First quarter 2005:
Excellent start for Fresenius Group into fiscal year 2005

 

• Sales € 1.79 billion, + 6 % in constant currency, + 4 % at actual rates
   
• EBIT € 212 million, + 10 % in constant currency, + 8 % at actual rates
   
• Net income € 46 million, + 21 % in constant currency, + 18 % at actual rates

• Strong sales and earnings growth at Fresenius Medical Care, in particular in North America and Europe
   
• Significant EBIT margin increase at Fresenius Kabi; return to positive sales growth in Germany accomplished
   
• Earnings improvement at Fresenius ProServe

Fresenius Medical Care to acquire Renal Care Group, Inc.

• Excellent strategic and geographic fit to Fresenius Medical Care's US operations
   
• On a combined basis more than 156,000 patients in over 2,000 dialysis clinics world-wide
   
• Anticipated neutral to slightly earnings accretive in 2006 and clearly accretive in 2007 and thereafter

Fresenius Medical Care to propose conversion of preference shares into ordinary shares in combination with a change of the company's legal form into a KGaA

 

• Strategic step that increases the financial flexibility of Fresenius Medical Care to exploit future growth opportunities
   
• Move toward a single share class will improve trading liquidity and the overall attractiveness of the ordinary shares
   
• Fresenius AG retains management control and continues to fully consolidate Fresenius Medical Care in its financial statements

First quarter 2005:
Excellent start for Fresenius Group into fiscal year 2005


2005 Group outlook confirmed
Based on the excellent business performance in the first quarter, Fresenius confirms its positive 2005 full-year outlook before the impact of the Renal Care Group acquisition. Fresenius expects a constant-currency sales increase of 6 to 9 %. Net income is projected to grow by 15 to 20 % in constant currency. All business segments are expected to contribute to this increase.


Sustained sales growth
In the first quarter of 2005, group sales increased 6 % in constant currency. Organic growth contributed 4 % and acquisitions 3 % to this increase. Currency translation effects had a -2 % and disinvestments a -1 % effect on sales. At actual rates, sales were € 1,787 million, an increase of 4 % (Q1 2004: € 1,720 million).

Excellent constant-currency sales growth was achieved in North America (+8 %), in Latin America (+22 %) and in Africa (+53 %). Asia-Pacific had excellent sales growth for Fresenius Kabi offset by Fresenius ProServe's low project volume in this region compared to 2004.

Sales contribution of the three business segments:

 

Strong earnings growth
Fresenius achieved excellent growth rates in earnings: EBITDA rose 8 % in constant currency and 6 % at actual rates to € 284 million (Q1 2004: € 269 million). EBIT rose 10 % in constant currency and 8 % at actual rates to € 212 million (Q1 2004: € 197 million). The EBIT margin further improved to 11.9 % in the first quarter 2005 (Q1 2004: 11.5 %).

Net interest expense improved to € -47 million (Q1 2004: € -52 million) due to a lower debt level compared to the first quarter of 2004 in combination with lower interest rates and minor currency translation effects.

The tax rate for the first quarter of 2005 was 39.4 % (Q1 2004: 40.0 %), in line with the full-year expectation of 39 to 40 %.

Minority interest increased to € 54 million (Q1 2004: € 48 million). Minority shareholders in Fresenius Medical Care accounted for 96 % of minority interests.

Net income rose 21 % in constant currency and 18 % at actual rates to € 46 million (Q1 2004: € 39 million). EBIT growth at Fresenius Medical Care and Fresenius Kabi as well as lower interest expenses were key drivers for this increase.

Earnings per ordinary share were € 1.11 (Q1 2004: € 0.94). Earnings per preference share were € 1.12 (Q1 2004: € 0.95). EPS increased by 18 % for both share classes.


Investments on target
Group investments in the first quarter of 2005 were € 229 million. As expected, this was a significant increase from the same period of the previous year (Q1 2004: € 89 million). € 48 million was spent for property, plant and equipment and intangible assets (Q1 2004: € 48 million) and € 181 million for acquisitions (Q1 2004: € 41 million).


Solid cash flow performance
Operating cash flow decreased 8 % to € 168 million (Q1 2004: € 182 million) despite the excellent quarterly earnings. This was mainly due to higher income tax payments of Fresenius Medical Care in North America. Free cash flow before acquisitions was € 126 million (Q1 2005: € 136 million). Free cash flow after acquisitions and dividends was € -9 million (Q1 2004: € 98 million).


Solid balance sheet structure
Total assets increased 5 % to € 8,625 million (December 31, 2004: € 8,188 million). In constant currency, total assets grew by 3 %. Current assets increased 7 % to € 2,939 million, mainly due to acquisitions (December 31, 2004: € 2,755 million). In constant currency current assets rose 5 %.

Group debt rose 3 % to € 2,813 million as of March 31, 2005, primarily as a result of acquisitions. (December 31, 2004: € 2,735 million). In constant currency the increase was 1 %.

Based on the positive EBITDA development, the ratio net debt/EBITDA remained almost unchanged at 2.3 as of March 31, 2005 despite the increased debt level (December 31, 2004: 2.2).

Shareholders' equity including minority interests rose 7 % to € 3,565 million compared to € 3,347 million on December 31, 2004. The equity ratio including minority interest improved to 41.3 % (December 31, 2004: 40.9 %).


Employee numbers continue to grow
As of March 31, 2005, the Group had 69,874 employees worldwide, an increase of 2 % (December 31, 2004: 68,494).


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 suppress graft rejection following an organ transplantation.

In the field of cancer treatment, the final results of two Phase I studies will be presented on May 17, 2005 during the 41st Annual Meeting of the American Society of Clinical Oncology (ASCO):

• the use of the antibody removab^® in peritoneal carcinomatosis and
• the use of the antibody rexomun^® in breast cancer.

A Phase II study for the treatment of breast cancer and a phase II study for the treatment of gastric cancer are now in preparation following the encouraging results. The studies are scheduled to commence at the end of 2005.

For 2005, Fresenius Biotech continues to expect an EBIT in the range of € -35 to € -40 million, largely due to the expanded clinical study program.


The Business Segments

Fresenius Medical Care
Fresenius Medical Care is the world's leading provider of products and services for patients with chronic kidney failure. As of March 31, 2005, Fresenius Medical Care treated about 125,900 patients (+5 %) in 1,630 dialysis clinics (+4 %).

• Excellent growth in sales and earnings continued
   
• Successful business performance in North America and Europe
   
• 2005 outlook confirmed

Fresenius Medical Care achieved excellent sales growth of 10 % to US$ 1,609 million in the first quarter of 2005 (Q1 2004: US$ 1,459 million). In constant currency, sales rose 9 %. Organic sales growth was 7 %.

In North America Fresenius Medical Care increased revenues by 9 % to US$ 1,088 million (Q1 2004: US$ 1,003 million). Sales outside North America (the "International" segment) rose 14 % (in constant currency: 8 %) to US$ 521 million (Q1 2004: US$ 456 million) mainly due to the very positive business performance in Europe.

Sales in dialysis care rose 10 % to US$ 1,162 million (Q1 2004: US$ 1,058 million). In the first quarter of 2005, Fresenius Medical Care performed about 4.72 million dialysis treatments, an increase of 3 %. This includes 3.25 million treatments in North America (+3 %) and 1.47 million outside North America (+5 %). In dialysis products, Fresenius Medical Care achieved sales growth of 11 % to US$ 447 million (Q1 2004: US$ 401 million).

Fresenius Medical Care's EBIT increased by 11 % to US$ 220 million (Q1 2004: US$ 198 million), the EBIT margin was 13.7 %. Net income increased 18 % to US$ 107 million in the first quarter of 2005.

For the year 2005, Fresenius Medical Care confirms its outlook before the impact of the Renal Care Group acquisition. The company expects a revenue growth at constant currency between 6 and 9 % and net income growth in the low double-digit range.

For more information, see Fresenius Medical Care 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 environment. The company is also a leading provider of transfusion technology products.

• Profitability significantly increased; EBIT margin of 13.1 % achieved
   
• Positive sales performance in Germany
   
• 2005 outlook confirmed

The acquisition of the Portuguese company Labesfal announced in early January was successfully closed in the first quarter of 2005. Labesfal manufactures and markets intravenously administered drugs (I.V. drugs). The company is consolidated in the financial statements of Fresenius Kabi as of January 1, 2005.

Sales at Fresenius Kabi rose 10 % in the first quarter of 2005 to € 398 million (Q1 2004: € 362 million). The company achieved good organic growth of 5 %. Acquisitions, mainly Labesfal, contributed 5 % to sales. Currency translation effects increased sales by 1 %, divestitures had a -1 % effect.

The development in the German market was positive. Fresenius Kabi was able to increase sales by 2 % after a decrease of 5 % in the first quarter 2004 which was a result of health care reform. Sales in the rest of Europe rose 12 %, mainly due to acquisitions. The Asian-Pacific region posted strong organic growth of 14 %.

Earnings developed positively in the first quarter of 2005. EBIT rose 27 % to € 52 million (Q1 2004: € 41 million). The EBIT margin was 13.1 % in the first quarter of 2005, an increase of 180 basis points compared to the first quarter of 2004 (11.3 %) and 90 basis points compared to the fourth quarter of 2004 (12.2 %).

Fresenius Kabi confirms its outlook for 2005. Including the Labesfal acquisition, constant-currency sales are expected to increase by about 10 % and the EBIT margin is projected to increase to >13 %.


Fresenius ProServe
Fresenius ProServe offers services for international health care systems, including hospital management, the planning and construction of hospitals and pharmaceutical and medical-technical production plants.

• Earnings improvement accomplished
   
• Decline in sales due to restrained order situation in project business
   
• 2005 outlook confirmed

Fresenius ProServe achieved sales in the first quarter of 2005 of € 171 million(Q1 2004: € 199 million). On a comparable basis (excluding the nursing home business sold in 2004 and the discontinued international hospital management business), the sales decrease would have been 10 %.This decrease mainly resulted from the delayed closing of projects in the hospital engineering and services business (VAMED). Continued investment caution of the pharmaceutical industry led to lower sales in pharmaceutical engineering and services (Pharmaplan). Sales in the hospital management business met expectations (Wittgensteiner Kliniken).

In the first quarter of 2005, Fresenius ProServe increased EBIT to € 3 million (Q1 2004: € 1 million; before one-time expenses: € 2 million).

Order intake in the first quarter of 2005 was € 47 million (Q1 2004: € 70 million). For the full year 2005, Fresenius ProServe expects order intake to increase compared to 2004. The bulk of new orders is expected to be acquired in the third and fourth quarters of 2005.

Fresenius ProServe confirms its outlook for 2005 and expects an EBIT between € 20 and € 25 million. Organic sales growth is expected to be in the range of 5 to 8 %.


Fresenius Medical Care to acquire Renal Care Group, Inc.
Fresenius Medical Care today announced that it has entered into a definitive agreement to acquire Renal Care Group, Inc., (NYSE: RCI), Nashville, Tennessee, for a price of US$ 48.00 per share in cash. The total net consideration for the acquisition of all outstanding shares of Renal Care Group is US$ 3.5 billion, which will be all-debt financed. The acquisition is anticipated to be neutral to slightly accretive to earnings in 2006 and clearly accretive to earnings in 2007 and thereafter.

Renal Care Group is a fast-growing, highly profitable dialysis service provider that will be an attractive complement to Fresenius Medical Care's US business. In 2004, Renal Care Group's revenue was approx. US$ 1.35 billion with an EBIT of US$ 254 million, net income was US$ 122 million. As of March 31, 2005, Renal Care Group owned more than 425 dialysis clinics and served over 30,400 patients. Through the combination with Renal Care Group, Fresenius Medical Care will be well positioned to create additional growth potential for its dialysis product business and will provide opportunities to successfully leverage its cost leadership position in dialysis products and services.

Fresenius Medical Care plans to finance the acquisition primarily through an extension of its senior credit agreement. The existing US$ 1.2 billion credit agreement will be replaced by a US$ 5.0 billion senior credit facility. Financing commitments have been received from Bank of America and Deutsche Bank, and are subject to customary conditions.

The transaction is subject to the approval of Renal Care Group's shareholders and other customary closing conditions, including the expiration of the waiting period under the Hart-Scott Rodino Antitrust Improvements Act.

For further details please see separate Investor News of Fresenius Medical Care at www.fmc-ag.com.

Fresenius Medical Care to propose conversion of preference shares into ordinary shares in combination with a change of the company's legal form into a KGaA
Fresenius Medical Care further announced its intention to offer the holders of the company's approx. 26.4 million preference shares the opportunity to convert these into ordinary shares. The preference shareholders who participate in this program pay a "premium" of € 12.25 per share for the conversion. Furthermore, the company will ask its ordinary shareholders to approve a change of the legal form from an "Aktiengesellschaft" (AG) to a "Kommanditgesellschaft auf Aktien" (KGaA).

As part of the transformation of legal form, a subsidiary of Fresenius AG in the legal form of an "Aktiengesellschaft" (stock corporation under German law) will be established as general partner of the Fresenius Medical Care AG & Co. KGaA. The Management Board of the general partner – which will be identical with the current Management Board of Fresenius Medical Care – will assume the management of Fresenius Medical Care. As long as Fresenius AG maintains ownership of more than 25 % of the share capital of the company, Fresenius AG will retain its current controlling position and fully consolidate the company in its financial statements.

The proposed change in the legal form of Fresenius Medical Care will allow to continue the high standards of corporate governance and transparency as today.

For further details please see separate Investor News of Fresenius Medical Care at www.fmc-ag.com.


Live video webcast of the Analyst Meeting
Instead of a Conference Call only, Fresenius AG and Fresenius Medical Care will host an Analyst Meeting on May 4, 2005 at the headquarters in Bad Homburg, Germany.

The Fresenius Medical Care Analyst Meeting will be at 2.30pm CET / 8.30am EDT.
The live video webcast of the meeting at Fresenius Medical Care's website can be followed at www.fmc-ag.com in the "Investor Relations" section.

The Fresenius AG Analyst Meeting will be at 4.30pm CET / 10.30am EDT.
The live video webcast of the meeting at Fresenius AG's website can be followed at www.fresenius-ag.com in the "Investor Relations / Presentations" section.

A replay of both webcasts will be available shortly after each meeting.


Quarterly report
The complete quarterly report from the first quarter 2005 will be available beginning on May 13, 2005 on the Internet at www.fresenius-ag.com / Investor Relations / Publications.

Fresenius Biotech successfully completed two Phase I studies evaluating trifunctional antibodies in the treatment of breast cancer and peritoneal carcinomatosis. The results of these studies were presented by investigators from the participating universities at the American Society of Clinical Oncology (ASCO) Annual Meeting in Orlando, Florida.

Encouraging results were achieved with the trifunctional antibody rexomun® (WHO INN: ertumaxomab), which was evaluated in a clinical trial for the first time. In this multi-center Phase I study including patients with metastastic breast cancer, rexomun® (ertumaxomab) proved to be safe and tolerable. Seventeen patients were involved in the study and received three intravenous doses of the antibody within a two-week period. The maximum tolerated doses for the first, second and third application were found at 10, 100 and 100 micrograms. Side effects were mild to moderate and transient with fever, chills, headache and nausea being the most common. In five out of 15 evaluable patients the tumor responded to the treatment leading to stable disease or remission. One patient had a complete remission that lasted for 7 months, two patients had a partial remission and two patients had stable disease. One patient with partial remission and two patients with stable disease received concomitant or subsequent hormone therapy. "These data strongly encourage us to proceed into phase II," said Dr. Thomas Gottwald, President of Fresenius Biotech. A Phase II study evaluating the efficacy of rexomun® (ertumaxomab) in breast cancer is in preparation and will start by the end of 2005.

In the second multi-center Phase I study presented at the ASCO convention, the trifunctional antibody removab® (INN: catumaxomab) proved to be safe and tolerable in the treatment of peritoneal carcinomatosis. A total of 17 patients were included. In 16 patients the peritoneal carcinomatosis was caused by cancer of the stomach or the colon. In one patient, the primary tumor could not be located. Four increasing doses of removab® (catumaxomab) were injected into the peritoneal cavity of the patients over a 10-day period. The maximum tolerated doses were found at 10, 20, 50 and 200 micrograms in the first, second, third and fourth infusion. Side effects were mild to moderate and transient with nausea, abdominal pain and fever being the most common. Irrigation of the peritoneal cavity was possible in eight patients before and after the treatment to determine the effect on the number of detected tumor cells, which decreased in seven out of these eight patients after treatment.

The average life expectancy of patients with peritoneal carcinomatosis normally ranges from three to six months. To date, 14 months after the start of the study, 7 out of 17 patients are still alive. Follow up showed survival of about 9 months after the start of treatment. Complete remission was achieved in one patient which continues after 14 months. "Again, like in the previous study on the trial on malignant ascites due to ovarian cancer, we have observed first signs of efficacy at an early stage of the clinical development," explained Dr. Thomas Gottwald. A pilot study is now evaluating the best mode of application of removab® (catumaxomab) in gastric cancer. A Phase II study on gastric cancer is expected to start by the end of 2005.

The trifunctional antibody removab® (catumaxumab) is also currently being evaluated in a Phase IIa trial in the treatment of ovarian cancer and in a Phase II/III pivotal trial in the treatment of malignant ascites. The results of these studies should be available during 2006.

The antibodies rexomun® (ertumaxomab) and removab® (catumaxomab) were developed and produced by Fresenius Biotech's partner TRION Pharma, a Munich-based biotech company. These novel antibodies have a unique mode of action. Trifunctional antibodies selectively bring together cancer cells and two different immuno-competent cell types thus prompting the destruction of the tumor cells. In addition, trial results indicate that these antibodies prime the immune system with the potential for long lasting immunity against the tumor.

Clinical studies: Phase I studies evaluate dose, safety and tolerability while Phase II clinical trials investigate the efficacy of new drugs.

INN: International Nonproprietary Name; Each INN is selected by the WHO, is a unique name that is globally recognized and is public property.

Fresenius AG today announced that Standard & Poor's and Moody's will change their credit ratings for the Company by one notch. Standard & Poor's plans to lower its rating from "BB+" to "BB" with a negative outlook upon completion of the Renal Care Group acquisition by Fresenius Medical Care. Moody's lowered its rating from "Ba1" to "Ba2" in anticipation of the Renal Care Group acquisition. The outlook is stable.

Stephan Sturm, Chief Financial Officer, commented: "This is an expected downgrade given the decision to fully debt-finance the acquisition of Renal Care Group. On the other hand, the acquisition sustainably strengthens Fresenius Medical Care's position in the global dialysis market. We have a proven ability to considerably reduce debt from solid cash flows and are therefore confident to meet our financial goals."

• Sales: € 3.70 billion, + 6 % in constant currency, + 4 % at actual rates
   
• EBIT: € 453 million, + 12 % in constant currency, + 10 % at actual rates
   
• Net incombe: € 101 million, + 28 % in constant currency, + 26 % at actual rates

 

• Strong sales and earnings growth at Fresenius Medical Care; driven by continued gains in North America and Europe
   
• Fresenius Kabi achieves new record in EBIT margin; very good sales development in all regions
   
• Fresenius ProServe improves earnings and achieves good order intake

2005 Group outlook raised
Based on these excellent results Fresenius raises its full-year outlook (before the acquisition of Renal Care Group by Fresenius Medical Care) and now expects net income growth of 20 to 25 % in constant currency. Previously, the Company expected 15 to 20 % net income growth. The projection for sales growth in constant currency remains at 6 to 9 %. All business segments are expected to achieve sales and earnings growth.

Sustained sales growth
In the first half of 2005, Group sales increased 6 % in constant currency. Organic growth contributed 5 % and acquisitions 2 % to this increase. Currency translation had a -2 % and divestments a -1 % effect on sales. Sales were € 3,702 million, an increase of 4 % at actual rates (H1 2004: € 3,553 million).

Strong constant-currency sales growth was achieved in North America (+7 %), in Latin America (+19 %) and in Africa (+44 %). In Asia-Pacific, Fresenius Kabi achieved an excellent sales growth. The lower project volume at Fresenius ProServe primarily impacted the sales development in this region.

 

Sales contribution of the three business segments:

 

Strong earnings growth
EBITDA increased 9 % in constant currency and 7 % at actual rates to € 604 million (H1 2004: € 564 million). Group EBIT rose 12 % in constant currency and 10 % at actual rates to € 453 million (H1 2004: € 412 million). The Group EBIT margin further improved to 12.2 % in the first half of 2005 (H1 2004: 11.6 %).

Group net interest expense was € -97 million in the first half of 2005 (H1 2004: € -104 million). This improvement was mainly the result of a lower debt level compared to the first half of 2004 in combination with lower interest rates and currency translation effects. The tax rate for the first half of 2005 was 39.3 % (H1 2004: 40.6 %), in line with the full-year expectation of 39 to 40 %.

Minority interest increased to € 115 million (H1 2004: € 103 million) mainly due to the strong earnings development of Fresenius Medical Care, which accounts for 96 % of minority interest.

Group net income grew strongly by 28 % in constant currency and 26 % at actual rates to € 101 million (H1 2004: € 80 million). Excellent operating results of Fresenius Medical Care and Fresenius Kabi, lower interest expenses and a slightly lower tax rate contributed to this increase.

Earnings per ordinary share were € 2.46 (H1 2004: € 1.95). Earnings per preference share were € 2.48 (H1 2004: € 1.97). EPS increased 26 % for both share classes.

Investments considerably increased
In the first half of 2005, Group investments doubled to € 342 million (H1 2004: €172 million). This significant increase was mainly driven by acquisitions at Fresenius Kabi. € 115 million was spent for property, plant and equipment and intangible assets (H1 2004: € 111 million) and € 227 million for acquisitions (H1 2004: € 61 million).

Solid cash flow performance
Operating cash flow was slightly lower than in the previous year at € 329 million (H1 2004: € 340 million) despite the excellent earnings development. This was mainly due to higher income tax payments of Fresenius Medical Care in North America. Free cash flow before acquisitions and dividends was € 224 million (H1 2004: € 239 million). Free cash flow after acquisitions (€ 182 million) and dividends (€ 127 million) was € -85 million (H1 2004: € 67 million).

Solid balance sheet structure
Total assets increased 10 % to € 9,045 million (December 31, 2004: € 8,188 million). In constant currency, total assets grew 3 %. Current assets increased 12 % to € 3,090 million (December 31, 2004: € 2,755 million). In constant currency, current assets grew 6 %. This increase was driven by acquisitions and growth of operations.

Group debt rose 9 % to € 2,993 million as of June 30, 2005 (December 31, 2004: € 2,735 million). In constant currency, debt grew 5 % and was driven by acquisitions.

The net debt/EBITDA ratio was 2.4 as of June 30, 2005 (December 31, 2004: 2.2). The positive EBITDA increase partially offset the higher debt level.

Shareholders' equity including minority interest rose 11 % to € 3,721 million compared to € 3,347 million on December 31, 2004. The equity ratio including minority interest improved to 41.1 % (December 31, 2004: 40.9 %).

Employee numbers continue to grow
As of June 30, 2005, the Group had 71,109 employees worldwide, an increase of 4 % (December 31, 2004: 68,494).

Fresenius Biotech
Fresenius Biotech develops innovative therapies with trifunctional antibodies for the treatment of cancer as well as cell therapies for the treatment of the immune system. In the field of polyclonal antibodies, Fresenius Biotech has successfully marketed ATG-Fresenius S for many years. ATG-Fresenius S is an immunosuppressive agent used to prevent and treat graft rejection following organ transplantation.

In the field of antibody therapies, two phase II studies are in preparation to investigate the treatment of gastric cancer and breast cancer following positive results from two phase I studies for the treatment of peritoneal carcinomatosis and breast cancer. Current studies for malignant ascites, malignant pleural effusion and ovarian cancer are continuing according to plan.

For 2005, Fresenius Biotech continues to expect an EBIT in the range of € -35 to € -40 million, largely due to the expanded clinical study program.

The Business Segments

Fresenius Medical Care
Fresenius Medical Care is the world's leading provider of products and services for patients with chronic kidney failure. As of June 30 2005, Fresenius Medical Care was serving approximately 128,200 patients (+4 %) in 1,645 dialysis clinics (+3 %).

• Strong sales and earnings growth continued
   
• North America and Europe once again key sales and earnings drivers
   
• 2005 net income outlook raised

In the first half of 2005, Fresenius Medical Care achieved sales growth of 9 % to US$ 3,283 million (H1 2004: US$ 3,011 million). In constant currency, sales rose 7 %. Organic growth was 6 %.
In North America Fresenius Medical Care achieved a strong sales increase of 7 % to US$ 2,215 million (H1 2004: US$ 2,063 million). Sales outside North America ("International") rose 13 % to US$ 1,068 million (H1 2004: US$ 948 million) mainly because of the very good development of the European business.
Sales in dialysis care increased 8 % to US$ 2,363 million (H1 2004: US$ 2,185 million). In the first half of 2005, Fresenius Medical Care delivered approximately 9.6 million dialysis treatments, an increase of 4 % over the same period in the previous year. North America accounted for 6.6 million treatments (+3 %) and the International segment for 3.0 million treatments (+5 %). Fresenius Medical Care achieved sales growth in dialysis products of 11 % to US$ 920 million (H1 2004: US$ 826 million).

EBIT rose 11 % to US$ 458 million (H1 2004: US$ 411 million) and the EBIT margin was 14.0 % (H1 2004: 13.6 %). Net income at Fresenius Medical Care grew to US$ 223 million in the first half of 2005, an increase of 17 %.

Based on its strong performance in the first half of 2005, Fresenius Medical Care now expects net income growth to be between 12 and 15 %. Previously, the company anticipated net income growth for 2005 to be in the low double-digit range. This guidance does not take into effect the impact of the Renal Care Group acquisition or the expected one-time costs of around US$ 10 million for the full year 2005 in connection with the transformation of Fresenius Medical Care's legal form, or the conversion of the preference shares into ordinary shares. Top-line revenue growth at constant currency should remain between 6 and 9%.

For further information, please see Fresenius Medical Care's Press release.

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.

• Earnings target exceeded: new record EBIT margin of 13.8 % in the second quarter of 2005
   
• Excellent organic growth of 6 % in the first half of 2005
   
• 2005 earnings outlook raised

In the first half of 2005, sales at Fresenius Kabi rose 11 % to € 818 million (H1 2004: € 738 million). The company achieved an excellent organic growth of 6 %. Acquisitions, primarily the Portuguese company Labesfal, contributed 5 % to sales. Currency translation added 1 % to sales growth. Divestments had a -1 % effect on sales.

Sales in Germany rose 2 %. Sales in Europe (excluding Germany) increased 13 %. Acquisitions contributed significantly to this growth. Fresenius Kabi continued to grow at double-digit rates outside of Europe: The Asia-Pacific region showed strong organic growth with an increase of 16 % and Latin America posted organic sales growth of 13 %.

Fresenius Kabi significantly increased earnings. EBIT rose 29 % in the first half of 2005 to € 110 million (H1 2004: € 85 million). The EBIT margin was 13.4 %, an increase of 190 basis points compared to the first half of 2004 (11.5 %). Compared to the first quarter of 2005, the Q2-EBIT margin improved by 70 basis points to 13.8 %.
Fresenius Kabi clearly exceeded the projected full-year EBIT margin target of >13.0 % in the first half of 2005. Therefore, the company raises its full-year EBIT margin outlook to >13.5 %. Constant-currency sales growth should remain at about 10 %.

Fresenius ProServe
Fresenius ProServe offers services for the international health care sector including hospital management and hospital planning and construction as well as planning and construction of pharmaceutical and medical-technical production sites. 

• Further improvement in earnings
   
• Good order intake
   
• Sales below previous year due to project delays

In the first half of 2005, Fresenius ProServe achieved sales of € 350 million (H1 2004: € 383 million). On a comparable basis (excluding the nursing home business sold in 2004 and the discontinued international hospital management business), the sales decrease would have been 4 %. This decrease resulted from delayed closing of projects in the hospital engineering and services business (VAMED). In addition, the ongoing investment caution in the pharmaceutical industry led to lower sales in pharmaceutical engineering and services (Pharmaplan). An increase in sales of 3 % was achieved in the hospital management business (Wittgensteiner Kliniken).

EBIT increased to € 7 million in the first half of 2005 despite lower sales (H1 2004: € 0 million; before one-time charges: € 6 million). On a comparable basis, this is an increase of 17 %.

Order intake developed very positively in the second quarter and reached € 109 million. Order intake in the first half of 2005 increased 15 % to € 156 million (H1 2004: € 136 million). Order backlog in the first half of 2005 increased 14 % to € 382 million (December 31, 2004: € 335 million). Based on this development and additional contracts expected to be signed in the third and fourth quarters of 2005, Fresenius ProServe expects improved sales in the second half of 2005.

Fresenius ProServe confirms its full-year outlook for 2005 and expects an EBIT of € 20 to € 25 million and an organic sales growth of 5 to 8 %.


Live video webcast
As part of the earnings announcement for the first half of 2005, an analyst conference will be held at the Fresenius headquarters in Bad Homburg on August 4, 2005 at 1:30 p.m. CEDT (7.30 a.m. EDT). The analyst conference will be broadcast live 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.

Quarterly report
The full first-half and second-quarter report will be available on the Internet by August 15, 2005 at www.fresenius-ag.com / Investor Relations / Publications.

On August 12, 2005, Citadel Equity Fund Ltd., London, submitted a countermotion to agenda item 1 of the Extraordinary General Meeting and to the only agenda item of the Separate Meeting of Preference Shareholders – Resolution on the conversion of non-voting bearer preference shares into bearer ordinary shares. Citadel Equity Fund Ltd. hereby requests all shareholders of Fresenius Medical Care AG to approve the conversion only when the conversion premium will be reduced to € 9.75 per bearer preference share.

Fresenius AG as shareholder of Fresenius Medical Care AG will vote in favor of this countermotion in the Extraordinary General Meeting. The Company owns 50.76 % of the ordinary shares of Fresenius Medical Care AG.

The proposed step towards just one share class at Fresenius Medical Care AG was well accepted by the shareholders. This is also reflected in the share price development of Fresenius Medical Care's ordinary and preference shares since the announcement of this measure beginning of May. The conversion of preference shares into ordinary shares is expected to improve trading liquidity of the ordinary shares and Fresenius Medical Care's position in the German stock index (DAX). In addition, it will increase the company's flexibility to finance future growth. Therefore, this initiative is in the interests of Fresenius Medical Care AG as well as of its preference and ordinary shareholders and accordingly in the interests of Fresenius AG.

The countermotion, however, indicates that the attractiveness of the conversion premium to be paid by the preference shareholders is perceived differently by some shareholders. In order to increase the incentive to the preference shareholders to participate in the conversion, Fresenius AG considers the reduced conversion premium of € 9.75 as proposed in Citadel's countermotion as acceptable. Given the advantages of a single share class, Fresenius AG is convinced that voting in favor of the countermotion is to the benefit of all shareholders of Fresenius Medical Care AG.

• Acquisition of HELIOS Kliniken builds Fresenius ProServe's hospital management business 
• Acquisition of Clinico to develop Fresenius Kabi's medical devices business  
• Committed financing 
• Excellent financial results in the 1st-3rd quarter of 2005 (preliminary);
  2005 Group outlook – earnings guidance raised

  

Acquisition of HELIOS Kliniken GmbH, a leading hospital operator in Germany

Fresenius has entered into an agreement to acquire HELIOS Kliniken GmbH, Fulda, Germany. Through the acquisition, Fresenius creates an excellent platform for further growth in the German acute care market. HELIOS is recognized for having medical quality standards of the highest level in the industry. With expected sales of approx. € 1.2 billion in 2005 the company ranks among the largest and financially most successful private hospital chains in Germany. The acquisition of HELIOS will establish Fresenius ProServe as one of the leading private hospital operators in Germany and create a strong third business segment within Fresenius Group.

„The hospital management business in Germany has been our clear focus following the streamlining of Fresenius ProServe's operations in 2003 and 2004. The acquisition of one of the most successful German hospital operators is an unique opportunity to strengthen our position in acute care hospitals. Building on this strong position, we will capitalize on the excellent growth potential of the ongoing privatization process in the German hospital market. HELIOS is an extremely well-managed company and is, just like Fresenius, strongly committed to deliver best-in-class medical treatment," commented Dr. Ulf M. Schneider, Chairman of the Management Board of Fresenius AG.

HELIOS Kliniken GmbH is one of the leading private German hospital operators in terms of revenue growth and profitability. Since 2002, the company posted a compounded annual growth rate of 28 % in sales. In 2004, HELIOS achieved revenues of € 1,161 million, operating income of € 95 million and net income of € 66 million. The company owns 24 hospitals with a total capacity of approx. 9,300 beds. HELIOS is the only hospital chain in Germany that operates four maximum-care hospitals with more than 1,000 beds each. The company has approx. 18,000 employees and performs about 330,000 inpatient and about 700,000 outpatient treatments annually.

HELIOS enjoys an excellent reputation with medical experts and patients. The company implemented a comprehensive medical quality management system and is the first German hospital chain that sets quantitative medical targets. The Annual report as well as the quality and intellectual capital reports document HELIOS's achievements and targets with outstanding transparency. HELIOS's experienced and acquisition-proven management team will continue to manage the company. All members of the HELIOS Management continue to be shareholders in the company.

"Our proven medical know-how and partnership network management is the basis for our leading position in medical quality standards. With Fresenius, we will further strengthen this position. We are well prepared for further growth in the highly dynamic German hospital market for acute care, even for ambitious privatization projects," commented Ralf Michels, Managing Director of HELIOS Kliniken GmbH.

In the future, the hospitals of HELIOS and the Fresenius hospitals of the Wittgensteiner Group will operate under the leadership and brand of HELIOS. Both companies are highly complementary in terms of geographical fit and medical focus. The combined business will include 55 clinics with 2004 pro-forma revenues of approx. € 1.5 billion.

The purchase price for 100 % of the HELIOS shares is € 1.5 billion plus € 100 million for the net cash position. Fresenius will acquire 94 % of the HELIOS shares, 6 % will continue to be held by the HELIOS management.

The acquisition requires antitrust approval. Fresenius anticipates to close this transaction at the end of 2005.


Acquisition of the business of Clinico GmbH – Fresenius Kabi strengthens product portfolio and production network of medical devices

Fresenius Kabi has entered into an agreement to acquire the business of Clinico GmbH, Bad Hersfeld, Germany. Clinico manufactures medical devices used for the application of infusion therapies and clinical nutrition, such as sterile disposables for the application of drugs, application systems for clinical nutrition as well as catheter systems. The company has a development center and a tool-making site in Germany as well as production plants in Poland and China with state-of-the-art production technologies. All Clinico production plants are certified according to ISO and meet the requirements of the FDA.

Fresenius Kabi is the European leader in infusion therapy and clinical nutrition and offers medical devices for the application of these therapies. With the acquisition of Clinico, Fresenius Kabi extends its product portfolio and will distribute Clinico's products through its existing sales and distribution organization. In addition, the company increases its development and production network for medical devices.

Preliminary sales for the fiscal year 2004/05 (September 30) were about € 51 million, mainly achieved with industrial clients. Clinico has over 1,500 employees.

The acquisition requires the approval of the German antitrust authority.


Committed financing

It is planned to finance the acquisitions through a capital increase in the amount of around € 800 million and a bond in the amount of around € 700 million. The capital increase from approved capital is planned to be completed in 2005 with a subscription right granted to shareholders. A major German bank has committed to underwrite the total amount of the capital increase at customary market conditions. The details of the capital increase will be published in the coming weeks. Commitments for a € 700 million bridge financing have been received from two international banks, as the bond is planned to be issued in the first half of 2006. The Else Kröner-Fresenius-Foundation has notified us, that it will participate in the planned capital increase with an amount of € 100 million. In addition, the proceeds from the disposal of unused subscription rights will be fully invested. Allianz Lebensversicherungs-AG has notified us, that it will positively support the planned capital increase.

Fresenius expects the 2005 acquisitions of Labesfal, Clinico and HELIOS to be slightly accretive to 2006 earnings per share and to be clearly accretive as from 2007.

The financing mix of equity and debt is designed to keep Fresenius Group's key credit ratios substantially unchanged.


Excellent financial results in the 1st-3rd quarter 2005 (preliminary);
2005 Group outlook – earnings guidance raised

In context with the announced transactions, Fresenius provides an overview on the financial results of the first nine months 2005.

Based on preliminary figures, Fresenius achieved excellent financial results in the first nine months of 2005.

Group sales increased 7 % in constant currency. At actual rates, sales were € 5,717 million, an increase of 6 %. Earnings increased stronger than sales: Group EBIT rose 13 % in constant currency and 12 % at actual rates to € 702 million. Group net income grew by 28 % in constant currency and 27 % at actual rates to € 159 million.

The business segments made the following contribution to this excellent development:

Based on preliminary figures, Fresenius Medical Care achieved sales growth of 9 % to US$ 5,000 million in the first nine months of 2005. EBIT and net income posted a strong performance: EBIT rose 11 % to US$ 694 million including US$ 8 million of one-time costs related to the transformation of Fresenius Medical Care's legal form into a KGaA. Net income was US$ 338 million, up 15 % from the first nine months of 2004.

For the year 2005, Fresenius Medical Care confirms its outlook and expects a revenue growth at constant currency between 6 and 9 % and a net income growth between 12 and 15 %. The company expects to achieve the upper end of the net income guidance. This guidance does not take into effect the impact of the Renal Care Group acquisition or the one-time costs for the full year 2005 in connection with the transformation of the company's legal form, or the conversion of the preference shares into ordinary shares.

Fresenius Kabi achieved an excellent sales growth of 12 % to € 1,239 million in the first nine months. EBIT increased significantly by 32 % to € 170 million. The EBIT margin was 13.7 % (Q1-3 2004: 11.7 %). In Q3 2005, the EBIT margin improved to 14.3 %.

Fresenius Kabi confirms its full-year EBIT margin outlook of >13.5 %. Constant-currency sales growth is expected at about 10 %.

In the first nine months of 2005, Fresenius ProServe achieved sales of € 552 million, a decrease of 5 % compared to the previous year. On a comparable basis (excluding the nursing home business sold in 2004 and the discontinued international hospital management business), sales would have been on previous year's level. EBIT was € 11 million in the first nine months of 2005 (Q1-Q3 2004: € 3 million; before one-time expenses: € 11 million). Based on a stronger order intake in its project business, Fresenius ProServe expects improved sales and earnings in Q4 2005.

Fresenius ProServe confirms its full-year outlook for 2005 and expects EBIT of € 20 to € 25 million and organic sales growth of 5 to 8%.

Based on these excellent preliminary Group figures, Fresenius raises its full-year earnings outlook (before the announced acquisitions): Net income is expected to grow at >25 % in constant currency. Previously, the Company expected 20 to 25 % net income growth. The projection for constant-currency sales growth remains at 6 to 9 %.

The final figures for the first nine months of 2005 will be announced on November 3, 2005, as originally scheduled.


Key figures of the business segments (preliminary):

Analyst Meeting and live video webcast

Fresenius AG will host an analyst meeting today, Friday, October 14, 2005, at 3.00 p.m. CEDT / 9.00 a.m. EDT at its headquarters in Bad Homburg, Germany.

The live video webcast of the analyst meeting can be followed at www.fresenius-ag.com.  A replay of the webcast will be available shortly after the meeting.


Glossary - maximum-care hospitals
The government plan for general and specialty hospitals basically encompasses four categories. Hospitals for maximum-care generally go far beyond the other categories with their range of services. They typically hold their clinical capacities for 24 hours 7days a week and are obliged to particular standards of quality assurance. Furthermore they shall provide state of the art medical and technical equipment. Hospitals for maximum-care are especially obliged to educational and professional training.

Today, the Management Board of Fresenius AG, with the approval of the Supervisory Board, has decided to increase the Company's subscribed share capital by 4,700,000 new ordinary shares and 4,700,000 new preference shares from approved capital with a subscription right granted to shareholders.

The new ordinary shares and preference shares will be subscribed by the members of an underwriting syndicate led by Deutsche Bank as the Global Co-ordinator and Dresdner Kleinwort Wasserstein and WestLB as Joint Bookrunners in line with market practice with the obligation to offer the new ordinary shares to the existing ordinary shareholders and the new preference shares to the existing preference shareholders of Fresenius AG at a subscription ratio of 9:2. For a residual amount of up to 113,533 bearer ordinary shares and up to 113,533 bearer preference shares the subscription rights were excluded.

The subscription prices amount to at least € 86 per ordinary share and € 93 per preference share and may be increased by a step-up until November 15, 2005. The final subscription prices are expected to be announced on November 15, 2005. The subscription period is expected to run from November 17 to November 30, 2005 and trading in the subscription rights is expected to be established during the period from November 17 to November 28, 2005. Fresenius AG expects to generate approximately € 840 million of (gross) proceeds from the capital increase.

The Else Kröner-Fresenius-Foundation has notified that it will participate in the planned capital increase with an amount of € 100 million. In addition, the proceeds from the disposal of unused subscription rights will be fully invested. Allianz Lebensversicherungs-AG has notified that it will positively support the planned capital increase. WestLB has notified that it will fully exercise its subscription rights.

After issuance of the new shares, the total number of outstanding ordinary shares of Fresenius AG will increase from currently 20,639,100 to 25,339,100 and the total number of outstanding preference shares will increase from currently 20,639,100 to 25,339,100.

The new shares are expected to be included in the quotation of the shares of Fresenius AG at the Frankfurt, Munich and Düsseldorf stock exchanges as of December 1, 2005 and have full dividend entitlement for 2005.


Capital Increase Data
 
Issuer: Fresenius AG

 

Transaction Structure: Capital increase with subscription rights

 

 

Offering: 4,700,000 new ordinary shares,
4,700,000 new preference shares

Subscription Ratio: 9 old ordinary shares entitle to the subscription of 2 new ordinary shares at the subscription price and 9 old preference shares entitle to the subscription of 2 new preference shares at the subscription price

 

 

Residual Amount:Up to 113,533 bearer ordinary shares,
Up to 113,533 bearer preference shares

 

 

Minimum Subscription Price: Euro 86 € per ordinary share,
Euro 93 € per preference share

 

 

Final Subscription Price: Announcement expected 15 November 2005

 

 

Subscription Period: Expected 17 November 2005 to 30 November 2005

 

 

Trading of Subscription Rights: Expected 17 November 2005 to
28 November 2005

 

 

Placement of Shares not subscribed: Private placement with institutional investors in Germany and abroad

 

 

Start of Trading of new shares subscribed for: Expected 1 December 2005

 

 

Stock Exchanges: Frankfurt (Prime Standard), Munich, Düsseldorf

 

 

Underwriting Syndicate:
Global Co-ordinator: Deutsche Bank

 

 

Joint Bookrunner: Deutsche Bank, Dresdner Kleinwort Wasserstein, WestLB

 

 

Joint Lead Manager: Deutsche Bank, Dresdner Kleinwort Wasserstein, WestLB

 

 

Co-Manager: ABN Amro Rothschild, Bayern LB, Commerzbank, DZ Bank, Helaba, HVB, Société Générale

 

• Sales € 5.7 billion,
• + 7 % in constant currency, + 6 % at actual rates
• EBIT € 703 million,
  + 13 % in constant currency, + 12 % at actual rates
• Net income € 161 million,
  + 30 % in constant currency, + 29 % at actual rates 

• Fresenius Medical Care continues strong sales and earnings growth
• Fresenius Kabi achieves excellent operating income and strong organic growth
• Fresenius ProServe increases order intake by 20 %

Compared to the preliminary figures announced on October 14, 2005, EBIT improved by € 1 million to € 703 million and net income by € 2 million to € 161 million.


2005 Group outlook confirmed
Fresenius confirms its increased earnings guidance as announced in the preliminary nine-month results release on October 14, 2005 as well as its sales expectation for the full-year 2005 (before the announced acquisitions).

Sales – high organic growth
In the first nine months of 2005, Group sales increased 7 % in constant currency. Organic growth contributed 6 % and acquisitions 2 % to this increase. Currency translation had a -1 % and divestments a -1 % effect on sales. Sales were € 5,712 million, an increase of 6 % at actual rates (Q1-3 2004: € 5,399 million).

Remarkable constant-currency sales growth was achieved in the main markets North America and Europe of 7 % each. Strong growth rates were achieved in Latin America (+20 %) and in Africa (+29 %). In Asia-Pacific, Fresenius Kabi achieved excellent sales growth. The lower project volume at Fresenius ProServe impacted the sales development in this region.

 Sales contribution of the three business segments: 
 

 

 

Excellent earnings growth
EBITDA increased 11 % in constant currency and 9 % at actual rates to € 937 million (Q1-3 2004: € 857 million). Group EBIT rose 13 % in constant currency and 12 % at actual rates to € 703 million (Q1-3 2004: € 628 million). The Group EBIT margin further improved to 12.3 % in the first nine months of 2005 (Q1-3 2004: 11.6 %).

Group net interest was € -146 million in the first nine months of 2005 (Q1-3 2004: € -156 million). This improvement was mainly the result of a lower debt level compared to the first nine months of 2004 in combination with lower interest rates.

The tax rate for the first nine months of 2005 was 39.3% (Q1-3 2004: 40.3 %), in line with the full-year expectation.

Minority interest increased to € 177 million (Q1-3 2004: € 157 million). 96 % was attributable to minority interest of Fresenius Medical Care.

Group net income grew strongly by 30 % in constant currency and by 29 % at actual rates to € 161 million (Q1-3 2004: € 125 million). Excellent operating results of the two largest business segments Fresenius Medical Care and Fresenius Kabi, lower interest expenses and a lower tax rate contributed to this increase.

Earnings per ordinary share were € 3.92 (Q1-3 2004: € 3.04). Earnings per preference share were € 3.94 (Q1-3 2004: € 3.06). EPS increased 29 % for both share classes.


Investments considerably increased
In the first nine months of 2005, Group investments increased considerably to € 460 million (Q1-3 2004: € 253 million). € 196 million was spent for property, plant and equipment and intangible assets (Q1-3 2004: € 174 million) and € 264 million for acquisitions (Q1-3 2004: € 79 million). The increase in acquisition spending was mainly driven by Fresenius Kabi.


Solid cash flow performance
Fresenius achieved a very good operating cash flow of € 592 million in the first nine month of 2005 (Q1-3 2004: € 580 million). This positive performance was driven by improved earnings whereas higher income tax payments of Fresenius Medical Care in North America had a negative effect. Free cash flow before acquisitions and dividends was € 412 million (Q1-3 2004: € 423 million). Free cash flow after acquisitions (€ 213 million) and dividends (€ 132 million) was € 67 million (Q1-3 2004: € 232 million). This figure was driven by significantly higher acquisition-spending and higher dividend payments.


Solid balance sheet structure
Total assets increased 12% to € 9,196 million (December 31, 2004: € 8,188 million). In constant currency, total assets grew 5 %. Current assets increased 15 % to € 3,163 million (December 31, 2004: € 2,755 million). In constant currency, current assets grew 9 %. This increase was driven by acquisitions and growth of operations.

Group debt rose 3 % to € 2,821 million as of September 30, 2005 (December 31, 2004: € 2,735 million). In constant currency, debt was 1 % below previous year-end's figure.

The net debt/EBITDA ratio was 2.1 as of September 30, 2005 (December 31, 2004: 2.2).
Shareholders' equity including minority interest rose 17 % to € 3,932 million compared to € 3,347 million on December 31, 2004 (at constant currency: +6 %). The equity ratio including minority interest improved to 42.8 % due to strong increase in earnings and currency translation effects (December 31, 2004: 40.9 %).


Employee numbers continue to grow
As of September 30, 2005, the Group had 72,484 employees worldwide, an increase of 6 % (December 31, 2004: 68,494).


Fresenius Biotech
Fresenius Biotech develops innovative therapies with trifunctional antibodies for the treatment of cancer as well as cell therapies for the treatment of the immune system. In the field of polyclonal antibodies, Fresenius Biotech has successfully marketed ATG-Fresenius S for many years. ATG-Fresenius S is an immunosuppressive agent used to prevent and treat graft rejection following organ transplantation.

In the field of trifunctional antibody therapies, the current studies for ovarian cancer (Phase IIa), malignant ascites (Phase II/III) and malignant pleural effusion (Phase I) are continuing according to plan. Results of those studies will be presented for ovarian cancer in the first half of 2006 and for malignant ascites as well as malignant pleural effusion in the second half of 2006. Two phase II studies are in preparation to investigate the treatment of gastric cancer and breast cancer following positive results from two phase I studies for the treatment of peritoneal carcinomatosis and breast cancer. In addition, Fresenius Biotech acquired from its partner Trion the exclusive worldwide clinical development, registration, marketing and sales rights for the trifunctional antibody lymphomun. With this antibody Fresenius Biotech extends its range of indications from solid tumors to malignancies of the blood. The antibody is in preclinical development.


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 September 30, 2005, Fresenius Medical Care was serving approximately 130,400 patients (+6 %) in 1,670 dialysis clinics (+5 %). The company delivered about 14.7 million treatments in the first nine months of 2005 (+5 %).

 

• Strong sales and earnings growth continued
• Excellent performance in North America and Europe
• 2005 outlook confirmed

In the first nine months of 2005, Fresenius Medical Care achieved sales growth of 9 % to US$ 4,999 million (Q1-3 2004: US$ 4,588 million). In constant currency, sales rose 8 %. Organic growth was 7 %.

In North America Fresenius Medical Care achieved a strong sales increase of 7 % to US$ 3,383 million (Q1-3 2004: US$ 3,149 million). Sales outside North America ("International") showed an even stronger growth of 12 % to US$ 1,616 million (Q1-3 2004: US$ 1,439 million). Sales in dialysis care increased 8 % to US$ 3,610 million (Q1-3 2004: US$ 3,334 million). In dialysis products, Fresenius Medical Care achieved sales growth of 11 % to US$ 1,389 million (Q1-3 2004: US$ 1,254 million).

EBIT rose 11 % to US$ 695 million (Q1-3 2004: US$ 625 million) and the EBIT margin was 13.9 % (Q1-3 2004: 13.6 %). EBIT includes one-time costs of US$ 8 million related to the transformation of Fresenius Medical Care's legal form into a KGaA. As previously announced, the company expects one-time costs for the full year 2005 to be approximately US$ 10 million for the transformation. Net income grew by 16 % to US$ 339 million in the first nine months of 2005.

For the year 2005, the Fresenius Medical Care reconfirms its outlook. This guidance does not take into effect the impact of the Renal Care Group acquisition or the one-time costs for the full year 2005 in connection with the transformation of the company's legal form, nor the conversion of the preference shares into ordinary shares.

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.

• New record EBIT margin of 14.3 % in the third quarter of 2005 
• Excellent organic growth of 7 % in the first nine months of 2005 
• 2005 outlook confirmed

In the first nine months of 2005, Fresenius Kabi's sales rose 12 % to € 1,239 million (Q1-3 2004: € 1,105 million). The company achieved an excellent organic growth of 7 %. Acquisitions, primarily the generic I.V. drug company Labesfal, contributed 5 % to sales. Currency translation added 1 % to sales growth. Divestments had a -1 % effect on sales.

Sales in Germany rose 2 %. Sales in Europe (excluding Germany) increased 14 %. Acquisitions contributed significantly to this growth. Fresenius Kabi continued to grow at double-digit rates outside of Europe: In Asia-Pacific Fresenius Kabi achieved strong growth of 15 %, in Latin America of 20 % and in Africa of 18 %.

EBIT of Fresenius Kabi significantly increased by 32 % in the first nine months to € 170 million (Q1-3 2004: € 129 million). The EBIT margin was 13.7 % (Q1-3 2004: 11.7 %). In Q3 2005, the EBIT margin improved by 50 basis points to 14.3 % compared to Q2 2005.
Fresenius Kabi confirms its full-year 2005 outlook.


Fresenius ProServe
Fresenius ProServe offers services for the international health care sector including hospital management and hospital planning and construction as well as planning and construction of pharmaceutical and medical-technical production sites.

• Order intake increased by 20 % in the first nine months of 2005
• Strong 4th quarter in project business expected
• 2005 outlook confirmed

In the first nine months of 2005, Fresenius ProServe achieved sales of € 551 million (Q1-3 2004: € 581 million). On a comparable basis (excluding the nursing home business sold in 2004 and the discontinued international hospital management business), sales were at previous year's level. Sales growth of 2 % to € 260 million was achieved in the hospital management business (Wittgensteiner Kliniken). In the hospital engineering and services business (VAMED) sales rose by 1 % to € 236 million. In the pharmaceutical engineering and services business (Pharmaplan) the order intake improved and Pharmaplan's sales increased in the third quarter 2005.

EBIT was € 11 million in the first nine months of 2005 (Q1-3 2004: € 3 million; before one-time expenses: € 11 million) and in line with the company's expectations.

Order intake and order backlog developed very positively: Order intake in the first nine months of 2005 increased 20 % to € 239 million (Q1-3 2004: € 199 million). Order backlog as of September 30, 2005 rose 19 % to € 399 million (December 31, 2004: € 335 million). Fresenius ProServe expects a strong fourth quarter 2005 in its project business.

Fresenius ProServe confirms its full-year outlook for 2005.


Live video webcast
As part of the earnings announcement for the first nine months of 2005, an analyst conference will be held at the Fresenius headquarters in Bad Homburg on November 3, 2005 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.


Quarterly report
The full nine-months and third-quarter report will be available on the Internet in due course at www.fresenius-ag.com / Investor Relations / Publications.

Today, the Management Board of Fresenius AG, with the approval of the Supervisory Board, has fixed the subscription prices for the new shares at € 93 per ordinary share and € 102 per preference share. The preliminary subscription prices were € 86 per ordinary share and € 93 per preference share. 4,700,000 new ordinary shares and 4,700,000 new preference shares will be issued.

As already announced, the new ordinary shares and preference shares will be subscribed by the members of an underwriting syndicate led by Deutsche Bank as the Global Co-ordinator and Dresdner Kleinwort Wasserstein and WestLB as Joint Bookrunners in line with market practice. They have the obligation to offer the new ordinary shares to the existing ordinary shareholders and the new preference shares to the existing preference shareholders of Fresenius AG at a subscription ratio of 9:2. For a residual amount of up to 108,635 bearer ordinary shares and up to 108,635 bearer preference shares the subscription rights were excluded. Due to the positive market reception, Fresenius AG expects to generate approximately € 900 million of proceeds.

The Else Kröner-Fresenius-Stiftung has sold a limited number of Fresenius shares prior to the subscription period. The proceeds from this disposal and the additional investment already announced in the amount of € 100 million will allow the Else Kröner-Fresenius-Stiftung to fully exercise the subscription rights from its remaining shares.

The subscription period is expected to run from November 17 to November 30, 2005. The trading in the subscription rights is expected to be established during the period from November 17 to November 28, 2005. The new shares are expected to be delivered and included in the quotation of the shares of Fresenius AG at the Frankfurt, Munich and Düsseldorf stock exchanges on December 1, 2005. The shares have full dividend entitlement for 2005.

The new shares created by Fresenius AG's capital increase have met substantial demand from existing and new shareholders. Approx. 99.7 % of the subscription rights for ordinary shares and approx. 99.5 % of the subscription rights for preference shares were exercised.

Existing shareholders of Fresenius AG were offered two new ordinary shares for every nine existing ordinary shares and two new preference shares for every nine existing preference shares. The subscription prices were € 93 for each new ordinary share and € 102 for each new preference share. The subscription rights were traded from November 17 to November 28, 2005. The new shares will be included in the quotation of the existing shares of Fresenius AG at the Frankfurt, Munich and Düsseldorf stock exchanges on December 1, 2005. They have full dividend entitlement for 2005. Proceeds generated in the transaction are in excess of € 900 million.

Dr. Ulf M. Schneider, CEO of Fresenius AG: "The positive market reception of the capital increase reflects the confidence of the capital markets in Fresenius and confirms the acceptance of our strategy. We are very pleased with the success of the capital increase."

The transaction was executed by a bank consortium led by Deutsche Bank as Global Co-ordinator and Dresdner Kleinwort Wasserstein and WestLB as Joint Bookrunners.