Fresenius successfully agreed the refinancing of the revolving facilities and Term Loan A of its 2008 syndicated credit agreement. The financing, structured as a Delayed Draw Syndicated Credit Agreement, was very well received in the bank market and substantially oversubscribed. Fresenius was therefore able to significantly increase the originally targeted transaction volume and to improve the pricing.

The company entered into a €2.25 billion syndicated credit agreement, comprised of 5-year revolving facilities (US$300 million and €600 million) and a 5-year Term Loan A (US$1.0 billion and €650 million).

Proceeds will be used to refinance the company's existing revolving facilities and Term Loan A, both maturing in September 2013, as well as for general corporate purposes. The refinancing through a Delayed Draw Syndicated Credit Agreement allows Fresenius to take advantage of the currently favorable financing conditions in the bank market. Funding of the transaction is projected for June 2013.

Going forward, the refinancing of the credit agreement will considerably reduce Group interest expenses.

The change of Fresenius SE's legal form into a KGaA¹ in combination with the conversion of all preference shares into ordinary shares was registered today with the commercial register and thereby became effective. The Company operates from now on as Fresenius SE & Co. KGaA. All shareholders of the former Fresenius SE are now ordinary shareholders of Fresenius SE & Co. KGaA.

Ulf Mark Schneider, CEO of Fresenius, commented: "I am very pleased that we successfully completed the share conversion and the change of legal form. This is an important step for Fresenius and its shareholders. The conversion significantly simplifies our share structure, increases trading liquidity, and improves our financial flexibility by facilitating access to equity capital markets. The new capital structure supports our corporate strategy and its focus on sustainable and profitable growth."

The ordinary shares of Fresenius SE & Co. KGaA will commence trading on January 31, 2011 (ISIN DE0005785604 / Sec ID no. 578560; ticker symbols FRE GR (Bloomberg), FREG.DE (Reuters)). According to the index regulation of Deutsche Börse AG, the new ordinary shares will be included in the German DAX30 index (Deutscher Aktienindex).

The registration of the change of the legal form at the commercial register was finally cleared following a court settlement of pending disputes initiated by minority shareholders.

¹ Kommanditgesellschaft auf Aktien - partnership limited by shares

• Sales €16.0 billion,
  +13% at actual rates, +8% in constant currency
• EBIT €2.4 billion,
  +18% at actual rates, +13% in constant currency
• Net income¹ €660 million,
  +28% at actual rates, +23% in constant currency

• Excellent sales and earnings growth in all business segments
• "15/15" mid-term goal exceeded (€15 billion in sales, EBIT margin of 15%)
• 15% dividend increase proposed
• Positive outlook for 2011: Sales growth ≥7%, net income¹ growth 8% to 12% (both in constant currency)
• New mid-term stretch goal: Group net income >€1 billion in 2014

Ulf Mark Schneider, CEO of Fresenius, commented: "2010 was another outstanding year for Fresenius. Our Group achieved record sales and earnings and double-digit earnings growth in all four business segments. We even exceeded our challenging "15/15" mid-term target – Group sales of €15 billion and an EBIT margin of 15% by 2010 – despite the most severe economic slowdown in postwar history. The global demand for high-quality and innovative health care products and services continues to increase. We see further significant growth potential for all our business segments and target Group net income of more than €1 billion in 2014."

 

18th consecutive dividend increase proposed
Based on the excellent financial results, the Management Board will propose to the Supervisory Board a dividend increase of 15% to €0.86 per ordinary share (2009: €0.75). The total dividend distribution is expected to be €140 million.

 

Positive outlook for 2011
Fresenius projects sales growth of ≥7% in constant currency. Net income¹ is expected to increase by 8% to 12% in constant currency. This will result in a 2010/2011 compounded annual net income growth rate of 15% to 17%.

The Group plans to invest ~5% of sales in property, plant and equipment.

The net debt/EBITDA ratio is expected to stay in the range of 2.5 to 3.0.

Strong sales growth in all business segments and regions
Group sales increased by 13% at actual rates and by 8% in constant currency to €15,972 million (2009: €14,164 million). Organic sales growth was 7%. Acquisitions contributed a further 1%. Currency translation had a positive effect of 5%.

Sales growth in the business segments was as follows:

In North America, sales grew by 9% in constant currency. Organic sales growth was 8%. In Europe, sales grew by 7% in constant currency, with organic sales growth contributing 6%. Organic sales growth reached 11% in Latin America and 7% in Asia-Pacific, where the growth rate was impacted by Fresenius Vamed's large prior-year medical supply contracts.

¹ Net income attributable to Fresenius SE & Co. KGaA; adjusted for the effects of mark-to-market accounting of the Mandatory Exchangeable Bonds (MEB) and the Contingent Value Rights (CVR) related to the acquisition of APP Pharmaceuticals. Both are non-cash items.


Excellent earnings growth and strong margin improvement
Group EBITDA increased by 17% at actual rates and by 12% in constant currency to €3,057 million (2009: €2,616 million). Group EBIT increased by 18% at actual rates and by 13% in constant currency to €2,418 million (2009: €2,054 million). The EBIT margin increased to 15.1% (2009: 14.5%). All business segments achieved double-digit earnings growth.
Despite a substantial negative currency effect, Group net interest improved to -€566 million (2009: -€580 million).

The other financial result was -€66 million and includes valuation changes of the fair redemption value of the Mandatory Exchangeable Bonds (MEB) of -€98 million and the Contingent Value Rights (CVR) of €32 million. Both are non-cash items.

The Group tax rate¹ was 32.9% (2009: 31.4%). The tax rate in 2009 was influenced by the revaluation of a tax claim at Fresenius Medical Care.

Noncontrolling interest increased to €583 million (2009: €497 million), of which 93% was attributable to the noncontrolling interest in Fresenius Medical Care.

Group net income² increased by 28% at actual rates and by 23% in constant currency to €660 million (2009: €514 million). Earnings per ordinary share increased by 28% to €4.08. A reconciliation to adjusted earnings according to U.S. GAAP can be found on page 14 of the PDF-File.

Net income³ (including special items) grew to €622 million or €3.85 per ordinary share.


¹ Adjusted for the effect of mark-to-market accounting of the Mandatory Exchangeable Bonds (MEB) related to the acquisition of APP Pharmaceuticals
² Net income attributable to Fresenius SE & Co. KGaA; adjusted for the effects of mark-to-market accounting of the Mandatory Exchangeable Bonds (MEB) and the Contingent Value Rights (CVR) related to the acquisition of APP Pharmaceuticals. Both are non-cash items.
³ Net income attributable to Fresenius SE & Co. KGaA


Continued investments in growth
The Fresenius Group spent €758 million on property, plant and equipment (2009: €671 million) or 4.7% of sales. Acquisition spending was €644 million (2009: €260 million), mainly due to acquisitions at Fresenius Medical Care.

 

Strong cash flow - 12% cash flow margin
Operating cash flow increased by 23% to €1,911 million (2009: €1,553 million), mainly driven by strong earnings growth. The cash flow margin improved to 12.0% (2009: 11.0%). Net capital expenditure was €733 million (2009: €662 million). Free cash flow before acquisitions and dividends increased by 32% to €1,178 million (2009: €891 million). Free cash flow after acquisitions and dividends was €345 million (2009: €389 million).

 

Solid balance sheet structure - Leverage ratio significantly improved
The Fresenius Group's total assets grew by 13% to €23,577 million (Dec. 31, 2009: €20,882 million). In constant currency, the increase was 7%. Current assets increased by 20% at actual rates and by 14% in constant currency to €6,435 million (Dec. 31, 2009: €5,363 million). Non-current assets grew by 10% at actual rates and by 5% in constant currency to €17,142 million (Dec. 31, 2009: €15,519 million).

Total shareholders' equity increased by 18% at actual rates and by 11% in constant currency to €8,844 million (Dec. 31, 2009: €7,491 million). The equity ratio improved to 37.5% (Dec. 31, 2009: 35.9%).

Group debt grew by 6% at actual rates and by 1% in constant currency to €8,784 million (Dec. 31, 2009: €8,299 million). Net debt increased by 2% to €8,015 million (Dec. 31, 2009: €7,879 million). At constant currency, net debt decreased by 3%.

Due to the strong earnings growth and cash flow development, the net debt/EBITDA ratio improved to 2.62 as of December 31, 2010 (Dec. 31, 2009: 3.01). At year-end 2008, following the acquisition of APP Pharmaceuticals, the ratio was 3.64.

 

Number of employees increased
As of December 31, 2010, Fresenius increased the number of its employees by 5% to 137,552 (Dec. 31, 2009: 130,510).


Fresenius Biotech
Fresenius Biotech develops innovative therapies with trifunctional antibodies for the treatment of cancer. 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.

Fresenius Biotech reported sales of €26 million in 2010. The immunosuppressive agent ATG contributed €23 million and the trifunctional antibody Removab (catumaxomab) €3 million to sales.

In January 2011, Fresenius Biotech announced a Removab distribution agreement with Swedish Orphan Biovitrum (Sobi). Under the seven-year agreement, Sobi will distribute Removab exclusively in Scandinavia, the Baltics and selected Balkan countries.

So far, Removab has been marketed primarily in Germany and Austria as well as in France.

In 2010, Fresenius Biotech's EBIT was -€32 million (2009: -€44 million). For 2011, Fresenius Biotech expects an EBIT of about -€30 million.


The Business Segments

Fresenius Medical Care
Fresenius Medical Care is the world's leading provider of services and products for patients with chronic kidney failure. As of December 31, 2010, Fresenius Medical Care was treating 214,648 patients in 2,757 dialysis clinics.
 

• Excellent sales and earnings growth continued - EBIT margin increased to 16.0%
• Outlook 2011: Sales of US$12.8 billion to US$13 billion and net income¹ of US$1.035 billion to US$1.055 billion expected

Fresenius Medical Care achieved sales growth of 7% to US$12,053 million (2009: US$11,247 million). Organic growth was 6%, acquisitions contributed a further 1%. There was no meaningful currency translation effect.

Sales in dialysis care increased by 9% to US$9,070 million (2009: US$8,350 million). Dialysis product sales grew by 3% to US$2,983 million (2009: US$2,897 million).

In North America, sales increased by 7% to US$8,130 million (2009: US$7,612 million). Dialysis services revenue increased by 7% to US$7,303 million. Average revenue per treatment for U.S. clinics decreased to US$355 in Q4 2010 compared to US$357 in Q4 2009. Increases in reimbursement were more than offset by reduced utilization of pharmaceuticals. Sales in dialysis products grew by 1% to US$827 million.

Sales outside North America ("International" segment) grew by 8% to US$3,923 million (2009: US$3,635 million). Sales in dialysis care increased by 14% to US$1,767 million. Dialysis product sales grew by 4% to US$2,156 million.

EBIT increased by 10% to US$1,924 million (2009: US$1,756 million) resulting in an excellent EBIT margin of 16.0% (2009: 15.6%).

In North America, the EBIT margin increased to 17.0% (2009: 16.4%) driven by an increase in revenue per treatment as well as the effect of economies of scale. In addition, the EBIT development benefitted from favorable pharmaceutical costs.

In the International segment, the EBIT margin was 17.3% (2009: 17.5%). EBIT margin was impacted by the devaluation of the Venezuelan bolivar and related charges as well as by lower gross profit margins of acquired. This was partially offset by economies of scale and favorable currency effects.

Net income¹ increased by 10% to US$979 million (2009: US$891 million).

In January 2011, Fresenius Medical Care announced the signing of a purchase agreement to acquire International Dialysis Centers (IDC), Euromedic International's dialysis service business. Fresenius Medical Care is taking advantage of this opportunity to expand its activities in the dialysis care market, especially in Eastern Europe, where IDC is the market leader. IDC currently treats over 8,200 hemodialysis patients and operates a total of 70 clinics in nine countries. On completion, the acquired operations will add approximately US$180 million in annual revenue. The purchase price was €485 million. The transaction remains subject to necessary regulatory approvals by the relevant anti-trust authorities and is expected to close in the second quarter of 2011. The transaction was financed through bonds issued in February 2011.

For 2011, Fresenius Medical Care expects revenue to grow to between US$12.8 billion to US$13 billion, corresponding to a growth rate of 6% to 8%. Net income¹ is expected to be between US$1.035 billion and US$1.055 billion, with operating margins forecast to increase by approximately 20 basis points.

For further information, please see Fresenius Medical Care's Investor News at www.fmc-ag.com.

¹ Net income attributable to Fresenius Medical Care AG & Co. KGaA


Fresenius Kabi
Fresenius Kabi offers infusion therapies, intravenously administered generic drugs and clinical nutrition for seriously and chronically ill patients in the hospital and outpatient environments. The company is also a leading supplier of medical devices and transfusion technology products.

• Excellent organic sales growth of 12% - EBIT margin increased to 20.1%
• Outlook 2011: Organic sales growth of ~5% on top of challenging 2010 base - EBIT margin >19%

Sales increased by 19% to €3,672 million (2009: €3,086 million). Excellent organic growth accounted for 12%, acquisitions contributed a further 1%. Currency translation had a positive effect of 6%, mainly attributable to the strength of the currencies in North America, Brazil and China against the Euro.

In Europe, sales reached €1,702 million (2009: €1,566 million), driven by 6% organic growth. In North America, sales increased to €975 million (2009: €728 million). Organic sales growth was an exceptional 26%. In the Asia-Pacific region, Fresenius Kabi achieved organic sales growth of 13% to €593 million (2009: €482 million). Sales in Latin America and Africa increased to €402 million (2009: €310 million), organic sales growth was 10%.

EBIT grew by 21% to €737 million (2009: €607 million). The EBIT margin improved to 20.1% (2009: 19.7%), driven by the strong development in North America, where product launches and competitors' supply constraints had a positive effect. EBIT includes €20 million for investments in efficiency improvements outside North America.

Net interest improved to -€279 million (2009: -€302 million).

Net income¹ increased by 47% to €294 million (2009: €200 million).

APP Pharmaceuticals (APP) achieved exceptional sales growth of 29% to US$1,143 million (2009: US$889 million). Adjusted EBITDA² grew by 34% to US$464 million (2009: US$345 million). EBIT increased by 43% to US$391 million (2009: US$273 million). The EBIT margin improved to 34.2% (2009: 30.7%). In addition to the reported APP earnings, Fresenius Kabi generated EBIT contributions from imported IV drugs distributed by APP in North America.

In 2010, APP received seven product approvals from the FDA (U.S. Food and Drug Administration). In addition, Fresenius Kabi Oncology received three FDA approvals.

The APP acquisition is clearly accretive to Group EPS in 2010, in line with our original 2008 expectations.

Operating cash flow of Fresenius Kabi increased by 43% to €567 million (2009: €397 million). The cash flow margin reached 15.4% (2009: 12.9%). Cash flow before acquisitions and dividends grew by 47% to €401 million (2009: €272 million).

Fresenius Kabi achieved outstanding growth in 2010. In 2011, organic sales growth is expected to grow by approximately 5%, taking the 2010/2011 compounded annual growth rate well into the 7 to 10% mid-term guidance range. Fresenius Kabi expects an EBIT margin of more than 19%. Net income for 2011 is expected to surpass 2010 earnings.

For the mid-term, Fresenius Kabi maintains its targets of 7% to 10% organic sales growth and an EBIT margin in the 18% to 20% range.


Special items relating to the acquisition of APP Pharmaceuticals are included in the segment "Corporate/Other".

¹ Net income attributable to Fresenius Kabi AG
² Non-GAAP financial measures - Adjusted EBITDA is a defined term in the indenture governing the Contingent Value Rights (CVRs), however it is not a recognized term under GAAP.



Fresenius Helios
Fresenius Helios is one of the largest private hospital operators in Germany. HELIOS Kliniken Group owns 63 hospitals, including five maximum care hospitals in Berlin-Buch, Erfurt, Krefeld, Schwerin and Wuppertal. HELIOS treats more than 2 million patients per year, thereof ~600,000 inpatients, and operates a total of more than 18,500 beds.

• Strong sales and earnings growth
• Outlook 2011: Organic sales growth of 3% to 5% and EBIT of €250 million to €260 million expected

Sales increased by 4% to €2,520 million (2009: €2,416 million). Organic growth was 5%, mainly driven by an increase in hospital admissions. The divestiture of one acute care hospital as of January 1, 2010 reduced sales growth by 1%.

EBIT grew by 15% to €235 million (2009: €205 million). The EBIT margin improved to 9.3% (2009: 8.5%). Net income¹ increased by 22% to €131 million (2009: €107 million).

As of January 1, 2011, HELIOS consolidates the hospital St. Marienberg in Lower Saxony. With 620 employees and 267 beds, the hospital treats about 12,000 inpatients annually. The hospital generated revenues of about €32 million in 2009.

The 2011 outlook remains positive: Fresenius Helios expects to achieve organic sales growth of 3% to 5%. EBIT is projected to increase to €250 million to €260 million.

As a new mid-term goal, Fresenius Helios targets sales of €3.5 billion by 2015, driven by both organic sales growth and acquisitions.


¹ Net income attributable to HELIOS Kliniken GmbH


Fresenius Vamed
Fresenius Vamed offers engineering and services for hospitals and other health care facilities.
 

• Strong sales and earnings growth - Order entry and order backlog with year-end record
• Outlook 2011: Sales and EBIT growth of 5% to 10% expected

Sales increased by 15% to €713 million (2009: €618 million). Organic sales growth reached 15%. Sales in the project business rose by 16% to €487 million (2009: €420 million). Sales in the service business increased by 14% to €226 million (2009: €198 million).

EBIT increased by 14% to €41 million (2009: €36 million). The EBIT margin was 5.8%, achieving the 2009 level. Net income rose to €30 million (2009: €27 million).

The excellent development of order intake and order backlog continued: Order intake in the project business increased by 16% to €625 million (2009: €539 million), reaching a new all-time high. In Q4 2010, order intake was €207 million. A €76 million order was received for a turn-key hospital construction in Gabon. Order backlog increased by 18% to a new year-end record of €801 million (Dec. 31, 2009: €679 million).

In 2011, Fresenius Vamed expects to achieve both sales and EBIT growth between 5% and 10%.

As a new mid-term stretch goal, Fresenius Vamed targets sales of €1 billion by 2014.

¹ Net income attributable to VAMED AG

Analyst Meeting and Audio Webcast
As part of the publication of the results for fiscal year 2010, an analyst meeting will be held at the Fresenius headquarters in Bad Homburg on February 23, 2011 at 1.30 p.m. CET (7.30 a.m. EST). All investors are cordially invited to follow the conference in a live broadcast over the Internet at www.fresenius.com see Investor Relations, Presentations. Following the meeting, a recording of the conference will be available as video-on-demand.

 

Fresenius Biotech is the first company in Germany to receive Paul-Ehrlich-Institut approval to use a polyclonal antibody in stem cell transplantations. As a result, the preparation - ATG-Fresenius S - can be used in the indication "prophylaxis of graft-versus-host disease (GVHD) for unrelated stem cell transplant donors in adults." Germany is now the fourth country to approve the preparation in this indication, after Argentina, Portugal and Thailand.

"The preparation's special mode of action and a steadily growing pool of unrelated donors make the application of ATG-Fresenius S in stem cell transplantations particularly attractive," said Dr. Christian Schetter, CEO of Fresenius Biotech. "Furthermore, there has been a considerable recent increase in the incidence of hematologic diseases which can be treated with stem cell transplantations."

In a randomized, multi-center prospective study with 201 patients, the efficacy and tolerability of ATG-Fresenius S in GVHD prophylaxis was assessed in unrelated donor stem cell transplantations. This study compared ATG-Fresenius S in combination with standard GVHD prophylaxis versus standard GVHD prophylaxis alone. Study results show that the acute and chronic GVHD rate could be reduced significantly following administration of ATG-Fresenius S. The results of this study were first presented in 2008 at the annual meeting of the American Society of Hematology and published in September 2009 in the Lancet Oncology¹ medical journal.

About ATG-Fresenius S
ATG-Fresenius S is a polyclonal antibody that is used for GVHD prophylaxis shortly before stem cell transplantation is performed. The preparation's mode of action, which mainly targets activated T-cells, includes complement-mediated cytolysis and apoptotic induction of T-cells and antigen-presenting cells.
ATG-Fresenius S prevents the adhesion of T-cells to the endothelium, minimizes T-cell infiltration and blocks numerous signal transmission paths within the immune system. Furthermore, ATG-Fresenius S has a propagating effect on regulatory cells. A direct anti-tumor effect is described in various hematologic tumors.
The polyclonal antibody ATG-Fresenius S was developed in Germany over 30 years ago for the treatment and prophylaxis of acute rejection reactions in the transplantation of solid organs. ATG-Fresenius S has been approved for use in these indications worldwide in more than 45 countries.

About GVHD (graft-versus-host disease)
GVHD is a frequent complication of stem cell transplantation, which is associated with a high degree of morbidity and mortality. GVHD is an immunological reaction of the donor lymphocytes to the patient's foreign antigens. The following GVHD risk factors are known: the patient's age, the degree of kinship between the donor and the recipient, the type of preparation used for stem cell transplantation as well as the source of the graft. Several components contribute to GVHD's development, among others, tissue damage during preparations for stem cell transplantation, cytokine production and lymphocyte activation. Various immune cells (T-cells, antigen-presenting cells and natural killer cells) are involved in the GVHD mechanism. GVHD frequently causes severe organ and tissue damage, which can become chronic to some extent. GVHD can affect any organ or tissue; the skin, stomach, intestines, liver and the immune system are most frequently attacked. One of the strategies for GVHD reduction is T-cell depletion. ATG-Fresenius S depletes T-cells and consequently represents an important therapeutic advance in GVHD prevention.


¹ Finke J et al., Standard graft-versus-host disease prophylaxis with or without anti-T-cell globulin in haematopoietic cell transplantation from matched unrelated donors: a randomised, open-label, multicentre phase 3 trial, Lancet Oncology 2009;10:855-864

• Sales €4.0 billion,
  +9% at actual rates, +7% in constant currency
• EBIT €575 million,
  +15% at actual rates, +13% in constant currency
• Net income¹ €170 million,
  +43% at actual rates, +39% in constant currency

• Group raises 2011 outlook for sales and earnings¹ growth
• Fresenius Medical Care and Fresenius Kabi raise 2011 outlook
• Fresenius Helios narrows earnings guidance to upper half of range
• Fresenius Vamed fully confirms guidance

Ulf Mark Schneider, CEO of Fresenius, commented: „After record results in 2010, we are pleased to report strong sales and earnings growth for the first quarter of 2011. All of our business segments had an excellent start. We have seen particularly strong growth at Fresenius Kabi in North America, where we continue to benefit from successful product launches and supply constraints in the injectable drugs market. Based on Fresenius Kabi's prospects, Fresenius Medical Care's successful implementation of the ESRD prospective payment system in the United States and Fresenius Helios' strong earnings development, we raise our Group's sales and earnings guidance for 2011."

For 2011, Fresenius Group now expects sales growth of 7% to 8% and net income¹ growth of 12% to 16%, both in constant currency. Previously, the company expected sales growth of ≥7% and net income growth of 8% to 12%, both in constant currency.

The Group plans to invest approximately 5% of sales in property, plant and equipment.

The net debt/EBITDA ratio is expected to stay in the range of 2.5 to 3.0.

¹ Net income attributable to Fresenius SE & Co. KGaA; adjusted for the effects of mark-to-market accounting of the Mandatory Exchangeable Bonds (MEB) and the Contingent Value Rights (CVR) related to the acquisition of APP Pharmaceuticals. Both are non-cash items.


Strong organic sales growth
Group sales increased by 9% (7% in constant currency) to €3,962 million (Q1 2010: €3,643 million). Organic sales growth was 6%. Acquisitions contributed a further 1%. Currency translation had a positive effect of 2%.

Sales growth in the business segments was as follows:

Organic sales growth was 5% in North America and 2% in Europe. Prior year sales in Europe were positively influenced by Fresenius Vamed's large medical supply contract to the Ukraine. Organic sales growth reached 13% in Latin America, 18% in Asia-Pacific and 28% in Africa.

Excellent earnings growth
Group EBITDA increased by 13% (12% in constant currency) to €737 million (Q1 2010: €650 million). Group EBIT increased by 15% (13% in constant currency) to €575 million (Q1 2010: €501 million). The EBIT margin increased to 14.5% (Q1 2010: 13.8%).

Group net interest improved to -€135 million (Q1 2010: -€143 million).

The other financial result was -€62 million and includes valuation changes of the fair redemption value of the Mandatory Exchangeable Bonds (MEB) of -€67 million and the Contingent Value Rights (CVR) of €5 million. Both are non-cash items. The CVR were delisted in March 2011. The MEB will come to maturity in August 2011.

The Group tax rate¹ was 30.7% (Q1 2010: 33.2%). The prior year was impacted by non-tax deductible charges related to the devaluation of the Venezuelan Bolivar.

Noncontrolling interest increased to €135 million (Q1 2010: €120 million), of which 93% was attributable to the noncontrolling interest in Fresenius Medical Care.

Group net income² increased by 43% (39% in constant currency) to €170 million (Q1 2010: €119 million). Earnings per ordinary share increased by 41% to €1.05. A reconciliation to adjusted earnings according to U.S. GAAP can be found on page 14 of the PDF-File.

Group net income³ (including special items) reached €128 million or €0.79 per ordinary share.


¹ Adjusted for the effect of mark-to-market accounting of the Mandatory Exchangeable Bonds (MEB) related to the acquisition of APP Pharmaceuticals
² Net income attributable to Fresenius SE & Co. KGaA; adjusted for the effects of mark-to-market accounting of the Mandatory Exchangeable Bonds (MEB) and the Contingent Value Rights (CVR) related to the acquisition of APP Pharmaceuticals. Both are non-cash items.
³ Net income attributable to Fresenius SE & Co. KGaA

Continued investments in growth
The Fresenius Group spent €136 million on property, plant and equipment (Q1 2010: €124 million). Acquisition spending was €311 million (Q1 2010: €81 million), mainly due to acquisitions at Fresenius Medical Care.

 

Cash flow development
Operating cash flow was €278 million (Q1 2010: €438 million). Strong earnings growth was more than offset by increased DSOs (days sales outstanding), primarily related to the introduction of the new Medicare end-stage renal disease prospective payment system in the U.S. dialysis service business, and raised inventory levels. The cash flow margin was 7.0% (Q1 2010: 12.0%). Net capital expenditure increased to €147 million (Q1 2010: €130 million). Free cash flow before acquisitions and dividends was €131 million (Q1 2010: €308 million). Free cash flow after acquisitions and dividends was -€133 million (Q1 2010: €218 million).

 

Solid balance sheet structure
The Group's total assets were €23,572 million (Dec. 31, 2010: €23,577 million). In constant currency, the increase was 4%. Current assets increased by 6% (9% in constant currency) to €6,808 million (Dec. 31, 2010: €6,435 million). Non-current assets were €16,764 million (Dec. 31, 2010: €17,142 million). In constant currency, the increase was 2%.

Total shareholders' equity decreased by 1% to €8,788 million (Dec. 31, 2010: €8,844 million). In constant currency, the increase was 4%. The equity ratio was 37.3% (Dec. 31, 2010: 37.5%).

Group debt remained almost unchanged (4% growth in constant currency) at €8,823 million (Dec. 31, 2010: €8,784 million). Net debt decreased by 1% to €7,929 million (Dec. 31, 2010: €8,015 million). In constant currency, net debt increased by 3%.

The net debt/EBITDA ratio improved to 2.52 as of March 31, 2011 (Dec. 31, 2010: 2.62).

 

Number of employees increased
As of March 31, 2011, Fresenius Group increased the number of its employees by 2% to 140,111 (Dec. 31, 2010: 137,552).

 

Fresenius Biotech
Fresenius Biotech develops innovative therapies with trifunctional antibodies for the treatment of cancer. 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.

Fresenius Biotech sales increased by 16% to €7.3 million in the first quarter of 2011 (Q1 2010: € 6.3 million). The immunosuppressive agent ATG contributed €6.5 million and the trifunctional antibody Removab (catumaxomab) €0.8 million to sales.

In March 2011, Fresenius Biotech received Paul-Ehrlich-Institut approval to use a polyclonal antibody in stem cell transplantations. As a result, ATG-Fresenius S now can be used in the indication "prophylaxis of graft-versus-host disease (GVHD) for unrelated stem cell transplant donors in adults".

In addition, reimbursement negotiations for Removab in Italy were successfully concluded.

In the first quarter of 2011, Fresenius Biotech's EBIT was -€7 million (Q1 2010: -€8 million). For 2011, Fresenius Biotech expects an EBIT of about -€30 million.


The Business Segments

Fresenius Medical Care
Fresenius Medical Care is the world's leading provider of services and products for patients with chronic kidney failure. As of March 31, 2011, Fresenius Medical Care was treating 216,942 patients in 2,769 dialysis clinics.

• Strong start into the year – despite the impact of the new Medicare prospective payment system in the U.S.
• Outlook 2011 raised: Sales above US$13 billion and net income¹ of US$1,070 million to US$1,090 million

Fresenius Medical Care achieved sales growth of 5% to US$3,036 million (Q1 2010: US$2,882 million). Organic growth was 3%, acquisitions contributed a further 2%.

Sales in dialysis service increased by 5% to US$2,285 million (Q1 2010: US$2,171 million). Dialysis product sales grew by 6% to US$751 million (Q1 2010: US$711 million).

In North America, sales increased by 1% to US$1,977 million (Q1 2010: US$1,960 million). Dialysis services sales increased by 1% to US$1,782 million. Average sales per treatment for U.S. clinics decreased to US$348 in the first quarter of 2011 compared to US$355 for the corresponding quarter in 2010 as a result of the implementation of the new Medicare end-stage renal disease prospective payment system. Dialysis product sales were US$195 million (Q1 2010: US$200 million).

Sales outside North America ("International" segment) grew by 14% to US$1,055 million (Q1 2010: US$922 million). Sales in dialysis services increased by 23% to US$503 million. Dialysis product sales increased by 8% to US$552 million, mainly driven by higher sales of peritoneal dialysis products, dialyzers, bloodlines and products for acute care treatments.

EBIT increased by 5% to US$445 million (Q1 2010: US$425 million) resulting in an EBIT margin of 14.7% (Q1 2010: 14.8%).

In North America, the EBIT margin increased to 15.8% (Q1 2010: 15.7%). The favorable development of pharmaceutical costs, was largely offset by the effects of the implementation of the new Medicare end-stage renal disease prospective payment system in the U.S.

In the International segment, the EBIT margin was 16.2% (Q1 2010: 16.4%).

Net income¹ increased by 5% to US$221 million (Q1 2010: US$211 million).

On March 8, 2011, Fresenius Medical Care announced the acquisition of all assets of Hema Metrics LLC related to its Crit-Line^® system. Based on its strong dialysis product business and sales organization, Fresenius Medical Care intends to establish this technology as the standard of care for fluid and anemia management in the North American market.

Based on the strong financial results in the first quarter of 2011 and the elimination of the "transition adjustment" imposed on dialysis facilities (as part of the new Medicare end-stage renal disease prospective payment system) in the U.S., the company raises its outlook for the full year 2011. Fresenius Medical Care now projects sales of more than US$13 billion. Previously, the company expected sales between US$12.8 billion and US$13.0 billion. Net income¹ is now expected between US$1,070 million and US$1,090 million. Previously, Fresenius Medical Care expected net income between US$1,035 million and US$1,055 million.


For further information, please see Fresenius Medical Care's Investor News at www.fmc-ag.com.

¹ Net income attributable to Fresenius Medical Care AG & Co. KGaA


Fresenius Kabi
Fresenius Kabi offers infusion therapies, intravenously administered generic drugs and clinical nutrition for seriously and chronically ill patients in the hospital and outpatient environments. The company is also a leading supplier of medical devices and transfusion technology products.

• Excellent first quarter – Outstanding organic sales growth of 16%
• Outlook 2011 raised: Organic sales growth >5% on top of challenging 2010 base - EBIT margin between 19% and 20%

Fresenius Kabi had a very successful start into 2011. Strong sales and earnings growth was mainly driven by continued high demand in North America. Product launches as well as continued supply constraints in the injectable drug market which had expanded in March 2010 had a positive effect. Moreover, Fresenius Kabi achieved excellent organic sales growth of 10% outside of North America.

Sales increased by 20% to €960 million (Q1 2010: €800 million). Organic growth was excellent and increased by 16%. Acquisitions contributed 1%. Currency translation had a positive effect of 3%, mainly attributable to the strength of the currencies in China, Brazil and Australia against the Euro.

In Europe, sales grew by 10% to €449 million (Q1 2010: €409 million), driven by strong organic growth of 8%. In North America, sales increased by 42% to €254 million (Q1 2010: €179 million). Organic sales growth was an exceptional 39%. In Asia-Pacific, Fresenius Kabi achieved sales growth of 22% to €156 million (Q1 2010: €128 million), driven by organic sales growth of 16%. Sales in Latin America and Africa increased by 20% to €101 million (Q1 2010: €84 million) with organic sales growth contributing 13%.

EBIT grew by 36% to €197 million (Q1 2010: €145 million). The EBIT margin improved significantly to 20.5% (Q1 2010: 18.1%), driven by the strong development in North America.

Net interest improved to -€68 million (Q1 2010: -€74 million).

Net income¹ increased by 89% to €87 million (Q1 2010: €46 million).

Fresenius Kabi's operating cash flow was €67 million (Q1 2010: €74 million). The cash flow margin was 7.0% (Q1 2010: 9.3%). Cash flow before acquisitions and dividends was €22 million (Q1 2010: €42 million).

Fresenius Kabi raises its outlook for 2011 and forecasts organic sales growth of >5%. Previously, organic sales growth of approximately 5% was expected. Furthermore, Fresenius Kabi expects an EBIT margin of 19% to 20% with net income¹ surpassing 2010 earnings. Previously, an EBIT margin of >19% was projected.


Special items relating to the acquisition of APP Pharmaceuticals are included in the segment "Corporate/Other".

¹ Net income attributable to Fresenius Kabi AG


Fresenius Helios
Fresenius Helios is one of the largest private hospital operators in Germany. HELIOS Kliniken Group owns 63 hospitals, including five maximum care hospitals in Berlin-Buch, Erfurt, Krefeld, Schwerin and Wuppertal. HELIOS treats more than 2 million patients per year, thereof approximately 600,000 inpatients, and operates a total of more than 18,500 beds.

• Strong organic sales growth of 5% continued
• Excellent earnings growth – EBIT margin improved to 9.0%
• Outlook 2011 – EBIT guidance narrowed to upper half of range

Sales increased by 7% to €648 million (Q1 2010: €608 million). Organic sales growth was 5%, mainly driven by an increase in hospital admissions. Acquisitions contributed 2% to overall sales growth, due to the consolidation of St. Marienberg hospital in Helmstedt/Lower Saxony with 267 beds.

EBIT grew by 12% to €58 million (Q1 2010: €52 million). The EBIT margin improved to 9.0% (Q1 2010: 8.6%).

The established clinics increased sales by 5% to €639 million. EBIT improved by 12% to €58 million. The EBIT margin was at 9.1%.

Net income¹ increased by 18% to €33 million (Q1 2010: €28 million).

In the first quarter of 2011, Fresenius Helios announced the acquisition of the municipal hospital in Rottweil, southwestern Germany. The 264-bed acute care clinic has approximately 600 employees and generated sales of approximately €31 million in 2009. The acquisition has been already approved by the German anti-trust authorities. Helios expects to close the transaction in the third quarter of 2011.

Fresenius Helios fully confirms its outlook for 2011. The company expects organic sales growth of 3% to 5%. EBIT is projected to increase to €250 million to €260 million; the company expects to achieve the upper half of this range.

¹ Net income attributable to HELIOS Kliniken GmbH


Fresenius Vamed
Fresenius Vamed offers engineering and services for hospitals and other health care facilities.

• €842 million order backlog – new all-time high
• Sales and earnings fully in line with our expectations
• Outlook 2011 fully confirmed

Fresenius Vamed's sales reached €140 million (Q1 2010: €156 million). Sales in the project business were €84 million (Q1 2010: €102 million). Prior year sales included a substantial medical supply contract with the Ukraine. Sales in the service business increased by 4% to €56 million (Q1 2010: €54 million).

Fresenius Vamed achieved an EBIT of €5 million (Q1 2010: €7 million). The EBIT margin was 3.6%. Net income¹ was €4 million (Q1 2010: €6 million).

As of March 31, 2011, order backlog increased by 5% to a new all-time high of €842 million (Dec. 31, 2010: €801 million), driven by strong order intake of €127 million (Q1 2010: €260 million). Order intake includes a €67 million project to build a private health care facility in the Ukraine and a €29 million medical equipment contract for the National Cancer Institute in Malaysia.

Fresenius Vamed fully confirms its 2011 outlook and expects to achieve both sales and EBIT growth between 5% and 10%.

¹ Net income attributable to VAMED AG


 

Analyst Meeting and Audio Webcast
As part of the publication of the results for the first quarter of 2011, a conference call will be held on May 4, 2011 at 2.00 p.m. CET (8.00 a.m. EST). All investors are cordially invited to follow the conference call in a live broadcast via the Internet at www.fresenius.com, Investor Relations, Presentations. Following the call, a replay of the conference call will be available on our website.
 

• Sales €8.0 billion,
  +4% at actual rates, +6% in constant currency
• EBIT €1,207 million,
  +8% at actual rates, +11% in constant currency
• Net income¹ €363 million,
  +20% at actual rates, +22% in constant currency

• Group earnings¹ outlook raised to 15% – 18% 
• Fresenius Medical Care fully confirms guidance
• Fresenius Kabi posts excellent growth, raises sales and earnings guidance
• Fresenius Helios raises earnings guidance
• Fresenius Vamed revises guidance due to project delays

Ulf Mark Schneider, CEO of Fresenius, commented: „Fresenius achieved excellent financial results in the first half. We are very pleased with Fresenius Kabi's growth in North America and in emerging markets, in particular in China. Based on the results of the first half of 2011, we raise our 2011 earnings guidance. Fresenius Medical Care's significant M&A activity this year shows that our Group's double-barreled growth strategy combining organic growth and acquisitions remains fully intact."

Group outlook 2011
Fresenius now expects 2011 net income¹ to increase by 15% to 18% in constant currency. Previously, the Company expected net income¹ growth of 12% to 16% in constant currency. Fresenius confirms its sales guidance. Sales are expected to increase by 7% to 8% in constant currency.

The Group plans to invest approximately 5% of sales in property, plant and equipment.

In 2011, the net debt/EBITDA ratio is expected to stay in the range of 2.5 to 3.0. Also for calendar year 2012, Fresenius Medical Care's announced and entirely debt-financed acquisitions are not expected to cause Group leverage to exceed that target range.

¹ Net income attributable to Fresenius SE & Co. KGaA; adjusted for the effects of mark-to-market accounting of the Mandatory Exchangeable Bonds (MEB) and the Contingent Value Rights (CVR) related to the acquisition of APP Pharmaceuticals. Both are non-cash items.

Strong organic sales growth
Group sales increased by 4% (6% in constant currency) to €8,004 million (H1 2010: €7,686 million). Organic sales growth was 5%. Acquisitions contributed a further 1%. Currency translation had a negative effect of 2%. This is mainly attributable to the average U.S. dollar rate decreasing 5% against the euro in the first half of 2011.

Sales growth in the business segments was as follows:

Organic sales growth was 3% in both, North America and Europe. Prior year sales in Europe were positively influenced by Fresenius Vamed's large medical supply contract to the Ukraine. Organic sales growth reached 15% in Latin America, 19% in Asia-Pacific and 23% in Africa.

Continued strong earnings growth
Group EBITDA grew by 7% (10% in constant currency) to €1,526 million (H1 2010: €1,428 million). Group EBIT increased by 8% (11% in constant currency) to €1,207 million (H1 2010: €1,121 million). The EBIT margin improved by 50 basis points to 15.1% (H1 2010: 14.6%).

Group net interest was -€276 million (H1 2010: -€281 million).

The other financial result was -€151 million and includes valuation changes of the fair redemption value of the Mandatory Exchangeable Bonds (MEB) of -€156 million and the Contingent Value Rights (CVR) of €5 million. Both are non-cash items. As the CVR were delisted in March 2011, the effect relates solely to the first quarter of 2011. The MEB will come to maturity on August 14, 2011.

The Group tax rate¹ was 30.9% (H1 2010: 31.9%).

Noncontrolling interest increased to €280 million (H1 2010: €270 million), of which 93% was attributable to the noncontrolling interest in Fresenius Medical Care.

Group net income² increased by 20% (22% in constant currency) to €363 million (H1 2010: €302 million). Earnings per ordinary share increased by 20% to €2.23.

Group net income³ (including special items) reached €257 million or €1.58 per ordinary share.

¹ Adjusted for the effect of mark-to-market accounting of the Mandatory Exchangeable Bonds (MEB) related to the acquisition of APP Pharmaceuticals
² Net income attributable to Fresenius SE & Co. KGaA; adjusted for the effects of mark-to-market accounting of the Mandatory Exchangeable Bonds (MEB) and the Contingent Value Rights (CVR) related to the acquisition of APP Pharmaceuticals. Both are non-cash items.
³ Net income attributable to Fresenius SE & Co. KGaA

Continued investments in growth
The Fresenius Group spent €286 million on property, plant and equipment (H1 2010: €320 million). Acquisition spending was €857 million (H1 2010: €151 million), mainly due to the acquisitions of Euromedic's dialysis service business as well as a minority stake in Renal Advantage, Inc., both by Fresenius Medical Care.

Cash flow development
Operating cash flow was €650 million (H1 2010: €805 million). Strong earnings growth was more than offset by increased DSOs (days sales outstanding), primarily related to the introduction of the new Medicare end-stage renal disease prospective payment system in the U.S. dialysis service business, and raised inventory levels. The cash flow margin was 8.1% (H1 2010: 10.5%). Net capital expenditure was €292 million (H1 2010: €320 million). Free cash flow before acquisitions and dividends was €358 million (H1 2010: €485 million). Free cash flow after acquisitions and dividends was -€791 million (H1 2010¹: €58 million).

Solid balance sheet structure
The Group's total assets increased slightly to €23,909 million (Dec. 31, 2010: €23,577 million). In constant currency, the increase was 6%. Current assets increased by 5% (9% in constant currency) to €6,752 million (Dec. 31, 2010: €6,435 million). Non-current assets were €17,157 million (Dec. 31, 20010: €17,142 million). In constant currency, the increase was 5%.

Total shareholders' equity decreased by 2% to €8,704 million (Dec. 31, 2010: €8,844 million). In constant currency, however, shareholders' equity increased by 4%. The equity ratio was 36.4% (Dec. 31, 2010: 37.5%).

Group debt grew by 3% (8% in constant currency) to €9,012 million (Dec. 31, 2010: €8,784 million) primarily resulting from acquisition financing. Net debt increased by 5% (10% in constant currency) to €8,404 million (Dec. 31, 2010: €8,015 million).

The net debt/EBITDA ratio increased slightly to 2.66 as of June 30, 2011 (Dec. 31, 2010: 2.62).

¹ Does not include a €100 million cash out for a short-term bank deposit by Fresenius Medical Care in Q2 2010.

Number of employees increased
As of June 30, 2011, Fresenius Group increased the number of its employees by 4% to 142,933 (Dec. 31, 2010: 137,552).

Fresenius Biotech
Fresenius Biotech develops innovative therapies with trifunctional antibodies for the treatment of cancer. 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.

Fresenius Biotech sales increased by 11% to €14.6 million in the first half of 2011 (H1 2010: €13.1 million). ATG sales increased by 9% to €12.8 million and Removab sales by 29% to €1.8 million.

In the second quarter of 2011, Fresenius Biotech received approval from the Austrian Federal Office for Safety in Health Care for the use of ATG-Fresenius S in stem cell transplantations. Austria is the fifth country to approve the immunosuppressive agent in this indication, following Germany, Portugal, Argentina and Thailand.

In June 2011, the Italian Medicines Agency, AIFA, has added Fresenius Biotech's trifunctional antibody Removab to its list of reimbursable medications.

In July 2011, the European Medicines Agency's (EMA) Committee for Medicinal Products for Human Use (CHMP) recommended a variation of the existing approval of Removab. The infusion time of currently 6 hours can now be reduced to 3 hours, which facilitates the use of Removab in an out-patient setting. Moreover, the CHMP recommendation allows marketing of follow-up results for the pivotal study in patients with malignant ascites showing that the 1-year survival rate in Removab-treated patients was more than four times higher than in the control group (11.4% Removab group vs. 2.6% control group).

In the first half of 2011, Fresenius Biotech's EBIT was -€13 million (H1 2010: -€15 million). For 2011, Fresenius Biotech expects an EBIT of about -€30 million.

The Business Segments

Fresenius Medical Care
Fresenius Medical Care is the world's leading provider of services and products for patients with chronic kidney failure. As of June 30, 2011, Fresenius Medical Care was treating 225,909 patients in 2,838 dialysis clinics.

• Acquisitions with a total annual sales volume of more than US$1 billion
• 2011 outlook fully confirmed

Fresenius Medical Care achieved sales growth of 7% to US$6,230 million (H1 2010: US$5,828 million). Organic sales growth was 3%, acquisitions contributed a further 2%.

Sales in dialysis services increased by 6% to US$4,647 million (H1 2010: US$4,395 million). Dialysis product sales grew by 10% to US$1,583 million (H1 2010: US$1,433 million).

In North America sales were US$4,005 million (H1 2010: US$3,986 million). Dialysis services sales increased by 1% to US$3,610 million. Average sales per treatment for U.S. clinics was US$348 in the second quarter of 2011 compared to US$356 for the corresponding quarter in 2010. This is a result of the targeted implementation of the new Medicare end-stage renal disease prospective payment system. Dialysis product sales decreased to US$395 million (H1 2010: US$408 million) as increased sales of dialysis products could not entirely offset lower pricing of renal drugs.

Sales outside North America ("International" segment) grew by 20% to US$2,218 million (H1 2010: US$1,842 million). Sales in dialysis services increased by 27% to US$1,037 million. Dialysis product sales increased by 15% to US$1,181 million.

EBIT increased by 7% to US$955 million (H1 2010: US$892 million). The EBIT margin of 15.3% remained at previous year's level.

In North America, the EBIT margin increased to 16.5% (H1 2010: 16.1%). This increase was mainly favorably influenced by the development of pharmaceutical costs and higher income from the joint venture with Vifor Pharma.

In the International segment, the EBIT margin was 16.9% (H1 2010: 17.6%), primarily driven by unfavorable currency effects.

Net income¹ increased by 5% to US$481 million (H1 2010: US$459 million).

Acquisition of Liberty Dialysis Holdings, Inc.: Fresenius Medical Care has executed a merger agreement with Liberty Dialysis Holdings, Inc., the holding company for Liberty Dialysis and Renal Advantage. The investment including assumed debt will be approximately US$1.7 billion. In addition, Fresenius Medical Care previously invested approximately US$300 million in Renal Advantage. The transaction is expected to close in early 2012. Liberty Dialysis Holdings, Inc., has annual sales of approximately US$1 billion and operates approximately 260 dialysis clinics. Fresenius Medical Care anticipates that facilities may need to be divested to secure regulatory clearance of the transaction.

Acquisition of American Access Care Holdings, LLC: Fresenius Medical Care has executed an agreement to acquire the U.S. based company American Access Care Holdings, LLC (AAC) for US$385 million. AAC operates 28 freestanding out-patient interventional radiology centers primarily dedicated to serving the vascular access needs of dialysis patients. The transaction is expected to close in the fourth quarter of 2011. On completion, the acquired operations would add approximately US$175 million in annual sales.

Both acquisitions will be financed from cash flow and debt and are expected to be accretive to earnings in the first year after closing of the transactions. Both transactions remain subject to clearance under the Hart–Scott–Rodino Antitrust Improvements Act.

Fresenius Medical Care fully confirms the outlook for 2011. The company projects sales of more than US$13 billion. Net income1 is expected between US$1,070 million and US$1,090 million.

For further information, please see Fresenius Medical Care's Investor News at www.fmc-ag.com.

¹ Net income attributable to Fresenius Medical Care AG & Co. KGaA.

Fresenius Kabi
Fresenius Kabi offers infusion therapies, intravenously administered generic drugs and clinical nutrition for seriously and chronically ill patients in the hospital and outpatient environments. The company is also a leading supplier of medical devices and transfusion technology products.

• Strong organic sales growth of 13%, EBIT margin increase to 20.9%
• 2011 outlook raised – Organic sales growth ~8% on challenging 2010 base - EBIT margin ~20%

Fresenius Kabi achieved excellent financial results. Growth in North America was driven by new product launches as well as continued supply constraints in the injectable drug market. Ongoing high demand from emerging markets contributed strongly to Fresenius Kabi's excellent organic sales growth.

Sales increased both organically and at actual rates by 13% to €1,971 million (H1 2010: €1,745 million). Acquisitions contributed 1%. Currency translation had a negative effect of 1%. U.S. dollar weakness was largely offset by the strength of the currencies in Switzerland, Brazil and Australia against the euro.

In Europe, sales grew by 9% to €909 million (H1 2010: €836 million), driven by organic sales growth of 7%. In North America, sales increased by 17% to €519 million (H1 2010: €445 million) with excellent organic sales growth of 22%. In Asia-Pacific, all-organic growth of 19% drove sales to €332 million (H1 2010: €279 million). Sales in Latin America and Africa increased by 14% to €211 million (H1 2010: €185 million) with organic sales growth contributing 12%.

EBIT grew by 18% to €411 million (H1 2010: €347 million). The EBIT margin improved to 20.9% (H1 2010: 19.9%), mainly attributable to the strong development in North America.

Net interest was -€143 million (H1 2010: -€141 million).

Net income¹ increased by 33% to €181 million (H1 2010: €136 million).

Fresenius Kabi's operating cash flow increased by 8% to €205 million (H1 2010: €189 million). The cash flow margin was 10.4% (H1 2010: 10.8%). Given increased capital expenditures, cash flow before acquisitions and dividends of €124 million remained unchanged from previous year's level.

In the second quarter of 2011, Fresenius Kabi announced the expansion of its Grand Island, New York, manufacturing facility. A total of US$38 million will be invested over the next two years, adding six additional production lines for I.V. drugs in order to secure the future growth of the business.

Fresenius Kabi further raises its outlook for 2011. The company now forecasts organic sales growth of ~8%. Previously, Fresenius Kabi targeted organic sales growth of >5%. The EBIT margin is now expected to be ~20% with net income clearly surpassing 2010 earnings. The previous guidance was 19% to 20%.

Special items relating to the acquisition of APP Pharmaceuticals are included in the segment "Corporate/Other".

¹ Net income attributable to Fresenius Kabi AG.

Fresenius Helios
Fresenius Helios is one of the largest private hospital operators in Germany. Helios owns 64 hospitals, including five maximum care hospitals in Berlin-Buch, Erfurt, Krefeld, Schwerin and Wuppertal. Helios treats more than 2 million patients per year, thereof approximately 650,000 inpatients, and operates approximately 19,000 beds.

• Solid organic sales growth at 4%, 50 basis points EBIT margin increase to 9.5%
• 2011 earnings outlook raised – EBIT of ~€260 million expected

Sales increased by 6% to €1,293 million (H1 2010: €1,223 million), mainly driven by solid organic sales growth of 4%. Acquisitions contributed 2% to overall sales growth due to the consolidation of the St. Marienberg hospital in Helmstedt/Lower Saxony.

EBIT grew by 12% to €123 million (H1 2010: €110 million). The EBIT margin improved to 9.5% (H1 2010: 9.0%).

The established clinics increased sales by 4% to €1,276 million. EBIT improved by 13% to €124 million. The EBIT margin was 9.7%.

Net income¹ increased by 16% to €72 million (H1 2010: €62 million).

The acquisition of the municipal hospital in Rottweil, southwestern Germany, was successfully completed in the second quarter of 2011. The hospital was consolidated as from July 1, 2011.

Fresenius Helios raises its EBIT outlook to ~€260 million. Previously, the company expected to reach the upper half of a range from €250 million to €260 million. Fresenius Helios fully confirms its sales outlook and projects organic sales growth of 3% to 5%.

¹ Net income attributable to HELIOS Kliniken GmbH.

Fresenius Vamed
Fresenius Vamed offers engineering and services for hospitals and other health care facilities.

• Sales and EBIT in line with expectations for the first half of 2011 – order backlog close to all-time high
• 2011 outlook revised due to expected project delays in H2 – Sales and EBIT growth of 0% to 5% expected

Fresenius Vamed's sales reached €313 million (H1 2010: €338 million). Sales in the project business were €202 million (H1 2010: €230 million). Prior year sales included a substantial medical supply contract with the Ukraine. Sales in the service business increased by 3% to €111 million (H1 2010: €108 million).

EBIT was €12 million (H1 2010: €15 million). The EBIT margin was 3.8% (H1 2010: 4.4%). Net income1 was €9 million (H1 2010: €12 million).

Order backlog of €762 million as of June 30, 2011, remained close to its all-time high (Dec. 31, 2010: €801 million). Order intake of €164 million (H1 2010: €328 million) was impacted by the postponement of orders to the second half of 2011.

Fresenius Vamed revises its full-year guidance as a consequence of project delays in Middle East / North Africa due to the unrest in the region. The company now projects sales and EBIT growth of 0% to 5%. Previously, the company expected sales and EBIT growth between 5% and 10%. Fresenius Vamed expects a significant increase in order intake in the second half of 2011 and continued sales and earnings growth following the temporary project delays.

¹ Net income attributable to VAMED AG.

Analyst Meeting and Audio Webcast
As part of the publication of the results for the first half of 2011, a conference call will be held on August 2, 2011 at 2.00 p.m. CET (8.00 a.m. EST). All investors are cordially invited to follow the conference call in a live broadcast via the Internet at www.fresenius.com, Investor Relations, Presentations. Following the call, a replay of the conference call will be available on our website.

Fresenius is expanding its production capacity in Southeast Asia. Fresenius Kabi, a market leader in infusion therapy and clinical nutrition, opened a new production facility in the coastal city Quy Nhon in central Vietnam today. Nearly 380 employees will work at the production facility. With the new plant, Fresenius Kabi will almost double its manufacturing capacity for infusion solutions and liquid medications. Most of these products are intended for the Vietnamese market. Investment costs totaled to approximately €20 million, and construction took about two years to complete.

Ulf Mark Schneider, CEO of Fresenius, said: "Health care systems in Vietnam and other countries in Southeast Asia are developing at a rapid pace, so there is a constantly increasing demand for Fresenius Kabi products in these countries. Our new plant in Quy Nhon will help us meet this demand and allow us to make a significant contribution to high-quality, yet affordable health care in the region."

The new plant replaces the existing Fresenius Kabi production facility in Quy Nhon. Jan Walter, managing director of Fresenius Kabi for Vietnam, Cambodia and Laos, explained: "Over the last three years, our sales in Vietnam have grown by more than 20 percent every year. The new plant in Quy Nhon will significantly increase our production capacity and has the country's most advanced production equipment for infusion solutions and liquid medications. So we are well equipped for the further growth that we expect to see at Fresenius Kabi in Vietnam over the next few years."

The new production facility covers 15,000 square meters. The manufacture of infusion solutions is already certified in line with GMP (good manufacturing practice) guidelines as set down by the World Health Organization. Most of the employees from the former plant will be taken over, and 45 new jobs are being created.

The Quy Nhon plant is run by Fresenius Kabi Bidiphar JSC, a joint venture between Fresenius Kabi and Bidiphar, a state-owned health care company based in Quy Nhon. Fresenius Kabi Bidiphar was founded on December 1, 2008, and Fresenius Kabi holds the majority of its shares and provides the management team. The joint venture is Vietnam's market leader in standard solutions and also enjoys a leading position in I.V. generic drugs. Other Fresenius Kabi products made outside Vietnam are sold through a separate entity in Ho Chi Minh City. Overall, Fresenius Kabi employs nearly 500 people in Vietnam.

HELIOS Kliniken GmbH, a subsidiary of Fresenius, expands its presence in the German hospital market. The company has agreed to acquire 94.7% of the share capital in Damp Group.

Damp operates seven acute care hospitals and four post acute care hospitals with a total of 4,112 beds (thereof 2,649 in acute care) and is among the ten largest private hospital operators in Germany. In addition, Damp operates eight outpatient medical care centers, two nursing care facilities with a total of 606 beds and a wellness resort. The company has 5,971 full-time employees.

The acquisition of Damp is an excellent geographic fit with the HELIOS hospital network in the north and northeast of Germany. The Damp hospitals enjoy a strong local market position and offer considerable growth potential. Both Damp and HELIOS were co-founders of the leading German medical quality initiative "Initiative Qualitätsmedizin".

In 2010, Damp achieved sales of €487 million and operating profit (EBIT) of €21 million. Acute care contributed 73% to total sales, post acute care 20%. The parties agreed not to disclose the purchase price.

Ulf Mark Schneider, CEO of Fresenius, commented: "We take advantage of this excellent opportunity to acquire a well-positioned and profitable company to strengthen HELIOS' presence in the German hospital market. As demonstrated with the acquisition of the privately-owned hospital operator Humaine in 2006, we will integrate Damp into the HELIOS network and achieve margin improvements in line with our established financial targets. Our focus on acquiring public-sector hospitals remains unchanged as we see a rebound in the German hospital privatization market."

The acquisition is still subject to the approval of local and antitrust authorities. Due to the geographic proximity of the HELIOS hospital Schwerin, HELIOS has to divest the Damp hospital Wismar (505 beds, sales of approximately €60 million) to secure regulatory clearance of the transaction.

HELIOS anticipates to close the transaction in the first half of 2012. The acquisition is expected to be accretive to Fresenius Group's earnings per share in 2013.

The acquisition will be financed from cash flow and debt. For 2012, the Damp acquisition and Fresenius Medical Care's recently announced acquisitions are not expected to lead to Group leverage above the target range of 2.5 to 3.0 net debt/EBITDA.

Fresenius has established a sponsored Level I American Depositary Receipt (ADR) program in the United States. An ADR is a receipt that is issued by a depositary bank representing ownership of a company's underlying shares. ADRs are created to facilitate U.S. investors to hold shares in non-U.S. companies and trade them in the same way as U.S. securities.

Fresenius ADRs will now be available for trading in the U.S. over-the-counter (OTC) market. Eight ADRs represent one Fresenius share. The ticker symbol is FSNUY. Deutsche Bank acts as depositary bank for the ADR program.

Ulf Mark Schneider, CEO of Fresenius, commented: "Fresenius is a global health care group with a strong presence in the United States. For many years, U.S. investors have been an important part of our shareholder base. The new ADR program now allows them to invest in Fresenius in their home market, providing them with the opportunity to participate in our Group's future development."

The Fresenius share is listed on the German stock exchanges in Frankfurt, Düsseldorf and Munich and is a member of the DAX30 stock index.