FRESENIUS SE & CO. KGAA 
By Bad Homburg v.d.H.
Q1/2014:
- Sales €5.2 billion (+7% at actual rates, +11% in constant currency)
- EBIT1 €643 million (-8% at actual rates, -6% in constant currency)
- Net income2 €228 million (+2% at actual rates, +3% in constant currency)
Ulf Mark Schneider, CEO of Fresenius, said: "The moderate start into the year was expected. We are therefore fully on track to achieve our growth targets for 2014. The integration of the hospitals acquired from Rhön-Klinikum AG is progressing well. Our expansion in fast-growing emerging markets continues unabated."
1 2014 before Fenwal integration costs (€1 million) and book gain from the divestment of two HELIOS hospitals (€22 million); 2013 before Fenwal integration costs (€7 million)
2 Net income attributable to shareholders of Fresenius SE & Co. KGaA; 2014 before Fenwal integration costs (€1 million) and book gain from the divestment of two HELIOS hospitals (€21 million); including these effects, net income attributable to shareholders of Fresenius SE & Co. KGaA increased by 13% (+14% in constant currency) to €248 million. 2013 before Fenwal integration costs (€5 million)
Group outlook 20141 fully confirmed
Fresenius fully confirms its guidance for 2014. Sales are expected to increase by 12% to 15% in constant currency. Net income2 is expected to increase by 2% to 5% in constant currency. The earnings forecast primarily reflects lower reimbursement rates for Medicare dialysis patients and substantial uncertainties regarding the IV drug shortage situation in the U.S. market.
The net debt/EBITDA ratio is expected to be in the range of 3.0 to 3.25.
11% sales growth in constant currency
Group sales increased by 7% (11% in constant currency) to €5,212 million (Q1/2013: €4,890 million). Organic sales growth was 2%. Acquisitions contributed 9%. Divestitures had a marginal effect on sales growth.
Sales of the business segments developed as follows:
Organic sales growth was 3% in North America and 2% in Europe. In Asia-Pacific organic sales growth was 2% impacted by a slow start in China for Fresenius Medical Care and Fresenius Kabi. In Latin America organic sales growth was 8%. In Africa, the decline in sales is mainly due to fluctuations in the project business at Fresenius Vamed.
Adverse currency translation effects weighed on Group sales in all regions, particularly in Latin America (-21%), Asia-Pacific (-7%), Africa (-7%) and North America (-4%).
1 Includes contributions from the acquisition of hospitals from Rhön-Klinikum AG
2 Net income attributable to shareholders of Fresenius SE & Co. KGaA; 2014 before integration costs for Fenwal (€30-40 million) and the hospitals acquired from Rhön-Klinikum AG and net of book gain from the divestment of two HELIOS hospitals (€21 million); 2013 before Fenwal integration costs (€40 million)
Group net income in line with guidance
Group EBITDA1 decreased by 3% (-1% in constant currency) to €867 million (Q1/2013: €898 million). Group EBIT1 decreased by 8% (-6% in constant currency) to €643 million (Q1/2013: €696 million). This decrease is mainly attributable to the year-over-year comparison of issues at Fresenius Medical Care and Fresenius Kabi which occurred in 2013. The EBIT margin was 12.3% (Q1/2013: 14.2%).
Group net interest was -€138 million (Q1/2013: -€163 million). Improved financing terms as well as favorable currency effects contributed to the decrease. In addition, net interest in Q1/2013 included €14 million one-time costs resulting from the early redemption of a Senior Note.
The Group tax rate2 improved to 26.3% (Q1/2013: 29.1%) due to a one-time effect at Fresenius Medical Care.
Noncontrolling interest was €144 million (Q1/2013: €154 million), of which 93% was attributable to the noncontrolling interest in Fresenius Medical Care.
Group net income3 increased by 2% (3% in constant currency) to €228 million (Q1/2013: €224 million). Earnings per share3 increased by 1% to €1.27 (Q1/2013: €1.26).
Group net income attributable to shareholders of Fresenius SE & Co. KGaA including integration costs for Fenwal and a book gain from the divestment of two HELIOS hospitals increased by 13% (+14% in constant currency) to €248 million. Earnings per share increased by 12% (+13% in constant currency) to €1.38. There were no integration costs related to the newly acquired hospitals from Rhön-Klinikum AG in the first quarter.
A reconciliation to earnings according to U.S. GAAP can be found on page 14 of this Investor News.
1 2014 before Fenwal integration costs (€1 million) and book gain from the divestment of two HELIOS hospitals (€22 million); 2013 before Fenwal integration costs (€7 million)
2 2014 before book gain from the divestment of two HELIOS hospitals; 2013 before Fenwal integration costs
3 Net income attributable to shareholders of Fresenius SE & Co. KGaA; 2014 before Fenwal integration costs (€1 million) and book gain from the divestment of two HELIOS hospitals (€21 million); 2013 before Fenwal integration costs (€5 million)
Continued investment in growth
The Fresenius Group spent €234 million on property, plant and equipment (Q1/2013: €179 million). Investments were mainly used for the equipment of new, and the expansion of existing dialysis clinics as well as the modernization and expansion of production facilities and hospitals.
Acquisition spending was €924 million (Q1/2013: €79 million), thereof €759 million as a further payment for the acquisition of hospitals from Rhön-Klinikum AG.
Cash flow development influenced by one-time items
Operating cash flow was €140 million (Q1/2013: €444 million) with a margin of 2.7% (Q1/2013: 9.1%). The decrease was mainly attributable to the payment for the W.R. Grace bankruptcy settlement of US$115 million1, increased working capital at Fresenius Medical Care and Fresenius Kabi as well as a change from annual to monthly upfront payments to Fresenius Vamed for a technical management contract.
Net capital expenditure increased to €243 million (Q1/2013: €188 million). Free cash flow before acquisitions and dividends was -€103 million (Q1/2013: €256 million). Free cash flow after acquisitions and dividends was -€1,006 million (Q1/2013: 229 million).
1 see Annual Report 2013, page 150 f.
Solid balance sheet structure
The Group's total assets increased by 5% (at actual rates and in constant currency) to €34,284 million (Dec. 31, 2013: €32,758 million). This increase is mainly attributable to the first-time consolidation of hospitals acquired from Rhön-Klinikum AG. Current assets grew by 9% to €8,656 million (Dec. 31, 2013: €7,972 million). Non-current assets increased by 3% to €25,628 million (Dec. 31, 2013: €24,786 million).
Total shareholders' equity increased by 3% to €13,619 million (Dec. 31, 2013: €13,260 million). The equity ratio was 39.7% (Dec. 31, 2013: 40.5%).
Group debt was €13,769 million (Dec. 31, 2013: €12,804 million). Net debt was €12,940 million (Dec. 31, 2013: €11,940 million).
As of March 31, 2014, the net debt/EBITDA ratio was 3.211 (Dec. 31, 2013: 2.512). The increase is mainly due to the acquisition of hospitals from Rhön-Klinikum AG.
Number of employees increases
As of March 31, 2014, the number of employees increased by 13% to 201,924 (Dec. 31, 2013: 178,337). This is almost entirely due to the acquisition of hospitals from Rhön-Klinikum AG.
1 Pro forma including acquired hospitals from Rhön-Klinikum AG; before Fenwal integration costs and book gain from the divestment of two HELIOS hospitals
2 Pro forma excluding advances made for the acquisition of hospitals from Rhön-Klinikum AG; before Fenwal integration costs
Business Segments
Fresenius Medical Care
Fresenius Medical Care is the world's leading provider of services and products for patients with chronic kidney failure. As of March 31, 2014, Fresenius Medical Care was treating 270,570 patients in 3,263 dialysis clinics.
- Sales growth in line with full year guidance
- Earnings impacted by sequestration and rebasing in the United States
- 2014 guidance confirmed
Sales increased by 3% (4% in constant currency) to US$3,564 million (Q1/2013: US$3,464 million). Organic sales growth was 3%. Acquisitions contributed 1%. Adverse currency effects reduced sales by 1%.
Sales in dialysis services increased by 4% (5% in constant currency) to US$2,782 million (Q1/2013: US$2,678 million). Dialysis product sales decreased by 1% (0% in constant currency) to US$782 million (Q1/2013: US$786 million).
In North America sales grew by 5% to US$2,393 million (Q1/2013: US$2,287 million). Dialysis services sales increased by 5% to US$2,201 million (Q1/2013: US$2,104 million). Dialysis product sales grew by 5% to US$192 million (Q1 2013: US$183 million).
Sales outside North America ("International" segment) decreased by 1% (4% increase in constant currency) to US$1,161 million (Q1/2013: US$1,169 million) impacted inter alia by the reorganization of the distribution network in China. Sales in dialysis services increased by 1% (8% in constant currency) to US$581 million (Q1/2013: US$574 million). Dialysis product sales decreased by 2% (-1% in constant currency) to US$580 million (Q1/2013: US$595 million).
EBIT decreased by 10% to US$445 million (Q1/2013: US$493 million). The EBIT margin was 12.5% (Q1/2013: 14.2%). As expected, EBIT was impacted by sequestration and rebasing of Medicare's reimbursement rate in the United States.
Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA decreased by 9% to US$205 million (Q1/2013: US$225 million).
Operating cash flow was US$112 million (Q1/2013: US$315 million) with a margin of 3.2% (Q1/2013: 9.1%). The decrease was mainly attributable to the payment for the W.R. Grace bankruptcy settlement of US$115 million and increased working capital.
Fresenius Medical Care confirms its outlook for 2014. Fresenius Medical Care expects sales to grow to approximately US$15.2 billion. Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA is expected in the range of US$1.0 to US$1.05 billion. The company has initiated a global efficiency program designed to enhance its performance over a multi-year period. Potential cost savings before income taxes of up to US$60 million generated from this program are not included in the outlook for 2014.
For further information, please see Fresenius Medical Care's Investor News at www.fmc-ag.com.
1 Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
Fresenius Kabi
Fresenius Kabi offers infusion therapies, intravenously administered generic drugs and clinical nutrition for seriously and chronically ill patients in the hospital and outpatient environments. The company is also a leading supplier of medical devices and transfusion technology products.
- EBIT margin of 16.6% in line with guidance
- Currency-adjusted sales increase
- 2014 guidance narrowed
Sales decreased by 4% (1% increase in constant currency) to €1,213 million (Q1/2013: €1,260 million). Organic sales growth was 1%. Adverse currency translation effects weighed on sales (-5%), mainly due to the weaker currencies in the United States, Brazil, Argentina and South Africa against the Euro.
Sales in Europe decreased by 3% (organic sales growth: -2%) to €500 million (Q1/2013: €517 million) mainly due to lower HES sales (blood volume substitutes) and changes in Fresenius Kabi's Russian distribution model. Sales in North America decreased by 5% (organic sales growth: 0%) to €382 million (Q1/2013: €401 million). Asia-Pacific sales were €222 million (organic sales growth: +3%;Q1/2013: €223 million) influenced by the 2013 price cut and the discontinuation of HES200 in China as well as delayed tenders in Australia and Vietnam. Sales in Latin America/Africa decreased by 8% (organic sales growth: + 11%) to €109 million (Q1/2013: €119 million).
EBIT1 was €201 million (Q1/2013: €237 million), a decrease of 13% in constant currency. EBIT was impacted by lower HES sales and the 2013 price cuts in China. The EBIT margin of 16.6% (Q1/2013: 18.8%) was in line with expectations and our guidance range.
Net income2 decreased by 11% to €106 million (Q1/2013: €119 million).
Fresenius Kabi's operating cash flow was €42 million (Q1/2013: €132 million) with a margin of 3.5% (Q1/2013: 10.5%), mainly due to temporarily higher working capital requirements. Cash flow before acquisitions and dividends was -€23 million (Q1/2013: €76 million).
Integration costs for Fenwal were €1 million (pre-tax). These costs are reported in the Group Corporate/Other segment. The vast majority of planned integration costs of €40-50 million are expected to accrue towards the end of 2014.
Fresenius Kabi narrows its 2014 outlook and now projects organic sales growth of 4% to 6% (previously: 3% to 7%) and an EBIT margin of 16.5% to 18% (previously: 16% to 18%). These ranges primarily reflect substantial uncertainties regarding the IV drug shortage situation in the U.S. market as well as full-year effects from the restrictions on the use of our blood volume substitutes.
Fresenius Kabi guidance excludes €40-50 million pre-tax Fenwal integration costs (€30-40 million after tax); see Group guidance
1 before Fenwal integration costs
2 Net income attributable to shareholders of Fresenius Kabi AG; before Fenwal integration costs
Fresenius Helios
Fresenius Helios is Germany's largest hospital operator. HELIOS owns 109 hospitals, thereof 85 acute care clinics including six maximum care hospitals in Berlin-Buch, Duisburg, Erfurt, Krefeld, Schwerin and Wuppertal and 24 post-acute care clinics. HELIOS treats more than 4.2 million patients per year, thereof more than 1.2 million inpatients, and operates more than 33,000 beds.
- 4% organic sales growth fully in line with guidance
- Integration of new hospitals progresses as planned
- 2014 guidance fully confirmed
Sales increased by 46% to €1,227 million (Q1/2013: €841 million). The strong increase in sales is mainly due to the newly acquired hospitals from Rhön-Klinikum AG. Organic sales growth was 4%. The divestment of two HELIOS hospitals reduced sales growth by 2%.
EBIT1 grew by 31% to €114 million (Q1/2013: €87 million). The EBIT margin was 9.3% (Q1/2013: 10.3%). The margin decline is due to the consolidation of the newly acquired hospitals from Rhön-Klinikum AG.
Net income2 increased by 38% to €77 million (Q1/2013: €56 million).
Sales of the established hospitals grew by 4% to €857 million. EBIT improved by 4% to €88 million. The EBIT margin was unchanged at 10.3%.
Sales of the acquired hospitals were €370 million, EBIT was €26 million.
In the first quarter, approximately 90% of the acquisition of hospitals from Rhön-Klinikum AG was closed. Approximately 70% of the acquired business was consolidated as of January 1, 2014, and approximately 20% as of March 1, 2014. For HSK Dr. Horst Schmidt Kliniken in Wiesbaden, the municipal shareholder approval is still pending. Fresenius Helios expects to close this part of the acquisition at the latest by the end of June.
The integration of the newly acquired hospitals is progressing as planned. The acquisition was EPS accretive in the first quarter. No integration costs accrued in the first quarter.
Fresenius Helios fully confirms its outlook for 2014. Fresenius Helios projects organic sales growth of 3 to 5%. EBIT (excluding the hospitals acquired from Rhön-Klinikum AG) is expected to increase to €390 to €410 million. Fresenius Helios will provide an outlook for all its hospitals (including HSK) with the announcement of Q2 results.
Fresenius Helios guidance before integration costs for the hospitals acquired from Rhön-Klinikum AG and net of book gain from the divestment of two HELIOS hospitals. The integration costs will be reported in the Group Corporate/Other segment, see Group guidance
1 2014 before book gain from the divestment of two HELIOS hospitals (€22 million)
2 Net income attributable to shareholders of HELIOS Kliniken GmbH; 2014 before book gain from the divestment of two HELIOS hospitals (€21 million)
Fresenius Vamed
Fresenius Vamed manages projects and provides services for hospitals and other health care facilities worldwide.
- 24 % increase in order intake
- EBIT in line with guidance
- 2014 guidance fully confirmed
Sales increased by 4% to €191 million (Q1/2013: €184 million). Organic sales growth was -2%. Acquisitions contributed 6%, e.g. the acquisition of two hospitals in the Czech Republic in 2013. Sales in the project business decreased by 2% to €80 million (Q1/2013: €82 million). Sales in the service business grew by 9% to €111 million (Q1/2013: €102 million).
EBIT was €6 million (Q1/2013: €5 million) with a margin of 3.1% (Q1/2013: 2.7%).
Net income1 increased to €4 million (Q1/2013: €3 million).
Order intake increased by 24% to €115 million (Q1/2013: €93 million). As of March 31, 2014, order backlog was €1,170 million (Dec. 31, 2013: €1,139 million).
Fresenius Vamed fully confirms its outlook for 2014 and expects to achieve organic sales growth of 5% to 10% and EBIT growth of 5% to 10%.
1 Net income attributable to shareholders of Vamed AG
Analyst-/Investor Conference Call
As part of the publication of the results for the first quarter of 2014, a conference call will be held on May 6, 2014 at 2 p.m. CEST (8 a.m. EDT). All investors are cordially invited to follow the conference call in a live broadcast via the Internet at www.fresenius.com, see Investor Relations, Presentations. Following the call, a replay of the conference call will be available on our website.
###
This release contains forward-looking statements that are subject to various risks and uncertainties. Future results could differ materially from those described in these forward-looking statements due to certain factors, e.g. changes in business, economic and competitive conditions, regulatory reforms, results of clinical trials, foreign exchange rate fluctuations, uncertainties in litigation or investigative proceedings, and the availability of financing. Fresenius does not undertake any responsibility to update the forward-looking statements in this release.
Text as PDF file
|
distributed by
|
