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Fresenius Medical Care has won the 26th German Business Innovation Award for its newly developed 5008 therapy system for patients with chronic kidney failure. The award was presented during a gala celebration on the evening of January 21 at the Old Opera House in Frankfurt. The prize recognizes the best innovations and outstanding technical-scientific advancements in Germany since 1980. Nearly 220 companies took part in the 2005 competition.
"We are very excited about the German Business Innovation Award. For many years our research and development activities in Germany have played a significant role in giving patients with chronic kidney failure the best-possible dialysis treatment. With the 5008 therapy system we want to continue our success and to further expand our leadership position in this sector. The 5008 is a fundamental milestone of our product portfolio strategy and it will be followed by other innovative devices," said Dr. Emanuele Gatti, the Management Board Member responsible for the development.
The 5008 therapy system comprises a newly designed dialysis machine, an artificial kidney or dialyzer, the related bloodlines and the dialysis concentrate. It sets itself apart with a simple interface and an improvement in treatment quality. Routine processes as well as maintenance have also been reduced significantly. "Nurses and doctors can spent even more time for patients," said Dr. Gatti. Furthermore, the new dialysis machine saves operating costs since it consumes as much as 30 percent less water and electricity. With that Fresenius Medical Care proves that medical progress does not lead to increased costs for health insurers – it could even provide financial relief for an even improved treatment.
Side-effects appear less often with the new system than with conventional dialysis machines. Long-term treatment with the newly developed machine has also proven to be more gentle. For the first time, Online-Hemodiafiltration (Online-HDF) is also a standard part of the 5008 therapy system. This best-possible therapy for patients with chronic kidney failure has a positive effect on risk factors related to cardiovascular diseases and could lower the mortality rate. "This type of treatment can now be used widely since the 5008 therapy system offers more simple operation and requires fewer resources," said Dr. Gatti.
The research and development department started the design of the new dialysis machine from the scratch. The developers were able to build on experience gathered by Fresenius Medical Care as a vertically integrated company that treats patients with chronic kidney failure at more than 1,600 clinics. The system was intensively tested not only in the laboratory but also in a number of dialysis centers. Before they were ready for release, the new developments were successfully tested in more than 240,000 treatments.
The dialysis machine is one of the most important products for the treatment of patients with chronic kidney failure. It pumps blood from a special access in a patient's arm to the dialyzer where metabolic toxins are removed with the help of dialysis solution. The filtered blood is then pumped back into the patient. The dialysis machine controls the circulation of blood outside the body and the composition of the dialysis fluid. In addition, it adds substances to prevent clotting. This life-saving therapy is usually administered three times a week and lasts about four hours.
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Fresenius Medical Care AG (Frankfurt Stock Exchange: FME - ISIN: DE0005785802, FME3 - ISIN: DE0005785836) (NYSE: FMS, FMS-p) is the world's largest, integrated provider of products and services for individuals undergoing dialysis because of chronic kidney failure, a condition that affects more than 1,300,000 individuals worldwide. Through its network of approximately 1,670 dialysis clinics in North America, Europe, Latin America, Asia-Pacific and Africa, Fresenius Medical Care provides dialysis treatment to approximately 130,400 patients around the globe. Fresenius Medical Care is also the world's leading provider of dialysis products such as hemodialysis machines, dialyzers and related disposable products.
For more information about Fresenius Medical Care visit the Company's website at www.fmc-ag.com.
(U.S. offer to conclude at midnight EST tonight)
Fresenius Medical Care AG ("the Company") (Frankfurt Stock Exchange: FME, FME3) (NYSE: FMS, FMS-p), the world's largest provider of Dialysis Products and Services, today announced that approximately 95% of all outstanding preference shares have been tendered for conversion into ordinary shares during the 4 week conversion period. This includes American Depositary Shares (ADS), of which roughly 92% of all the outstanding preference ADS have been tendered. The U.S. conversion offer ends tonight at 12.00 midnight EST. The final number of tendered preference shares (including tendered ADSs) is expected to be announced on February 8, 2006.
Ben Lipps, Chief Executive Officer of Fresenius Medical Care, commented: "I am very pleased that approximately 95% of all outstanding preference shares have been tendered. This demonstrates the attractiveness of the conversion offer. With the completion of the conversion we have fulfilled the mandate of the extraordinary shareholder meeting on August 30, 2005. The conversion and the change of the legal form of our Company are major steps towards enhancing the attractiveness of our shares and in providing flexibility for future growth opportunities for the benefit of all stakeholders."
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Fresenius Medical Care AG is the world's largest, integrated provider of products and services for individuals undergoing dialysis because of chronic kidney failure, a condition that affects more than 1,300,000 individuals worldwide. Through its network of approximately 1,670 dialysis clinics in North America, Europe, Latin America, Asia-Pacific and Africa, Fresenius Medical Care provides dialysis treatment to approximately 130,400 patients around the globe. Fresenius Medical Care is also the world's leading provider of dialysis products such as hemodialysis machines, dialyzers and related disposable products.
For more information about Fresenius Medical Care visit the Company's website at www.fmc-ag.com.
The conversion offer may be made in the United States only by prospectus and ends today at 12:00 midnight EST. Each United States resident preference shareholder of Fresenius Medical Care AG should read the prospectus because it contains important information about the conversion offer. Fresenius Medical Care preference shareholders can obtain the U.S. prospectus and other documents that are filed with the United States Securities and Exchange Commission's website at www.sec.gov. Preference shareholders may also obtain copies of the prospectus and other documents filed with the Securities and Exchange Commission for free by contacting Fresenius Medical Care.
Fresenius Medical Care AG ("the Company") (Frankfurt Stock Exchange: FME, FME3) (NYSE: FMS, FMS-p), the world's largest provider of Dialysis Products and Services, today announced the final results of the Company's preference share conversion offer. During the four-week conversion period which ended February 3, 2006, 26,629,422 preference shares were tendered for conversion. This represents approximately 96% of all outstanding preference shares. This number includes 699,949 preference shares represented by American Depositary Shares (ADS), which represents approximately 92% of all the outstanding preference ADS as of February 3, 2006. Three preference ADSs represent one preference share.
In connection with the conversion, preference shareholders had to pay a conversion premium of €9,75 per tendered preference share (€3.25 per preference ADS) to the Company. Upon effectiveness of the conversion Fresenius Medical Care will receive total gross proceeds of approximately
€ 260 million.
The transformation of the legal form of the Company from an Aktien-gesellschaft into a partnership limited by shares (Kommanditgesellschaft auf Aktien – KGaA) is scheduled for the evening of Friday, February 10, 2006. The transformation will become effective upon registration with the commercial register of the local court (Amtsgericht), in Hof an der Saale (Germany).
Monday, February 13, 2006, is scheduled to be the first trading day of the Fresenius Medical Care AG & Co. KGaA shares including the new ordinary shares, on German stock exchanges and the first trading day of Fresenius Medical Care AG & Co. KGaA ADSs on the New York Stock Exchange.
Anticipated Time Schedule:
February 10, 2006
Scheduled trading stop of Fresenius Medical Care AG preference and ordinary shares and preference shares tendered for conversion will continue from 05:30 p.m. Central European Time onwards. Thereafter, the transformation into KGaA and conversion become effective.
February 13, 2006
First trading day of the shares of Fresenius Medical
Care AG & Co. KGaA; First trading day of American Depositary Shares (ADS) of Fresenius Medical Care AG & Co. KGaA on the New York Stock Exchange.
At the earliest:
February 13, 2006
Delivery of new ordinary shares resulting from conversion.
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Fresenius Medical Care AG is the world's largest, integrated provider of products and services for individuals undergoing dialysis because of chronic kidney failure, a condition that affects more than 1,300,000 individuals worldwide. Through its network of approximately 1,670 dialysis clinics in North America, Europe, Latin America, Asia-Pacific and Africa, Fresenius Medical Care provides dialysis treatment to approximately 130,400 patients around the globe. Fresenius Medical Care is also the world's leading provider of dialysis products such as hemodialysis machines, dialyzers and related disposable products.
For more information about Fresenius Medical Care visit the Company's website at www.fmc-ag.com.
Fresenius Medical Care AG & Co. KGaA ("the Company") (Frankfurt Stock Exchange: FME, FME3) (NYSE: FMS, FMS-p), the world's largest provider of Dialysis Products and Services, today announced the completion of the conversion of preference shares into ordinary shares and the transformation of the legal form of the Company from an Aktiengesellschaft into a partnership limited by shares (Kommanditgesellschaft auf Aktien – KGaA). The transformation and the conversion have become effective upon registration with the commercial register of the local court (Amtsgericht), in Hof an der Saale (Germany) on Friday evening, February 10, 2006. All Shareholders in former Fresenius Medical Care AG have now become shareholders in Fresenius Medical Care AG & Co. KGaA. The new ordinary shares which resulted from the conversion will start trading today.
As of February 10, 2006, the share capital of Fresenius Medical Care AG & Co. KGaA amounts to €250,271,178.24 consisting of 96,629,422 ordinary bearer shares and 1,132,757 non-voting preference bearer shares which have not been converted within the conversion offer.
Ben Lipps, Chief Executive Officer of Fresenius Medical Care, commented: "I am very pleased that we completed both, the conversion and the change of the legal form. With that we have fulfilled the mandate of the extraordinary shareholder meeting on August 30, 2005. The conversion and the change of the legal form of our Company are major steps towards enhancing the attractiveness of our shares and in providing flexibility for future growth opportunities for the benefit of all stakeholders."
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Fresenius Medical Care is the world's largest, integrated provider of products and services for individuals undergoing dialysis because of chronic kidney failure, a condition that affects more than 1,300,000 individuals worldwide. Through its network of approximately 1,670 dialysis clinics in North America, Europe, Latin America, Asia-Pacific and Africa, Fresenius Medical Care provides dialysis treatment to approximately 130,400 patients around the globe. Fresenius Medical Care is also the world's leading provider of dialysis products such as hemodialysis machines, dialyzers and related disposable products.
For more information about Fresenius Medical Care visit the Company's website at www.fmc-ag.com.
Fresenius Medical Care AG & Co. KGaA (Frankfurt Stock Exchange: FME, FME3) (NYSE: FMS, FMS-p), the world's largest provider of dialysis products and services, today announced that its wholly-owned subsidiary Fresenius Medical Care Holdings, Inc. and Renal Care Group, Inc. (NYSE:RCI) have entered into a definitive agreement to sell approximately 100 dialysis clinics serving on average approximately 60 to 65 patients per clinic to National Renal Institutes, Inc., a wholly owned subsidiary of DSI Holding Company, Inc. (DSI). The execution of this agreement is an important step toward concluding the review by the United States Federal Trade Commission (FTC) of Fresenius Medical Care's acquisition of Renal Care Group.
The purchase price for the divested clinics is approximately $450 million to be paid in cash, subject to post-closing adjustments for working capital and other routine matters. The sale of the clinics is expected to close shortly after the completion of Fresenius Medical Care's acquisition of Renal Care Group, Inc.
Ben Lipps, Chief Executive Officer of Fresenius Medical Care, commented: "We are very pleased to have reached an agreement with such a qualified and committed buyer at a facility valuation that is comparable to recently announced transactions in the renal industry. We are confident that DSI is as committed as Fresenius Medical Care and Renal Care Group to continuing to provide high-quality care for our patients while we accomplish a smooth and prompt transition that supports our employees and affiliated physicians. We look forward to completing our merger with Renal Care Group, which is targeted to close on or before March 31, 2006, subject to meeting all closing conditions including final approval by the FTC."
Fresenius Medical Care is hosting a conference call to be broadcast live via the Internet on Wednesday, February 22, 2006, at which time the Company will present its full year 2005 financial results. During the call, the Company will also discuss the divestiture of the clinics.
Following the completion of the acquisition of Renal Care Group, Fresenius Medical Care will own and operate approximately 1,500 dialysis clinics in North America, which will serve approximately 115,000 patients.
Banc of America Securities LLC acted as financial advisor to Fresenius Medical Care in connection with this transaction.
About National Renal Institutes, Inc.
National Renal Institutes, Inc., is a wholly-owned subsidiary of DSI Holding Company, Inc. (DSI), a healthcare services company based in Nashville, Tennessee, that operates kidney dialysis treatment clinics, hospitals and acute care centers. By placing emphasis on specific areas of medicine and surgery, DSI facilities can focus on delivering comprehensive care that carefully coordinates all the disciplines in one setting. The DSI concept is designed to provide excellent patient care and improve the quality of life for the patients, patients' families, employees, and physicians at DSI facilities.
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Fresenius Medical Care is the world's largest, integrated provider of products and services for individuals undergoing dialysis because of chronic kidney failure, a condition that affects more than 1,300,000 individuals worldwide. Through its network of approximately 1,670 dialysis clinics in North America, Europe, Latin America, Asia-Pacific and Africa, Fresenius Medical Care provides dialysis treatment to approximately 130,400 patients around the globe. Fresenius Medical Care is also the world's leading provider of dialysis products such as hemodialysis machines, dialyzers and related disposable products.
For more information about Fresenius Medical Care visit the Company's website at www.fmc-ag.com.
The Company exceeded its financial targets, achieved record earnings and proposes its 9th consecutive annual dividend increase.
Net Revenue : $ 6,772 million, + 9%
Operating Income (EBIT): $ 939 million, + 10%
Operating Income (EBIT) excluding one-time-costs: $ 961 million, + 13%
Net Income: $ 455 million, + 13%
Net Income excluding one-time-costs: $ 472 million, + 17%
Dividend Proposal
Ordinary Share: € 1.23, + 10%
Preference Share: € 1.29, + 9%
Fresenius Medical Care AG & Co. KGaA ("the Company") (Frankfurt Stock Exchange: FME, FME3) (NYSE: FMS, FMS-p), the world's largest provider of Dialysis Products and Services, today announced its results for the fourth quarter and full year of 2005.
Fourth Quarter 2005:
Revenue
Total revenue for the fourth quarter 2005 compared to the fourth quarter 2004 increased by 8% (10% at constant currency) to $1,772 million. The organic growth rate worldwide was 9%. Dialysis Services revenue grew by 8% to $1,257 million (8% at constant currency) in the fourth quarter of 2005. Dialysis Products revenue increased by 9% to $516 million (13% at constant currency) in the same period.
North America revenue increased by 9% to $1,194 million. Dialysis Services revenue increased by 7% to $1,049 million. Average revenue per treatment for the U.S. clinics increased by 4% to $302 in the fourth quarter 2005, as compared to $290 for the same quarter in 2004. Dialysis Products revenue increased by 22% to $145 million led by strong sales of our 2008K hemodialysis machines and dialyzers.
International revenue was $578 million, an increase of 7% (12% at constant currency) as compared to the fourth quarter of 2004. Dialysis Services revenue reached $208 million, an increase of 11% (15% at constant currency). Dialysis Products revenue increased by 5% to $370 million (10% at constant currency).
Earnings
Operating income (EBIT) increased by 7% to $244 million. Operating income for the fourth quarter 2005 includes $14 million of one-time costs associated with the transformation of Fresenius Medical Care's legal form into a Kommanditgesellschaft auf Aktien (or KGaA, a partnership limited by shares) and related legal fees and costs concerning the settlement of shareholder litigation.
Excluding one-time costs, operating income for the fourth quarter 2005 increased by 14% to $258 million. This very good performance resulted in an operating margin of 14.6% as compared to 13.9% for the same quarter in 2004.
Compared to the fourth quarter 2004, the operating margin in North America increased by 50 basis points to 14.5%. In our International segment, the operating margin increased by 210 basis points to 17.4%. Our strong operational performance in the International segment was positively impacted by better production efficiencies, a favorable reimbursement environment in major dialysis service countries and foreign currency gains.
Net interest expense remained unchanged at $46 million for the fourth quarter of 2005 as compared to the same quarter in 2004.
Income tax expense was $82 million in the fourth quarter of 2005, as compared to $72 million in the fourth quarter of 2004, reflecting effective tax rates of 41.3% and 39.8%, respectively.
Net income for the fourth quarter 2005 was $116 million, an increase of 7%. Excluding one-time costs, net income increased by 18% to $127 million.
Earnings per share (EPS) for the fourth quarter of 2005 rose by 5% to $1.18 per ordinary share ($0.39 per American Depositary Share (ADS), as compared to $1.12 ($0.37 per ADS) for the fourth quarter of 2004. The weighted average number of shares outstanding for the fourth quarter of 2005 was approximately 97.6 million shares, as compared to 96.3 million shares for the fourth quarter 2004. The increase in shares outstanding results from stock option exercises in 2005.
Cash Flow
In the fourth quarter of 2005, the Company generated $200 million in net cash from operations, or 11.3% of revenue, which is at the high end of our expectations.
A total of $135 million, net of disposals, was used for capital expenditures. Free Cash Flow before acquisitions was $65 million for the fourth quarter of 2005. Days Sales Outstanding (DSO) in the fourth quarter of 2005 remained unchanged at 82 days from the third quarter of 2005 as a result of strong cash collection efforts. A total of $39 million in cash was used for acquisitions.
Full Year 2005:
Earnings and Revenue
For the full year 2005, net income was $455 million, up 13% from 2004. Excluding one-time costs, net income increased by 17% to $472 million.
Net revenue was $6,772 million, up 9% compared to 2004. Adjusted for currency, net revenue rose 8%.
Operating income (EBIT) increased by 10% to $939 million. Operating income for the full year 2005 includes $22 million of one-time costs associated with the transformation of Fresenius Medical Care's legal form into a Kommanditgesellschaft auf Aktien and related legal fees and costs concerning the settlement of shareholder litigation.
Excluding one-time costs, operating income increased by 13% to $961 million, resulting in an operating margin of 14.2% as compared to 13.7% for the year 2004.
Net interest expense for the full year 2005 decreased by 6% to $173 million. Income tax expense was $309 million for the full year as compared to $265 million in 2004. This reflects an effective tax rate of 40.3% for 2005.
For the full year 2005,earnings per ordinary share rose by 13% to $4.68 ($1.56 per ADS). The weighted average number of shares outstanding during 2005 was approximately 96.8 million.
Cash Flow
Cash from operations during the full year 2005 was $670 million as compared to $828 million for 2004. This decrease was mainly due to income tax payments for prior years in Germany and North America, and a reduction in cash generated due to a slower rate of DSO improvement this year.
A total of $297 million was used for capital expenditures, net of disposals. Free Cash Flow before acquisitions for 2005 was $373 million as compared to $567 million in 2004. Net cash used for acquisitions was $125 million in 2005.
For a complete overview of the fourth quarter and the full year 2005, please refer to the appendix.
Patients - Clinics – Treatments
As of December 31, 2005, Fresenius Medical Care treated approximately 131,450 patients worldwide, which represents a 6% increase in patients. North America provided dialysis treatments for more than 89,300 patients (up 3%) and the International segment served approximately 42,150 patients (up 11%).
As of December 31, 2005, the Company operated a total of 1,680 clinics worldwide, comprised of 1,155 clinics, an increase of 2% in North America, and 525 clinics, an increase of 11%, in the International segment.
Fresenius Medical Care delivered approximately 19.73 million dialysis treatments worldwide in 2005, which represents an increase of 5% year over year. North America accounted for 13.47 million treatments, an increase of 4%, and the International segment delivered 6.26 million treatments, an increase of 8% over last year.
Dividends
The Company will continue to follow an earnings-driven dividend policy. For the ninth consecutive year, shareholders can expect to receive an increased annual dividend for the fiscal year 2005. At the Annual General Meeting to be held on May 09, 2006, shareholders will be asked to approve a dividend of € 1.23 per ordinary share, an increase of 10% from 2004 (€ 1.12) and € 1.29 per preference share, an increase of 9% from 2004 (€ 1.18).
Renal Care Group Acquisition:
On February 15, 2006, the Company announced that its wholly-owned subsidiary, Fresenius Medical Care Holdings, Inc. and Renal Care Group, Inc. (RCG) have signed an agreement to sell a total of approximately 100 dialysis clinics to National Renal Institutes, Inc., a wholly-owned subsidiary of DSI Holding Company, Inc. The purchase price for the clinics is approximately $450 million to be paid in cash, subject to post-closing adjustments for working capital and other routine matters. The sale of the clinics is expected to close shortly after the completion of Fresenius Medical Care's acquisition of Renal Care Group, Inc.
The execution of this agreement is an important step toward concluding the review by the United States Federal Trade Commission (FTC) of Fresenius Medical Care's acquisition of Renal Care Group. The completion of the merger with Renal Care Group is targeted to close on or before March 31, 2006, subject to meeting all closing conditions including final approval by the FTC.
Transformation of Legal Form to a KGaA and Conversion of Preference Shares into Ordinary Shares:
Within the 4-week tender period ended February 3, 2006, approximately 96% of all outstanding preference shares were tendered for conversion into ordinary shares. This includes tenders of roughly 92% of outstanding preference shares represented by American Depositary Shares (ADS). The transformation into a Kommanditgesellschaft auf Aktien (KGaA – partnership limited by shares) and the conversion of preference shares into ordinary shares became effective upon registration with the commercial register of the local court (Amtsgericht) in Hof an der Saale (Germany) on Friday evening, February 10, 2006.
As of February 10, 2006, the share capital of Fresenius Medical Care AG & Co. KGaA consists of 96,629,422 ordinary bearer shares and 1,132,757 non-voting preference bearer shares.
Outlook for 2006:
For the full year 2006, the Company expects revenue growth at constant currencies of approximately 25% on a pro forma basis, giving effect to the RCG merger as compared to 2005 reported revenues. Pro forma amounts assume consolidation of RCG's operations into Fresenius Medical Care for the full twelve months of 2006. For the full year 2006, the Company expects to report revenue of more than $8 billion.
The Company's projected net income growth on a pro forma basis for 2006 is expected to be between 10 and 15 percent, based on the $472 million net income excluding one-time costs, achieved in 2005.
Guidance provided by the Company does not take into effect any expected one-time items and the change of accounting principle for stock options - SFAS 123(R) in the fiscal year 2006. The Company expects the after tax impact of the one-time items and SFAS 123(R) to be around $50 million.
In addition in 2006, the Company expects capital expenditures on a pro forma basis to be approximately $450 million, and approximately $100 million for acquisitions.
Ben Lipps, Chief Executive Officer of Fresenius Medical Care, commented: "Once again, we have exceeded our financial targets and achieved record earnings. Our financial performance shows the continued strength of our business segments worldwide. In addition, we are proposing our ninth consecutive annual dividend increase. Having now selected a qualified and committed buyer for the clinics to be divested, we are focusing on the completion of the RCG transaction, which is targeted to close on or before March 31, 2006, subject to meeting all closing conditions including final approval by the FTC. We are clearly well positioned for the future. "
Video Webcast
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 of 2005 on February 22, 2006, at 10:00 a.m. CET. The Company cordially invites you to view the live video webcast of the meeting at the Company's website www.fmc-ag.com. A replay will be available shortly after the meeting.
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Fresenius Medical Care is the world's largest, integrated provider of products and services for individuals undergoing dialysis because of chronic kidney failure, a condition that affects more than 1,400,000 individuals worldwide. Through its network of approximately 1,680 dialysis clinics in North America, Europe, Latin America, Asia-Pacific and Africa, Fresenius Medical Care provides dialysis treatment to approximately 131,450 patients around the globe. Fresenius Medical Care is also the world's leading provider of dialysis products such as hemodialysis machines, dialyzers and related disposable products. For more information about Fresenius Medical Care visit the Company's website at www.fmc-ag.com.
- Sales: € 7.9 billion, + 8 % at actual rates and in constant currency
- EBIT: € 969 million, + 15 % at actual rates , + 14 % in constant currency
- Net incombe: € 222 million, + 32 % at actual rates, + 31 % in constant currency
- Strong sales and earnings growth at Fresenius Medical Care
- Excellent business performance and EBIT margin increase to 13.9 % at Fresenius Kabi
- Fresenius ProServe within expectations; order intake in project business +40 %
- Strong sales and earnings growth expected for 2006
Dividend increase proposed
2005 was a very successful year for Fresenius. Based on the Group's excellent financial results, for the 13th consecutive year the Management Board will propose to the Supervisory Board a dividend increase to € 1.48 per ordinary share (2004: € 1.35) and € 1.51 per preference share (2004: € 1.38). As the 9.4 million new shares from the capital increase in December 2005 are fully entitled to the 2005 dividend, the total dividend distribution will be € 75.8 million (2004: € 55.9 million).
Positive Group outlook for 2006
For 2006, Fresenius expects to achieve sales growth of about 30 % to approximately € 10.5 billion including Renal Care Group and an organic growth of 5-6 %.
Net income is projected to grow by more than 30 % in constant currency. The net income guidance already includes an amount of approx. € 30 million (after tax) associated with expected one-time expenses for the integration of Renal Care Group and the refinancing of debt as well as for costs related to the change of accounting principles for stock options. Due to the higher number of shares issued in December 2005, earnings per share are projected to increase by approximately 10 % in constant currency.
Investments in property, plant and equipment and intangible assets are projected to increase to approximately € 550 - 600 million.
Strong organic sales growth
In 2005, Group sales increased 8 % to € 7,889 million (2004: € 7,271 million). Organic growth contributed 7 % and acquisitions 2 %. Divestments had a -1 % effect on sales. Currency translation had hardly any impact.
Remarkable sales growth of 8 % was achieved each in our main markets North America and Europe. Latin America with sales growth of 30 % and Africa with 16 % performed strongly. In Asia-Pacific, Fresenius Medical Care and particularly Fresenius Kabi achieved an excellent sales increase. Sales of Fresenius ProServe, however, decreased due to the lower project volume in this region.
Sales contribution of the three business segments:
Excellent earnings growth
EBITDA increased 11 % to € 1,289 million (2004: € 1,160 million). Group EBIT rose 15 % at actual rates and 14 % in constant currency to € 969 million (2004: € 845 million). The Group EBIT margin improved to 12.3 % (2004: 11.6 %).
Group net interest improved to € -203 million (2004: € -209 million) primarily as a result of a lower debt level in combination with lower interest rates from various refinancing measures.
The tax rate for 2005 was 38.9 % (2004: 39.8 %).
Minority interest was € 246 million (2004: € 215 million). 96 % was attributable to the minority interest of Fresenius Medical Care.
Group net income grew significantly by 32 % at actual rates and by 31 % in constant currency to € 222 million (2004: € 168 million). Key growth drivers were the excellent operating results of Fresenius Medical Care and Fresenius Kabi as well as reduced financing costs and a lower tax rate.
Earnings per ordinary share rose to € 5.28 (2004: € 4.08) while earnings per preference share rose to € 5.31 (2004: € 4.11). This is an increase of 29 % for both share classes. The average number of shares grew to 41.88 million primarily due to the capital increase.
Investments at record level
Total Group investments increased to € 2.25 billion (2004: € 421 million). € 1.89 billion was spent on acquisitions (2004: € 113 million), including € 1.5 billion for HELIOS. € 353 million was spent for property, plant and equipment and intangible assets (2004: € 308 million).
Solid cash flow performance
Fresenius achieved a good operating cash flow of € 780 million (2004: € 851 million). Key drivers were the significant improvement in earnings whereas income tax payments of Fresenius Medical Care for prior years had a negative effect. Cash flow before acquisitions and dividends was € 449 million (2004: € 565 million). Dividends of € 132 million and about 20 % of the 2005 acquisitions (net) were financed through cash flow. The balance was financed through bank debt and the capital increase.
Solid balance sheet structure
Total assets increased 42 % to € 11,594 million (December 31, 2004: € 8,188 million). In constant currency, total assets grew 33 %. The substantial increase in assets is acquisition-related, mainly due to the HELIOS acquisition. Current assets increased 28 % to € 3,531 million (December 31, 2004: € 2,755 million). In constant currency, current assets grew 21 %. Non-current assets were € 8,063 million (2004: € 5,433 million), a constant currency increase of 39 %. This was primarily due to an increase in goodwill.
Group debt increased 28 % to € 3,502 million (December 31, 2004: € 2,735 million) due to acquisition financing. In constant currency, the increase was 24 %.
Including HELIOS's EBITDA contribution the net debt/EBITDA ratio was 2.3 (December 31, 2004: 2.2).
Shareholders' equity including minority interest was € 5,130 million, a 40 % constant-currency increase (December 31, 2004: € 3,347 million). This was due to the excellent earnings development and the proceeds from the capital increase. The equity ratio including minority interest improved to 44.2 % (December 31, 2004: 40.9 %).
Employee numbers continue to grow
As of December 31, 2005, the Group had 91,971 employees worldwide (December 31, 2004: 68,494). The increase of 23,477 employees is principally due to the acquisition of HELIOS.
Fresenius Biotech
Fresenius Biotech develops innovative therapies with trifunctional antibodies for the treatment of cancer as well as cell therapies for the treatment of the immune system. In the field of polyclonal antibodies, Fresenius Biotech has successfully marketed ATG-Fresenius S for many years. ATG-Fresenius S is an immunosuppressive agent used to prevent and treat graft rejection following organ transplantation.
In the field of the trifunctional antibody therapies for the treatment of cancer, Fresenius Biotech expects results from the clinical study for ovarian cancer in the first half of 2006. The results from the malignant ascites and malignant pleural effusion studies are expected in the second half of 2006. Following the positive results from two phase I studies for the treatment of peritoneal carcinomatosis and breast cancer, phase II studies for the treatment of gastric cancer and breast cancer are being prepared.
In 2005, Fresenius Biotech's EBIT was € -40.6 million (2004: € -28 million). This development was within our expectations and is a result of the increased research and development spending. For 2006, Fresenius Biotech‘s EBIT is expected to be in the range of € -45 to -50 million, largely due to the expanded clinical study program.
The Business Segments
Fresenius Medical Care
Fresenius Medical Care is the world's leading provider of products and services for patients with chronic kidney failure. As of December 31, 2005, Fresenius Medical Care was serving approximately 131,450 patients (+6 %) in 1,680 dialysis clinics (+4 %). The company delivered about 19.7 million treatments in 2005 (+5 %).
- Strong sales and earnings growth continued
- Transformation into KGaA and conversion of preference shares successfully completed
- Closing of the Renal Care Group (RCG) acquisition expected in 1st quarter of 2006
EBIT rose 10 % to US$ 939 million (2004: US$ 852 million) and the EBIT margin was 13.9 % (2004: 13.7 %). This figure includes one-time costs of US$ 22 million associated with the transformation of Fresenius Medical Care's legal form into a KGaA and related legal fees and costs concerning the settlement of shareholder litigation. Net income including one-time costs grew by 13 % to US$ 455 million in 2005 (2004: US$ 402 million).
For the full year 2006, Fresenius Medical Care expects revenue growth at constant currencies of approximately 25 % on a pro forma basis, giving effect to the RCG merger as compared to 2005 reported revenues. Pro forma amounts assume consolidation of RCG's operations into Fresenius Medical Care for the full twelve months of 2006. For the full year 2006, Fresenius Medical Care expects to report revenue of more than US$ 8 billion.
Fresenius Medical Care's projected net income growth on a pro forma basis for 2006 is expected to be between 10 and 15 %, based on the US$ 472 million net income excluding one-time costs, achieved in 2005.
Guidance provided by the Fresenius Medical Care does not take into effect any expected one-time items and the change of accounting principle for stock options - SFAS 123(R) in the fiscal year 2006. Fresenius Medical Care expects the after tax impact of the one-time items and SFAS 123(R) to be around US$ 50 million.
For further information, please see Fresenius Medical Care's press release at www.fmc-ag.com.
Fresenius Kabi
Fresenius Kabi offers infusion therapies and clinical nutrition for seriously and chronically ill patients in the hospital and out-patient environments. The company is also a leading provider of transfusion technology products.
- Excellent EBIT margin of 13.9 % achieved – guidance exceeded
- Strong organic growth of 7 %
- Outlook 2006: significant growth in sales and earnings expected
Fresenius Kabi's sales rose 13 % to € 1,681 million (2004: € 1,491 million). The company achieved excellent organic growth of 7 %. Acquisitions, primarily Labesfal, contributed 5 % to sales. Divestments had a -1 % effect on sales. Currency translation added 2 % to growth. Constant currency growth of 11 % exceeded the company's earlier guidance.
Sales in Europe (excluding Germany) increased 15 % with acquisitions making a significant contribution. Sales in Germany rose 1 %. Fresenius Kabi continued to grow exceptionally outside of Europe and achieved sales growth of 17 % in Asia-Pacific, 28 % in Latin America and 13 % in Africa.
Fresenius Kabi achieved a new record EBIT with a 33 % increase to € 234 million (2004: € 176 million). The EBIT margin improved by 210 basis points to 13.9 % (2004: 11.8 %). Key drivers were the strong sales growth, further cost optimization and improved efficiency, especially in production.
Fresenius Kabi expects the positive development to continue in 2006. Sales are expected to increase about 10 % in constant currency. The Asia-Pacific and Latin America regions are projected to continue their growth pattern. The first-time consolidation of Clinico and Pharmatel will also have a positive effect on sales. Pharmatel is an Australian company, in which Fresenius Kabi increased its stake from 25.1 % to 50.1 % at the beginning of 2006. The projected sales growth combined with cost optimizations will result in a significant earnings improvement in 2006. Fresenius Kabi's EBIT-margin is projected to increase to 14.5 - 15.0 %.
Fresenius ProServe
Fresenius ProServe offers services for the international health care sector including hospital operations, technical management and hospital planning and construction as well as planning and construction of pharmaceutical and medical-technical production sites.
*incl. HELIOS
- Acquisition of HELIOS Kliniken successfully closed
- 2005 sales and earnings within expectations
- Outlook 2006: Further positive development expected
EBIT was € 20 million (2004: € 9 million; before one-time expenses: € 17 million), in line with the company's expectations.
Order intake and order backlog at the project business developed very positively: Order intake increased 40 % to € 341 million (2004: € 244 million). Order backlog rose 7 % to € 360 million (December 31, 2004: € 335 million).
The acquisition of HELIOS was completed at the end of 2005. The company was consolidated as of December 31, 2005 in the Group's balance sheet.
HELIOS developed positively in 2005 and met its communicated targets. Sales reached € 1,200 million. EBIT was € 105 million, the EBIT margin therefore 8.8 %. Net income amounted to € 67 million. The figures are in accordance with US-GAAP as followed by the Fresenius Group. In 2004, HELIOS had prepared its financial statements according to International Finance Reporting Standards (2004 IFRS: sales € 1,161 million, EBIT € 95 million, net income € 66 million).
Through the acquisition of HELIOS, Fresenius ProServe has become a strong third business segment within the Fresenius Group. Including HELIOS for the full 2005 financial year, sales at Fresenius ProServe were € 2,009 million and EBIT € 125 million.
For 2006, Fresenius ProServe expects an organic sales growth of 1 to 3 % based on 2005 sales of € 2,009 million. Projected EBIT will be between € 140 million and € 150 million.
Video Webcast
As part of the publication of our 2005 results, a press conference will be held on February 22, 2006 at 10:00 a.m. CET. We cordially invite you to follow the live video broadcast of the conference over the Internet at www.fresenius-ag.com. Following the conference, a recording of the conference will be available as video-on-demand.
Annual report
The 2005 Annual Report will be available on March 20, 2006 on the Internet at www.fresenius-ag.com / Investor Relations / Publications.
For tables Fresenius Group in Figures and Consolidated statement of income (US GAAP) see pdf file.
HUMAINE operates six acute and post acute care hospitals in the fields of neurology, oncology and traumatology with a total of 1,850 beds, thereof 1,530 in the acute care area. The group owns two advanced care hospitals with about 600 beds each. HUMAINE was founded in 1984 and has approximately 2,900 employees.
The clinic group is privately owned. In 2005, it achieved sales of € 197 million and operating profit (EBIT) of € 14 million. The parties agreed not to disclose the purchase price which is to be paid in a combination of cash and, to a lesser extent, Fresenius ordinary and preference shares. HELIOS expects that the transaction will be completed in mid-2006. Initially, 60% of the shares will be acquired, and HELIOS has an option to acquire the remaining 40 %. The acquisition of HUMAINE will be accretive to Fresenius Group's earnings per share in the fiscal year 2006.
The acquisition is an important step in the expansion strategy of HELIOS. "With HUMAINE we have acquired a well-managed clinic group which complements the HELIOS network both geographically and in terms of medical orientation. While the focus will continue to be on the privatization of public-sector hospitals, HELIOS takes advantage of the opportunity to purchase HUMAINE in order to strengthen the hospital operations business. HUMAINE is a profitable company and fully fits our financial acquisition criteria in the hospital sector. With the experienced management team we will rapidly integrate HUMAINE into the HELIOS Kliniken Group to achieve further profitability improvements," says Dr. Ulf M. Schneider, Chairman of the Management Board of Fresenius AG.
The acquisition still requires approval by the antitrust authorities.
HELIOS Kliniken Group operates 51 clinics of its own with a total of 14,300 beds, including four maximum-care hospitals in Erfurt, Berlin-Buch, Wuppertal and Schwerin. The company's 24,800 employees carry out 420,000 in-patient treatments a year and in 2005 achieved sales of € 1.55 billion.
Fresenius is a health care group with international operations, providing products and services for dialysis, hospital and the ambulatory medical care of patients. In 2005, sales were € 7.9 billion. On December 31, 2005 the Fresenius Group had 91,971 employees worldwide.
Fresenius Medical Care AG & Co. KGaA (FWB: FME, FME3) (NYSE: FMS, FMS-p), the world's largest provider of dialysis products and services, today announced the expansion of its Ogden, Utah production facility. This expansion will increase the production capacity from 27 million to more than 33 million dialyzers annually. The plant expansion supports Fresenius Medical Care North America's commitment to provide single-use dialyzers to the U.S. market, which is estimated to be over 60% single-use dialyzer therapy, including independent dialysis care providers.
In North America, Fresenius Medical Care provides innovative treatment therapy through its UltraCare® program, which employs single-use dialyzers as the preferred method of care for approximately 90,000 patients in more than 1,150 clinics.
The expansion of the Ogden, Utah plant is expected to be completed during the first half of 2007. The capital expenditure for this expansion is included in the Company's 2006 financial guidance, and demonstrates a clear commitment to meet the continued demand for the single-use dialyzer product line.
Rice Powell, CEO of the Products and Hospital Group and Co-CEO of FMCNA, commented. "It is clear from the growth in our single-use dialyzer product line that our customers prefer this modality to treat their patients who suffer from chronic kidney disease. We view this expansion as our pledge to the future of renal patient care. As the world's premier manufacturer of dialyzers, we believe this expansion will benefit the local community, our employees, our patients and our shareholders."
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Fresenius Medical Care is the world's largest, integrated provider of products and services for individuals undergoing dialysis because of chronic kidney failure, a condition that affects more than 1,400,000 individuals worldwide. Through its network of approximately 1,680 dialysis clinics in North America, Europe, Latin America, Asia-Pacific and Africa, Fresenius Medical Care provides dialysis treatment to approximately 131,450 patients around the globe. Fresenius Medical Care is also the world's leading provider of dialysis products such as hemodialysis machines, dialyzers and related disposable products. For more information about Fresenius Medical Care visit the Company's website at www.fmc-ag.com.
Fresenius Finance B.V., a wholly-owned subsidiary of Fresenius AG, has given notice to exercise its option to redeem the remaining € 87,921,000 outstanding amount of its 7.75% Series A Senior Notes due 2009 (ISIN XS0167402840/XS0167402501), listed on the Luxembourg Stock Exchange.
The repurchase price is 103.875 % or € 1,038.75 per € 1,000 nominal value of the Notes, plus accrued interest. The redemption will become effective on April 30, 2006 and payment will be made on May 2, 2006.
In January 2006, € 212,079,000 of principal amount of Series A Senior Notes were already repurchased in a tender offer. Both redemption exercises are financed by the excess proceeds of the new issue of € 1 billion Senior Notes, which was executed in January 2006.
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Fresenius is a health care group with international operations, providing products and services for dialysis, hospital and the ambulatory medical care of patients. In 2005, sales were € 7.9 billion. On December 31, 2005 the Fresenius Group had 91,971 employees worldwide.