Fresenius confirms its guidance after a strong second quarter with double-digit sales and earnings growth

If no timeframe is specified, information refers to H1/2017

Q2/2017:

• Sales: €8.5 billion (+18%, +17% in constant currency)
• EBIT¹: €1,177 million (+14%, +13% in constant currency)
• Net income^1,2: €459 million (+21%, +21% in constant currency)

H1/2017:

• Sales: €16.9 billion (+19%, +17% in constant currency)
• EBIT¹: €2,393 million (+20%, +19% in constant currency)
• Net income^1,2: €916 million (+24%, +23% in constant currency)

Stephan Sturm, CEO of Fresenius, said: “We were able to sustain our strong momentum also in the second quarter. Strong increases in sales and earnings have put us well on track to reach our full-year targets. We are very pleased with the business development of Quirónsalud while its integration into Fresenius is proceeding according to plan. A focus in the second half will be to close the acquisitions announced by Fresenius Kabi. Those will put our business on an even broader foundation for future growth.”

 

¹ Before special items
² Net income attributable to shareholders of Fresenius SE & Co. KGaA

2017 Group guidance confirmed

Fresenius confirms its guidance for 2017. Group sales are expected to increase by 15% to 17% in constant currency. Group net income^1,2,3 is expected to grow by 19% to 21% in constant currency.

Pro forma the acquisitions of Akorn and Merck KGaA’s biosimilars business, the net debt/EBITDA⁴ ratio is expected to be approximately 3.3 at the end of 2017.

17% sales growth in constant currency

Group sales increased by 19% (17% in constant currency) to €16,894 million (H1/2016: €14,218 million). Organic sales growth was 6%⁵. Positive currency translation effects (2%) were mainly related to the appreciation of the U.S. dollar against the Euro. Acquisitions and the agreement with the United States Departments of Veterans Affairs and Justice at Fresenius Medical Care (“VA agreement”) contributed 11%. In Q2/2017, Group sales increased by 18% (17% in constant currency) to €8,532 million (Q2/2016: €7,203 million). Organic sales growth was 5%. Acquisitions contributed 12% while divestitures had no meaningful impact on sales.

¹ Before transaction costs of ~€50 million for the acquisitions of Akorn, Inc. and Merck KGaA’s biosimilars business
² Before expected expenditures for the further development of Merck KGaA’s biosimilars business of ~€50 million (expected closing Q3/17)
³ Net income attributable to shareholders of Fresenius SE & Co. KGaA
⁴ Calculated at expected FY average exchange rates for both net debt and EBITDA; before transaction costs of ~€50 million; excluding further potential acquisitions
⁵ Excluding effects of VA agreement
For a detailed overview of special items please see the reconciliation tables on page 15 in the PDF document.

Group sales by region:

23% net income² growth in constant currency

Group EBITDA³ increased by 20% (18% in constant currency) to €3,098 million (H1/2016: €2,586 million). Group EBIT³ increased by 20% (19% in constant currency) to €2,393 million (H1/2016: €1,987 million). The EBIT margin³ increased to 14.2% (H1/2016: 14.0%). In Q2/2017, Group EBIT³ increased by 14% (13% in constant currency) to €1,177 million (Q2/2016: €1,028 million), with an EBIT margin³ of 13.8% (Q2/2016: 14.3%).

Group net interest reached -€326 million³ (H1/2016: -€291 million), mainly due to the financing of the Quirónsalud acquisition.

The Group tax rate increased to 28.5%³ (H1/2016: 28.3%), mainly driven by the higher proportion of U.S. pre-tax income, primarily due to the VA agreement. In Q2/2017, the Group tax rate was 27.9%3 (Q2/2016: 28.2%).

¹ Including effects of VA agreement
² Net income attributable to shareholders of Fresenius SE & Co. KGaA; before special items
³ Before special items
For a detailed overview of special items please see the reconciliation tables on page 15 in the PDF document.

Noncontrolling interest increased to €562 million (H1/2016: €480 million), of which 96% was attributable to the noncontrolling interest in Fresenius Medical Care.

Group net income¹ increased by 24% (23% in constant currency) to €916 million (H1/2016: €736 million). The VA agreement increased net income¹ growth by 2%-points. Earnings per share¹ increased by 22% (21% in constant currency) to €1.65 (H1/2016: €1.35). In Q2/2017, Group net income¹ increased by 21% (21% in constant currency) to €459 million (Q2/2016: €378 million). Earnings per share¹ increased by 19% (19% in constant currency) to €0.82 (Q2/2016: €0.70).

 

¹ Net income attributable to shareholders of Fresenius SE & Co. KGaA; before special items
For a detailed overview of special items please see the reconciliation tables on page 15 in the PDF document.

Continued investment in growth

Spending on property, plant and equipment was €709 million (H1/2016: €674 million), primarily for the modernization and expansion of dialysis clinics, production facilities as well as hospitals and day clinics. Total acquisition spending of €6,421 million (H1/2016: €505 million) was mainly related to the acquisition of Quirónsalud.

Strong operating cash flow

Operating cash flow increased by 26% to €1,683 million (H1/2016: €1,333 million), mainly driven by the excellent development at Fresenius Medical Care and Fresenius Kabi. The cash flow margin increased to 10.0% (H1/2016: 9.4%). Operating cash flow in Q2/2017 increased by 21% to €1,207 million (Q2/2016: €997 million), with a margin of 14.1% (Q2/2016: 13.8%). As expected, the operating cash flow of Fresenius Medical Care improved considerably in Q2/2017.

Free cash flow before acquisitions and dividends increased by 54% to €998 million (H1/2016: €649 million). Free cash flow after acquisitions and dividends was -€5,645 million
(H1/2016: -€207 million).

Solid balance sheet structure

The Group’s total assets increased by 13% (18% in constant currency) to €52,897 million (Dec. 31, 2016: €46,697 million), mainly due to the acquisition of Quirónsalud. Current assets grew by 9% (14% in constant currency) to €12,799 million (Dec. 31, 2016: €11,744 million). Non-current assets increased by 15% (19% in constant currency) to €40,098 million (Dec. 31, 2016: € 34,953 million).

Total shareholders’ equity grew by 1% (6% in constant currency) to €21,020 million (Dec. 31, 2016: €20,849 million). The equity ratio was 39.7% (Dec. 31, 2016: 44.6%).

Group debt increased by 35% (39% in constant currency) to €19,910 million (Dec. 31, 2016: € 14,780 million), mainly driven by the acquisition financing of Quirónsalud. As of June 30, 2017, the net debt/EBITDA ratio was 3.00¹ (Dec. 31, 2016: 2.33¹; pro forma Quirónsalud 3.09¹).

¹ Net debt and EBITDA at LTM average exchange rates; before special items
For a detailed overview of special items please see the reconciliation tables on page 15 in the PDF document.

Business Segments

Fresenius Medical Care

Fresenius Medical Care is the world's largest provider of products and services for individuals with chronic kidney failure. As of June 30, 2017, Fresenius Medical Care was treating 315,305 patients in 3,690 dialysis clinics. Along with its core business, the company seeks to expand the range of medical services in the field of care coordination.

• 9% sales growth in constant currency in Q2
• 46% operating cash flow growth in Q2
• 2017 outlook confirmed

Sales increased by 14% (11% in constant currency, 7% organic) to €9,019 million (H1/2016: €7,942 million). Acquisitions/divestitures and the VA agreement contributed 4% in total. In Q2/2017, sales increased by 11% (9% in constant currency, 6% organic) to €4,471 million (Q2/2016: €4,026 million).

Health Care Services sales (dialysis services and care coordination) increased by 15% (11% in constant currency) to €7,418 million (H1/2016: €6,472 million). Product sales increased by 9% (7% in constant currency) to €1,601 million (H1/2016: €1,470 million).

In North America, sales increased by 14% to €6,600 million (H1/2016: €5,778 million). Health Care Services sales grew by 15% to €6,182 million (H1/2016: €5,383 million). Product sales increased by 6% to €418 million (H1/2016: €395 million).

Sales outside North America increased by 12% (10% in constant currency) to €2,410 million (H1/2016: €2,156 million). Health Care Services sales increased by 14% (11% in constant currency) to €1,236 million (H1/2016: €1,089 million). Product sales increased by 10% (8% in constant currency) to €1,174 million (H1/2016: €1,068 million).

EBIT increased by 16% (13% in constant currency) to €1,235 million (H1/2016: €1,068 million). The EBIT margin was 13.7% (H1/2016: 13.5%). Excluding the VA agreement EBIT increased by 7% (5% in constant currency). In Q2/2017, EBIT increased by 2% (stable in constant currency) to €584 million (Q2/2016: €571 million). The EBIT margin was 13.0% (Q2/2016: 14.2%).

Net income¹ increased by 21% (19% in constant currency) to €577 million (H1/2016: €477 million). Excluding the VA agreement net income1 increased by 10% (8% in constant currency). In Q2/2017, net income¹ grew by 2% (stable in constant currency) to €269 million (Q2/2016: €264 million).

Operating cash flow increased by 37% to €1,052 million (H1/2016: €767 million). The cash flow margin increased to 11.7% (H1/2016: 9.7%). In Q2/2017, operating cash flow increased by 46% to €882 million (Q2/2016: €604 million) with a cash flow margin of 19.7% (Q2/2016: 15.0%).

Fresenius Medical Care confirms its outlook for 2017. The company expects sales to grow by 8% to 10%² in constant currency. Net income^1,2 is expected to increase by 7% to 9% in constant currency.

¹ Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
² Excluding effects of VA agreement

For further information, please see Fresenius Medical Care’s Investor News at www.freseniusmedicalcare.com.

Fresenius Kabi

Fresenius Kabi offers intravenously administered generic drugs, clinical nutrition and infusion therapies 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.

• 7% organic sales growth in Q2; positive contributions from all regions
• 9% constant currency EBIT growth in Q2
• 2017 outlook confirmed

Sales increased by 9% (7% in constant currency, 7% organic) to €3,202 million (H1/2016: €2,946 million). Acquisitions/divestitures had no meaningful impact on sales. In Q2/2017, sales increased by 8% (7% in constant currency and organic) to €1,598 million (Q2/2016: €1,476 million).

Sales in Europe increased by 5% (6% organic) to €1,097 million (H1/2016: €1,048 million). Currency translation effects had no meaningful impact. In Q2/2017, sales increased by 3% (4% organic) to €553 million (Q2/2016: €536 million).

Sales in North America increased by 9% (6% organic) to €1,187 million (H1/2016: €1,086 million). In Q2/2017, sales increased by 11% (9% organic) to €568 million (Q2/2016: €510 million).

Sales in Asia-Pacific increased by 10% (10% organic) to €582 million (H1/2016: €531 million). In Q2/2017, sales increased by 9% (10% organic) to €302 million (Q2/2016: €277 million).

Sales in Latin America/Africa increased by 20% (11% organic) to €336 million (H1/2016: €281 million), mainly due to inflation-driven price increases. In Q2/2017, sales increased by 14% (8% organic) to €175 million (Q2/2016: €153 million).

EBIT¹ increased by 7% (6% in constant currency) to €622 million (H1/2016: €582 million). The EBIT margin¹ was 19.4% (H1/2016: 19.8%). In Q2/2017, EBIT¹ increased by 11% (9% in constant currency) to €309 million (Q2/2016: €279 million). The EBIT margin¹ increased to 19.3% (Q2/2016: 18.9%).

Net income² increased by 13% (11% in constant currency) to €379 million (H1/2016: €336 million). In Q2/2017, net income² increased by 15% (13% in constant currency) to €188 million (Q2/2016: €163 million).

Operating cash flow increased by 17% to €395 million (H1/2016: €339 million) driven by strong operating results and improved net working capital. The margin increased to 12.3% (H1/2016: 11.5%). In Q2/2017, operating cash flow was €203 million (Q2/2016: €212 million). The cash flow margin was 12.7% (Q2/2016: 14.4%).

Fresenius Kabi confirms its outlook for 2017 and expects 5% to 7% organic sales growth and EBIT growth in constant currency of 6% to 8%^3,4.

 

¹ Before special items
² Net income attributable to shareholders of Fresenius SE & Co. KGaA; before special items
³ Before transaction costs of ~€50 million for the acquisitions of Akorn, Inc. and Merck KGaA’s biosimilars business
⁴ Before expected expenditures for the further development of Merck KGaA’s biosimilars business of ~€50 million (expected closing Q3/17)
For a detailed overview of special items please see the reconciliation tables on page 15 in the PDF document.

Fresenius Helios

Fresenius Helios is Europe's leading private hospital operator. The company comprises HELIOS Kliniken in Germany and Quirónsalud in Spain. HELIOS Kliniken operates 112 hospitals, thereof 88 acute care clinics and 24 post-acute care clinics, and treats more than 5.2 million patients annually. Quirónsalud operates 44 hospitals, 44 outpatient centers and around 300 occupational risk prevention centers, and treats approximately 9.7 million patiens per year.

• 52% sales growth (2% excluding Quirónsalud) in Q2
• 63% EBIT increase (3% excluding Quirónsalud) in Q2
• 2017 outlook confirmed

Sales increased by 46% (4% organic) to €4,256 million (H1/2016: €2,912 million). Acquisitions, mainly Quirónsalud, increased sales by 42%. In Q2/2017, sales increased by 52% (2% organic) to €2,238 million (Q2/2016: €1,477 million).

Sales of HELIOS Kliniken² increased by 4% (4% organic) to €3,038 million (H1/2016: €2,912 million). In Q2/2017, sales increased by 2% (2% organic) to €1,510 million (Q2/2016: €1,477 million). Quirónsalud is consolidated since February 1, 2017 and generated sales of €1,218 million (thereof €728 million in Q2/2017).

EBIT grew by 62% to €537 million (H1/2016: €332 million). The EBIT margin increased to 12.6% (H1/2016: 11.4%). In Q2/2017, EBIT increased by 63% to €282 million (Q2/2016: €173 million). The EBIT margin increased to 12.6% (Q2/2016: 11.7%).

EBIT of HELIOS Kliniken² increased by 8% to €359 million with a margin of 11.8% (H1/2016: 11.4%). In Q2/2017, EBIT increased by 3% to €178 million (Q2/2016: €173 million). EBIT of Quirónsalud was €178 million (thereof €104 million in Q2/2017) with a margin of 14.6%.

Net income¹ increased by 42% to €373 million (H1/2016: €262 million). In Q2/2017, net income¹ increased by 39% to €192 million (Q2/2016: €138 million).

¹ Net income attributable to shareholders of Fresenius SE & Co. KGaA
² HELIOS Kliniken Germany, excluding Quirónsalud

Operating cash flow increased by 32% to €304 million (H1/2016: €230 million) driven by the first-time consolidation of Quirónsalud and good operating results. The margin was 7.1% (H1/2016: 7.9%).

Fresenius Helios confirms its outlook for 2017 and projects organic sales growth of 3% to 5%¹ and sales of ~€8.6 billion (thereof Quirónsalud: ~€2.5 billion²). EBIT is expected to increase to €1,020 to €1,070 million (thereof Quirónsalud: €300 to 320 million²).

¹ HELIOS Kliniken Germany, excluding Quirónsalud
² Quirónsalud consolidated for 11 months

Fresenius Vamed

Fresenius Vamed manages projects and provides services for hospitals and other health care facilities worldwide. The portfolio ranges along the entire value chain: from project development, planning, and turnkey construction, via maintenance and technical management, to total operational management.

• 2% sales growth in Q2 driven by service business
• Project business with strong order intake of €412 million in H1
• 2017 outlook confirmed

Sales increased by 2% (2% organic) to €481 million (H1/2016: €472 million). Sales in the project business decreased by 6% to €184 million (H1/2016: €195 million). Sales in the service business grew by 7% to €297 million (H1/2016: €277 million). In Q2/2017, sales increased by 2% (1% organic) to €258 million (Q2/2016: €254 million).

EBIT increased by 6% to €17 million (H1/2016: €16 million). The EBIT margin increased to 3.5% (H1/2016: 3.4%). In Q2/2017, EBIT increased by 22% to €11 million (Q2/2016: €9 million) with an EBIT margin of 4.3%.

Net income¹ remained unchanged at €11 million. In Q2/2017, net income¹ increased by 17% to €7 million (Q2/2016: €6 million).

Order intake reached a strong €412 million, but could not quite match the previous year’s excellent level (H1/2016: €465 million). As of June 30, 2017, order backlog grew to an all-time high of €2,188 million (December 31, 2016: €1,961 million).

Fresenius Vamed confirms its outlook for 2017 and expects both organic sales growth and EBIT growth in the range of 5% to 10%.

¹ Net income attributable to shareholders of VAMED AG

Conference Call

As part of the publication of the results for the first half of 2017, a conference call will be held on August 1, 2017 at 2 p.m. CEDT (8 a.m. EDT). All investors are cordially invited to follow the conference call in a live broadcast over the Internet at www.fresenius.com/media-calendar. Following the call, a replay will be available on our website.

For additional information on the performance indicators, please refer to our website www.fresenius.com/alternative-performance-measures.