• Sales € 10.8 billion, + 37 % at actual rates, + 37 % in constant currency
• EBIT € 1,444 million, + 49 % at actual rates, + 50 % in constant currency
• Net income € 330 million, + 49 % at actual rates, + 49 % in constant currency

• Sales exceeding the € 10 billion mark and EBIT exceeding the € 1 billion mark for the first time
• Excellent sales and earnings growth in all business segments
• Further margin improvements in all business segments achieved
• 15 % increase in dividend per share proposed
• Strong cash flow supports rapid de-levering

14th consecutive dividend increase proposed
2006 was the most successful year in the Company's history. Based on the Group's excellent financial results, the Management Board will propose to the Supervisory Board a dividend increase of 15 % to € 0.57 per ordinary share (2005, adjusted for the share split: € 0.49) and to € 0.58 per preference share (2005, adjusted for the share split: € 0.50). The total dividend distribution is expected to be € 88.8 million (2005: € 75.8 million).

Positive outlook for 2007
For 2007, Fresenius Group projects further improvements in sales and earnings. Group sales are expected to grow by 8 to 10 % in constant currency. Net income is expected to increase by 20 to 25 % in constant currency. We anticipate further margin improvements of all business segments to contribute to this growth.

Investments in property, plant and equipment and in intangible assets are planned to increase from € 600 million in 2006 to € 600 to 700 million.


Strong sales growth across all business segments and regions
Group sales increased by 37 % to € 10,777 million in 2006 (2005: € 7,889 million). Organic growth was 9 %. Acquisitions, in particular Renal Care Group and HELIOS Kliniken, contributed 29 %. Divestitures had a -1 % effect on sales. Currency translation effects had no impact.

Strong sales growth was achieved in the core markets of North America and Europe. In North America, sales grew significantly due to the Renal Care Group consolidation and an excellent organic growth rate of 9 %. In Europe, the substantial sales increase was mainly driven by the consolidation of HELIOS Kliniken. Organic growth in Europe was 5 %. Excellent growth rates were achieved in the emerging markets with organic growth of 19 % in Asia-Pacific, 22 % in Latin America and 18 % in Africa.

Sales contribution of the three business segments:

Fresenius ProServe's increased sales contribution is the result of the consolidation of HELIOS Kliniken.

 

Excellent earnings growth
Group operating income (EBIT) increased by 49 % at actual rates and by 50 % in constant currency to € 1,444 million (2005: € 969 million). The Group EBIT margin improved to 13.4 % (2005: 12.3 %). Operating income for the full year 2006 includes a gain of € 32 million from the divestitures of dialysis clinics in the USA. The sale was a condition of the US Federal Trade Commission for the approval of the Renal Care Group acquisition. Operating income for the full year 2006 also includes a total of € 44 million for one-time expenses, e.g. for the integration of Renal Care Group, as well as for expenses related to the stock option accounting change.

Group net interest was € -395 million (2005: € -203 million). The increase was primarily driven by the debt financing of the Renal Care Group acquisition. Net interest also includes one-time expenses of € 30 million associated with the early refinancing of Group debt.

The tax rate was 39.5 % (2005: 38.9 %). It was substantially influenced by the tax expense associated with the divestiture of the dialysis clinics in the USA as the goodwill attributable to the divested clinics is not considered for tax purposes. Excluding this effect the tax rate was 37.2 %, well within our guidance of 36 to 38 %.

Minority interest was € 305 million (2005: € 246 million), of which 93 % was attributable to the minority interest in Fresenius Medical Care.

Group net income grew strongly by 49 % at actual rates as well as in constant currency to € 330 million (2005: € 222 million). Net income includes a total of € 29 million for one-time expenses, primarily for the early refinancing of debt, for the integration of Renal Care Group, and for expenses related to the stock option accounting change.

Earnings per ordinary share were € 2.15 (2005, adjusted for the share split: € 1.76) and earnings per preference share* were € 2.16 (2005, adjusted for the share split: € 1.77). This is an increase of 22 % for both share classes. The average number of shares grew to 153,006,012 in 2006.

^* In accordance with SFAS 128 („Earnings per Share") the calculation of basic and diluted earnings per share for the fiscal years 2006 and 2005 have been adjusted retrospectively by the increased weighted average number of shares outstanding.

Capital expenditure at high level
Fresenius Group spent € 600 million for property, plant and equipment and intangible assets (2005: € 353 million). Acquisition spending increased to € 3,714 million mainly due to the Renal Care Group acquisition (2005: € 1,894 million).


Strong cash flow
Operating cash flow increased by 35 % to € 1,052 million (2005: € 780 million). Key drivers were the strong increase in earnings and further improvements in working capital management. Cash flow before acquisitions and dividends was € 481 million (2005: € 449 million). The acquisition of Renal Care Group was entirely debt-financed.


Solid balance sheet structure
Total assets increased by 30 % to € 15,024 million (December 31, 2005: € 11,594 million). In constant currency, total assets grew by 38 %. The substantial increase is mainly related to the consolidation of the Renal Care Group. Current assets increased by 16 % to € 4,106 million (December 31, 2005: € 3,531 million). Non-current assets were € 10,918 million (December 31, 2005: € 8,063 million), an increase of 35 %.

Shareholders' equity including minority interest grew by 12 % to € 5,728 million (December 31, 2005: € 5,130 million), driven by the very good earnings development. Given the debt financing of the Renal Care Group acquisition, the equity ratio (including minority interest) decreased to 38.1 % (December 31, 2005: 44.2 %).

Group debt increased to € 5,872 million (December 31, 2005: € 3,502 million) due to the financing of the Renal Care Group acquisition.

As of March 31, 2006, following the closing of the Renal Care Group acquisition, the net debt/EBITDA ratio was at 3.5. Given the excellent earnings growth and a strong cash flow the net debt/EBITDA ratio improved significantly to 3.0 as of December 31, 2006 (December 31, 2005: 2.3).


Employees
As of December 31, 2006, the Group had 104,872 employees (December 31, 2005: 91,971). The increase of 12,901 employees is primarily due to the acquisitions of Renal Care Group and HUMAINE Kliniken.


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 December 2006, first results of a phase II/III pivotal study on malignant ascites in patients with ovarian cancer were published, including treatment data of 129 patients. The results showed a clear advantage of the therapy with the trifunctional antibody removab^® over a therapy with puncture alone. The results of 128 patients with tumor diseases other than ovarian cancer (e.g. gastric cancer) are expected for the first quarter of 2007. Data on overall survival of all patients of the study are expected in the second quarter of 2007. The application dossier for marketing authorization for removab^® in malignant ascites is planned to be submitted to the European Medicines Agency (EMEA) in the second half of 2007.

In June 2006, Fresenius Biotech published the results of a phase Ila study in the treatment of ovarian cancer patients assessing tolerability, dose regimen and efficacy. Based on the encouraging results, the company plans to start a phase II study in this indication in Europe in the first half of 2007.

The phase II study with the antibody rexomun^® to treat breast cancer, which started in March 2006, and the phase II study with the antibody removab^® to treat gastric cancer, which started in June 2006, are ongoing.

Fresenius Biotech's operating income (EBIT) was € -45 million in 2006 (2005: € -41 million). For 2007, Fresenius Biotech expects an EBIT of approximately € -50 million.


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, 2006, Fresenius Medical Care was serving 163,517 patients in 2,108 dialysis clinics.

^* before one-time expenses, expenses related to the stock option accounting change and the effect of the FTC-related clinic divestitures in the USA; excluding 2005 one-time expenses.

• Excellent sales and earnings growth in all regions
• Integration of Renal Care Group successfully completed
• Outlook 2007: double-digit sales and earnings growth expected

Fresenius Medical Care achieved strong sales growth of 26 % to US$ 8,499 million (2005: US$ 6,772 million). This was mainly driven by the excellent organic growth of 10 % and the consolidation of the Renal Care Group. Sales in dialysis care increased by 31 % to US$ 6,377 million (2005: US$ 4,867 million). In dialysis products Fresenius Medical Care achieved sales of US$ 2,122 million (2005: US$ 1,905 million), an increase of 11 %.

In North America Fresenius Medical Care's sales increased by 32 % to US$ 6,025 million (2005: US$ 4,577 million). Organic growth of 9 % in this region was excellent. Sales outside North America ("International") grew by 13 % (12 % in constant currency) to US$ 2,474 million (2005: US$ 2,195 million).

Net income increased by 18 % to US$ 537 million (2005: US$ 455 million). This result includes one-time expenses of US$ 47 million primarily for the early refinancing of debt, for the integration of Renal Care Group, and expenses related to the stock option accounting change as well as for the after-tax loss on the divestiture of dialysis clinics in the USA. Excluding the above effects and adjusted by one-time expenses in the previous year, net income increased by 24 % to US$ 584 million.

For the full year 2007, Fresenius Medical Care expects revenue to be about US$ 9.4 billion. The net income is expected to be between US$ 675 million and US$ 695 million in 2007.

For further information, please see Fresenius Medical Care's Investor News 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.

• Strong organic sales growth of 8 %
• EBIT margin at new record levels in the fourth quarter and for the full year 2006
• Outlook 2007: strong margin growth and increase in earnings expected

In 2006, Fresenius Kabi's sales increased by 13 % to € 1,893 million (2005: € 1,681 million). The company achieved strong organic growth of 8 %. Acquisitions, primarily Clinico and Australian Pharmatel, contributed 4 % to sales. Currency translation effects contributed 1 % to growth.

Sales in Europe (excluding Germany) increased by 7 %, in Germany by 5 %.
Fresenius Kabi continued its exceptional growth outside Europe and achieved sales growth of 41 % in Asia-Pacific, 27 % in Latin America and 17 % in the other regions. Organic growth in the regions outside Europe was again well into the double digits.

Earnings at Fresenius Kabi reached new record levels: EBIT increased by 24 % to € 291 million (2005: € 234 million). The EBIT margin improved to 15.4 % in the full year 2006 (2005: 13.9 %). The original mid-term EBIT margin target of about 15.5 % by 2007 was therefore reached ahead of time. In the fourth quarter, the EBIT margin reached a new record level of 16.0 %. Net profit rose by 29 % to € 143 million (2005: € 111 million). This already includes one-time expenses of € 11 million for the early refinancing of the 2003 Euro Bond.

In 2007, Fresenius Kabi expects a positive sales and earnings performance. Organic sales growth is projected to be 6 to 8 %. Strong sales growth is anticipated again from the regions outside Europe. Based on the positive sales projection and further manufacturing and logistics improvements Fresenius Kabi expects an EBIT margin of 16.0 to 16.5 % in 2007.

Also for the mid-term, Fresenius Kabi expects to continue its positive financial performance: The company targets organic sales growth of 6 to 8 %. Further, Fresenius Kabi foresees its EBIT margin in the 16 to 18 % range.


 

Fresenius ProServe

Fresenius ProServe is a leading German hospital operator with 55 facilities. Moreover, the company offers engineering and services for hospitals and other health care facilities.
 

• Very good revenue and earnings development in the hospital operations business
• Strong order intake in engineering and services business
• Outlook 2007: Continued sales and earnings improvements expected

Fresenius ProServe's sales grew by 7 % to € 2,155 million in 2006 (2005 including HELIOS Kliniken: € 2,009 million). Organic growth was 3 %. EBIT increased by 23 % to € 154 million (2005 including HELIOS Kliniken: € 125 million).

Sales in hospital operations (HELIOS Kliniken Group) increased by 8 % to € 1,673 million (2005 including HELIOS Kliniken : € 1,550 million). The sales growth is mainly attributable to the acquisition of HUMAINE Kliniken, which was consolidated as of July 1, 2006. However, HELIOS also achieved strong organic growth of 3 %. EBIT increased to € 133 million, the EBIT margin improved to 7.9 % (2005 including HELIOS Kliniken: € 107 million and 6.9 %).

HELIOS continued its growth strategy in the German hospital market. In January 2007, the company has agreed to acquire two hospitals in North-Rhine Westphalia with a total of 333 beds and sales of about € 32 million in 2006. The acquisition still requires approval by the antitrust authorities.

Sales in the engineering and services business (VAMED, Pharmaplan) increased by 5 % to € 482 million (2005: € 459 million). EBIT rose by 14 % to € 25 million (2005: € 22 million). Order intake and order backlog continued to develop very positively: Order intake increased by 19 % to € 407 million (2005: € 341 million). Order backlog also grew by 19 % to € 428 million as of December 31, 2006 (December 31, 2005: € 360 million).

In December 2006, Fresenius ProServe has signed a definitive agreement to sell its subsidiary Pharmaplan GmbH to NNE A/S (NNE). NNE is a wholly-owned subsidiary of Novo Nordisk A/S, Copenhagen. The approval by the antitrust authorities is expected in the first quarter of 2007. The sale of Pharmaplan is a further step by Fresenius ProServe to focus on its business with hospitals and other healthcare facilities.

Fresenius ProServe projects further improvements in sales and earnings. Future growth potential is mainly expected from hospital privatizations in Germany. For 2007, Fresenius ProServe forecasts organic sales growth of 2 to 3 %. EBIT is expected to increase to € 160 to 170 million.


 

Video Webcast
As part of the publication of our results for the fiscal year 2006, an analyst conference will be held at the Fresenius headquarters in Bad Homburg on February 22, 2007 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-ag.com / Investor Relations / Presentations. Following the meeting, a recording of the conference will be available as video-on-demand.

Fresenius today announced encouraging results in the non-ovarian cancer patient stratum of a phase II/III pivotal study on malignant ascites using the trifunctional antibody removab^® (catumaxomab). After positive results in the treatment of patients with ascites from ovarian cancer (see Investor News December 18, 2006 for ovarian stratum), the antibody again showed a clear advantage over a therapy with puncture alone. The median puncture-free survival period (primary endpoint) in the patient group treated with removab^® was significantly longer compared to the control group and clinically relevant. The median puncture-free survival was 37 days in the removab^® group versus 14 days in the control group (p< 0.0001).

In the subgroup of patients with ascites from gastric cancer (51 % of all non-ovarian cancer patients) the difference was even more marked with a median puncture-free survival of 44 days in the removab^® group versus 15 days in the control group (p<0.0001). All other patients (10 % breast, 7 % pancreatic, 6 % colorectal cancer, 26 % others) had a median puncture-free survival of 30 days (removab^®) versus 9 days in the control group (p<0.0003). On a pooled basis for both strata (ovarian and non-ovarian cancers) the median puncture-free survival was 46 days in the removab^® group versus 11 days in the control group (p<0001).

Positive results were also achieved in key secondary endpoints. Of special importance was the length of time between treatment and first therapeutic puncture (median time to the first therapeutic puncture). In contrast to the primary endpoint, patients who died before the next puncture were not included in this metric. As a result, this secondary endpoint is not affected by the prognosis of these patients at the onset of ascites. The median time to the first therapeutic puncture for all non-ovarian cancers was 80 days (control group: 15 days; p< 0.0001). Patients with gastric cancer benefited especially from the treatment. Median time to the first therapeutic puncture was 118 days in the removab^® group versus 15 days in the control group (p< 0.0001). For all other patients the median time to the first therapeutic puncture in the removab^® group was 69 versus 15 days in the control group (p< 0.0001). On a pooled basis for both strata (ovarian and non-ovarian cancers) the median time to the first therapeutic puncture was 77 days in the treatment group versus 13 days in the control group (p< 0.0001). In addition, the EpCAM-positive tumor cell concentration in the ascites fluid decreased in patients treated with removab^®. At the same time, an increase in CD45-positive leukocytes was seen. Both results indicate a direct anti-tumor effect of the trifunctional antibody.

Removab^® showed a very good safety profile in this stratum. This is particularly important as malignant ascites occurs at a very late stage in patients with non-ovarian cancers. Drug-related adverse events due to cytokine release were mild to moderate and mostly fully reversible, with fever, nausea and vomiting being the most common. Pathologic increases of liver parameters and undesirable changes in white blood cell counts were also mild to moderate, transient and mostly without clinical relevance.

"These results continue to support the potential of removab. They demonstrate the significant benefit for ascites patients due to non-ovarian cancers even though they have a worse prognosis compared to ovarian cancer. This indicates that removab^® could also play an important role in the treatment of ascites for all underlying non-ovarian cancers," said Dr. Thomas Gottwald, President Fresenius Biotech.

The phase II/III pivotal trial with the trifunctional antibody removab^® included a total of 258 patients divided in two strata: ovarian cancer (129 patients) and non-ovarian cancers (129 patients). Based on a 2:1 randomization ratio, the removab^® arm in the non-ovarian stratum included 85 patients, of which 62 received all four doses of 10, 20, 50 und 150 µg each. The intraperitoneal infusions were administered over a six-hour period in intervals of three to four days.

Non-ovarian cancer patients account for about 80 % of all malignant ascites cases. The encouraging results of this study signifcantly increase the number of patients that is potentially eligible for the removab^® treatment.

Data on overall survival in connection with the study are expected in the second quarter of 2007 due to the longer follow-up period associated with this secondary endpoint. Market launch of removab^® is expected in 2008.

***

Puncture-free survival period
Period between the last infusion (control group: day of the puncture) and the first subsequent necessary puncture or death, which ever occurs first.

Trifunctional Antibodies
Trifunctional antibodies are developed by Fresenius Biotech in cooperation with TRION Pharma. Trifunctional antibodies are proteins that bring together cancer cells with two different cell types of the immune system: T-cells and accessory cells (e.g., natural killer cells, macrophages). This mode of action of the trifunctional antibody is the basis for an immune response against the tumor.

***

Fresenius Biotech is a company of the Fresenius health care group, focused on the development and marketing of biopharmaceuticals in the fields of oncology, immunology and regenerative medicine.

Additional information is available on the Internet at www.fresenius-biotech.de.

Fresenius ProServe closed the announced divestiture of its subsidiary Pharmaplan GmbH to NNE A/S on March 31, 2007. All necessary antitrust approvals were received by NNE prior to the completion of the acquisition.

NNE is a wholly-owned subsidiary of Novo Nordisk A/S, Copenhagen, a pharmaceutical company with approximately 23,200 employees worldwide and annual sales of € 5,194 million in 2006.

Pharmaplan provides consulting, engineering and qualification/validation services for the pharmaceutical industry worldwide. The sale of Pharmaplan is a further step by Fresenius ProServe to focus on its two core areas hospital operations (HELIOS Kliniken) and hospital engineering and services (VAMED).

Fresenius Kabi, a European leader in infusion therapy and clinical nutrition, has entered into an agreement with Kyorin Pharmaceutical Co. Ltd., Tokyo, Japan, to acquire its artificial colloid product business. Fresenius Kabi acquires the rights for the production, marketing and sale of these products. Kyorin's artificial colloids sales were € 5.2 million in the fiscal year ended March 31, 2006. The colloids are based on hydroxyethyl starch (HES) and are mainly used in surgical and emergency procedures to substitute blood loss. Kyorin is the only provider of HES products for blood volume replacement in Japan.

In addition, Fresenius Kabi is currently setting up a subsidiary in Tokyo for the marketing and distribution of the acquired products as well as its own product portfolio in Japan. The new subsidiary will allow Fresenius Kabi to enhance its presence in the world's second largest healthcare market.

"In Japan, we are focusing on the intensive care and acute care hospital segments. Kyorin's artificial colloids will perfectly complement Fresenius Kabi's product range. With these products, we will enter the Japanese blood-volume replacement market for the first time. We believe that the high medical benefits and the strong patient safety profile of HES products offer excellent growth opportunities in this attractive market segment", said Mats Henriksson, President of Fresenius Kabi's Asia-Pacific region.

***

About Kyorin

Kyorin is a pharmaceutical company with a long-standing tradition in healthcare. The company is focused on the marketing and sale of drugs for respiratory, otolaryngologic (ear, nose and throat medicine) and urologic diseases.

As of March 31, 2006 (end of the fiscal year), Kyorin Pharmaceutical Co. Ltd. achieved sales of 67.4 bn JPY (approximately € 440 million) and employed 1,502 people worldwide. Kyorin Pharmaceutical Co., Ltd. is a 100% subsidiary of Kyorin Co. Ltd. Kyorin Co. Ltd. is listed on the Tokyo Stock Exchange.

• Sales € 2.77 billion, + 16 % at actual rates, + 22 % in constant currency
• EBIT € 380 million, + 31 % at actual rates, + 37 % in constant currency
• Net income € 93 million, + 43 % at actual rates, + 48 % in constant currency

• All business segments in line with forecast
• Continued strong sales and earnings growth
• Fresenius ProServe to focus on hospital business – agreement reached to sell Pharmatec to Robert Bosch GmbH

Outlook for 2007 confirmed
Based on the Group's strong financial results in the first quarter, Fresenius fully confirms its positive outlook for 2007 issued at the end of February. Group sales are expected to grow by 8 to 10 % in constant currency. Net income is expected to increase by 20 to 25 % in constant currency. Further margin improvements in all business segments are expected to contribute to this growth.

 

Sales – Very good organic growth
Group sales increased by 16 % to € 2,767 million in the first quarter of 2007 (Q1 2006: € 2,388 million). Organic growth was 7 %. Acquisitions contributed 17 %, in particular Renal Care Group which was consolidated for the first time as from the second quarter of 2006. Divestitures reduced sales by 2 %. Currency translation effects had a negative impact of 6 %. This was mainly attributable to the average dollar depreciation of 9 % against the euro in the first quarter of 2007 compared to previous year's period.

In North America sales grew significantly due to the Renal Care Group consolidation and an excellent organic growth rate of 9 %. In Europe sales increased by 8 % in constant currency, with organic growth of 4 %. Strong growth rates were achieved in the emerging markets with organic growth of 12 % in Asia-Pacific, 10 % in Latin America and 25 % in Africa.

Excellent earnings growth
EBITDA increased by 34 % in constant currency and by 27 % at actual rates to € 479 million (Q1 2006: € 377 million). Group operating income (EBIT) increased by 37 % in constant currency and by 31 % at actual rates to € 380 million (Q1 2006: € 291 million). This growth was driven by the successful operating results in all business segments. The Group's EBIT margin improved to 13.7 % (Q1 2006: 12.2 %).

Group net interest was € -95 million (Q1 2006: € -84 million, including one-time expenses of € 25 million for the early refinancing of Group debt). This increase was primarily driven by debt financing of the Renal Care Group acquisition as from Q2 2006.

The tax rate further improved to 36.1 % from 36.7 % in Q1 2006.

Minority interest was € 89 million (Q1 2006: € 66 million), of which 93 % was attributable to the minority interest in Fresenius Medical Care.

Group net income grew strongly by 48 % in constant currency and by 43 % at actual rates to € 93 million (Q1 2006: € 65 million, including one-time expenses of € 11 million).

Earnings per ordinary share were € 0.60 and earnings per preference share were € 0.60 (Q1 2006 adjusted for the share split in February 2007: ordinary share € 0.43 and preference share € 0.43). This is an increase of 40 %.

 

Investments at high level
Fresenius Group spent € 140 million for property, plant and equipment and intangible assets (Q1 2006: € 100 million). Acquisition spending was € 155 million (Q1 2006: € 3,290 million).

 

Strong cash flow
Operating cash flow increased by 54 % to € 287 million (Q1 2006: € 186 million), mainly driven by the strong increase in earnings. Cash flow before acquisitions and dividends increased to € 155 million (Q1 2006: € 91 million). The free cash flow after acquisitions (€ 63 million) and dividends (€ 4 million) was € 88 million (Q1 2006:
€ -3,199 million).

 

Solid balance sheet structure
Total assets increased in constant currency and at actual rates by 1 % to € 15,159 million (December 31, 2006: € 15,024 million). Current assets increased by 1 % to € 4,165 million (December 31, 2006: € 4,106 million). Non-current assets were € 10,994 million (December 31, 2005: € 10,918 million).

Shareholders' equity including minority interest grew by 3 % to € 5,873 million (December 31, 2006: € 5,728 million). The equity ratio (including minority interest) was 38.7 % (December 31, 2006: 38.1 %).

The Group's debt was € 5,778 million (December 31, 2006: € 5,872 million). Given the excellent earnings growth and a strong cash flow the net debt/EBITDA ratio improved to 2.8 as of March 31, 2007 (December 31, 2006: 3.0).

 

Employees
As of March 31, 2007, the Group had 107,348 employees (December 31, 2006: 104,872), an increase of 2 %.

 

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 March 2007, encouraging results in the non-ovarian cancer patient stratum of a phase II/III pivotal study on malignant ascites were published, including treatment data of 129 patients. The results showed a clear advantage of the therapy with the trifunctional antibody removab^® over a therapy with puncture alone. Data on overall survival of all 258 patients for both strata of the study are expected in the second quarter of 2007.

The Phase II studies with the antibody rexomun^® to treat breast cancer and with the antibody removab^® to treat gastric cancer are ongoing. These studies started in March 2006 and June 2006 respectively. A phase II study with removab^® is due to start in Europe in the first half of 2007 for the treatment of patients with ovarian cancer.

Fresenius Biotech's operating income (EBIT) was € -11 million in Q1 2007. For 2007, Fresenius Biotech expects an EBIT of approximately € -50 million (2006: € -45 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, 2007, Fresenius Medical Care was serving 169,216 patients in 2,194 dialysis clinics.

• Excellent sales increase and high organic growth in all regions
• Continued strong earnings growth
• Outlook for 2007 fully confirmed

Fresenius Medical Care achieved strong sales growth of 33 % to US$ 2,321 million (Q1 2006: US$ 1,747 million), mainly driven by the excellent organic growth of 9 % and by the consolidation of Renal Care Group. Sales in dialysis care increased by 38 % to US$ 1,760 million (Q1 2006: US$ 1,273 million). In dialysis products Fresenius Medical Care achieved sales of US$ 560 million (Q1 2006: US$ 474 million), an increase of 18 %.

In North America Fresenius Medical Care's sales increased by 37 % to US$ 1,637 million (Q1 2006: US$ 1,194 million). Sales outside North America ("International") grew by 24 % (17 % in constant currency) to US$ 684 million (Q1 2006: US$ 553 million). This was primarily driven by the positive operating performance in Europe and the Asia-Pacific region.

Fresenius Medical Care increased EBIT by 50 % to US$ 365 million (Q1 2006: US$ 244 million), the EBIT margin was 15.7 % (Q1 2006: 14.0 %). Net income increased by 38 % to US$ 160 million (Q1 2006: US$ 116 million, including one-time expenses of US$ 9 million).

For the full year 2007, Fresenius Medical Care confirms its outlook and expects sales of about US$ 9.4 billion. The net income is expected to be between US$ 675 million and US$ 695 million.

For further information, please see Fresenius Medical Care's Investor News 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.

• Very good organic sales growth
• Continued strong earnings development
• Outlook for 2007 fully confirmed

In the first quarter of 2007, Fresenius Kabi's sales increased by 4 % to € 483 million (Q1 2006: € 466 million). Currency translation effects had an impact of -3 %. This was mainly due to the depreciation of the currencies in China, Brazil, Mexico and Canada against the euro. Organic growth was 6 %, acquisitions contributed 1 % to growth.

Organic sales in Europe (excluding Germany) increased by 5 %. In Germany organic sales decreased by 1 %. Outside Europe, Fresenius Kabi achieved organic sales growth of 22 % in the Asia-Pacific region. In Latin America organic sales growth was 7 % and in other regions 8 %.

Fresenius Kabi achieved a very good EBIT growth, with an increase of 13 % to € 77 million (Q1 2006: € 68 million). The EBIT margin was 15.9 % (Q1 2006: 14.6 %). Net income rose by 62 % to € 42 million (Q1 2006: € 26 million, including one-time expenses for early debt refinancing of € 8 million).

Fresenius Kabi confirms its outlook for the full year 2007. The company expects a further successful sales and earnings performance. Organic sales growth is projected to be 6 to 8 %. Continued strong sales growth is anticipated from the regions outside Europe. Based on the positive sales projection and further manufacturing and logistics improvements Fresenius Kabi expects an EBIT margin of 16.0 to 16.5 % in 2007.

 

Fresenius ProServe

Fresenius ProServe is a leading German hospital operator with 55 facilities. Moreover, the company offers engineering and services for hospitals and other health care facilities.

• Strong operating results achieved
• Divestiture of Pharmaplan finalized, agreement signed to sell Pharmatec to Robert Bosch GmbH
• Outlook for 2007 fully confirmed

Fresenius ProServe's sales grew by 9 % to € 521 million in Q1 2007 (Q1 2006: € 476 million). Organic growth was 3 %. EBIT increased by 20 % to € 36 million (Q1 2006: € 30 million).

Sales in hospital operations (HELIOS Kliniken Group) increased by 15 % to € 439 million (Q1 2006: € 383 million). The sales growth is mainly attributable to the acquisition of HUMAINE Kliniken, which was consolidated as of July 1, 2006. HELIOS also achieved strong organic growth of 3 %. EBIT increased by 19 % to € 32 million, the EBIT margin was 7.3 % (Q1 2006: € 27 million and 7.0 %).

In 2007, HELIOS continued its growth strategy in the German hospital market. The company acquired two hospitals in North Rhine-Westphalia with approximately 330 beds and revenues of € 32 million in 2006. A further hospital was acquired on Lake Constance with 170 beds and revenues of € 22 million in 2005 and was consolidated as from January 1, 2007. In addition, the option to acquire the outstanding equity stake (40 %) in HUMAINE Kliniken GmbH was exercised.

Sales in the engineering and services business was € 82 million (Q1 2006: € 93 million). The decrease was due to the sale of Pharmaplan, which was deconsolidated as of January 1, 2007. Organic growth was 2 %. EBIT of € 5 million was at previous year's level. Order intake continued to develop very positively and increased by 18 % to € 78 million (Q1 2006: € 66 million). Order backlog was € 431 million (December 31, 2006: € 428 million).

On May 1, 2007, Fresenius ProServe agreed to sell its subsidiary Pharmatec to Robert Bosch GmbH. With the divestiture of Pharmaplan and Pharmatec, Fresenius ProServe completes its strategy to focus on its business with hospitals and other healthcare facilities. Pharmatec manufactures high quality pure steam, pure water and sterilization equipment for the pharmaceutical industry. In 2006, the company had sales of about € 30 million. The transaction requires antitrust approval. Fresenius ProServe anticipates the closing of the transaction mid-year 2007.

Fresenius ProServe confirms its outlook for the full year 2007 and expects organic sales growth of 2 to 3 %. EBIT is expected to increase to € 160 to 170 million.

 

Conference Call
As part of the publication of the first quarter 2007 results, a conference call will be held on May 2, 2007 at 2.00 p.m. CEDT (8.00 a.m. EDT). We invite all investors to follow the conference call over the Internet at www.fresenius-ag.com/Investor Relations/Presentations. Following the conference, a recording of the call will be available.

 

Quarterly financial report
The quarterly financial report for the first quarter 2007 will be available on May 14, 2007 on the Internet at www.fresenius-ag.com/Investor Relations/Financial Reports.

Fresenius AG today announced that it will reorganize its hospital business effective January 1, 2008. The current business segment Fresenius ProServe will be replaced by the two new business segments Fresenius HELIOS and Fresenius VAMED which so far have formed Fresenius ProServe. Following the reorganization, the Fresenius Group will have four business segments – Fresenius Medical Care, Fresenius Kabi, Fresenius HELIOS and Fresenius VAMED.

This step underlines the growing importance of the hospital operations business (HELIOS) and the engineering and services business for hospitals (VAMED). In future, these business segments will be run independently and be directly represented in Fresenius AG's Management Board.

In 2006, HELIOS Kliniken achieved revenues of € 1.67 billion. Operating income was € 133 million. HELIOS owns 58 clinics with 15,800 beds. The company will continue to operate under its original name HELIOS Kliniken GmbH. VAMED had revenues of € 392 million in 2006. Operating income was € 24 million. In addition, VAMED handled approximately € 350 million in third-party revenues through management contracts. VAMED has a strong international presence and managed healthcare projects in approximately 80 countries. The company will also continue to operate under its original name VAMED AG.

The following shows the new group structure:

As part of the new organizational structure, Dr. Francesco De Meo (43) and Dr. Ernst Wastler (48) will join the Management Board of Fresenius AG effective January 1, 2008. Francesco De Meo will be responsible for the business segment Fresenius HELIOS. Ernst Wastler will be in charge of the business segment Fresenius VAMED.

Since July 1, 2000, Dr. Francesco De Meo has served as a managing director of HELIOS Kliniken GmbH with responsibility for personnel and legal affairs. He will succeed Ralf Michels as CEO of HELIOS Kliniken GmbH effective January 1, 2008. Ralf Michels will then become a member of the Supervisory Board of HELIOS Kliniken GmbH.

Ernst Wastler has served as CEO of VAMED AG since July 1, 2001. He joined the company in 1984 and has contributed significantly to the international expansion of VAMED.

As a result of the reorganization, Andreas Gaddum, member of the Management Board of Fresenius AG and responsible for the business segment Fresenius ProServe, will leave the company by mutal agreement effective December 31, 2007. Andreas Gaddum has played a key role in focussing Fresenius ProServe on the hospital business.

In addition, Fresenius announced the appointment of Dr. Jürgen Götz (43) as member of the Management Board of Fresenius AG effective July 1, 2007. Jürgen Götz will be responsible for legal, compliance and personnel affairs. He also will assume the position as Labor Relations Director from Stephan Sturm who will continue to serve as CFO of Fresenius AG.

"The new organizational structure sets the stage for the focused expansion of Fresenius HELIOS and Fresenius VAMED within our group. In addition, we reduce the number of management layers and increase the transparency of the hospital business for our investors. I would like to thank Andreas Gaddum for his significant contributions and his achievements in Fresenius ProServe's strategic realignment. At the same time, I am looking forward to working with Jürgen Götz, Francesco De Meo and Ernst Wastler in the Fresenius Management Board. They have done an outstanding job in their current assignments and are superbly qualified to be part of our senior leadership team as we take the company to the next level", commented Dr. Ulf M. Schneider, Chairman of the Management Board of Fresenius AG.

The Company expects no restructuring costs to result from these organizational changes. Fresenius Group will adjust its financial reporting to the new structure in the first quarter of 2008.

Fresenius today announced that the conversion of Fresenius AG into a European Company (Societas Europaea) took effect on July 13, 2007 with the entry of Fresenius SE in the commercial register of the Bad Homburg municipal court. The Company's Supervisory Board will continue to have twelve members, divided equally between employee and shareholder representatives. For the first time, employees from other European countries outside of Germany will have Board representation with one member representing Austrian employees and another representing Italian employees. The six shareholder representatives for the new Supervisory Board were already appointed as part of the December 4, 2006 Ex­traordinary General Meeting that had approved the statutes of Fresenius SE. During that Meeting, a vast majority of 99.99 percent of the ordinary share capital represented had approved the conversion.

An SE is a public limited-liability company under European law. The SE particularly facilitates an open and international corporate culture while reflecting Fresenius' global orientation. With the exception of the composition of the Supervisory Board, the conversion will have no effect on the Company's management structure.

Fresenius today announced that further secondary endpoint data from a phase II/III study with removab (catumaxomab) in patients with malignant ascites confirm clear benefits for patients treated with the antibody. Trial data show that removab significantly increases time to tumor progression and has a positive influence on overall survival time. Moreover, a prolonged interval between punctures was seen in the removab group compared to the control group and this effect was also observed beyond the end of study.

The results of the randomized study include treatment data from 258 patients with malignant ascites caused by various cancers. Most patients had late-stage disease with a median life expectancy of two to three months. The primary endpoint of the study had already demonstrated that patients receiving removab had a four-fold increased puncture-free survival over a therapy with puncture alone (median 46 vs. 11 days, p<0.0001). The median time to the first therapeutic puncture, a key secondary endpoint, improved to 77 days in the removab group versus 13 days in the control group (p<0.0001). In contrast to the primary endpoint, patients who died before the next puncture were not included in this metric.

There was a clear difference between the two study arms with regard to the time to progression (TTP) of the underlying cancer. The median TTP (secondary endpoint) for the 170 patients treated with removab was 111 days, compared to 35 days for the 88 patients of the control group (p<0.0001). In the subgroup of patients with ascites from ovarian cancer, removab-treated TTP was also 111 days, compared to patients in the control group with 35 days (p=0.0002). In addition, patients with other primary cancers receiving removab also showed significant improvement in TTP, with a median of 110 days versus 34 days with puncture-therapy alone (p<0.0001).

A positive trend was also observed for overall survival. Median overall survival in the 170 patients in the removab group was 72 days, compared to 68 days of the 88 patients in the control group (p=0.0846). In a prospectively planned evaluation of 131 patients treated per protocol, a median survival advantage of 18 days was shown (removab: 86 days vs. control group: 68 days, p=0.0085). removab treatment also showed a positive influence on the overall survival of ovarian cancer patients with a median survival of 110 days over 81 days for patients receiving puncture-therapy alone (p=0.1543). In patients with gastric cancer (the largest subgroup among patients with cancers other than ovarian cancer) the median survival advantage was 27 days (71 vs. 44 days, p=0.0313).

After the primary end point of the study (puncture-free survival) was reached, the data showed that puncture intervals in patients treated with removab continued to be longer than those of the patients in the control group. The intervals between the first and second puncture were 26 and 24 days in the ovarian and non-ovarian cancer group treated with removab vs. 13 and 16 days in the control group.

Secondary study endpoints and other data collected from patients after reaching the primary endpoint confirm the benefit of removab treatment for this patient group at a late stage of their disease. Collectively, the study results further indicate the efficacy of removab in the treatment of various primary cancers. "The results of the phase II/III study show clear benefits for patients being treated with removab", says Dr. Bernhard Ehmer, President Fresenius Biotech. "The results also suggest a direct antitumor effect of the trifunctional antibody. Primary and secondary endpoints as well as post study data are consistent, and demonstrate a pronounced positive trend. They all point in the right direction and this gives us confidence in our ongoing development program for ovarian and gastric cancer."

Fresenius Biotech confirms that the submission for marketing authorization with EMEA is expected in late 2007.


About the phase II/III study with removab
A total of 258 patients with end-stage cancer and recurrent symptomatic malignant ascites, who either no longer responded to or could no longer be treated with chemotherapy, were enrolled in this study. 129 of the patients had ovarian cancer and 129 participants had other forms of epithelial tumors (gastric 51 %, breast 10 %, pancreatic 7 %, colorectal 6 %, others 26 %). Participants in the study were randomized in a 2:1 ratio, with 170 patients randomized to treatment with removab and 88 patients to puncture therapy alone. After reaching the study endpoint 51% of patients in the control arm were also given removab (crossover). removab was administered intraperitoneally at ascending doses through infusions, following paracentesis on days 0, 3, 7, and 10. 131 patients received all four infusions of 10, 20, 50, and 150 µg.

Mode of action of trifunctional antibody removab (catumaxomab)
The therapeutic objective of trifunctional antibodies is to generate a stronger immune reaction against tumor cells. removab has two different antigen binding sites: While one arm of the antibody recognizes and binds to T-cells, the other arm binds EpCAM (epithelial cell adhesion molecule) that is overexpressed in many types of epithelial cancers. Immune effector cells with Fc receptors (macrophages, monocytes, dendritic cells and natural killer cells) can also bind the Fc region of intact trifunctional antibodies. This simultaneous binding subsequently results in the costimulation and activation of T-cells and accessory cells, enabling the generation of a strong immune response against tumor cells. Preclinical data also suggest a potential long-lasting effect to prevent cancer recurrence. Apart from removab two other trifunctional antibodies targeting other cancer antigens are currently undergoing clinical development.

Trifunctional Antibodies
Trifunctional antibodies are proteins that activate different cell types of the immune system simultaneously and target tumor cells specifically. Trifunctional antibodies therefore are very effective in destroying cancer cells and show a therapeutic effect even at very low doses. They are being developed by TRION Pharma GmbH.


About Fresenius Biotech
Fresenius Biotech is a company within the Fresenius health care group and is focused on the development and marketing of biopharmaceuticals in the fields of oncology, immunology and regenerative medicine. For further information please visit www.fresenius-biotech.de. 

About Fresenius
Fresenius is a health care group with international operations, providing products and services for dialysis, hospital and outpatient medical care. In 2006, group sales were about € 10.8 billion. On December 31, 2006 the Fresenius Group had 104,872 employees worldwide. For further information please visit www.fresenius.de. 

About TRION Pharma
TRION Pharma is a biopharmaceutical company that develops and produces trifunctional antibodies based on a globally patented technology platform together with Fresenius Biotech in Munich. For further information please visit www.trionpharma.de. 


Glossary
Puncture-free survival period: Period between the last infusion (control group: day of the puncture) and the first subsequent necessary puncture or death, which ever occurs first.

TTP (Time to Progression): Time to progression is the length of time between treatment and further growth of the primary tumor or metastases.

• Sales € 5.59 billion, + 10 % at actual rates, + 15 % in constant currency
• EBIT € 780 million, + 15 % at actual rates, + 20 % in constant currency
• Net income € 195 million, + 39 % at actual rates, + 44 % in constant currency

• Excellent sales and earnings growth and further margin improvements in all business segments

Earnings outlook for 2007 raised
Based on the Group's strong financial results in the first half, Fresenius raises its earnings outlook for 2007. Net income is now expected to increase by ~25 % in constant currency. Previously, the Company expected net income to increase by 20 to 25 %. Group sales are expected to grow by 8 to 10 % in constant currency.

 

Sales – excellent organic growth
Group sales increased by 10 % to € 5,592 million (H1 2006: € 5,078 million). Organic sales growth was 7 %. Acquisitions contributed 10 %, in particular Renal Care Group, which was consolidated as from the second quarter of 2006. Divestitures reduced sales by 2 %. Currency translation effects had a negative impact of 5 %. This was mainly attributable to the average dollar rate depreciating 8 % against the euro in the first half of 2007 compared to previous year's period.

In North America sales grew significantly due to the Renal Care Group consolidation and an excellent organic growth rate of 8 %. In Europe sales increased by 8 % in constant currency, with organic growth of 4 %. Strong growth rates were achieved in the emerging markets with organic growth of 9 % in Asia-Pacific, 13 % in Latin America and 24 % in Africa.

Strong earnings growth
EBITDA increased by 18 % in constant currency and by 13 % at actual rates to € 977 million (H1 2006: € 867 million). Group operating income (EBIT) increased by 20 % in constant currency and by 15 % at actual rates to € 780 million (H1 2006: € 681 million; adjusted € 652 million including a gain from the divestiture of US dialysis clinics and one-time expenses related to the Renal Care Group acquisition). The strong earnings growth was driven by the successful operating results in all business segments. The Group's EBIT margin improved to 13.9 % (H1 2006: 13.4 %, adjusted margin: 12.8 %).

Group net interest was € -185 million (H1 2006: € -194 million, including one-time expenses of € 30 million for the early refinancing of Group debt).

The tax rate improved to 36.0 % (H1 2006: 42.3%; 37.4 % adjusted for the tax expense related to the divestiture of US dialysis clinics).

Minority interest increased to € 186 million (H1 2006: € 141 million), of which 93 % was attributable to the minority interest in Fresenius Medical Care.

Group net income also grew strongly by 44 % in constant currency and by 39 % at actual rates to € 195 million (H1 2006: € 140 million, including one-time expenses of € 16 million).

Earnings per ordinary share were € 1.26 and earnings per preference share were € 1.27 (H1 2006, adjusted for the February 2007 share split: ordinary share € 0.91, preference share € 0.92). This represents an increase of 38 % for both share classes.

 

High level of investment
Fresenius Group spent € 304 million for property, plant and equipment and intangible assets (H1 2006: € 225 million). Acquisition spending was € 221 million (H1 2006: € 3,408 million).

 

Strong cash flow
Operating cash flow increased by 48 % to € 553 million (H1 2006: € 373 million), mainly driven by the strong earnings increase. Cash flow before acquisitions and dividends increased by 60 % to € 256 million (H1 2006: € 160 million). Free cash flow after acquisitions (€ 162 million) and dividends (€ 188 million) was € -94 million (H1 2006: € -2,997 million).

 

Solid balance sheet structure
Total assets increased by 3 % in constant currency and by 2 % at actual rates to € 15,343 million (December 31, 2006: € 15,024 million). Current assets increased by 4 % to € 4,275 million (December 31, 2006: € 4,106 million). Non-current assets were € 11,068 million (December 31, 2006: € 10,918 million).

Shareholders' equity including minority interest grew by 3 % to € 5,895 million (December 31, 2006: € 5,728 million). The equity ratio (including minority interest) was 38.4 % (December 31, 2006: 38.1 %).

The Group's debt was € 5,909 million (December 31, 2006: € 5,872 million). The net debt/EBITDA ratio stood at 2.9 on June 30, 2007 (December 31, 2006: 3.0).

 

Employees
As of June 30, 2007, the Group had 108,860 employees (December 31, 2006: 104,872), an increase of 4 %.

 

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 July 2007, Fresenius Biotech announced further secondary endpoint data from a phase II/III study with removab^® (catumaxomab) in patients with malignant ascites. The data confirmed clear benefits for patients treated with the antibody. The trial data showed that removab significantly increases time to tumor progression and has a positive influence on overall survival time. Moreover, a prolonged time interval between therapeutic punctures for the treatment of malignant ascites was seen in the removab group compared to the control group. This effect was also observed beyond the end of the study. In December 2006 and March 2007, Fresenius Biotech already announced encouraging results on the primary study endpoint – puncture free survival.

The submission for marketing authorization with the European Medicines Agency (EMEA) for removab in malignant ascites is expected in late 2007.

The Phase II studies with the antibody rexomun^® to treat breast cancer and with the antibody removab to treat gastric cancer are ongoing. These studies started in March 2006 and June 2006, respectively. A phase II study with removab for the treatment of patients with ovarian cancer was started in Europe.

In the first half of 2007, Fresenius Biotech's operating income (EBIT) was € -20 million. For 2007, Fresenius Biotech expects an EBIT of approximately € -50 million (2006: € -45 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, 2007, Fresenius Medical Care was serving 171,687 patients in 2,209 dialysis clinics.

• Continued strong organic sales development
• Excellent earnings growth
• 2007 outlook raised

Fresenius Medical Care achieved significant sales growth of 21 % to US$ 4,725 million (H1 2006: US$ 3,912 million). This was mainly driven by the strong organic growth of 8 % and by the consolidation of Renal Care Group (RCG) as from the second quarter of 2006. Sales in dialysis care increased by 22 % to US$ 3,556 million (H1 2006: US$ 2,924 million). In dialysis products, Fresenius Medical Care achieved sales of US$ 1,169 million (H1 2006: US$ 988 million), an increase of 18 %.

In North America Fresenius Medical Care's sales increased by 20 % to US$ 3,297 million (H1 2006: US$ 2,754). Sales outside North America ("International") grew by 23 % (in constant currency: 16 %) to US$ 1,428 million (H1 2006: US$ 1,158 million). This was driven by the positive operating performance in Europe, the Asia-Pacific region and in Latin America.

Fresenius Medical Care increased EBIT by 23 % to US$ 756 million (H1 2006: US$ 616 million, adjusted US$ 581 million including a gain from the divestiture of US dialysis clinics and one-time expenses related to the RCG acquisition). The EBIT margin was 16.0 % (H1 2006: 15.7 %, adjusted 14.8 %). Net income increased by 38 % to US$ 339 million (H1 2006: US$ 246 million, including one-time expenses of US$ 16 million).

Based on the strong operational performance in the first half of 2007, Fresenius Medical Care raises its outlook for the full year 2007 and now expects to achieve revenue of more than US$ 9.5 billion. This represents an increase of at least 12 %. Previously, Fresenius Medical Care expected revenue of approximately US$ 9.4 billion. Net income is now projected to be in the range of US$ 685 million to US$ 705 million in 2007. This represents an increase of between 19 % and 23 % on an adjusted basis as compared to 2006 after one-time effects. On a reported basis, this translates into an increase in net income of between 28 % and 31 %. Previously, Fresenius Medical Care expected net income in the range of US$ 675 million to US$ 695 million.

For further information, please see Fresenius Medical Care's Investor News 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 organic sales growth
• Continued strong EBIT margin increase in second quarter and first half of 2007
• 2007 outlook fully confirmed

In the first half of 2007, Fresenius Kabi increased sales by 5 % to € 986 million (H1 2006: € 937 million). Currency translation effects had an impact of -2 %. This was mainly due to the depreciation of currencies in South Africa, China and Canada. Organic growth was 7 %. In the second quarter of 2007, Fresenius Kabi achieved strong organic growth of 8 %.

In Europe (excluding Germany) organic sales growth was 5 % while sales in Germany were at previous year's level. In the second quarter of 2007, organic sales growth was 1 % in Germany. Outside Europe, Fresenius Kabi achieved organic sales growth of 22 % in the Asia-Pacific region in the first half of 2007. Organic sales growth in Latin America was 10 % and in other regions 11 %.

Fresenius Kabi continued its excellent earnings growth. In the first half of 2007, EBIT increased by 14 % to € 159 million (H1 2006: € 139 million). The EBIT margin improved to 16.1 % (H1 2006: 14.8 %). In the second quarter of 2007, Fresenius Kabi achieved an EBIT margin of 16.3 %. Net income increased by 45 % to € 87 million (H1 2006: € 60 million, including one-time expenses for early debt refinancing of € 11 million).

Fresenius Kabi fully confirms its outlook for the full year 2007. Organic sales growth is projected to be 6 to 8 %. Continued strong sales growth is anticipated from the regions outside Europe. Based on the positive sales projection and further manufacturing and logistics improvements Fresenius Kabi expects an EBIT margin of 16.0 to 16.5 % in 2007.

 

Fresenius ProServe

Fresenius ProServe is a leading German hospital operator with 58 facilities. Moreover, the company offers engineering and services for hospitals and other health care facilities.

• Continued strong sales and earnings growth
• Sale of Pharmatec to Robert Bosch GmbH completed June 30, 2007
• 2007 earnings outlook raised

Fresenius ProServe's sales grew by 10 % to € 1,069 million (H1 2006: € 974 million). Organic sales growth was 2 %. EBIT increased by 21 % to € 75 million (H1 2006: € 62 million).

Sales in hospital operations (HELIOS Kliniken Group) grew by 16 % to € 890 million (H1 2006: € 767 million). The growth is mainly attributable to the acquisition of HUMAINE Kliniken, which was consolidated as from July 1, 2006. HELIOS achieved strong organic growth of 3 %. EBIT increased by 21 % to € 68 million, EBIT margin was 7.6 % (H1 2006: € 56 million and 7.3 %).

In the second quarter of 2007, HELIOS Kliniken inaugurated its newly constructed hospital Berlin-Buch. In parallel, HELIOS continued its growth strategy in the German hospital market. In July 2007, HELIOS agreed to acquire the Mariahilf hospital in Hamburg. The hospital has 255 beds and achieved revenues of € 26 million in 2006.

Sales in the engineering and services business was € 179 million (H1 2006: € 207 million). The decrease was mainly due to the sale of Pharmaplan, which was deconsolidated as of January 1, 2007. Organic growth was -2 %. EBIT was € 9 million (H1 2006: € 9 million).

Furthermore, Fresenius ProServe agreed to sell its subsidiary Pharmatec to Robert Bosch GmbH on May 1, 2007. In 2006, the company had sales of about € 30 million. The transaction was completed June 30, 2007.

Order intake in the engineering and services business was € 106 million (H1 2006: € 185 million). The decrease was due to the postponement of orders to the second half of 2007 and to a very strong order intake in the second quarter of 2006. Order backlog was € 379 million (December 31, 2006: € 428 million).

Based on the excellent financial results in the first half, Fresenius ProServe raises its 2007 EBIT outlook from previously € 160 to 170 million to now € ~170 million. The outlook for organic sales growth is confirmed at 2 to 3 %.

 

Conference Call
As part of the publication of the results from the first half of 2007, a conference call will be held on August 2, 2007 at 2.00 p.m. CEDT (8.00 a.m. EDT). We invite all investors to follow the conference call over the Internet at www.fresenius.com, see Investor Relations/Presentations. Following the conference, a recording of the call will be available.

 

Quarterly financial report
The report for the second quarter and the first half of 2007 will be available from August 14, 2007 at www.fresenius.com, see Investor Relations/Financial reports.

• Sales € 8.4 billion, + 7 % at actual rates, + 11 % in constant currency
• EBIT € 1.2 billion, + 12 % at actual rates, + 17 % in constant currency
• Net income € 298 million, + 28 % at actual rates, + 32 % in constant currency

Outlook raised
Based on the Group's excellent financial results in the third quarter, Fresenius now expects net income to increase by more than 25 % in constant currency. Group sales are expected to grow by 9 to 10 % in constant currency. Previously, the Company expected net income to increase by ~25 % in constant currency and sales to grow by 8 to 10 % in constant currency.

 

Substantial growth: Group sales up 11 % in constant currency
In the first three quarters Group sales increased by 11 % in constant currency and by 7 % at actual rates to € 8,390 million (Q1-3 2006: € 7,843 million). Organic sales growth was 6 %. Acquisitions contributed a further 6 %. Divestitures reduced sales growth by 1 %. Currency translation had a negative impact of 4 %.

In North America sales grew by 14 % in constant currency due to the Renal Care Group consolidation and an organic growth rate of 6 %. In Europe sales grew by 7 % in constant currency with organic sales growth contributing 4 %. Strong growth rates were achieved in the emerging markets with organic growth of 9 % in Asia-Pacific, 11 % in Latin America and 18 % in Africa.

Excellent earnings growth: net income up 32 % in constant currency
Group EBITDA increased by 15 % in constant currency and by 10 % at actual rates to € 1,485 million (Q1-3 2006: € 1,350 million). Group operating income (EBIT) grew by 17 % in constant currency and by 12 % at actual rates to € 1,184 million (Q1-3 2006: € 1,060 million; adjusted for the gain from the divestiture of US dialysis clinics and one-time expenses related to the Renal Care Group acquisition: € 1,036 million). The Group's EBIT margin improved to 14.1 % (Q1-3 2006: 13.5 %).

Group net interest was € -279 million (Q1-3 2006: € -295 million, including one-time expenses of € 30 million for the early refinancing of Group debt).

The tax rate was 36.0 % (Q1-3 2006: 40.9 %; adjusted for the tax expense related to the divestiture of US dialysis clinics: 37.8 %).

Minority interest increased to € 281 million (Q1-3 2006: € 219 million), of which 93 % was attributable to the minority interest in Fresenius Medical Care.

Group net income grew strongly by 32 % in constant currency and by 28 % at actual rates to € 298 million (Q1-3 2006: € 233 million, including one-time expenses of € 16 million).

Earnings per ordinary share were € 1.92 and earnings per preference share were € 1.93 (Q1-3 2006 adjusted for the February 2007 share split: ordinary share € 1.52, preference share € 1.53). This represents an increase of 26 % for both share classes.

 

Investments at a high level of € 727 million
Fresenius Group spent € 485 million for property, plant and equipment and intangible assets (Q1-3 2006: € 374 million). Acquisitions were € 242 million (Q1-3 2006: € 3,537 million).

 

Strong cash flow
Operating cash flow increased by 55 % to € 912 million (Q1-3 2006: € 588 million), driven by the strong earnings increase. In 2006, tax payments associated with the divestiture of US dialysis clinics had a negative effect. The cash flow margin was 10.9 % (Q1-3 2006: 7.5 %). Cash flow before acquisitions and dividends nearly doubled to € 447 million (Q1-3 2006: € 228 million). Free cash flow after acquisitions (€ 182 million) and dividends (€ 191 million) was € 74 million (Q1-3 2006: € -2,986 million).

 

Balance sheet structure: Net debt/EBITDA ratio improved
Fresenius Group's total assets increased by 4 % in constant currency and just slightly at actual rates to € 15,054 million (December 31, 2006: € 15,024 million). Current assets increased by 4 % to € 4,266 million (December 31, 2006: € 4,106 million). Non-current assets were € 10,788 million (December 31, 2006: € 10,918 million).

Shareholders' equity including minority interest grew by 4 % to € 5,946 million (December 31, 2006: € 5,728 million). The equity ratio (including minority interest) was 39.5 % (December 31, 2006: 38.1 %).

Group debt decreased by 5 % at actual rates and 1 % in constant currency to € 5,596 million (December 31, 2006: € 5,872 million). The net debt/EBITDA ratio improved to 2.7 as of September 30, 2007, well below the level of 3.0 as of December 31, 2006.

 

Number of employees increased
As of September 30, 2007, Fresenius increased the number of its employees by 5 % to 110,379 (December 31, 2006: 104,872).

 

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.

After successful completion of the phase II/III study with removab^® in patients with malignant ascites, submission for marketing authorization with the European Medicines Agency (EMEA) is expected for late 2007.

For the future marketing of removab in the USA and Japan, Fresenius Biotech is in discussions with potential partners.

Fresenius Biotech and Nabi Biopharmaceuticals agreed to terminate the agreement for the clinical development and marketing of ATG-Fresenius S in North America. Fresenius Biotech will assume responsibility for the clinical development and registration of ATG-Fresenius S in the US and continue with the ongoing phase III study.

In the first three quarters of 2007, Fresenius Biotech's operating income (EBIT) was € -33 million. For the full year 2007, Fresenius Biotech continues to expect EBIT of approximately € -50 million (2006: € -45 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 September 30, 2007, Fresenius Medical Care was serving 172,227 patients in 2,221 dialysis clinics.

• Strong organic sales growth of 7 %
• EBIT margin improved
• Earnings outlook now confirmed at upper end

Fresenius Medical Care achieved strong sales growth of 16 % to US$ 7,151 million (Q1-3 2006: US$ 6,147 million). This was mainly driven by the strong organic growth of 7 % and by the consolidation of Renal Care Group (RCG). Sales in dialysis care increased by 16 % to US$ 5,357 million (Q1-3 2006: US$ 4,628 million). In dialysis products, sales grew by 18 % to US$ 1,794 million (Q1-3 2006: US$ 1,519 million).

In North America, sales growth was 14 % to US$ 4,957 million (Q1-3 2006: US$ 4,367 million). Sales outside North America ("International" segment) grew by 23 % (in constant currency: 15 %) to US$ 2,194 million (Q1-3 2006: US$ 1,780 million). This was driven by positive operating performance in Europe, the Asia-Pacific region and in Latin America.

EBIT rose by 19 % to US$ 1,152 million (Q1-3 2006: US$ 964 million; adjusted for the gain from the divestiture of US dialysis clinics and one-time expenses related to the RCG acquisition: US$ 936 million). The EBIT margin was 16.1 % (Q1-3 2006: 15.7 %; adjusted 15.2 %). Net income increased by 35 % to US$ 520 million (Q1-3 2006: US$ 385 million, including one-time expenses of US$ 20 million).

Fresenius Medical Care confirms its outlook for the full year 2007 and expects to achieve revenue of more than US$ 9.5 billion. This represents an increase of at least 12 %. Net income was projected to be in the range of US$ 685 million to US$ 705 million in 2007. Based on the strong performance in the third quarter, Fresenius Medical Care now expects the net income to be at the upper end of this guidance.

For further information, please see Fresenius Medical Care's Investor News 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.

• Strong organic sales growth of 7 %
• EBIT margin improves by 100 basis points to 16.2 %
• 2007 outlook fully confirmed

Fresenius Kabi increased sales by 6 % to € 1,494 million (Q1-3 2006: € 1,404 million). Currency translation effects had a negative impact of 2 %. This was mainly due to the depreciation of currencies in South Africa, China and Canada. Organic growth was 7 %. In the third quarter of 2007, Fresenius Kabi achieved an excellent organic growth of 8 %.

In Europe (excluding Germany) organic sales growth was 5 %. In Germany organic sales growth was 1 %. In the Asia-Pacific region Fresenius Kabi achieved significant organic sales growth of 22 %. Organic sales growth in Latin America was 10 % and in other regions 10 %.

Fresenius Kabi continued its excellent earnings growth. EBIT grew by 14 % to € 242 million (Q1-3 2006: € 213 million). The EBIT margin improved to 16.2 % (Q1-3 2006: 15.2 %). Fresenius Kabi reported strong growth in net income of 31 % to € 132 million (Q1-3 2006: € 101 million, including one-time expenses for early debt refinancing of € 11 million).

Fresenius Kabi fully confirms its outlook for the full year 2007. Organic sales growth is projected to be well into the 6 to 8 % range. Continued very strong sales growth is anticipated in particular from the regions outside Europe. Based on the positive sales projection and further manufacturing and logistics improvements Fresenius Kabi expects an EBIT margin of 16.0 to 16.5 % in 2007.

 

Fresenius ProServe
Fresenius ProServe is a leading German hospital operator with 58 facilities. Moreover, the company offers engineering and services for hospitals and other health care facilities.

• HELIOS achieves further operating margin improvement
• VAMED wins contract worth more than € 100 million
• Sales guidance for 2007 fully confirmed, EBIT guidance increased

Fresenius ProServe achieved sales growth of 5 % to € 1,601 million (Q1-3 2006: € 1,526 million). Organic growth was 1 %, held back by delayed project revenues at VAMED. Acquisitions contributed 9 % whereas divestitures, primarily Pharmaplan and Pharmatec, had a negative impact of 5 %.

EBIT increased by 16 % to € 122 million (Q1-3 2006: € 105 million).

Sales in hospital operations (HELIOS Kliniken Group) increased by 12 % to € 1,348 million (Q1-3 2006: € 1,204 million). HELIOS achieved strong organic growth of 3 %. EBIT increased by 18 % to € 111 million (Q1-3 2006: € 94 million). The EBIT margin improved by 40 basis points to 8.2 %. In the third quarter of 2007, HELIOS reached an excellent EBIT margin of 9.4 % (Q3 2006: 8.7 %).

In July 2007, HELIOS agreed to acquire the Mariahilf hospital in Hamburg. The completion of the transaction is currently delayed by a legal proceeding against the seller of the hospital.

Sales in the engineering and services business were € 253 million (Q1-3 2006: € 322 million). The decrease is mainly due to the divestitures of Pharmaplan and Pharmatec, which were deconsolidated as of January 1, 2007, and June 30, 2007, respectively. Organic growth in the first three quarters was -7 % due to project delays at VAMED. EBIT was € 13 million (Q1-3 2006: € 14 million).

Order intake in the engineering business was € 245 million (Q1-3 2006: € 291 million). The decrease was due to the deconsolidation of the above-mentioned companies and the postponement of orders. In the third quarter of 2007, order intake increased by 31 % compared to the prior-year figure. This was mainly attributable to a contract worth more than € 100 million. The project includes the construction of a health and spa resort in Vienna/Austria. VAMED continues to expect an increase in its order intake in 2007 over 2006.

Due to its substantial order backlog of € 476 million (December 31, 2006: € 428 million) and its current view on the fourth quarter, VAMED remains confident to increase its sales in 2007 over 2006.

Based on the excellent financial results in 2007 to date, Fresenius ProServe raises its 2007 EBIT outlook from previously € ~170 million to more than € 170 million. The outlook for organic sales growth is confirmed at 2 to 3 %.

 

Analyst Meeting
As part of the publication of the results for the first three quarters of 2007, an analyst meeting will be held at the Fresenius headquarters in Bad Homburg on October 31, 2007 at 1:30 p.m. CET (8.30 a.m. EDT). All investors are cordially invited to follow the conference in a live broadcast over the Internet at www.fresenius.com / Investor Relations / Presentations. Following the meeting, a recording of the conference will be available as video-on-demand.

 

Quarterly financial report
The report for the third quarter and the first three quarters of 2007 will be available from November 14, 2007 at www.fresenius.com, see Investor Relations/Financial reports.