points compared to the first half of 2004 (11.5 %). Compared to the first quarter of 2005, the Q2-EBIT margin improved by 70 basis points to 13.8 %.
Fresenius Kabi clearly exceeded the projected full-year EBIT margin target of >13.0 % in the first half of 2005. Therefore, the company raises its full-year EBIT margin outlook to >13.5 %. Constant-currency sales growth should remain at about 10 %.

Fresenius ProServe
Fresenius ProServe offers services for the international health care sector including hospital management and hospital planning and construction as well as planning and construction of pharmaceutical and medical-technical production sites. 

• Further improvement in earnings
   
• Good order intake
   
• Sales below previous year due to project delays

In the first half of 2005, Fresenius ProServe achieved sales of € 350 million (H1 2004: € 383 million). On a comparable basis (excluding the nursing home business sold in 2004 and the discontinued international hospital management business), the sales decrease would have been 4 %. This decrease resulted from delayed closing of projects in the hospital engineering and services business (VAMED). In addition, the ongoing investment caution in the pharmaceutical industry led to lower sales in pharmaceutical engineering and services (Pharmaplan). An increase in sales of 3 % was achieved in the hospital management business (Wittgensteiner Kliniken).

EBIT increased to € 7 million in the first half of 2005 despite lower sales (H1 2004: € 0 million; before one-time charges: € 6 million). On a comparable basis, this is an increase of 17 %.

Order intake developed very positively in the second quarter and reached € 109 million. Order intake in the first half of 2005 increased 15 % to € 156 million (H1 2004: € 136 million). Order backlog in the first half of 2005 increased 14 % to € 382 million (December 31, 2004: € 335 million). Based on this development and additional contracts expected to be signed in the third and fourth quarters of 2005, Fresenius ProServe expects improved sales in the second half of 2005.

Fresenius ProServe confirms its full-year outlook for 2005 and expects an EBIT of € 20 to € 25 million and an organic sales growth of 5 to 8 %.


Live video webcast
As part of the earnings announcement for the first half of 2005, an analyst conference will be held at the Fresenius headquarters in Bad Homburg on August 4, 2005 at 1:30 p.m. CEDT (7.30 a.m. EDT). The analyst conference will be broadcast live over the Internet at www.fresenius-ag.com / Investor Relations / Presentations. Following the meeting, a recording of the conference will be available as video-on-demand.

Quarterly report
The full first-half and second-quarter report will be available on the Internet by August 15, 2005 at www.fresenius-ag.com / Investor Relations / Publications.

• Acquisition of HELIOS Kliniken builds Fresenius ProServe's hospital management business 
• Acquisition of Clinico to develop Fresenius Kabi's medical devices business  
• Committed financing 
• Excellent financial results in the 1st-3rd quarter of 2005 (preliminary);
  2005 Group outlook – earnings guidance raised

  

Acquisition of HELIOS Kliniken GmbH, a leading hospital operator in Germany

Fresenius has entered into an agreement to acquire HELIOS Kliniken GmbH, Fulda, Germany. Through the acquisition, Fresenius creates an excellent platform for further growth in the German acute care market. HELIOS is recognized for having medical quality standards of the highest level in the industry. With expected sales of approx. € 1.2 billion in 2005 the company ranks among the largest and financially most successful private hospital chains in Germany. The acquisition of HELIOS will establish Fresenius ProServe as one of the leading private hospital operators in Germany and create a strong third business segment within Fresenius Group.

„The hospital management business in Germany has been our clear focus following the streamlining of Fresenius ProServe's operations in 2003 and 2004. The acquisition of one of the most successful German hospital operators is an unique opportunity to strengthen our position in acute care hospitals. Building on this strong position, we will capitalize on the excellent growth potential of the ongoing privatization process in the German hospital market. HELIOS is an extremely well-managed company and is, just like Fresenius, strongly committed to deliver best-in-class medical treatment," commented Dr. Ulf M. Schneider, Chairman of the Management Board of Fresenius AG.

HELIOS Kliniken GmbH is one of the leading private German hospital operators in terms of revenue growth and profitability. Since 2002, the company posted a compounded annual growth rate of 28 % in sales. In 2004, HELIOS achieved revenues of € 1,161 million, operating income of € 95 million and net income of € 66 million. The company owns 24 hospitals with a total capacity of approx. 9,300 beds. HELIOS is the only hospital chain in Germany that operates four maximum-care hospitals with more than 1,000 beds each. The company has approx. 18,000 employees and performs about 330,000 inpatient and about 700,000 outpatient treatments annually.

HELIOS enjoys an excellent reputation with medical experts and patients. The company implemented a comprehensive medical quality management system and is the first German hospital chain that sets quantitative medical targets. The Annual report as well as the quality and intellectual capital reports document HELIOS's achievements and targets with outstanding transparency. HELIOS's experienced and acquisition-proven management team will continue to manage the company. All members of the HELIOS Management continue to be shareholders in the company.

"Our proven medical know-how and partnership network management is the basis for our leading position in medical quality standards. With Fresenius, we will further strengthen this position. We are well prepared for further growth in the highly dynamic German hospital market for acute care, even for ambitious privatization projects," commented Ralf Michels, Managing Director of HELIOS Kliniken GmbH.

In the future, the hospitals of HELIOS and the Fresenius hospitals of the Wittgensteiner Group will operate under the leadership and brand of HELIOS. Both companies are highly complementary in terms of geographical fit and medical focus. The combined business will include 55 clinics with 2004 pro-forma revenues of approx. € 1.5 billion.

The purchase price for 100 % of the HELIOS shares is € 1.5 billion plus € 100 million for the net cash position. Fresenius will acquire 94 % of the HELIOS shares, 6 % will continue to be held by the HELIOS management.

The acquisition requires antitrust approval. Fresenius anticipates to close this transaction at the end of 2005.


Acquisition of the business of Clinico GmbH – Fresenius Kabi strengthens product portfolio and production network of medical devices

Fresenius Kabi has entered into an agreement to acquire the business of Clinico GmbH, Bad Hersfeld, Germany. Clinico manufactures medical devices used for the application of infusion therapies and clinical nutrition, such as sterile disposables for the application of drugs, application systems for clinical nutrition as well as catheter systems. The company has a development center and a tool-making site in Germany as well as production plants in Poland and China with state-of-the-art production technologies. All Clinico production plants are certified according to ISO and meet the requirements of the FDA.

Fresenius Kabi is the European leader in infusion therapy and clinical nutrition and offers medical devices for the application of these therapies. With the acquisition of Clinico, Fresenius Kabi extends its product portfolio and will distribute Clinico's products through its existing sales and distribution organization. In addition, the company increases its development and production network for medical devices.

Preliminary sales for the fiscal year 2004/05 (September 30) were about € 51 million, mainly achieved with industrial clients. Clinico has over 1,500 employees.

The acquisition requires the approval of the German antitrust authority.


Committed financing

It is planned to finance the acquisitions through a capital increase in the amount of around € 800 million and a bond in the amount of around € 700 million. The capital increase from approved capital is planned to be completed in 2005 with a subscription right granted to shareholders. A major German bank has committed to underwrite the total amount of the capital increase at customary market conditions. The details of the capital increase will be published in the coming weeks. Commitments for a € 700 million bridge financing have been received from two international banks, as the bond is planned to be issued in the first half of 2006. The Else Kröner-Fresenius-Foundation has notified us, that it will participate in the planned capital increase with an amount of € 100 million. In addition, the proceeds from the disposal of unused subscription rights will be fully invested. Allianz Lebensversicherungs-AG has notified us, that it will positively support the planned capital increase.

Fresenius expects the 2005 acquisitions of Labesfal, Clinico and HELIOS to be slightly accretive to 2006 earnings per share and to be clearly accretive as from 2007.

The financing mix of equity and debt is designed to keep Fresenius Group's key credit ratios substantially unchanged.


Excellent financial results in the 1st-3rd quarter 2005 (preliminary);
2005 Group outlook – earnings guidance raised

In context with the announced transactions, Fresenius provides an overview on the financial results of the first nine months 2005.

Based on preliminary figures, Fresenius achieved excellent financial results in the first nine months of 2005.

Group sales increased 7 % in constant currency. At actual rates, sales were € 5,717 million, an increase of 6 %. Earnings increased stronger than sales: Group EBIT rose 13 % in constant currency and 12 % at actual rates to € 702 million. Group net income grew by 28 % in constant currency and 27 % at actual rates to € 159 million.

The business segments made the following contribution to this excellent development:

Based on preliminary figures, Fresenius Medical Care achieved sales growth of 9 % to US$ 5,000 million in the first nine months of 2005. EBIT and net income posted a strong performance: EBIT rose 11 % to US$ 694 million including US$ 8 million of one-time costs related to the transformation of Fresenius Medical Care's legal form into a KGaA. Net income was US$ 338 million, up 15 % from the first nine months of 2004.

For the year 2005, Fresenius Medical Care confirms its outlook and expects a revenue growth at constant currency between 6 and 9 % and a net income growth between 12 and 15 %. The company expects to achieve the upper end of the net income guidance. This guidance does not take into effect the impact of the Renal Care Group acquisition or the one-time costs for the full year 2005 in connection with the transformation of the company's legal form, or the conversion of the preference shares into ordinary shares.

Fresenius Kabi achieved an excellent sales growth of 12 % to € 1,239 million in the first nine months. EBIT increased significantly by 32 % to € 170 million. The EBIT margin was 13.7 % (Q1-3 2004: 11.7 %). In Q3 2005, the EBIT margin improved to 14.3 %.

Fresenius Kabi confirms its full-year EBIT margin outlook of >13.5 %. Constant-currency sales growth is expected at about 10 %.

In the first nine months of 2005, Fresenius ProServe achieved sales of € 552 million, a decrease of 5 % compared to the previous year. On a comparable basis (excluding the nursing home business sold in 2004 and the discontinued international hospital management business), sales would have been on previous year's level. EBIT was € 11 million in the first nine months of 2005 (Q1-Q3 2004: € 3 million; before one-time expenses: € 11 million). Based on a stronger order intake in its project business, Fresenius ProServe expects improved sales and earnings in Q4 2005.

Fresenius ProServe confirms its full-year outlook for 2005 and expects EBIT of € 20 to € 25 million and organic sales growth of 5 to 8%.

Based on these excellent preliminary Group figures, Fresenius raises its full-year earnings outlook (before the announced acquisitions): Net income is expected to grow at >25 % in constant currency. Previously, the Company expected 20 to 25 % net income growth. The projection for constant-currency sales growth remains at 6 to 9 %.

The final figures for the first nine months of 2005 will be announced on November 3, 2005, as originally scheduled.


Key figures of the business segments (preliminary):

Analyst Meeting and live video webcast

Fresenius AG will host an analyst meeting today, Friday, October 14, 2005, at 3.00 p.m. CEDT / 9.00 a.m. EDT at its headquarters in Bad Homburg, Germany.

The live video webcast of the analyst meeting can be followed at www.fresenius-ag.com.  A replay of the webcast will be available shortly after the meeting.


Glossary - maximum-care hospitals
The government plan for general and specialty hospitals basically encompasses four categories. Hospitals for maximum-care generally go far beyond the other categories with their range of services. They typically hold their clinical capacities for 24 hours 7days a week and are obliged to particular standards of quality assurance. Furthermore they shall provide state of the art medical and technical equipment. Hospitals for maximum-care are especially obliged to educational and professional training.

• Sales € 5.7 billion,
• + 7 % in constant currency, + 6 % at actual rates
• EBIT € 703 million,
  + 13 % in constant currency, + 12 % at actual rates
• Net income € 161 million,
  + 30 % in constant currency, + 29 % at actual rates 

• Fresenius Medical Care continues strong sales and earnings growth
• Fresenius Kabi achieves excellent operating income and strong organic growth
• Fresenius ProServe increases order intake by 20 %

Compared to the preliminary figures announced on October 14, 2005, EBIT improved by € 1 million to € 703 million and net income by € 2 million to € 161 million.


2005 Group outlook confirmed
Fresenius confirms its increased earnings guidance as announced in the preliminary nine-month results release on October 14, 2005 as well as its sales expectation for the full-year 2005 (before the announced acquisitions).

Sales – high organic growth
In the first nine months of 2005, Group sales increased 7 % in constant currency. Organic growth contributed 6 % and acquisitions 2 % to this increase. Currency translation had a -1 % and divestments a -1 % effect on sales. Sales were € 5,712 million, an increase of 6 % at actual rates (Q1-3 2004: € 5,399 million).

Remarkable constant-currency sales growth was achieved in the main markets North America and Europe of 7 % each. Strong growth rates were achieved in Latin America (+20 %) and in Africa (+29 %). In Asia-Pacific, Fresenius Kabi achieved excellent sales growth. The lower project volume at Fresenius ProServe impacted the sales development in this region.

 Sales contribution of the three business segments: 
 

 

 

Excellent earnings growth
EBITDA increased 11 % in constant currency and 9 % at actual rates to € 937 million (Q1-3 2004: € 857 million). Group EBIT rose 13 % in constant currency and 12 % at actual rates to € 703 million (Q1-3 2004: € 628 million). The Group EBIT margin further improved to 12.3 % in the first nine months of 2005 (Q1-3 2004: 11.6 %).

Group net interest was € -146 million in the first nine months of 2005 (Q1-3 2004: € -156 million). This improvement was mainly the result of a lower debt level compared to the first nine months of 2004 in combination with lower interest rates.

The tax rate for the first nine months of 2005 was 39.3% (Q1-3 2004: 40.3 %), in line with the full-year expectation.

Minority interest increased to € 177 million (Q1-3 2004: € 157 million). 96 % was attributable to minority interest of Fresenius Medical Care.

Group net income grew strongly by 30 % in constant currency and by 29 % at actual rates to € 161 million (Q1-3 2004: € 125 million). Excellent operating results of the two largest business segments Fresenius Medical Care and Fresenius Kabi, lower interest expenses and a lower tax rate contributed to this increase.

Earnings per ordinary share were € 3.92 (Q1-3 2004: € 3.04). Earnings per preference share were € 3.94 (Q1-3 2004: € 3.06). EPS increased 29 % for both share classes.


Investments considerably increased
In the first nine months of 2005, Group investments increased considerably to € 460 million (Q1-3 2004: € 253 million). € 196 million was spent for property, plant and equipment and intangible assets (Q1-3 2004: € 174 million) and € 264 million for acquisitions (Q1-3 2004: € 79 million). The increase in acquisition spending was mainly driven by Fresenius Kabi.


Solid cash flow performance
Fresenius achieved a very good operating cash flow of € 592 million in the first nine month of 2005 (Q1-3 2004: € 580 million). This positive performance was driven by improved earnings whereas higher income tax payments of Fresenius Medical Care in North America had a negative effect. Free cash flow before acquisitions and dividends was € 412 million (Q1-3 2004: € 423 million). Free cash flow after acquisitions (€ 213 million) and dividends (€ 132 million) was € 67 million (Q1-3 2004: € 232 million). This figure was driven by significantly higher acquisition-spending and higher dividend payments.


Solid balance sheet structure
Total assets increased 12% to € 9,196 million (December 31, 2004: € 8,188 million). In constant currency, total assets grew 5 %. Current assets increased 15 % to € 3,163 million (December 31, 2004: € 2,755 million). In constant currency, current assets grew 9 %. This increase was driven by acquisitions and growth of operations.

Group debt rose 3 % to € 2,821 million as of September 30, 2005 (December 31, 2004: € 2,735 million). In constant currency, debt was 1 % below previous year-end's figure.

The net debt/EBITDA ratio was 2.1 as of September 30, 2005 (December 31, 2004: 2.2).
Shareholders' equity including minority interest rose 17 % to € 3,932 million compared to € 3,347 million on December 31, 2004 (at constant currency: +6 %). The equity ratio including minority interest improved to 42.8 % due to strong increase in earnings and currency translation effects (December 31, 2004: 40.9 %).


Employee numbers continue to grow
As of September 30, 2005, the Group had 72,484 employees worldwide, an increase of 6 % (December 31, 2004: 68,494).


Fresenius Biotech
Fresenius Biotech develops innovative therapies with trifunctional antibodies for the treatment of cancer as well as cell therapies for the treatment of the immune system. 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.

In the field of trifunctional antibody therapies, the current studies for ovarian cancer (Phase IIa), malignant ascites (Phase II/III) and malignant pleural effusion (Phase I) are continuing according to plan. Results of those studies will be presented for ovarian cancer in the first half of 2006 and for malignant ascites as well as malignant pleural effusion in the second half of 2006. Two phase II studies are in preparation to investigate the treatment of gastric cancer and breast cancer following positive results from two phase I studies for the treatment of peritoneal carcinomatosis and breast cancer. In addition, Fresenius Biotech acquired from its partner Trion the exclusive worldwide clinical development, registration, marketing and sales rights for the trifunctional antibody lymphomun. With this antibody Fresenius Biotech extends its range of indications from solid tumors to malignancies of the blood. The antibody is in preclinical development.


The Business Segments

Fresenius Medical Care
Fresenius Medical Care is the world's leading provider of products and services for patients with chronic kidney failure. As of September 30, 2005, Fresenius Medical Care was serving approximately 130,400 patients (+6 %) in 1,670 dialysis clinics (+5 %). The company delivered about 14.7 million treatments in the first nine months of 2005 (+5 %).

 

• Strong sales and earnings growth continued
• Excellent performance in North America and Europe
• 2005 outlook confirmed

In the first nine months of 2005, Fresenius Medical Care achieved sales growth of 9 % to US$ 4,999 million (Q1-3 2004: US$ 4,588 million). In constant currency, sales rose 8 %. Organic growth was 7 %.

In North America Fresenius Medical Care achieved a strong sales increase of 7 % to US$ 3,383 million (Q1-3 2004: US$ 3,149 million). Sales outside North America ("International") showed an even stronger growth of 12 % to US$ 1,616 million (Q1-3 2004: US$ 1,439 million). Sales in dialysis care increased 8 % to US$ 3,610 million (Q1-3 2004: US$ 3,334 million). In dialysis products, Fresenius Medical Care achieved sales growth of 11 % to US$ 1,389 million (Q1-3 2004: US$ 1,254 million).

EBIT rose 11 % to US$ 695 million (Q1-3 2004: US$ 625 million) and the EBIT margin was 13.9 % (Q1-3 2004: 13.6 %). EBIT includes one-time costs of US$ 8 million related to the transformation of Fresenius Medical Care's legal form into a KGaA. As previously announced, the company expects one-time costs for the full year 2005 to be approximately US$ 10 million for the transformation. Net income grew by 16 % to US$ 339 million in the first nine months of 2005.

For the year 2005, the Fresenius Medical Care reconfirms its outlook. This guidance does not take into effect the impact of the Renal Care Group acquisition or the one-time costs for the full year 2005 in connection with the transformation of the company's legal form, nor the conversion of the preference shares into ordinary shares.

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


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

• New record EBIT margin of 14.3 % in the third quarter of 2005 
• Excellent organic growth of 7 % in the first nine months of 2005 
• 2005 outlook confirmed

In the first nine months of 2005, Fresenius Kabi's sales rose 12 % to € 1,239 million (Q1-3 2004: € 1,105 million). The company achieved an excellent organic growth of 7 %. Acquisitions, primarily the generic I.V. drug company Labesfal, contributed 5 % to sales. Currency translation added 1 % to sales growth. Divestments had a -1 % effect on sales.

Sales in Germany rose 2 %. Sales in Europe (excluding Germany) increased 14 %. Acquisitions contributed significantly to this growth. Fresenius Kabi continued to grow at double-digit rates outside of Europe: In Asia-Pacific Fresenius Kabi achieved strong growth of 15 %, in Latin America of 20 % and in Africa of 18 %.

EBIT of Fresenius Kabi significantly increased by 32 % in the first nine months to € 170 million (Q1-3 2004: € 129 million). The EBIT margin was 13.7 % (Q1-3 2004: 11.7 %). In Q3 2005, the EBIT margin improved by 50 basis points to 14.3 % compared to Q2 2005.
Fresenius Kabi confirms its full-year 2005 outlook.


Fresenius ProServe
Fresenius ProServe offers services for the international health care sector including hospital management and hospital planning and construction as well as planning and construction of pharmaceutical and medical-technical production sites.

• Order intake increased by 20 % in the first nine months of 2005
• Strong 4th quarter in project business expected
• 2005 outlook confirmed

In the first nine months of 2005, Fresenius ProServe achieved sales of € 551 million (Q1-3 2004: € 581 million). On a comparable basis (excluding the nursing home business sold in 2004 and the discontinued international hospital management business), sales were at previous year's level. Sales growth of 2 % to € 260 million was achieved in the hospital management business (Wittgensteiner Kliniken). In the hospital engineering and services business (VAMED) sales rose by 1 % to € 236 million. In the pharmaceutical engineering and services business (Pharmaplan) the order intake improved and Pharmaplan's sales increased in the third quarter 2005.

EBIT was € 11 million in the first nine months of 2005 (Q1-3 2004: € 3 million; before one-time expenses: € 11 million) and in line with the company's expectations.

Order intake and order backlog developed very positively: Order intake in the first nine months of 2005 increased 20 % to € 239 million (Q1-3 2004: € 199 million). Order backlog as of September 30, 2005 rose 19 % to € 399 million (December 31, 2004: € 335 million). Fresenius ProServe expects a strong fourth quarter 2005 in its project business.

Fresenius ProServe confirms its full-year outlook for 2005.


Live video webcast
As part of the earnings announcement for the first nine months of 2005, an analyst conference will be held at the Fresenius headquarters in Bad Homburg on November 3, 2005 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-ag.com / Investor Relations / Presentations. Following the meeting, a recording of the conference will be available as video-on-demand.


Quarterly report
The full nine-months and third-quarter report will be available on the Internet in due course at www.fresenius-ag.com / Investor Relations / Publications.

• Sales: + 3 % to € 7.5 billion
  currency-adjusted: + 9 %
   
• EBIT: + 10 %* to € 837 million
   
• Net income: + 44 %* to € 134 million
   
• Dividend: + 10 % to
  € 1.14 per ordinary share and
  € 1.17 per preference share

The Fresenius health care group increased sales in the 2002 financial year by a plus of 3 % to € 7,507 million. Calculated at the exchange rates of the previous year the sales increase amounted to 9 %. Net income of the Fresenius Group increased by 44 % to € 134 million. This increase resulted from goodwill no longer being amortized in accordance with the changes in the US GAAP accounting rules effective since January 1, 2002.

Dividend
The Managing Board will propose to the Supervisory Board that the dividend be increased. This also reflects our strong belief in the future earnings development. A dividend of € 1.14 (2001: € 1.03) per ordinary share entitled to dividend, and of € 1.17 (2001: € 1.06) per preference share entitled to dividend is to be paid. This corresponds to an increase of 11 % per ordinary share and 10 % per preference share, and a total payment of € 47.3 million.

Accounting at the Fresenius Group has been in accordance with US GAAP since January 1, 2002. The figures for the previous year therefore correspond to the US GAAP accounting rules in force during 2001, i.e. the figures for 2001 include amortization of goodwill.

* Comparable figure without special charge for US legal issues

 

 

 

Group outlook on year-end 2003
The Fresenius Group is in an excellent strategic position worldwide. Thanks to its leading market positions in many of its fields of activity, Fresenius has a solid basis for growth in the future, supported by new products and therapies. Despite the difficult economic development and sustained pressure to save costs in the health systems, especially in the western health care markets, the Group expects a positive development in the 2003 financial year. At the exchange rates in force during 2002, a high single-digit sales growth rate is expected for the 2003 financial year. This is an ambitious target in view of the absolute sales figure of € 7.5 billion achieved in 2002, and since Fresenius has to exceed market growth. Earnings are also expected to further increase at constant exchange rates: The growth rate in net income will be higher than that of sales.


Sales
In the 2002 financial year, Fresenius increased consolidated sales to € 7,507 million (+ 3%). A continued strong organic growth of 6 % again confirms the good position of Fresenius in the markets. Acquisitions increased growth by 3 percentage points. The changes in exchange rates had an effect of –6 percentage points. The devaluation of the Argentinean peso, and in particular the weaker US dollar compared to the euro
(- 5.6 % on average over the year) negatively affected sales in the currency conversion.

The strongest regions of the Group from a sales point of view continue to be North America with 54 % and Europe with 34 % of total sales, followed by the region Asia-Pacific with 8 % and Latin America and other regions with 4 %. Fresenius achieved sales increases in all regions of the world on a currency-adjusted basis: High growth rates were achieved particularly in the region Asia-Pacific. Despite the difficult economic situation in Argentina and Brazil, sales in Latin America rose by 11 % currency-adjusted.

 

 

The breakdown of sales by business segment compared to the previous year changed in the favour of Fresenius ProServe, since Wittgensteiner Kliniken AG which was acquired effective June 1, 2001 was consolidated for a whole year for the first time in 2002.

 


Earnings
In the 2001 financial year Fresenius Medical Care had taken a special charge for expenses in connection with legal disputes in the United States relating to the National Medical Care transaction in 1996. In order to make it easier to compare the development of the Group, the following report includes comments on the previous year's figures without this special charge.

Earnings of the Fresenius Group were influenced in the 2002 financial year by two main factors: On the one hand, goodwill was no longer amortized as a result of the change in US GAAP accounting rules as of January 1, 2002, which had a positive effect on earnings. On the other hand, there were negative impacts on earnings through expenses in the production facilities and in the services field in connection with the conversion of dialysis treatment from re-use to single-use dialysers by Fresenius Medical Care in the United States.

Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to € 1,178 million and were 6 % (1 % at constant exchange rates) lower than the previous year's figure. The EBIT growth rate, 10 % to € 837 million, resulted from goodwill no longer being amortized. If EBIT of the year 2001 before special charge does not include goodwill amortization, EBIT of 2002 would have been 8 % (currency-adjusted: 4 %) lower. The goodwill in the Fresenius Group's balance sheet has substance.

Net interest of the Group amounted to € -270 million and improved in the 2002 financial year by 6 % (2001: € -286 million). The conversion of interest expenses from US dollars to euros had a positive effect, since a large portion of bank loans were granted in the United States. Furthermore, the redemption of the high-interest trust preferred securities due in 2006 of Fresenius Medical Care reduced the interest expense.

The tax ratio dropped from 42.6 % in 2001 to 37.0 % in the year under report, largely caused by goodwill no longer being amortized.

The share of earnings allocated to minority interests increased to € 218 million, after € 180 million in the 2001 financial year. Of this amount, 94 % of minority interests concern Fresenius Medical Care.

Net income increased to € 134 million compared to € 93 million in 2001.

Earnings per share amounted to € 3.27 after € 2.29 in the previous year, based on a total of 40,969,684 ordinary and preference shares.

The changes in currency exchange rates negatively influenced the earnings situation of the Group through translation effects: At constant exchange rates, i.e. calculated at the 2001 exchange rates, EBIT would have increased by 15 % and net income by 53 %.


Capital expenditure
Fresenius invested € 507 million in the year under report. This is 7 % of total consolidated sales. In the previous year the investment was € 1,233 million (17% of sales), strongly marked by acquisitions. With the number of acquisitions in the recent years Fresenius was able to achieve leading positions in its markets. These considerable efforts have been carried out to secure future growth.

While investments in tangible and intangible assets decreased by € 52 million to € 377 million, funds provided for acquisitions dropped substantially to € 130 million from € 804 million in 2001. Of the total amount invested in the year under report, 74 % was allocated to tangible and intangible assets and 26 % to acquisitions.

Acquisitions mainly concerned the purchase of dialysis clinics by Fresenius Medical Care. Major investment projects in the field of tangible assets were the founding and equipping of dialysis clinics, mainly in the United States, as well as the extension and modernisation of existing clinics, the building of a joint production facility in Mexico for infusion solutions of Fresenius Kabi and peritoneal dialysis products of Fresenius Medical Care. In addition, Fresenius Kabi's European production plants for infusion solutions continued to be build up and optimised.

Split into business segments, Fresenius Medical Care invested 68 % of the total amount, followed by Fresenius Kabi with 15 %. By region, 49 % of investments were made in Europe, followed by North America with 35 % and the regions Asia-Pacific and Latin America with 8 % each.


Cash flow
The cash flow statement of the Group developed extremely well. The operating cash flow and free cash flow showed high growth rates.

The operating cash flow amounted to € 697 million in the year under report (€ 509 million in 2001). This corresponds to an increase of 37 %. It fully covers the financing requirements from investment activities before acquisitions: Funds provided for investments of the Group amounted to € 377 million and proceeds from disposals of fixed assets amounted to € 62 million. The free cash flow before acquisitions and dividends amounted to € 382 million and was three times higher than the figure for the previous year due to the significantly lower capital expenditure and improved working capital management. All acquisitions and the dividends for 2002 were able to be financed from the free cash flow. The free cash flow after acquisitions and dividends was positive and amounted to € 163 million.


Asset and equity structure
The balance sheet total of the Group dropped by € 952 million (10 %) compared to 31.12.2001 to € 8,915 million. This decrease is solely a result of currency effects. At constant exchange rates the balance sheet total increased only slightly, by 1 % over the previous year. This reflects the reduced acquisition activity of the Group and improvements in current assets.

The liabilities side of the balance sheet shows a decrease in equity including minority interests of 9 % to € 3,369 million (2001: € 3,689 million). This is largely due to the change in exchange rates; currency-adjusted the increase would have been 4 %. The equity ratio including minority interests increased marginally from 37.4 % as of 31.12.2001 to 37.8 % at the end of the year under report.

The liabilities of the Group from bank loans, Eurobonds, commercial papers and trust preferred securities totalled € 3,283 million on 31.12.2002; this corresponds to a drop of € 454 million compared to the previous year's figure of € 3,737 million. The decrease resulted to a large extent from the changed exchange rates in the translation into euros of the US dollar loans. € 175 million financial liabilities were repaid in the year under report.


The Business Segments

Fresenius Medical Care
In 2002, Fresenius Medical Care further expanded its market position in dialysis. As of 31.12.2002 Fresenius Medical Care treated around 112,200 patients in 1,480 dialysis clinics, 6 % more than in the previous year. In Europe, Latin America and the region Asia-Pacific growth rates were registered that were substantially higher than those of the market. As a result of the introduction of single-use dialysers the growth rates in North America were lower than anticipated. The switch from single-use dialysers however represents a major strategic step and the basis for future growth.

In 2002 Fresenius Medical Care increased sales by 5 % (currency-adjusted: 6 %) to US$ 5,084 million (2001: US$ 4,859 million). 74 % of sales were achieved in the United States, 18 % in Europe and 8 % in the other regions of the world.

The main growth driver was dialysis care, sales of which rose by 4 % to US$ 3,709 million (2001: US$ 3,557 million). The main reason for this growth was the increased number of dialysis treatments: Altogether Fresenius Medical Care performed 16.4 million dialysis treatments in the year under report, 7 % more than in the previous year. Sales of dialysis products amounted to 27 % of total sales of Fresenius Medical Care and rose by 6% to US$ 1,375 million (2001: US$ 1,302 million). If sales of products to company-owned dialysis clinics are included, sales reached US$ 1,776 million, which likewise corresponds to a 6 % increase.

Fresenius Medical Care increased EBIT by 8 % to US$ 695 million from US$ 644 million before special charge in the previous year (2001: goodwill-adjusted: US$ 765 million). The result was influenced by costs in connection with the switch from re-use to single-use dialysers in the United States.

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

In the currency conversion into euros, the weakness of the dollar meant that sales of Fresenius Medical Care totalling € 5,378 million were 1 % lower than the previous year's figure of € 5,426 million. As far as EBIT is concerned, currency conversion resulted in an increase of 2 % to € 735 million (previous year: € 719 million before special charge).


Fresenius Kabi
Fresenius Kabi achieved sales of € 1,262 million, 1 % lower than the previous year's figure of € 1,277 million. The sales development was influenced to a large extent by shrinking sales of the company ProReha and its sale in August 2002 as well as lower sales in the manufacturing contract business. If these effects are not taken into account, Fresenius Kabi achieved an organic growth of 7 %, growing faster than the market. Acquisitions contributed 1 percentage point, currency effects reduced growth by 3 percentage points. The hospital business achieved a 76 % share of sales, namely € 959 million (2001: € 954 million). The Ambulatory Care Business, € 303 million, corresponded to 24 % of total sales (2001: € 323 million).

Fresenius Kabi achieved an EBIT amounting to € 91 million in the 2002 financial year compared to € 53 million in 2001 (goodwill-adjusted: € 63 million). The development of earnings was negatively affected in the 2002 financial year by measures to increase profitability at the factory in Uppsala, Sweden. Furthermore, losses made by the company ProReha, and its sale effective August 1, 2002, affected earnings. These expenses totalled € 27 million. The measures carried out in the year under report will make a substantial contribution towards the future development of earnings of Fresenius Kabi.


Fresenius ProServe
Fresenius ProServe was able to present a 55 % sales upswing: Sales amounted to € 701 million (2001: € 451 million). The healthcare business generated 80 % (€ 559 million) of total sales, and the pharma industry business € 142 million, or 20 %. Of the € 250 million increase in sales about € 100 million were generated organically and € 145 million were generated by acquisitions, mainly Wittgensteiner Kliniken AG which in 2001 only contributed seven months towards the total sales of Fresenius ProServe.

Orders received and orders on hand even exceeded the high level of the previous year: Orders received in the project business of Fresenius ProServe rose to € 327 million (2001: € 266 million); orders on hand reached € 424 million (2001: € 266 million). This corresponds to a plus of 23 % and 16 % respectively. Important orders were received by the healthcare business in the 2002 financial year. Fresenius ProServe was awarded engineering orders and turnkey projects for hospitals.

Fresenius ProServe achieved an EBIT of € 24 million in the year under report (2001: € 6 million; goodwill-adjusted: € 11 million). This significant increase is largely a result of the development in the healthcare business, particularly of the consolidation for the whole year of Wittgensteiner Kliniken AG.


Fresenius HemoCare
Fresenius HemoCare achieved sales of € 229 million in 2002 (2001: € 215 million). The 7 % increase is due to acquisition activities and organic growth. Currency conversion effects had an impact of –2 % on the sales development of Fresenius HemoCare.

EBIT of Fresenius HemoCare amounting to € 10 million was 25 % higher than the previous year's figure of € 8 million (goodwill-adjusted: € 10 million). Sustained high expenditure on research and development and the building up of the sales organisations had negative effects on earnings.

As from the 2003 financial year, the activities of the business segment Fresenius HemoCare were re-allocated within the Fresenius Group.