Fresenius Medical Care, the world’s largest provider of dialysis products and services, today announced that CFO Michael Brosnan plans to retire from the Company after his successor has been identified and transitioned into the role. Fresenius Medical Care expects to name a new Chief Financial Officer by the end of this year. 

Michael Brosnan said: “My career at Fresenius Medical Care has been a fulfilling and challenging part of my professional life. I have worked with many wonderful people and I admire them for their dedication to the Company and thank them for the strong company that has continued to grow with their contributions.”

Rice Powell, Chief Executive Officer of Fresenius Medical Care and Chairman of the Management Board, said: “We thank Mike for his many years of valuable work and for his significant contributions to the success of Fresenius Medical Care. We wish him all the best in his retirement.”

Stephan Sturm, Chairman of the Supervisory Board of Fresenius Medical Care Management AG, said: “On behalf of the entire Supervisory Board, I would like to thank Mike Brosnan for the tireless efforts that he has dedicated to our company over the years. I wish Mike all the best for the new phase in his life that he will be entering after his retirement from Fresenius Medical Care.”

Michael Brosnan has been Global CFO of Fresenius Medical Care since January 2010. Previously, he served as CFO of Fresenius Medical Care North America for seven years. He joined the company in 1998 as Vice President of Finance and Administration for the company’s laboratory services organization and then assumed several key executive positions at Fresenius Medical Care in North America. Prior to joining the company, he held senior financial positions at Polaroid Corporation and was an audit partner at KPMG.

• Delivered on FY/18 Group targets
• Fresenius Kabi to show continued growth
• Helios Germany impacted by regulatory changes and initiatives to secure medium-term growth; Helios Spain to show continuous dynamic growth
• 26th consecutive dividend increase proposed
• Healthy growth targets for 2020 – 2023; consistent with expectations from December 2018

 

 

¹ Growth rate adjusted for IFRS 15 adoption and divestitures of Care Coordination activities (Q4/17 base: €8,290 million; FY/17 base: €32,841 million)
² Before special items and after adjustment^s
3 Net income attributable to shareholders of Fresenius SE & Co. KGaA
For a detailed overview of special items and adjustments please see the reconciliation tables on pages 21-24 of the pdf file.

 

Group expectations for FY/19 confirmed
For FY/19, Fresenius projects sales growth¹ of 3% to 6% in constant currency. Net income^2,3  growth is expected to be ~0% in constant currency. NxStage is not included in this guidance because the acquisition is not closed yet and Fresenius does not expect a significant impact on its Group guidance metrics. This guidance is in line with the expectations announced on December 6, 2018. 

Fresenius expects its year-end 2019 net debt/EBITDA⁴ ratio to be broadly stable over the year-end 2018 figure. 

Fresenius intends to further increase its dividend for FY 2019.

Healthy growth targets⁵ for 2020 – 2023
Based on the expected financial results for FY/19, Group sales are projected to grow organically with a compounded annual growth rate (CAGR) of 4% to 7% in 2020 to 2023. Group net income² is projected to increase organically with a CAGR of 5% to 9% in 2020 to 2023. Fresenius expects its launched and contemplated sales growth and efficiency improvement initiatives as well as the expected break-even of Fresenius Kabi’s biosimilars business to drive an acceleration of Group earnings growth over that period. Small and medium-sized acquisitions are expected to contribute an incremental CAGR of approx. 1%-point to both sales and net income growth.

¹ FY/18 base: €33,009 million; FY/18 adjusted for divestitures of Care Coordination activities at FMC (H1/18); FY/19: adjusted for IFRS 16 effects; excluding effects from pending acquisition of NxStage by FMC
² Net income attributable to shareholders of Fresenius SE & Co. KGaA 
³ FY/18 base: €1,872 million; FY/18 before special items and after adjustments; FY/19 before special items (transcation-related expenses, expenses associated with the cost optimization program at FMC, revaluations of biosimilars contingent liabilities); adjusted for IFRS 16 effects; excluding effects from pending acquisition of NxStage by FMC
⁴ Both net debt and EBITDA calculated at expected annual average exchange rates; excluding effects from pending acquisition of NxStage by FMC; excluding further potential acquisitions; adjusted for IFRS 16 effects
⁵ Before special items
For a detailed overview of special items and adjustments please see the reconciliation tables on pages 21-24 of the pdf file.
 

26th consecutive dividend increase proposed
Consistent with Fresenius’ stated dividend policy, the Management Board will propose to the Supervisory Board a 7% increase in the dividend for FY/18 to €0.80 per share (2017: €0.75). The proposed total dividend payout to Fresenius SE & Co. KGaA shareholders amounts to €445 million.

6% sales growth in constant currency¹ 
Group sales¹ increased by 2%¹ (6%¹ in constant currency) to €33,530 million (FY/17: €32,841 million). Organic sales growth was 4%¹. Acquisitions/divestitures contributed net 2%¹ to growth. Negative currency translation effects of 4%¹ were mainly driven by the devaluation of the U.S. dollar and the Argentinian peso against the euro. 

In Q4/18, Group sales¹ increased by 7%¹ (7%¹ in constant currency) to €8,835 million (Q4/17: €8,290 million). Organic sales¹ growth was 6%¹. Acquisitions/divestitures contributed net 1%¹ to growth. There were no meaningful currency translation effects.

 

7% net income^1,2 growth in constant currency
Group EBITDA² decreased by 3%² (0%² in constant currency) to €5,991 million (FY/17: €6,174 million). Group EBIT² decreased by 4%² (-1%² in constant currency) to €4,561 million (FY/17: €4,746 million). The EBIT margin² was 13.6% (FY/17: 14.5%). Group EBIT² before expenses for the further development of the biosimilars business decreased by 2%² (increased by 1%² in constant currency) to €4,727 million. In FY/17, the compensation for treatments of U.S. war veterans (“VA agreement”) had contributed €87 million as a one-time effect. Group EBIT² excluding the VA agreement and expenses for the further development of the biosimilars business increased by 3% in constant currency. 

In Q4/18, Group EBIT² was broadly stable year-over-year² (broadly stable² in constant currency) at €1,250 million (Q4/17: €1,244 million), with an EBIT margin² of 14.1% (Q4/17: 15.0%). Group EBIT² excluding the prior-year VA agreement and expenses for the further development of the biosimilars business was also broadly stable year-over-year² in constant currency.

Group net interest² was -€570 million (FY/17: -€630 million). The decrease was mainly driven by refinancings at lower rates, lower debt, currency effects as well as proceeds from the divestitures of Care Coordination activities at Fresenius Medical Care. 

The decrease of the Group tax rate² to 22.0% (FY/17: 27.9%) was mainly due to the U.S. tax reform and some related one-time effects at Fresenius Medical Care and Fresenius Kabi. In Q4/18, the Group tax rate² was 22.6% (Q4/17: 28.0%).
Noncontrolling interest² was €1,240 million (2017: €1,164 million), of which 94% was attributable to the noncontrolling interest in Fresenius Medical Care.

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

Group net income^1,2 increased by 12% (15% in constant currency) to €2,027 million (FY/17: €1,814 million), mainly due to gains related to divestitures of Care Coordination activities at Fresenius Medical Care. Earnings per share^1,2 increased by 12% (15% in constant currency) to €3.65 (FY/17: €3.27). In Q4/18, Group net income^1,2 increased by 1% (0% in constant currency) to €516 million (Q4/17: €511 million). Earnings per share^1,2 increased by 1% (0% in constant currency) to €0.93 (Q4/17: €0.92).

Group net income^1,3 before special items increased by 3% (6% in constant currency) to €1,871 million (FY/17: €1,816 million). Earnings per share^1,3 increased by 3% (6% in constant currency) to €3.37 (FY/17: €3.28). In Q4/18, Group net income^1,3 increased by 3% (3% in constant currency) to €504 million (Q4/17: €487 million). Earnings per share^1,3 increased by 3% (3% in constant currency) to €0.91 (Q4/17: €0.88).

Group net income^1,4 before special items and after adjustments increased by 4% (7% in constant currency) to €1,871 million (FY/17: €1,804 million). Earnings per share^1,4 increased by 3% (6% in constant currency) to €3.37 (FY/17: €3.26). In Q4/18, Group net income^1,4 increased by 6% (5% in constant currency) to €504 million (Q4/17: €477 million). Earnings per share^1,4 increased by 6% (5% in constant currency) to €0.91 (Q4/17: €0.86).

Group net income^1,4,5 before expenses for the further development of the biosimilars business increased by 8% (11% in constant currency) to €1,991 million (2017: €1,847 million). Earnings per share^1,4,5 increased by 8% (11% in constant currency) to €3.58 (2017: €3.33). In Q4/18, Group net income^1,4,5 increased by 6% (6% in constant currency) to €542 million (Q4/17: €510 million). Earnings per share^1,4,5 increased by 5% (5% in constant currency) to €0.97 (Q4/17: €0.92).

¹Net income attributable to shareholders of Fresenius SE & Co. KGaA
²After special items
³Before special items
⁴Before special items and after adjustments
⁵Before expenses for the further development of the biosimilar business

Continued investment in growth 
Spending on property, plant and equipment was €2,163 million (FY/17: €1,828 million), primarily for the modernization and expansion of dialysis clinics, production facilities as well as hospitals and day clinics. This corresponds to 6% of sales.

Total acquisition spending was €1,086 million (FY/17: €6,852 million). FY/17 spending had included the acquisition of Quirónsalud as well as the acquisition of the biosimilars business of Merck KGaA.

Cash flow development
Group operating cash flow decreased by 5% to €3,742 million (FY/17: €3,937 million) with a margin of 11.2% (FY/17: 11.6%). In FY/17 Fresenius Medical Care had received a ~€200 million payment under the VA agreement. The FY/18 cash flow was impacted by a change in working capital items at Fresenius Helios, the earnings decrease at Helios Germany and negative currency translation effects. Operating cash flow in Q4/18 increased by 7% to €1,193 million (Q4/17: €1,116 million) with a margin of 13.5% (Q4/17: 12.8%). 

Given the effects described above in combination with growing investments, free cash flow before acquisitions and dividends decreased to €1,665 million (FY/17: €2,232 million). Free cash flow after acquisitions and dividends was €1,374 million (FY/17: -€4,557 million).

Solid balance sheet structure
The Group’s total assets increased by 7% (5% in constant currency) to €56,703 million (Dec. 31, 2017: €53,133 million). Current assets grew by 17% (17% in constant currency) to €14,790 million (Dec. 31, 2017: €12,604 million). Non-current assets increased by 3% (2% in constant currency) to €41,913 million (Dec. 31, 2017: €40,529 million).

Total shareholders’ equity increased by 15% (13% in constant currency) to €25,008 million (Dec. 31, 2017: €21,720 million). The equity ratio increased to 44.1% (Dec. 31, 2017: 40.9%). 

Group debt was broadly stable (decreased by 2% in constant currency) at €18,984 million (Dec. 31, 2017: €19,042 million). Group net debt decreased by 6% (-8% in constant currency) to €16,275 million (Dec. 31, 2017: €17,406 million) mainly due to the proceeds from divestitures of Care Coordination activities at Fresenius Medical Care. 

As of December 31, 2018, the net debt/EBITDA ratio was 2.71^1,2  (December 31, 2017: 2.84^1,2). Excluding the proceeds from divestitures of Care Coordination activities the net debt/EBITDA ratio was 2.91^1,2.

¹At LTM average exchange rates for both net debt and EBITDA; pro forma closed acquisitions/divestitures, excluding effects from pending acquisition of NxStage by FMC
²Before special items

 

Business Segments
 

Fresenius Medical Care 
Fresenius Medical Care is the world's largest provider of products and services for individuals with renal diseases. As of December 31, 2018, Fresenius Medical Care was treating 333,331 patients in 3,928 dialysis clinics. Along with its core business, the company provides related medical services in the field of Care Coordination.

• 7% comparable sales growth in constant currency in Q4/18
• 9% comparable² net income increase in constant currency in Q4/18
• Attractive share buyback program for 2019 and 2020
• Outlook for FY/19 (in constant currency): 3% to 7% adjusted sales growth³ and adjusted net income development⁴ in range of -2% to +2% expected

¹Excluding VA agreement Q4/18: 6%; FY/18: 4%
²Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
³FY/18 base: €16,026 million; FY/18 adjusted for divestitures of Care Coordination activities; FY/19 adjusted for IFRS 16 effects, excluding effects from pending NxStage transaction
⁴FY/18 base: €1,341 million; FY/18 before special items and after adjustments; FY/19 before special items (before transcation-related expenses, expenses associated with the cost optimization program), adjusted for IFRS 16 effects, excluding effects from pending NxStage transaction

Sales decreased by 7% (-2% in constant currency) to €16,547 million  (FY/17: €17,784 million). Organic sales growth was 4%. Currency translation effects reduced sales by 5%. The adoption of IFRS 15 reduced sales by 3%. 

With the FY/17 base additionally adjusted for divestitures of Care Coordination activities, sales decreased by 1% (increased by 4% in constant currency).  

In Q4/18, sales decreased by 3% (-3% in constant currency) to €4,300 million (Q4/17: €4,429 million). Organic sales growth was 6%. The adoption of IFRS 15 reduced sales by 2%. Q4/17 base additionally adjusted for divestitures of Care Coordination activities, sales in Q4/18 increased by 7% (7% in constant currency).

Health Care services sales¹ (dialysis services and care coordination) decreased by 2% (increased by 4% in constant currency) to €13,264 million (FY/17: €13,487 million). Health Care product sales increased by 1% (5% in constant currency) to €3,283 million (FY/17: €3,252 million).

In North America, sales¹ decreased by 2% (increased by 2% in constant currency) to €11,570 million (FY/17: €11,834 million). Health Care services sales¹ decreased by 2% (increased by 2% in constant currency) to €10,725 million (FY/17: €10,991 million). Excluding the FY/17 effect from the VA Agreement (€94 million), Health Care services sales¹ increased by 3% in constant currency. Health Care product sales of €845 million (FY/17: €843 million) were on the prior-year level (increased by 5% in constant currency).

¹On a comparable basis

Sales outside North America increased by 1% (8% in constant currency) to €4,962 million (FY/17: €4,890 million). Health Care services sales increased by 2% (11% in constant currency) to €2,539 million (FY/17: €2,496 million). Health Care product sales increased by 1% (5% in constant currency) to €2,423 million (FY/17: €2,394 million). 

Fresenius Medical Care’s EBIT increased by 29% (33% in constant currency) to €3,038 million (FY/17: €2,362 million), mainly driven by gains related to divestitures of Care Coordination activities. The EBIT margin increased to 18.4% (FY/17: 13.3%). EBIT on a comparable basis increased by 6% in constant currency and EBIT margin increased to 14.2% (FY/17: 13.6%). 

In Q4/18, EBIT increased by 18% (12% in constant currency) to €613 million (Q4/17: €519 million). The EBIT margin increased to 14.3% (Q4/17: 11.7%). EBIT on a comparable basis increased by 42% (increased by 39% in constant currency) and EBIT margin increased to 15.1% (Q4/17: 11.3%). 

Net income¹ increased by 55% (60% in constant currency) to €1,982 million (FY/17: €1,280 million). Net income¹ growth on a comparable basis was 14% in constant currency. Adjusted net income¹ growth was 4% in constant currency. 

In Q4/18, net income¹ increased by 8% (1% in constant currency) to €425 million (Q4/17: €394 million). Net income¹ growth on a comparable basis was 9% in constant currency. Adjusted net income¹ growth was 4% in constant currency. 

Operating cash flow was €2,062 million (FY/17: €2,192 million). The cash flow margin increased to 12.5% (FY/17: 12.3%). In Q4/18, operating cash flow was €698 million (Q4/17: €528 million). The cash flow margin increased to 16.2% (Q4/17: 11.9%).

For FY/19, Fresenius Medical Care expects adjusted sales to grow by 3% to 7%² in constant currency. Net income¹ is expected to develop in the range of -2% to +2%³ in constant currency in 2019.

For 2020, Fresenius Medical Care expects adjusted sales as well as adjusted net income to grow at a mid to high single digit rate, both at constant currency.

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

¹Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
²FY/18 base: €16,026 million; FY/18 adjusted for divestitures of Care Coordination activities (H1/18); FY/19 adjusted for IFRS 16 effects, excluding effects from pending NxStage transaction
³FY/18 base: €1,341 million; FY/18 before special items and after adjustments; FY/19 before special items (before transaction-related expenses, expenses associated with the cost optimization program), adjusted for IFRS 16 effects, excluding effects from pending NxStage transaction

 

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. In the biosimilars business, we are developing products with a focus on oncology and autoimmune diseases.

• 7% organic sales growth and 10% EBIT¹ growth in constant currency (excl. biosimilars expenses) in FY/18
• Operating cash flow at all-time high
• FY/19 outlook: 3% to 6% organic sales growth⁵ and 3% to 6% EBIT⁶ growth in constant currency expected 

¹Before special items
²Before expenses for the further development of the biosimilars business: Q4/18: 8%; FY/18: 10%
³Net income attributable to shareholders of Fresenius SE & Co. KGaA
⁴Before expenses for the further development of the biosimilars business: Q4/18: 20%; FY/18: 21%
⁵FY/18 base: €6,544 million; FY/19 adjusted for IFRS 16 effects
⁶FY/18 base: €1,139 million; FY/18 before special items including expenditures for further development of biosimilars business (€120 million after tax); FY/19 before special items (before transaction-related expenses, revaluations of biosimilars contingent liabilities), adjusted for IFRS 16 effects

Sales increased by 3% (7% in constant currency) to €6,544 million (FY/17: €6,358 million). Organic sales growth was 7%. Strong negative currency translation effects of 4% were mainly related to the devaluation of the U.S. dollar, the Argentinian peso and the Brazilian real against the euro. In Q4/18, sales increased by 6% (7% in constant currency) to €1,687 million (Q4/17: €1,594 million). Organic sales growth was 7%.

Sales in Europe grew by 2% (organic growth: 3%) to €2,248 million (FY/17: €2,214 million). In Q4/18, sales in Europe increased by 2% (organic growth: 3%) to €590 million. 

Sales in North America increased by 3% (organic growth: 8%) to €2,359 million (FY/17: €2,290 million). In Q4/18, sales increased by 8% (organic growth: 5%) to €599 million (Q4/17: €554 million). 

Sales in Asia-Pacific increased by 9% (organic growth: 12%) to €1,300 million (FY/17: €1,196 million). In Q4/18, sales increased by 11% (organic growth: 13%) to €336 million (Q4/17: €302 million). 

Sales in Latin America/Africa decreased by 3% (increased organically by 13%) to €637 million (FY/17: €658 million). In Q4/18, sales increased by 2% (organical growth: 18%) to €162 million (Q4/17: €159 million).

EBIT¹ decreased by 3% (increased by 2% in constant currency) to €1,139 million (FY/17: €1,177 million) with an EBIT margin¹ of 17.4% (FY/17: 18.5%). In Q4/18, EBIT¹ increased by 5% (6% in constant currency) to €285 million (Q4/17: €272 million) with an EBIT margin¹ of 16.9% (Q4/17: 17.1%).

EBIT¹ before expenses for the further development of the biosimilars business increased by 5% (10% in constant currency) to €1,305 million (FY/17: €1,237 million) with an EBIT margin¹ of 19.9% (FY/17: 19.5%). In Q4/18, EBIT¹ before expenses for the further development of the biosimilars business increased by 6% (8% in constant currency) to €338 million (Q4/17: €318 million) with an EBIT margin¹ of 20.0% (Q4/17: 19.9%).

Net income^1,2 increased by 6% (12% in constant currency) to €742 million (FY/17: €702 million). In Q4/18, net income^1,2 increased by 19% (21% in constant currency) to €188 million (Q4/17: €158 million).

Operating cash flow increased by 3% to on an all-time-high of €1,040 million (2017: €1,010 million), mainly driven by a strong operational performance. The cash flow margin was 15.9% (2017: 15.9%). 

For FY/19, Fresenius Kabi expects organic sales growth³ of 3% to 6% and EBIT growth⁴ in constant currency of 3% to 6%.

¹Before special items
²Net income attributable to shareholders of Fresenius SE & Co. KGaA
³FY/18 base: €6,544 million; FY/19 adjusted for IFRS 16 effects
⁴FY/18 base: €1,139million; FY/18 before special items including expenditures for further development of biosimilars business (€120 million after tax); FY/19 before special items (before acquisition-related expenses, revaluations of biosimilars contingent liabilities), adjusted for IFRS 16 effects

 

Fresenius Helios
Fresenius Helios is Europe's leading private hospital operator. The company comprises Helios Germany and Helios Spain (Quirónsalud). Helios Germany operates 86 hospitals, ~125 outpatient centers and treats approximately 5.3 million patients annually. Quirónsalud operates 47 hospitals, 57 outpatient centers and around 300 occupational risk prevention centers, and treats approximately 13.3 million patients annually.

• 4% organic sales growth in Q4/18
• DRG catalogue effects and preparatory initiatives for regulatory changes continue to weigh on Helios Germany
• Helios Spain with dynamic growth
• FY/19 outlook³: 2% to 5% organic sales growth and EBIT decline of -5% to -2% expected

As of July 1, 2018 Fresenius Helios transferred its German post-acute care business to Fresenius Vamed. To allow a like-for-like comparison, we also provide sales and EBIT growth rates adjusted for the effects of this transaction. 

Fresenius Helios increased sales by 4% (6%¹) to €8,993 million (FY/17: €8,668 million). Organic sales growth was 3%. In Q4/18, sales decreased by 1% (increased by 4%¹; organic growth: 4%) to €2,231 million (Q4/17: €2,246 million).

Sales of Helios Germany decreased by 2% (increased by 2%¹; organic growth: 2%) to €5,970 million (FY/17: €6,074 million). In Q4/18, sales decreased by 5% (increased by 3%¹; organic growth: 3%) to €1,439 million (Q4/17: €1,512 million). Sales were impacted by a decline in admissions, inter alia due to an unexpectedly high fluctuation among doctors and a shortage of nursing staff as well as a trend towards outpatient treatments. The volume decline was offset by DRG inflator increases and better results from the negotiations with our payors. 

Helios Spain increased sales by 17% (organic growth: 6%) to €3,023 million (FY/17: €2,594 million), mainly due to an excellent operating performance and an additional month of consolidation (Quirónsalud is consolidated since February 1, 2017). In Q4/18 Helios Spain increased sales by 8% (organic growth: 7%) to €792 million (Q4/17: €734 million). 

Fresenius Helios EBIT remained unchanged (increased by 3%¹) at €1,052 million (FY/17: €1,052 million) with a margin of 11.7% (FY/17: 12.1%). In Q4/18, EBIT decreased by 2% (increased by 2%¹) to €277 million (Q4/17: €283 million) with a margin of 12.4% (Q4/17: 12.6%).

EBIT of Helios Germany decreased by 14% (-10%¹) to €625 million (FY/17: €725 million) with a margin of 10.5% (FY/17: 11.9%). In Q4/18, EBIT decreased by 22% (-15%¹) to €137 million (Q4/17: €176 million) with a margin of 9.5% (Q4/17: 11.6%). The significant fixed cost base in the hospital business has a strong operating leverage effect on EBIT as market dynamics and sales development slow down. The development of Helios Germany is impacted by additional catalogue effects, preparatory structural measures for expected regulatory requirements (e.g. clustering) and a lack of privatization opportunities in the German market. An unexpectedly high fluctuation among doctors and a shortage of nursing staff have an additional negative impact on the earnings development.

EBIT of Helios Spain increased by 26% to €413 million (FY/17: €327 million), mainly due to the strong operating performance and the additional month of consolidation, with a margin of 13.7% (FY/17: 12.6%). In Q4/18, EBIT increased by 19% to €127 million (Q4/17: €107 million) with a margin of 16.0% (Q4/17: 14.6%).

Net income² of Fresenius Helios decreased by 6% to €686 million (FY/17: €728 million). In Q4/18, net income² decreased by 16% to €170 million (Q4/17: €202 million).

Operating cash flow was €554 million (FY/17: €733 million) with a margin of 6.2% (FY/17: 8.5%). The decrease is mainly attributable to the earnings decrease at Helios Germany and the changes in working capital.

For FY/19, Fresenius Helios expects organic sales growth of 2% to 5% and an EBIT³ decline of -5% to -2%.

¹Adjusted for German post-acute care business transferred to Fresenius Vamed
²Net income attributable to shareholders of Fresenius SE & Co. KGaA
³Adjusted for IFRS 16 effects

 

Fresenius Vamed
Fresenius Vamed manages projects and provides services for hospitals and other health care facilities worldwide and is a leading post-acute care provider in Central Europe. The portfolio ranges along the entire value chain: from project development, planning, and turnkey construction, via maintenance and technical management to total operational management.

• Excellent organic sales growth of 16% in FY/18
• Order intake at all-time high - strong foundation for future growth
• FY/19 outlook: ~10% organic sales growth and 15% to 20% EBIT growth³ expected

As of July 1, 2018 Fresenius Helios transferred its German post-acute care business to Fresenius Vamed. To allow for a like-for-like comparison, we also provide sales and EBIT growth rates adjusted for the effects of this transaction. 

Sales increased by 37% (19%¹) to €1,688 million (FY/17: €1,228 million). Organic sales growth was 16% with a strong momentum in both the project and service businesses as well as increased sales from services for Fresenius Helios. Sales of the project business increased by 17% to €712 million (FY/17: €606 million). Sales in the service business grew by 57% (20%¹) to €976 million (FY/17: €622 million). In Q4/18, sales increased by 45% (22%¹; organic growth: 20%) to €697 million (Q4/17: €480 million).

EBIT increased by 45% (9%¹) to €110 million (FY/17: €76 million) with a margin of 6.5% (FY/17: 6.2%). In Q4/18, EBIT increased by 39% (11%¹) to €61 million (Q4/17: €44 million) with a margin of 8.8% (Q4/17: 9.2%).

Net income² increased by 44% to €72 million (FY/17: €50 million). In Q4/18, net income² increased by 34% to €39 million (FY/17: €29 million).

Order intake increased by 12% to €1,227 million (FY/17: €1,096 million) and reached a new all-time high. As of December 31, 2018, order backlog was €2,420 million (December 31, 2017: €2,147 million).

For FY/19, Fresenius Vamed expects organic sales growth in the range of ~10% and EBIT growth³ of 15% to 20%.

¹Without German post-acute care business acquired from Fresenius Helios
²Net income attributable to shareholders of VAMED AG
³Including the German post-acute care business acquired from Fresenius Helios, adjusted for IFRS 16 effects
 

Conference Call
As part of the publication of the results for fiscal year 2018, a conference call will be held on February 20, 2019 at 2 p.m. CET (8 a.m. EST). All investors are cordially invited to follow the conference call in a live broadcast over the Internet at www.fresenius.com/investors. Following the call, a replay will be available on our website.

• Delivered on FY/18 Group targets
   
• Fresenius Kabi to show continued growth 
   
• Helios Germany impacted by regulatory changes and initiatives to secure medium-term growth; Helios Spain to show continuous dynamic growth
   
• 26th consecutive dividend increase proposed
   
• Healthy growth targets for 2020 – 2023; consistent with expectations from December 2018

¹Growth rate adjusted for IFRS 15 adoption and divestitures of Care Coordination activities (Q4/17 base: €8,290 million; FY/17 base: €32,841 million)
²Before special items and after adjustments
³Net income attributable to shareholders of Fresenius SE & Co. KGaA
For a detailed overview of special items and adjustments please see the reconciliation tables on pages 22-24 of the pdf file.

Stephan Sturm, CEO of Fresenius, said: “2018 was not an easy year, and yet it was another successful one for Fresenius. We have further developed and enhanced our medical offering, while once again increasing both sales and earnings. 2019 will be a year of investment in growth areas such as home dialysis, biosimilars and new hospital services and therapies. Our goal is to provide even better treatment for even more patients as the basis for continued, strong growth – which is also reflected in our healthy mid-term growth targets.”

Group expectations for FY/19 confirmed
For FY/19, Fresenius projects sales growth¹ of 3% to 6% in constant currency. Net income^2,3  growth is expected to be ~0% in constant currency. NxStage is not included in this guidance because the acquisition is not closed yet and Fresenius does not expect a significant impact on its Group guidance metrics. This guidance is in line with the expectations announced on December 6, 2018. 

Fresenius expects its year-end 2019 net debt/EBITDA⁴ ratio to be broadly stable over the year-end 2018 figure. 

Fresenius intends to further increase its dividend for FY 2019.

Healthy growth targets⁵ for 2020 – 2023
Based on the expected financial results for FY/19, Group sales are projected to grow organically with a compounded annual growth rate (CAGR) of 4% to 7% in 2020 to 2023. Group net income² is projected to increase organically with a CAGR of 5% to 9% in 2020 to 2023. Fresenius expects its launched and contemplated sales growth and efficiency improvement initiatives as well as the expected break-even of Fresenius Kabi’s biosimilars business to drive an acceleration of Group earnings growth over that period. Small and medium-sized acquisitions are expected to contribute an incremental CAGR of approx. 1%-point to both sales and net income growth.

¹ FY/18 base: €33,009 million; FY/18 adjusted for divestitures of Care Coordination activities at FMC (H1/18); FY/19: adjusted for IFRS 16 effects; excluding effects from pending acquisition of NxStage by FMC
² Net income attributable to shareholders of Fresenius SE & Co. KGaA 
³ FY/18 base: €1,872 million; FY/18 before special items and after adjustments; FY/19 before special items (transcation-related expenses, expenses associated with the cost optimization program at FMC, revaluations of biosimilars contingent liabilities); adjusted for IFRS 16 effects; excluding effects from pending acquisition of NxStage by FMC
⁴ Both net debt and EBITDA calculated at expected annual average exchange rates; excluding effects from pending acquisition of NxStage by FMC; excluding further potential acquisitions; adjusted for IFRS 16 effects
⁵ Before special items
For a detailed overview of special items and adjustments please see the reconciliation tables on pages 22-24 of the pdf file.
 

26th consecutive dividend increase proposed
Consistent with Fresenius’ stated dividend policy, the Management Board will propose to the Supervisory Board a 7% increase in the dividend for FY/18 to €0.80 per share (2017: €0.75). The proposed total dividend payout to Fresenius SE & Co. KGaA shareholders amounts to €445 million.

6% sales growth in constant currency¹ 
Group sales¹ increased by 2%¹ (6%¹ in constant currency) to €33,530 million (FY/17: €32,841 million). Organic sales growth was 4%¹. Acquisitions/divestitures contributed net 2%¹ to growth. Negative currency translation effects of 4%¹ were mainly driven by the devaluation of the U.S. dollar and the Argentinian peso against the euro. 

In Q4/18, Group sales¹ increased by 7%¹ (7%¹ in constant currency) to €8,835 million (Q4/17: €8,290 million). Organic sales¹ growth was 6%¹. Acquisitions/divestitures contributed net 1%¹ to growth. There were no meaningful currency translation effects.

Group sales by region:

7% net income^1,2 growth in constant currency
Group EBITDA² decreased by 3%² (0%² in constant currency) to €5,991 million (FY/17: €6,174 million). Group EBIT² decreased by 4%² (-1%² in constant currency) to €4,561 million (FY/17: €4,746 million). The EBIT margin² was 13.6% (FY/17: 14.5%). Group EBIT² before expenses for the further development of the biosimilars business decreased by 2%² (increased by 1%² in constant currency) to €4,727 million. In FY/17, the compensation for treatments of U.S. war veterans (“VA agreement”) had contributed €87 million as a one-time effect. Group EBIT² excluding the VA agreement and expenses for the further development of the biosimilars business increased by 3% in constant currency. 

In Q4/18, Group EBIT² was broadly stable year-over-year² (broadly stable² in constant currency) at €1,250 million (Q4/17: €1,244 million), with an EBIT margin² of 14.1% (Q4/17: 15.0%). Group EBIT² excluding the prior-year VA agreement and expenses for the further development of the biosimilars business was also broadly stable year-over-year² in constant currency.

Group net interest² was -€570 million (FY/17: -€630 million). The decrease was mainly driven by refinancings at lower rates, lower debt, currency effects as well as proceeds from the divestitures of Care Coordination activities at Fresenius Medical Care. 

The decrease of the Group tax rate² to 22.0% (FY/17: 27.9%) was mainly due to the U.S. tax reform and some related one-time effects at Fresenius Medical Care and Fresenius Kabi. In Q4/18, the Group tax rate² was 22.6% (Q4/17: 28.0%).

Noncontrolling interest² was €1,240 million (2017: €1,164 million), of which 94% was attributable to the noncontrolling interest in Fresenius Medical Care.

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

Group net income^1,2 increased by 12% (15% in constant currency) to €2,027 million (FY/17: €1,814 million), mainly due to gains related to divestitures of Care Coordination activities at Fresenius Medical Care. Earnings per share^1,2 increased by 12% (15% in constant currency) to €3.65 (FY/17: €3.27). In Q4/18, Group net income^1,2 increased by 1% (0% in constant currency) to €516 million (Q4/17: €511 million). Earnings per share^1,2 increased by 1% (0% in constant currency) to €0.93 (Q4/17: €0.92).

Group net income^1,3 before special items increased by 3% (6% in constant currency) to €1,871 million (FY/17: €1,816 million). Earnings per share^1,3 increased by 3% (6% in constant currency) to €3.37 (FY/17: €3.28). In Q4/18, Group net income^1,3 increased by 3% (3% in constant currency) to €504 million (Q4/17: €487 million). Earnings per share^1,3 increased by 3% (3% in constant currency) to €0.91 (Q4/17: €0.88).

Group net income^1,4 before special items and after adjustments increased by 4% (7% in constant currency) to €1,871 million (FY/17: €1,804 million). Earnings per share^1,4 increased by 3% (6% in constant currency) to €3.37 (FY/17: €3.26). In Q4/18, Group net income^1,4 increased by 6% (5% in constant currency) to €504 million (Q4/17: €477 million). Earnings per share^1,4 increased by 6% (5% in constant currency) to €0.91 (Q4/17: €0.86).

Group net income^1,4,5 before expenses for the further development of the biosimilars business increased by 8% (11% in constant currency) to €1,991 million (2017: €1,847 million). Earnings per share^1,4,5 increased by 8% (11% in constant currency) to €3.58 (2017: €3.33). In Q4/18, Group net income^1,4,5 increased by 6% (6% in constant currency) to €542 million (Q4/17: €510 million). Earnings per share^1,4,5 increased by 5% (5% in constant currency) to €0.97 (Q4/17: €0.92).

¹Net income attributable to shareholders of Fresenius SE & Co. KGaA
²After special items
³Before special items
⁴Before special items and after adjustments
⁵Before expenses for the further development of the biosimilar business

Continued investment in growth 
Spending on property, plant and equipment was €2,163 million (FY/17: €1,828 million), primarily for the modernization and expansion of dialysis clinics, production facilities as well as hospitals and day clinics. This corresponds to 6% of sales.

Total acquisition spending was €1,086 million (FY/17: €6,852 million). FY/17 spending had included the acquisition of Quirónsalud as well as the acquisition of the biosimilars business of Merck KGaA.

Cash flow development
Group operating cash flow decreased by 5% to €3,742 million (FY/17: €3,937 million) with a margin of 11.2% (FY/17: 11.6%). In FY/17 Fresenius Medical Care had received a ~€200 million payment under the VA agreement. The FY/18 cash flow was impacted by a change in working capital items at Fresenius Helios, the earnings decrease at Helios Germany and negative currency translation effects. Operating cash flow in Q4/18 increased by 7% to €1,193 million (Q4/17: €1,116 million) with a margin of 13.5% (Q4/17: 12.8%). 

Given the effects described above in combination with growing investments, free cash flow before acquisitions and dividends decreased to €1,665 million (FY/17: €2,232 million). Free cash flow after acquisitions and dividends was €1,374 million (FY/17: -€4,557 million).

Solid balance sheet structure
The Group’s total assets increased by 7% (5% in constant currency) to €56,703 million (Dec. 31, 2017: €53,133 million). Current assets grew by 17% (17% in constant currency) to €14,790 million (Dec. 31, 2017: €12,604 million). Non-current assets increased by 3% (2% in constant currency) to €41,913 million (Dec. 31, 2017: € 40,529 million).

Total shareholders’ equity increased by 15% (13% in constant currency) to €25,008 million (Dec. 31, 2017: €21,720 million). The equity ratio increased to 44.1% (Dec. 31, 2017: 40.9%). 

Group debt was broadly stable (decreased by 2% in constant currency) at €18,984 million (Dec. 31, 2017: € 19,042 million). Group net debt decreased by 6% (-8% in constant currency) to € 16,275 million (Dec. 31, 2017: € 17,406 million) mainly due to the proceeds from divestitures of Care Coordination activities at Fresenius Medical Care. 

As of December 31, 2018, the net debt/EBITDA ratio was 2.71^1,2  (December 31, 2017: 2.84^1,2). Excluding the proceeds from divestitures of Care Coordination activities the net debt/EBITDA ratio was 2.91^1,2.

¹At LTM average exchange rates for both net debt and EBITDA; pro forma closed acquisitions/divestitures, excluding effects from pending acquisition of NxStage by FMC
²Before special items

Increased number of employees 
As of December 31, 2018, the number of employees was 276,750 (Dec. 31, 2017: 273,249).

Business Segments
Fresenius Medical Care 
Fresenius Medical Care is the world's largest provider of products and services for individuals with renal diseases. As of December 31, 2018, Fresenius Medical Care was treating 333,331 patients in 3,928 dialysis clinics. Along with its core business, the company provides related medical services in the field of Care Coordination.

• 7% comparable sales growth in constant currency in Q4/18
• 9% comparable² net income increase in constant currency in Q4/18
• Attractive share buyback program for 2019 and 2020
• Outlook for FY/19 (in constant currency): 3% to 7% adjusted sales growth³ and adjusted net income development⁴ in range of -2% to +2% expected

¹Excluding VA agreement Q4/18: 6%; FY/18: 4%
²Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
³FY/18 base: €16,026 million; FY/18 adjusted for divestitures of Care Coordination activities; FY/19 adjusted for IFRS 16 effects, excluding effects from pending NxStage transaction
⁴FY/18 base: €1,341 million; FY/18 before special items and after adjustments; FY/19 before special items (before transcation-related expenses, expenses associated with the cost optimization program), adjusted for IFRS 16 effects, excluding effects from pending NxStage transaction

Sales decreased by 7% (-2% in constant currency) to €16,547 million  (FY/17: €17,784 million). Organic sales growth was 4%. Currency translation effects reduced sales by 5%. The adoption of IFRS 15 reduced sales by 3%. 

With the FY/17 base additionally adjusted for divestitures of Care Coordination activities, sales decreased by 1% (increased by 4% in constant currency).  

In Q4/18, sales decreased by 3% (-3% in constant currency) to €4,300 million (Q4/17: €4,429 million). Organic sales growth was 6%. The adoption of IFRS 15 reduced sales by 2%. Q4/17 base additionally adjusted for divestitures of Care Coordination activities, sales in Q4/18 increased by 7% (7% in constant currency).

Health Care services sales¹ (dialysis services and care coordination) decreased by 2% (increased by 4% in constant currency) to €13,264 million (FY/17: €13,487 million). Health Care product sales increased by 1% (5% in constant currency) to €3,283 million (FY/17: €3,252 million).

In North America, sales¹ decreased by 2% (increased by 2% in constant currency) to €11,570 million (FY/17: €11,834 million). Health Care services sales¹ decreased by 2% (increased by 2% in constant currency) to €10,725 million (FY/17: €10,991 million). Excluding the FY/17 effect from the VA Agreement (€94 million), Health Care services sales¹ increased by 3% in constant currency. Health Care product sales of €845 million (FY/17: €843 million) were on the prior-year level (increased by 5% in constant currency).

¹On a comparable basis

Sales outside North America increased by 1% (8% in constant currency) to €4,962 million (FY/17: €4,890 million). Health Care services sales increased by 2% (11% in constant currency) to €2,539 million (FY/17: €2,496 million). Health Care product sales increased by 1% (5% in constant currency) to €2,423 million (FY/17: €2,394 million). 

Fresenius Medical Care’s EBIT increased by 29% (33% in constant currency) to €3,038 million (FY/17: €2,362 million), mainly driven by gains related to divestitures of Care Coordination activities. The EBIT margin increased to 18.4% (FY/17: 13.3%). EBIT on a comparable basis increased by 6% in constant currency and EBIT margin increased to 14.2% (FY/17: 13.6%). 

In Q4/18, EBIT increased by 18% (12% in constant currency) to €613 million (Q4/17: €519 million). The EBIT margin increased to 14.3% (Q4/17: 11.7%). EBIT on a comparable basis increased by 42% (increased by 39% in constant currency) and EBIT margin increased to 15.1% (Q4/17: 11.3%). 
 
Net income¹ increased by 55% (60% in constant currency) to €1,982 million (FY/17: €1,280 million). Net income¹ growth on a comparable basis was 14% in constant currency. Adjusted net income¹ growth was 4% in constant currency. 

In Q4/18, net income¹ increased by 8% (1% in constant currency) to €425 million (Q4/17: €394 million). Net income¹ growth on a comparable basis was 9% in constant currency. Adjusted net income¹ growth was 4% in constant currency. 

Operating cash flow was €2,062 million (FY/17: €2,192 million). The cash flow margin increased to 12.5% (FY/17: 12.3%). In Q4/18, operating cash flow was €698 million (Q4/17: €528 million). The cash flow margin increased to 16.2% (Q4/17: 11.9%).

For FY/19, Fresenius Medical Care expects adjusted sales to grow by 3% to 7%² in constant currency. Net income¹ is expected to develop in the range of -2% to +2%³ in constant currency in 2019.

For 2020, Fresenius Medical Care expects adjusted sales as well as adjusted net income to grow at a mid to high single digit rate, both at constant currency.

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

¹Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
²FY/18 base: €16,026 million; FY/18 adjusted for divestitures of Care Coordination activities (H1/18); FY/19 adjusted for IFRS 16 effects, excluding effects from pending NxStage transaction
³FY/18 base: €1,341 million; FY/18 before special items and after adjustments; FY/19 before special items (before transaction-related expenses, expenses associated with the cost optimization program), adjusted for IFRS 16 effects, excluding effects from pending NxStage transaction

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. In the biosimilars business, we are developing products with a focus on oncology and autoimmune diseases.

• 7% organic sales growth and 10% EBIT¹ growth in constant currency (excl. biosimilars expenses) in FY/18
• Operating cash flow at all-time high
• FY/19 outlook: 3% to 6% organic sales growth⁵ and 3% to 6% EBIT⁶ growth in constant currency expected 

¹Before special items
²Before expenses for the further development of the biosimilars business: Q4/18: 8%; FY/18: 10%
³Net income attributable to shareholders of Fresenius SE & Co. KGaA
⁴Before expenses for the further development of the biosimilars business: Q4/18: 20%; FY/18: 21%
⁵FY/18 base: €6,544 million; FY/19 adjusted for IFRS 16 effects
⁶FY/18 base: €1,139 million; FY/18 before special items including expenditures for further development of biosimilars business (€120 million after tax); FY/19 before special items (before transaction-related expenses, revaluations of biosimilars contingent liabilities), adjusted for IFRS 16 effects

Sales increased by 3% (7% in constant currency) to €6,544 million (FY/17: €6,358 million). Organic sales growth was 7%. Strong negative currency translation effects of 4% were mainly related to the devaluation of the U.S. dollar, the Argentinian peso and the Brazilian real against the euro. In Q4/18, sales increased by 6% (7% in constant currency) to €1,687 million (Q4/17: €1,594 million). Organic sales growth was 7%.

Sales in Europe grew by 2% (organic growth: 3%) to €2,248 million (FY/17: €2,214 million). In Q4/18, sales in Europe increased by 2% (organic growth: 3%) to €590 million. 

Sales in North America increased by 3% (organic growth: 8%) to €2,359 million (FY/17: €2,290 million). In Q4/18, sales increased by 8% (organic growth: 5%) to €599 million (Q4/17: €554 million). 

Sales in Asia-Pacific increased by 9% (organic growth: 12%) to €1,300 million (FY/17: €1,196 million). In Q4/18, sales increased by 11% (organic growth: 13%) to €336 million (Q4/17: €302 million). 

Sales in Latin America/Africa decreased by 3% (increased organically by 13%) to €637 million (FY/17: €658 million). In Q4/18, sales increased by 2% (organical growth: 18%) to €162 million (Q4/17: €159 million).

EBIT¹ decreased by 3% (increased by 2% in constant currency) to €1,139 million (FY/17: €1,177 million) with an EBIT margin¹ of 17.4% (FY/17: 18.5%). In Q4/18, EBIT¹ increased by 5% (6% in constant currency) to €285 million (Q4/17: €272 million) with an EBIT margin¹ of 16.9% (Q4/17: 17.1%).

EBIT¹ before expenses for the further development of the biosimilars business increased by 5% (10% in constant currency) to €1,305 million (FY/17: €1,237 million) with an EBIT margin¹ of 19.9% (FY/17: 19.5%). In Q4/18, EBIT¹ before expenses for the further development of the biosimilars business increased by 6% (8% in constant currency) to €338 million (Q4/17: €318 million) with an EBIT margin¹ of 20.0% (Q4/17: 19.9%).

Net income^1,2 increased by 6% (12% in constant currency) to €742 million (FY/17: €702 million). In Q4/18, net income^1,2 increased by 19% (21% in constant currency) to €188 million (Q4/17: €158 million).

Operating cash flow increased by 3% to on an all-time-high of €1,040 million (2017: €1,010 million), mainly driven by a strong operational performance. The cash flow margin was 15.9% (2017: 15.9%). 

For FY/19, Fresenius Kabi expects organic sales growth³ of 3% to 6% and EBIT growth⁴ in constant currency of 3% to 6%.

¹Before special items
²Net income attributable to shareholders of Fresenius SE & Co. KGaA
³FY/18 base: €6,544 million; FY/19 adjusted for IFRS 16 effects
⁴FY/18 base: €1,139million; FY/18 before special items including expenditures for further development of biosimilars business (€120 million after tax); FY/19 before special items (before acquisition-related expenses, revaluations of biosimilars contingent liabilities), adjusted for IFRS 16 effects 

Fresenius Helios
Fresenius Helios is Europe's leading private hospital operator. The company comprises Helios Germany and Helios Spain (Quirónsalud). Helios Germany operates 86 hospitals, ~125 outpatient centers and treats approximately 5.3 million patients annually. Quirónsalud operates 47 hospitals, 57 outpatient centers and around 300 occupational risk prevention centers, and treats approximately 13.3 million patients annually.

 

• 4% organic sales growth in Q4/18
• DRG catalogue effects and preparatory initiatives for regulatory changes continue to weigh on Helios Germany
• Helios Spain with dynamic growth
• FY/19 outlook³: 2% to 5% organic sales growth and EBIT decline of -5% to -2% expected

As of July 1, 2018 Fresenius Helios transferred its German post-acute care business to Fresenius Vamed. To allow a like-for-like comparison, we also provide sales and EBIT growth rates adjusted for the effects of this transaction. 

Fresenius Helios increased sales by 4% (6%¹) to €8,993 million (FY/17: €8,668 million). Organic sales growth was 3%. In Q4/18, sales decreased by 1% (increased by 4%¹; organic growth: 4%) to €2,231 million (Q4/17: €2,246 million).

Sales of Helios Germany decreased by 2% (increased by 2%¹; organic growth: 2%) to €5,970 million (FY/17: €6,074 million). In Q4/18, sales decreased by 5% (increased by 3%¹; organic growth: 3%) to €1,439 million (Q4/17: €1,512 million). Sales were impacted by a decline in admissions, inter alia due to an unexpectedly high fluctuation among doctors and a shortage of nursing staff as well as a trend towards outpatient treatments. The volume decline was offset by DRG inflator increases and better results from the negotiations with our payors. 

Helios Spain increased sales by 17% (organic growth: 6%) to €3,023 million (FY/17: €2,594 million), mainly due to an excellent operating performance and an additional month of consolidation (Quirónsalud is consolidated since February 1, 2017). In Q4/18 Helios Spain increased sales by 8% (organic growth: 7%) to €792 million (Q4/17: €734 million). 

Fresenius Helios EBIT remained unchanged (increased by 3%¹) at €1,052 million (FY/17: €1,052 million) with a margin of 11.7% (FY/17: 12.1%). In Q4/18, EBIT decreased by 2% (increased by 2%¹) to €277 million (Q4/17: €283 million) with a margin of 12.4% (Q4/17: 12.6%).

EBIT of Helios Germany decreased by 14% (-10%¹) to €625 million (FY/17: €725 million) with a margin of 10.5% (FY/17: 11.9%). In Q4/18, EBIT decreased by 22% (-15%¹) to €137 million (Q4/17: €176 million) with a margin of 9.5% (Q4/17: 11.6%). The significant fixed cost base in the hospital business has a strong operating leverage effect on EBIT as market dynamics and sales development slow down. The development of Helios Germany is impacted by additional catalogue effects, preparatory structural measures for expected regulatory requirements (e.g. clustering) and a lack of privatization opportunities in the German market. An unexpectedly high fluctuation among doctors and a shortage of nursing staff have an additional negative impact on the earnings development.

EBIT of Helios Spain increased by 26% to €413 million (FY/17: €327 million), mainly due to the strong operating performance and the additional month of consolidation, with a margin of 13.7% (FY/17: 12.6%). In Q4/18, EBIT increased by 19% to €127 million (Q4/17: €107 million) with a margin of 16.0% (Q4/17: 14.6%).

Net income² of Fresenius Helios decreased by 6% to €686 million (FY/17: €728 million). In Q4/18, net income² decreased by 16% to €170 million (Q4/17: €202 million).

Operating cash flow was €554 million (FY/17: €733 million) with a margin of 6.2% (FY/17: 8.5%). The decrease is mainly attributable to the earnings decrease at Helios Germany and the changes in working capital.

For FY/19, Fresenius Helios expects organic sales growth of 2% to 5% and an EBIT³ decline of -5% to -2%.

¹Adjusted for German post-acute care business transferred to Fresenius Vamed
²Net income attributable to shareholders of Fresenius SE & Co. KGaA
³Adjusted for IFRS 16 effects

Fresenius Vamed
Fresenius Vamed manages projects and provides services for hospitals and other health care facilities worldwide and is a leading post-acute care provider in Central Europe. The portfolio ranges along the entire value chain: from project development, planning, and turnkey construction, via maintenance and technical management to total operational management.

• Excellent organic sales growth of 16% in FY/18
• Order intake at all-time high - strong foundation for future growth
• FY/19 outlook: ~10% organic sales growth and 15% to 20% EBIT growth³ expected

As of July 1, 2018 Fresenius Helios transferred its German post-acute care business to Fresenius Vamed. To allow for a like-for-like comparison, we also provide sales and EBIT growth rates adjusted for the effects of this transaction. 

Sales increased by 37% (19%¹) to €1,688 million (FY/17: €1,228 million). Organic sales growth was 16% with a strong momentum in both the project and service businesses as well as increased sales from services for Fresenius Helios. Sales of the project business increased by 17% to €712 million (FY/17: €606 million). Sales in the service business grew by 57% (20%¹) to €976 million (FY/17: €622 million). In Q4/18, sales increased by 45% (22%¹; organic growth: 20%) to €697 million (Q4/17: €480 million).

EBIT increased by 45% (9%¹) to €110 million (FY/17: €76 million) with a margin of 6.5% (FY/17: 6.2%). In Q4/18, EBIT increased by 39% (11%¹) to €61 million (Q4/17: €44 million) with a margin of 8.8% (Q4/17: 9.2%).

Net income² increased by 44% to €72 million (FY/17: €50 million). In Q4/18, net income² increased by 34% to €39 million (FY/17: €29 million).

Order intake increased by 12% to €1,227 million (FY/17: €1,096 million) and reached a new all-time high. As of December 31, 2018, order backlog was €2,420 million (December 31, 2017: €2,147 million).

For FY/19, Fresenius Vamed expects organic sales growth in the range of ~10% and EBIT growth³ of 15% to 20%.

¹Without German post-acute care business acquired from Fresenius Helios
²Net income attributable to shareholders of VAMED AG
³Including the German post-acute care business acquired from Fresenius Helios, adjusted for IFRS 16 effects
 

Press Conference 
As part of the publication of the results for fiscal year 2018, a press conference will be held on February 20, 2019 at 10 a.m. CET. You are cordially invited to follow the press conference in a live broadcast over the Internet at www.fresenius.com/media-calendar. Following the press conference, a replay will be available on our website.

• Growth trend unchanged: organic revenue growth of 4% for full year 2018
• Net income growth of 60% (14% on a comparable basis) at constant currency
• 22nd consecutive dividend increase proposed: +10% to EUR 1.17
• Share buyback program of up to EUR 1bn over the next 2 years
• Meaningful investments in 2019 to capture future growth opportunities and optimize cost base
• Significantly accelerated net income growth in 2020 expected

Key figures (IFRS) – fourth quarter and full year 2018



For a reconciliation of adjusted figures, please refer to the table at the end of the PDF.
cc = constant currency

“Our company’s growth continued in 2018, generating very solid cash flow that we are using for further investments in future growth and to create direct shareholder return,” said Rice Powell, Chief Executive Officer of Fresenius Medical Care. “We achieved a strong increase in earnings per share, steadily strengthened our core competencies, and further positioned the company to meet the challenges of a rapidly evolving healthcare market. The ongoing Global Efficiency Program continues to improve the company’s efficiency. In addition, our focus in 2019 will be on accelerating our investments to further improve our cost base and capture future growth opportunities. Key growth areas are for example U.S. home care supported by the acquisition of NxStage and increasing patient numbers in developing economies.”

Solid revenue growth targeted for 2019 and 2020
For 2019, Fresenius Medical Care expects adjusted revenue^2,3 to grow between 3% and 7% and adjusted net income^2,3 to develop in the range of (2%) to 2%. Based on the ramp-up of the new 2019 cost optimization program, the phasing of contributions from the Global Efficiency Program II and other measures initiated, Fresenius Medical Care anticipates a back-end loaded acceleration of adjusted net income^2,3 growth.

For 2020, Fresenius Medical Care expects adjusted revenue² as well as adjusted net income² to grow at a mid to high single digit rate.

These targets as well as the 2018 base are and will be adjusted in order to make the business performance in the respective periods comparable for items such as: FCPA related charges, the IFRS 16 implementation, the contributions from Sound in H1 2018, the gain (loss) related to divestitures of Care Coordination activities and expenses for the cost optimization program. All effects from the pending NxStage acquisition are excluded from the targets for 2019 and 2020.

Global Efficiency Program II on track
Fresenius Medical Care launched the second phase of its Global Efficiency Program (GEP II) in 2018. The program’s objectives are to identify and realize further efficiency potential and enhance the company’s overall competitiveness. In 2018, we achieved 15% of the targeted sustained cost improvements, which is well ahead of the anticipated contribution of 10% for the year. Therefore, the company increases the lower end of the expected range of sustained cost improvements to EUR 150 million and now expects EUR 150 million to EUR 200 million per annum by 2020.

Investments in future growth and improved cost base
New 2019 cost optimization program
Fresenius Medical Care remains committed to a continuous optimization of its business. In 2019, the company will invest around EUR 100 million in order to sustainably improve its cost base in addition to the GEP II program. Based on enhancements in the products and services business, the 2019 cost optimization program is expected to be accretive to net income already from 2020 onwards.

Investments in future growth
Based on very positive patient sentiment towards the provision of dialysis in the home setting and an innovative product portfolio, Fresenius Medical Care plans to invest in building and redesigning training facilities, rolling out training courses, building up and scaling the home distribution infrastructure and optimizing facilities to meet increasing demand for home dialysis products and services. As a part of the home strategy Fresenius Medical Care is in the process of acquiring NxStage Medical, Inc., which produces and markets an innovative product portfolio of medical devices for use in home dialysis and in the critical care setting.

The second major focus of investment in 2019 will be developing economies such as China. Given the company’s more than 15 years of experience in China on the product side, the strong growth of chronic diseases and the current development of the Chinese healthcare market, Fresenius Medical Care will invest in response to the strong growth impulse there and to participate actively in the market opportunity. Our target is to build a network of more than 100 clinics and to invest in home dialysis in China in the coming years. Another example is the Indian market, where we grow our clinic network and have just launched our new 4008A machine, which is engineered for developing economies.  

Creating direct shareholder return
22nd consecutive dividend increase proposed
Based on the solid results for full year 2018, a new record dividend of EUR 1.17 per share, representing an increase of 10% will be proposed to the Annual General Meeting in May 2019. If approved, and based on dividend-entitled shares, the company would return a total of EUR 359 million to its shareholders.

Share buyback program
Fresenius Medical Care has decided to utilize its strong balance sheet to create additional shareholder return by buying back shares in a total aggregate amount of up to EUR 1 billion over the course of 2019 and 2020 in compliance with EU safe harbor provisions.

NxStage
On 29 January 2019 Fresenius Medical Care announced that the company has extended the end-date under the merger agreement with NxStage Medical, Inc. to account for the interruption of the U.S. Federal Trade Commission’s review of the transaction during the recent U.S. government shutdown. The merger agreement’s end-date has been extended to August 6, 2019, or such earlier date on which there has been 60 consecutive days of full funding of the U.S. Federal Trade Commission’s operations. The closing of the transaction is expected in the first quarter of 2019.  

Revenue development reflects portfolio divestitures
Revenue in the fourth quarter 2018 decreased by 3% at constant currency to EUR 4,300 million. On a comparable basis (excluding the effects from IFRS 15 and the H2 2017 contribution from the divested Sound Inpatient Physicians, Inc.) revenue rose 7% (+7% at constant currency). Health Care Services revenue decreased by 5% (-5% at constant currency) to EUR 3,413 million while Health Care Products revenue increased by 5% to EUR 887 million (+6% at constant currency).

Revenue for the full year 2018 decreased by 2% at constant currency to EUR 16,547 million (+4% at constant currency on a comparable basis). Health Care Services revenue decreased by 9% (-4% at constant currency) to EUR 13,264 million, mainly due to the divestitures in Q2 2018, with organic growth at a solid 4%. Health Care Products revenue increased by 1% (+5% at constant currency) to EUR 3,283 million, primarily driven by higher sales of chronic hemodialysis products and renal pharmaceuticals, as well as acute and peritoneal dialysis products.

Corporate cost in the fourth quarter 2018 amounted to EUR 67 million. The fourth quarter 2017 (EUR 289 million) included a EUR 200 million FCPA-related charge. Corporate costs for the full year 2018 declined from EUR 539 million to EUR 359 million, including a EUR 77 million FCPA-related charge.

Operating income (EBIT) in the fourth quarter 2018 rose 18% (+12% at constant currency) to EUR 613 million. On a comparable basis (excluding effects from the divestitures of Care Coordination activities, the H2 2017 contribution from Sound Physicians, the U.S. ballot initiatives and the 2018 FCPA-related charge), EBIT increased by 42% (+39% at constant currency) to EUR 648 million. For the full year 2018, EBIT was EUR 3,038 million, a strong increase of 29% (+33% at constant currency) on the previous year. On a comparable basis, EBIT increased by 3% (+6% at constant currency) to EUR 2,346 million, mainly due to the lower FCPA-related charge.

Net interest expense in the fourth quarter 2018 was EUR 58 million, compared to EUR 80 million in the fourth quarter 2017. For the full year 2018, net interest expense was EUR 301 million, a year-over-year reduction of 17%. This reduction was supported by the repayment of higher-interest-bearing instruments and their replacement mainly with a Euro bond at lower interest rates in July 2018, a lower debt level, interest income from investing the Sound Physicians sale proceeds, and lower interest on taxes.

Income tax expense in the fourth quarter 2018 benefited from prior year and audit impacts. For the full year 2018, income tax expense increased by 15% to EUR 511 million. On a reported basis, the tax rate was 18.7% (22.2% for the full year 2017), a reduction largely driven by the gain related to the divestitures of Care Coordination activities with a lower tax basis and favorable prior year tax effects.

Excluding (i) the impact from the gain (loss) related to divestitures from Care Coordination activities, (ii) the H2 2017 contribution from Sound Physicians, (iii) the U.S. ballot initiatives and (iv) the FCPA-related charge, the VA agreement and the Natural Disaster costs as well as the effects from the U.S. tax reform, the 2018 effective tax rate decreased by 70 basis points to 30.1%.

Net income¹ for the fourth quarter 2018 increased by 8% (+1% at constant currency) to EUR 425 million. On a comparable basis (excluding (i) the impact from the gain (loss) related divestitures from Care Coordination activities, (ii) the H2 2017 contribution from Sound Physicians, (iii) the U.S. ballot initiatives and (iv) the 2018 FCPA-related charge) net income for the fourth quarter of 2018 increased 13% to EUR 408 million (+9% at constant currency). Based on approximately 306.9 million shares (weighted average number of shares outstanding), basic earnings per share (EPS) improved by 8%, to EUR 1.38. Adjusted for the previously described effects, EPS rose 13% to EUR 1.33 (+9% at constant currency).

Net income¹ for the full year 2018 increased by 55% (+60% at constant currency) to EUR 1,982 million. Excluding the four effects described in the previous paragraph ((i) EUR +673 million, (ii) EUR 38 million, (iii) EUR -40 million, and (iv) EUR -28 million), net income increased 11% to EUR 1,377 million (14% at constant currency). Based on approximately 306.5 million shares, basic EPS increased from EUR 4.17 to EUR 6.47 (+55%). Excluding the effects described above, EPS increased 11% (+14% at constant currency) to EUR 4.49. On an adjusted basis, net income and EPS increased by 4% at constant currency.

North America growth affected by divestitures
In the fourth quarter 2018, North America segment revenue declined 6% to EUR 2,981 million (-9% at constant currency), reflecting the divestiture of Care Coordination activities. On a comparable basis, excluding the effects caused by IFRS 15 and the revenue of Sound Physicians in the fourth quarter 2017, the segment grew by 8% (+5% at constant currency). Health Care Services revenue came in at EUR 2,746 million, of which Care Coordination contributed EUR 291 million. Dialysis Care revenue reached EUR 2,455 million, a strong increase of 10% (+7% at constant currency). Health Care Products revenue grew strongly by 10% to EUR 235 million (+7% at constant currency).

Operating income in North America in the fourth quarter 2018 was EUR 492 million, a decline of 19%. The operating income margin of 16.5% came in below 2017’s strong fourth quarter margin of 19.2%. The Dialysis EBIT in North America fell 4% to EUR 498 million.

For the full year 2018, North America revenue was at EUR 11,570 million, down by 10% (-6% at constant currency). On a comparable basis (excluding the effects from IFRS 15 and the H2 2017 impact from Sound Physicians), revenue fell by 2% (+ 2% at constant currency). Reflecting the divestiture of Care Coordination activities, Health Care Services revenue declined by 11% (-7% at constant currency) to EUR 10,725 million.

Dialysis Care revenue decreased by 2% (+3% at constant currency) to EUR 9,089 million, mainly due to increased organic revenue per treatment and growth in same-market treatments, partially offset by the effect caused by IFRS 15. Care Coordination revenue fell 42% to EUR 1,636 million (-39% at constant currency).

Health Care Products revenue grew by a solid 5% in constant currency to EUR 845 million, driven by higher sales of renal pharmaceuticals and products for peritoneal dialysis and hemodialysis.

Operating income increased by 28% to EUR 2,665 million (+33% at constant currency). The operating income margin reached 23.0% (FY 2017: 16.2%). While the Care Coordination margin was positively influenced by the divestiture of certain activities, the margin in the Dialysis business declined to 17.6% (FY 2017: 19.3%), primarily due to the effect from the prior-year agreement with the U.S. Department of Veterans Affairs, the move of calcimimetic drugs in dialysis services, and lower revenue from commercial payors.

At the end of 2018, 204,107 patients were being treated at the company’s 2,529 clinics in North America. Dialysis treatments increased by 3%.

At $354, revenue per treatment in the United States in 2018 was up by 4% due to the move of calcimimetic drugs, partially offset by lower revenue from commercial payors and higher implicit price concessions. Cost per treatment increased by 6% to $289, largely driven by the move of calcimimetic drugs and property-related costs, partially offset by lower costs for healthcare supplies.

Highest 5-Diamond Patient Safety results in the U.S. achieved
Nearly 100% of Fresenius Medical Care’s U.S. clinics achieved 5-Diamond status in the 5-Diamond Patient Safety Program, compared with 93% of all participating providers. Nearly 44% of all dialysis providers participated. Participation in the 5-Diamond Patient Safety Program is just one part of our commitment to delivering an exceptional patient experience.

Solid Health Care Services growth in EMEA
Revenue in the EMEA segment increased by 3% (+5% at constant currency) to EUR 679 million in the fourth quarter 2018. Health Care Services revenue increased by 6% (+9% at constant currency) to EUR 331 million, while Health Care Products revenue was flat at EUR 348 million (+2% at constant currency). Non-dialysis products contributed revenue of EUR 18 million (Q4 2017: EUR 20 million). Operating income in EMEA decreased by 12% (-11% at constant currency) to EUR 97 million in the fourth quarter 2018, while the operating income margin fell to 14.4% (Q4 2017: 16.7%).

For the full year 2018, EMEA revenue increased by 2% (+4% at constant currency) to EUR 2,587 million. Health Care Services revenue increased by 3% (+6% in constant currency), based on same-market treatment growth and contributions from acquisitions. Health Care Products revenue was stable at EUR 1,313 million (+2% at constant currency), driven by higher sales of machines, products for acute care, renal pharmaceuticals, bloodlines and concentrates, partially offset by lower sales of dialyzers as well as products for peritoneal dialysis. Operating income decreased by 10% to EUR 399 million (-10% at constant currency). The operating income margin fell to 15.4% (FY 2017: 17.4%), mainly due to an impairment of intangible assets and higher personnel costs in certain countries.

At the end of 2018, 65,061 patients were being treated at the company’s 776 clinics in EMEA. Dialysis treatments increased by 4%.

Strong year-end performance in Asia-Pacific
Asia-Pacific revenue grew strongly by 9% (+9% at constant currency) to EUR 454 million in the fourth quarter 2018. At EUR 207 million, Health Care Services revenue in the region increased by 8% (+7% at constant currency). The 9% (+11% constant currency) growth in Health Care Products revenue to EUR 247 million was mainly supported by higher sales of products for chronic hemodialysis and acute care treatments. Operating income climbed a strong 13% (+12% at constant currency) to EUR 86 million. The operating income margin rose to 18.8% (Q4 2017: 18.2%).

For the full year 2018, Asia-Pacific revenue grew by 4% (+8% at constant currency) to EUR 1,689 million, mainly driven by same-market treatment growth and acquisitions. Health Care Services contributed EUR 776 million. Health Care Products revenue of EUR 913 million was mainly supported by higher sales of products for chronic hemodialysis and acute care treatments. Operating income declined by 3% (-1% at constant currency) to EUR 304 million, while the operating income margin was 18.0% (FY 2017: 19.3%).
This development was primarily driven by unfavorable currency transaction effects, partially offset by business growth in certain countries in the region.

At the end of 2018, 31,476 patients were being treated at the company’s 394 clinics in Asia-Pacific. Dialysis treatments increased by 3%.

Lower contribution from Latin America
Latin America revenue was EUR 182 million in the fourth quarter 2018, a decrease of 2% (and a strong increase of 33% at constant currency). Health Care Services revenue was flat at EUR 129 million (+44% at constant currency). Health Care Products revenue decreased by 5% (+8% at constant currency) to EUR 53 million. Operating income came in at EUR 5 million, 63% below 2017’s fourth quarter (-93% at constant currency). The operating margin was 2.8% (Q4 2017: 7.4%).

For the full year 2018, Latin America revenue decreased by 5% (+22% at constant currency) to EUR 686 million. Revenue in Health Care Services was EUR 489 million, a decrease of 5% (+27% at constant currency) due to organic revenue increase driven by hyperinflation in Argentina, contributions from acquisitions, and same-market growth. Health Care Products revenue of EUR 197 million decreased by 4% (+11% at constant currency), driven by higher sales of machines and acute and peritoneal dialysis products, partially offset by lower sales in dialyzers. Operating income decreased by 51% (-65% at constant currency) to EUR 29 million. The operating income margin was 4.2% (FY 2017: 8.1%), mainly impacted by hyperinflation in Argentina and unfavorable currency transaction effects.

At the end of 2018, Fresenius Medical Care treated 32,687 patients at 229 clinics in Latin America. Dialysis treatments increased by 4%.

Solid operating cash flow
In the fourth quarter 2018, the company generated net cash provided by operating activities of EUR 698 million, representing 16.2% of revenue (Q4 2017: EUR 528 million). The increase was primarily attributable to a favorable development of trade accounts receivables due to a positive development of DSO and lower income tax payments.

In the full year 2018, the company generated net cash provided by operating activities of EUR 2,062 million, compared with EUR 2,192 million for the full year 2017. This represents 12.5% of revenue, clearly exceeding our 2018 target of more than 10%. The slight decrease in net cash provided by operating activities was largely driven by the 2017 payment under the VA agreement, increased inventory levels and a discretionary contribution to plan assets in the U.S., partially offset by lower income tax payments. Free cash flow reached EUR 1,059 million (FY 2017: EUR 1,351 million). DSO as of December 31, 2018 was 75 days, the same level as at the end of 2017.

¹Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
²Numbers at constant currency
³Reported revenue 2018 of EUR 16,547 million adjusted for Sound H1 2018; reported net income 2018 of EUR 1,982 million adjusted for Sound H1 2018, the gain (loss) related to divestitures of Care Coordination activities and the 2018 FCPA related charge (for details see reconciliation at the attached tables)

Press Conference
Fresenius Medical Care will hold a press conference at its headquarters in Bad Homburg, Germany to discuss the results of the fourth quarter and full year 2018 on Wednesday, February 20, 2018, at 10 a.m. CET. The press conference will be webcast in the media center of the company's website www.freseniusmedicalcare.com. A replay will be available shortly after the conference.

Methocarbamol Injection is the newest addition to the company´s anesthesia and analgesia portfolio.

Fresenius Kabi announced today that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) has issued a positive opinion, recommending marketing authorization for MSB11022 a biosimilar candidate of Humira^® (adalimumab)*. The European Commission (EC) will now decide on the approval of MSB11022 which is expected in Q2/ 2019.
*Humira^® is a registered trademark of AbbVie Biotechnology Ltd.

Fresenius Kabi announced today that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) has issued a positive opinion, recommending marketing authorization for MSB11022 a biosimilar candidate of Humira® (adalimumab)*. The European Commission (EC) will now decide on the approval of MSB11022 which is expected in Q2/ 2019.
*Humira^® is a registered trademark of AbbVie Biotechnology Ltd.