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October 08, 2015
London, UK
The cornerstone for the modernization of University Hospital Schleswig-Holstein was laid today in Lübeck, Germany. VAMED and its consortium partner BAM will construct new buildings and renovate existing ones in a €520 million project, with completion scheduled for 2021. In addition, the consortium will provide technical management services until 2044. The total contract has a volume of approximately €1.7 billion.
Q1/2015:
Ulf Mark Schneider, CEO of Fresenius, said: “Fresenius had an excellent start into the year, even before taking into account very favorable exchange rate effects. All four business segments contributed to the strong financial results, with Fresenius Kabi’s performance in particular standing out. We expect continued momentum in sales and profit growth in the coming quarters and raise our Group earnings guidance for 2015.”
1 Before special items
2 Net income attributable to shareholders of Fresenius SE & Co. KGaA; before special items
2015 Group earnings guidance1 raised
Based on the Group’s excellent financial results in the first quarter of 2015 and positive prospects for the remainder of the year, Fresenius raises its 2015 earnings guidance. For 2015, Fresenius now expects net income2 growth of 13% to 16% in constant currency. Previously, the company expected net income2 growth of 9% to 12% in constant currency. The company fully confirms its Group sales guidance. Sales are expected to increase by 7% to 10% in constant currency.
The net debt/EBITDA3 ratio is expected to be approximately 3.0 at the end of 2015.
13% sales growth in constant currency
Group sales in the first quarter increased by 24% (13% in constant currency) to €6,483 million (Q1/2014: €5,212 million). Organic sales growth was 6%. Acquisitions contributed 8%, while divestitures reduced sales by 1%.
Group sales by region:
1 Based on the average exchange rates through April 24 and the exchange rates of April 24 applied to the remainder of the year, this implies sales of ~€27.6 billion and net income of ~€1.34 billion, at the lower end of the guidance range.
2 Net income attributable to shareholders of Fresenius SE & Co. KGaA; 2015 before integration costs (~€10 million before tax for hospitals acquired from Rhön-Klinikum AG), before costs for the efficiency program at Fresenius Kabi (~€100 million before tax), and before the disposal gains from the divestment of two HELIOS hospitals (€34 million before tax); 2014 before special items
3 At annual average exchange rates for both net debt and EBITDA; without major acquisitions; before special items
16% net income1 growth in constant currency
Group EBITDA2 increased by 29% (15% in constant currency) to €1,115 million (Q1/2014: €867 million). Group EBIT2 increased by 32% (18% in constant currency) to €851 million (Q1/2014: €643 million). The EBIT margin was 13.1% (Q1/2014: 12.3%).
Group net interest increased to -€165 million (Q1/2014: -€138 million). Interest rate savings were more than offset by interest on incremental debt for acquisitions completed in 2014 and by currency translation effects.
The Group tax rate2 increased to 30.2% (Q1/2014: 26.3%). In the first quarter of 2014, a one-time item at Fresenius Medical Care had positively influenced the Group tax rate.
Noncontrolling interest was €187 million (Q1/2014: €144 million), of which 95% was attributable to the noncontrolling interest in Fresenius Medical Care.
Group net income3 before special items increased by 28% (16% in constant currency) to €292 million (Q1/2014: €228 million). Earnings per share3 increased by 28% (16% in constant currency) to €0.54 (Q1/2014: €0.42).
Group net income3 including special items increased by 28% (17% in constant currency) to €317 million (Q1/2014: €248 million). Earnings per share3 increased by 26% (17% in constant currency) to € 0.58 (Q1/2014: € 0.46).
A reconciliation to earnings according to U.S. GAAP can be found on page 14 in the pdf of this Investor News.
1 Net income attributable to shareholders of Fresenius SE & Co. KGaA; before special items
2 Before special items
3 Net income attributable to shareholders of Fresenius SE & Co. KGaA
Continued investment in growth
Spending on property, plant and equipment was €273 million (Q1/2014: €234 million), primarily for the modernization and expansion of dialysis clinics, production facilities and hospitals. Total acquisition spending was €104 million (Q1/2014: €924 million).
Increase in operating cash flow
Operating cash flow increased to €531 million (Q1/2014: €140 million). The cash flow margin increased to 8.2% (Q1/2014: 2.7%). Operating cash flow in the first quarter of 2014 was affected by the payment for the W.R. Grace bankruptcy settlement of US$115 million1.
Net capital expenditure increased to €273 million (Q1/2014: €243 million). Free cash flow before acquisitions and dividends improved to €258 million (Q1/2014: -€103 million). Free cash flow after acquisitions and dividends increased to €256 million (Q1/2014: €1,006 million).
1 See Annual Report 2014, page 152 f.
Solid balance sheet structure
The Group’s total assets increased by 8% (0% in constant currency) to €43,032 million (Dec. 31, 2014: €39,897 million). Current assets grew by 7% (0% in constant currency) to €10,688 million (Dec. 31, 2014: €10,028 million). Non-current assets increased by 8% (1% in constant currency) to €32,344 million (Dec. 31, 2014: € 29,869 million).
Total shareholders’ equity increased by 12% (3% in constant currency) to €17,271 million (Dec. 31, 2014: €15,483 million). The equity ratio increased to 40.1% (Dec. 31, 2014: 38.8%).
Group debt grew by 3% (decreased by 3% in constant currency) to €15,940 million (Dec. 31, 2014: € 15,454 million).
As of March 31, 2015, the net debt/EBITDA ratio was 3.401 (3.121 at LTM average exchange rates for both net debt and EBITDA).
1 Pro forma acquisitions; before special items
Business Segments
Fresenius Medical Care
Fresenius Medical Care is the world's largest integrated provider of products and services for individuals undergoing dialysis because of chronic kidney failure. As of March 31, 2015, Fresenius Medical Care was treating 286,768 patients in 3,396 dialysis clinics.
Sales increased by 11% (17% in constant currency) to US$3,960 million (Q1/2014: US$3,564 million). Organic sales growth was 7%. Acquisitions contributed 10%. Adverse currency effects reduced sales by 6%.
Health Care services sales (dialysis services and care coordination) increased by 14% (18% in constant currency) to US$3,182 million (Q1/2014: US$2,782 million). Dialysis product sales were US$778 million (Q1/2014: US$782 million), an increase by 11% in constant currency.
In North America, sales increased by 16% to US$2,771 million (Q1/2014: US$2,393 million). Health Care services sales grew by 17% to US$2,571 million (Q1/2014: US$2,201 million). Dialysis product sales increased by 4% to US$200 million (Q1/2014: US$192 million).
Sales outside North America grew by 2% (18% in constant currency) to US$1,180 million (Q1/2014: US$1,161 million). Health Care services sales increased by 5% (24% in constant currency) to US$611 million (Q1/2014: US$581 million). Dialysis product sales decreased by 2% (increased by 13% in constant currency) to US$569 million (Q1/2014: US$580 million).
EBIT increased by 13% (21% in constant currency) to US$504 million (Q1/2014: US$445 million) due to improvements in the operating business across all regions. The EBIT margin increased to 12.7% (Q1/2014: 12.5%).
Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA increased by 2% (10% in constant currency) to US$210 million (Q1/2014: US$205 million).
Operating cash flow increased to US$447 million (Q1/2014: US$112 million, affected by the payment for the W.R. Grace bankruptcy settlement of US$115 million2). The cash flow margin increased to 11.3% (Q1/2014: 3.2%).
Fresenius Medical Care confirms its outlook for 2015. The company expects sales to grow at 5% to 7%, which at constant currency is a growth rate of 10% to 12%. Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA is expected to increase 0% to 5% in 2015.
Savings from the global efficiency program are included, while potential acquisitions are not. The outlook reflects further operating cost investments within the Care Coordination segment. The outlook is based on exchange rates prevailing at the beginning of 2015.
1 Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
2 See Annual Report 2014, page 152 f.
For further information, please see Fresenius Medical Care’s Investor News at www.freseniusmedicalcare.com.
Fresenius Kabi
Fresenius Kabi offers infusion therapies, intravenously administered generic drugs and clinical nutrition for seriously and chronically ill patients in the hospital and outpatient environments. The company is also a leading supplier of medical devices and transfusion technology products.
Sales increased by 15% (5% in constant currency) to €1,394 million (Q1/2014: €1,213 million). Organic sales growth was 5%. Acquisitions contributed 1% while divestitures reduced sales by 1%. Positive currency translation effects (10%) were mainly related to the Euro’s depreciation against the U.S. dollar and the Chinese yuan.
Sales in Europe grew by 4% (organic growth: 5%) to €518 million (Q1/2014: €500 million). Sales in North America increased by 24% (organic growth: 3%) to €473 million (Q1/2014: €382 million). Sales growth was boosted by IV drug shortages easing more slowly than expected. Asia-Pacific sales increased by 20% (organic growth: 4%) to €268 million (Q1/2014: €222 million). Sales in Latin America/Africa grew by 24% (organic growth: 8%) to €135 million (Q1/2014: €109 million).
EBIT1 increased by 28% (10% in constant currency) to €257 million (Q1/2014: €201 million). The EBIT margin was 18.5% (Q1/2014: 16.6%).
Net income2 increased by 32% (14% in constant currency) to €140 million (Q1/2014: €106 million).
Operating cash flow increased by 98% to €83 million (Q1/2014: €42 million) with a margin of 6.0% (Q1/2014: 3.5%).
Fresenius Kabi’s initiative to increase production efficiency and streamline administrative structures is well on track. Costs of €10 million before tax were incurred in the first quarter of 2015. These costs are reported in the Group segment Corporate/Other.
Fresenius Kabi raises its outlook3 for 2015 and now expects organic sales growth of 4% to 7% and EBIT growth in constant currency in the range of 11% to 14%. The implied EBIT margin is 18.5% to 19.5%. Previously, Fresenius Kabi projected organic sales growth of 3% to 5% and an EBIT growth in constant currency in the range of 4% to 6% with an implied EBIT margin in the range of 17.5% to 18.5%.
Fresenius Kabi’s outlook excludes ~€100 million costs before tax for the efficiency program. For segment reporting purposes, these costs will not be reported in the Fresenius Kabi segment but as special items in the Group segment Corporate/Other.
1 Before special items
2 Net income attributable to shareholders of Fresenius Kabi AG; before special items
3 Based on the average exchange rates through April 24 and the exchange rates of April 24 applied to the remainder of the year, this implies sales of ~€5.8 billion and EBIT of ~€1.11 billion, at the lower end of the expected range
Fresenius Helios
Fresenius Helios is Germany’s largest hospital operator. HELIOS operates 111 hospitals, thereof 87 acute care clinics (including seven maximum care hospitals in Berlin-Buch, Duisburg, Erfurt, Krefeld, Schwerin, Wiesbaden and Wuppertal) and 24 post-acute care clinics. HELIOS treats approximately 4.5 million patients per year, thereof 1.2 million inpatients, and operates more than 34,000 beds.
Sales increased by 13% to €1,391 million (Q1/2014: €1,227 million). Organic sales growth was 4% (Q1/2014: 4%). Acquisitions contributed 10% while divestitures reduced sales by 1%.
EBIT1 grew by 29% to €147 million (Q1/2014: €114 million). The EBIT margin increased to 10.6% (Q1/2014: 9.3%).
Net income2 increased by 39% to €107 million (Q1/2014: €77 million).
Sales of the established hospitals, including the former Rhön-Klinikum facilities consolidated for more than one year, grew by 4% to €1,263 million (Q1/2014: €1,214 million). EBIT1 increased by 27% to €143 million (Q1/2014: €113 million). The EBIT margin increased to 11.3% (Q1/2014: 9.3%). Sales of the acquired hospitals3 consolidated for less than one year were €128 million. EBIT1 was €4 million with a margin of 3.1%.
The integration of the hospitals acquired from Rhön-Klinikum AG is fully on track. Total integration costs for 2014 and 2015 are confirmed at approximately €60 million. Integration costs were €2 million in Q1/2015 taking the total to date to €53 million. Amount and timing of projected near-term cost synergies (€85 million p.a.) are also confirmed.
Fresenius Helios fully confirms its outlook for 2015. Fresenius Helios projects organic sales growth of 3% to 5% and reported sales growth of 6% to 9%. EBIT is expected to increase to €630 to €650 million.
Fresenius Helios’ outlook excludes integration costs for the hospitals acquired from Rhön-Klinikum AG (~€10 million before tax) and the disposal gains from the divestment of two HELIOS hospitals (€34 million before tax). For segment reporting purposes, these items will not be reported in the Fresenius Helios segment, but as special items in the Group segment Corporate/Other.
1 Before special items
2 Net income attributable to shareholders of HELIOS Kliniken GmbH; before special items
3 Hospitals acquired from Rhön-Klinikum AG
Fresenius Vamed
Fresenius Vamed manages projects and provides services for hospitals and other health care facilities worldwide.
Sales increased by 9% (8% in constant currency) to €208 million (Q1/2014: €191 million). Organic sales growth was 6%. Acquisitions contributed 2%. Sales in the project business were unchanged at €80 million (Q1/2014: € 80 million). Sales in the service business grew by 15% to €128 million (Q1/2014: € 111 million).
EBIT grew by 17% to €7 million (Q1/2014: €6 million) with a margin of 3.4% (Q1/2014: 3.1%).
Net income1 was unchanged at €4 million (Q1/2014: €4 million).
Order intake increased by 67% to €192 million (Q1/2014: €115 million). As of March 31, 2015, order backlog reached a new all-time high of €1,510 million (Dec. 31, 2014: €1,398 million).
Fresenius Vamed confirms its outlook for 2015 and expects to achieve single-digit organic sales growth and EBIT growth 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 quarter of 2015, a conference call will be held on April 30, 2015 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, see Investor Relations, Presentations. Following the call, a replay will be available on our website.
This release contains forward-looking statements that are subject to various risks and uncertainties. Future results could differ materially from those described in these forward-looking statements due to certain factors, e.g. changes in business, economic and competitive conditions, regulatory reforms, results of clinical trials, foreign exchange rate fluctuations, uncertainties in litigation or investigative proceedings, and the availability of financing. Fresenius does not undertake any responsibility to update the forward-looking statements in this release.
Detailed information for credit investors.
