The stock split with capital increase from company funds was recorded in the commercial register today. After close of trading, shareholder's deposits and the stock exchange listing will be converted. Trading at the new split-adjusted price will start on Monday, August 4, 2014.

Fresenius shares will continue to trade under ISIN DE0005785604.

The subscribed capital of Fresenius SE & Co. KGaA now amounts to € 540,511,632 divided into 540,511,632 ordinary shares.

For American Depositary Receipt (ADR) investors:
In conjunction with the stock split, Fresenius will also change the ratio of its American Depositary Receipts ("ADRs") which trade on OTCQX International Premier in the U.S. At present, 8 ADRs represent one underlying Fresenius share. This ratio will now change so that 4 ADRs represent one underlying share. The ratio change will come into effect on August 4, 2014.

Fresenius is mourning the loss of Dr. Gerhard Rupprecht, who died in an accident at the end of last week. Dr. Rupprecht, who was 65, joined the Supervisory Board of Fresenius AG (now Fresenius SE & Co. KGaA) in October 2004, and as Deputy Chairman since March 2011 made important contributions to the company's successful development.

Dr. Rupprecht, a doctorate holder in mathematics and former Chief Executive Officer of Allianz Deutschland AG, had also been a member of the Supervisory Board of Fresenius Management SE since May 2010.

The Supervisory Boards, the Management Board and the company's employees will retain respectful memories of Dr. Rupprecht, and remain grateful for his many valuable services to Fresenius.

The Supervisory Board of Fresenius SE & Co. KGaA will propose that the next Annual General Meeting elect Mr. Michael Diekmann to the Supervisory Board. The Supervisory Board believes that his immense expertise and experience qualify Mr. Diekmann for the position of Deputy Chairman, which is now vacant. If elected to the Board, Mr. Diekmann has declared that he will seek this post.

Mr. Michael Diekmann, 59, has served as Chief Executive Officer of Allianz SE since April 2003. He has been member of the company's Management Board since 1998. He is currently a member of the Supervisory Boards of Siemens AG, BASF SE and Linde AG, serving as Deputy Chairman at the latter two companies. After reaching the age limit for Management Board members at Allianz SE, Mr. Diekmann will retire as member of the Management Board in May 2015.

Fresenius SE & Co. KGaA is required to appoint a new Supervisory Board member following the death of Dr. Gerhard Rupprecht, who served as the Board's Deputy Chairman.

Q3/2014:
Sales: €6.0 billion (+20% in constant currency, +18% at actual rates)
EBIT¹: €820 million (+10% in constant currency, +9% at actual rates)
Net income²: €281 million (+5% in constant currency, +4% at actual rates)

Q1-3/2014: 
Sales: €16.7 billion (+14% in constant currency, +11% at actual rates) 
EBIT³: €2.2 billion (+3% in constant currency, +1% at actual rates)
Net income⁴: €768 million (+4% in constant currency, +2% at actual rates)
 
Ulf Mark Schneider, CEO of Fresenius, said: "Fresenius had a strong third quarter with growth accelerating in all four business segments. Emerging markets stood out with double-digit organic sales growth. We confirm our full year Group guidance and remain optimistic about the fundamental growth trends in our markets."
 
¹before integration costs
²Net income attributable to shareholders of Fresenius SE & Co. KGaA; before integration costs
³2014 before integration costs and disposal gains (two HELIOS hospitals, Rhön stake); 2013 before integration costs
⁴Net income attributable to shareholders of Fresenius SE & Co. KGaA; 2014 before integration costs and disposal gains (two HELIOS hospitals, Rhön stake); 2013 before integration costs
 
2014 Group outlook¹ fully confirmed
Based on the Group's strong financial results in the first three quarters, Fresenius confirms its 2014 Group guidance. Sales are expected to increase by 14% to 16%, net income² is expected to increase by 2% to 5% (both in constant currency).
 
The net debt/EBITDA ratio is expected to be approximately 3.25 at year-end.
 
¹Includes contributions from the acquisition of hospitals from Rhön-Klinikum AG and acquisitions at Fresenius Medical Care
²Net income attributable to shareholders of Fresenius SE & Co. KGaA; 2014 before integration costs and disposal gains (two HELIOS hospitals, Rhön stake)
 

14% sales growth in constant currency
Group sales increased by 11% (14% in constant currency) to €16,711 million (Q1-3/2013: €15,032 million). Organic sales growth was 4%. Acquisitions contributed 11%. Divestitures reduced sales growth by 1%. In Q3/2014, Group sales increased by 18% (20% in constant currency) to €5,978 million (Q3/2013: €5,045 million). Organic sales growth was 6%.
 
Group sales by region developed as follows:

In the first nine months, organic sales growth was 4% in North America and 3% in Europe. In Asia-Pacific organic sales growth was 5%. In Latin America organic sales growth was 10%. In Africa, the decline in sales is mainly due to fluctuations in the project business at Fresenius Vamed. Adverse currency translation effects weighed on Group sales in Latin America (-17%), Asia-Pacific (-4%), Africa (-5%) and North America (-3%).
 
4% net income growth in constant currency
Group EBITDA¹ grew by 3% (5% in constant currency) to €2,905 million (Q1-3/2013: €2,824 million). Group EBIT¹ increased by 1% (3% in constant currency) to €2,223 million (Q1-3/2013: €2,202 million). The EBIT margin was 13.3% (Q1-3/2013: 14.6%). In Q3/2014 Group EBIT² was €820 million (Q3/2013: €754 million), the EBIT margin was 13.7% (Q3/2013: 14.9%).
 
Group net interest was -€431 million (Q1-3/2013:-€449 million). Improved financing terms as well as favorable currency effects contributed to the decrease.
 
The Group tax rate¹ was 29.5% and above the prior-year level (Q1-3/2013: 28.3%). This is mainly due to a special tax effect at Fresenius Medical Care in Q2/2014.
 
Noncontrolling interest was €495 million (Q1-3/2013: €504 million), of which 95% was attributable to the noncontrolling interest in Fresenius Medical Care.
 
Group net income³ increased by 2% (4% in constant currency) to €768 million(Q1-3/2013: €753 million). Earnings per share³ increased by 1% (2% in constant currency) to €1.42 (Q1-3/2013: €1.41). The weighted average number of shares outstanding was 539,976,138 (Q1-3/2013: 535,366,314). In Q3/2014, Group net income⁴ increased by 4% (5% in constant currency) to €281 million (Q3/2013: €271 million).
 
Group net income attributable to shareholders of Fresenius SE & Co. KGaA (including special items) increased by 11% (13% in constant currency) to €810 million (Q1-3/2013: €727 million). Earnings per share increased by 10% (12% in constant currency) to €1.50 (Q1-3/2013: €1.36). In Q3/2014, Group net income attributable to shareholders of Fresenius SE & Co. KGaA (including special items) increased by 4% (6% in constant currency) to €276 million (Q3/2013: €265 million). Earnings per share increased by 2% (4% in constant currency) to €0.51 (Q3/2013: €0.50).
 
¹2014 before integration costs and disposal gains (two HELIOS hospitals, Rhön stake); 2013 before integration costs
²2014 before integration costs; 2013 before integration costs
³Net income attributable to shareholders of Fresenius SE & Co. KGaA; 2014 before integration costs and disposal gains (two HELIOS hospitals, Rhön stake); 2013 before integration costs
⁴Net income attributable to shareholders of Fresenius SE & Co. KGaA; 2014 before integration costs; 2013 before integration costs
 
Continued investment in growth
The Fresenius Group spent €854 million on property, plant and equipment (Q1-3/2013: €676 million). The Company primarily invested in the modernization and expansion of production facilities and hospitals as well as in the equipment of new, and the expansion of existing dialysis clinics.
 
Total acquisition spending was €1,861 million (Q1-3/2013: €442 million), including €805 million for the acquisition of hospitals from Rhön-Klinikum AG and €919 million for acquisitions at Fresenius Medical Care.
 
Strong cash flow margin increase in Q3
Operating cash flow increased by 8% to €1,695 million (Q1-3/2013: €1,566 million) with a margin of 10.1% (Q1-3/2013: 10.4%). The margin decrease was attributable to the payment for the W.R. Grace bankruptcy settlement of US$115 million in Q1/2014 and increased working capital at Fresenius Medical Care. Operating cash flow in Q3/2014 increased to €945 million with a margin of 15.8% (Q3/2013: €619 million with a margin of 12.3%). The strong Q3/2014 margin is due to the very good sequential and year-on-year cash flow development in all business segments.
 
Net capital expenditure increased to €848 million (Q1-3/2013: €659 million). Free cash flow before acquisitions and dividends was €847 million (Q1-3/2013: €907 million). Free cash flow after acquisitions and dividends was -€1,154 million (Q1-3/2013: €151 million).
 
¹see Annual Report 2013, page 150 f.
 
Solid balance sheet structure
The Group's total assets increased by 15% (10% in constant currency) to €37,718 million (Dec. 31, 2013: €32,758 million). This increase is mainly attributable to the first-time consolidation of hospitals acquired from Rhön-Klinikum AG, acquisitions at Fresenius Medical Care and currency effects. Current assets grew by 20% (16% in constant currency) to €9,584 million (Dec. 31, 2013: €7,972 million). Non-current assets increased by 14% (8% in constant currency) to €28,134 million (Dec. 31, 2013: €24,786 million).
 
Total shareholders' equity increased by 12% (7% in constant currency) to €14,854 million (Dec. 31, 2013: €13,260 million). The equity ratio was 39.4% (Dec. 31, 2013: 40.5%).
 
Group debt grew by 16% (11% in constant currency) to €14,878 million (Dec. 31, 2013: €12,804 million). Net debt was €13,843 million (Dec. 31, 2013: €11,940 million). The increase is mainly due to the hospitals acquired from Rhön-Klinikum AG, the acquisitions at Fresenius Medical Care as well as currency effects.
 
As of September 30, 2014, the net debt/EBITDA ratio was 3.44¹ (Dec. 31, 2013: 2.51²).
 
¹Pro forma including acquired Rhön hospitals, acquisition at Fresenius Medical Care and excluding two HELIOS hospitals; before integration costs and disposal gains (two HELIOS hospitals; Rhön stake)
²Pro forma excluding advances made for the acquisition of hospitals from Rhön-Klinikum AG; before integration costs
 
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, 2014, Fresenius Medical Care was treating 283,135 patients in 3,349 dialysis clinics.

• 7% organic sales growth in Q3
• 17.3% operating cash flow margin in Q3
• 2014 guidance confirmed

 
Sales increased by 7% (8% in constant currency) to US$11,511 million (Q1-3/2013: US$10,743 million). Organic sales growth was 5%. Acquisitions contributed 4%, while divestitures reduced sales growth by 1%. In Q3/2014, sales increased by 12% to US$4,113 (Q3/2013: US$3,666).
 
Sales in dialysis services increased by 8% (10% in constant currency) to US$8,928 million (Q1-3/2013: US$8,235 million). Dialysis product sales grew by 3% (3% in constant currency) to US$2,583 million (Q1-3/2013: US$2,508 million).
 
In North America, sales grew by 7% to US$7,624 million (Q1-3/2013: US$7,099 million). Dialysis services sales increased by 8% to US$7,015 million (Q1-3/2013: US$6,485 million). Dialysis product sales decreased by 1% to US$609 million (Q1-3/2013: US$614 million).
 
Sales outside North America ("International" segment) increased by 6% (9% in constant currency) to US$3,843 million (Q1-3/2013: US$3,619 million). Sales in dialysis services increased by 9% to US$1,913 million (Q1-3/2013: US$1,750 million). Dialysis product sales increased by 3% to US$1,930 million (Q1-3/2013: US$1,869 million).
 
EBIT was US$1,591 million (Q1-3/2013: US$1,595 million). The EBIT margin was 13.8% (Q1-3/2013: 14.8%). EBIT was impacted by sequestration and rebasing of Medicare's reimbursement rate in the United States. In Q3/2014, EBIT increased by 6% to US$590 million (Q3/2013: US$557 million). EBIT margin was 14.3% (Q3/2013: 15.2%).
 
Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA was US$710 million (Q1-3/2013: US$761 million). In Q3/2014, net income was US$271 million (Q3/2013: US$273 million).
 
Operating cash flow was US$1,274 million (Q1-3/2013: US$1,446 million). The decrease was mainly attributable to the payment for the W.R. Grace bankruptcy settlement of US$115 million and increased working capital in Q1/2014. The cash flow margin was 11.1% (Q1-3/2013: 13.5%). In Q3/2014, operating cash flow increased to US$712 million (Q3/2013: US$605 million), the cash flow margin was 17.3% (Q3/2013: 16.5%).
 
Fresenius Medical Care confirms its outlook for 2014. Fresenius Medical Care expects sales of approximately US$15.2 billion, translating into a growth rate of around 4%. This outlook excludes sales of approximately US$500 million from acquisitions completed during the first nine months of 2014. Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA is expected to be unchanged between US$1.0 to US$1.05 billion. The company has initiated a global efficiency program designed to enhance its performance over a multi-year period. Potential cost savings before income taxes of up to US$60 million generated from this program are not included in the outlook for 2014.
 
For further information, please see Fresenius Medical Care's Press Release at www.fmc-ag.com.
 
¹Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA 
 
Fresenius Kabi
Fresenius Kabi offers infusion therapies, intravenously administered generic drugs and clinical nutrition for seriously and chronically ill patients in the hospital and outpatient environments. The company is also a leading supplier of medical devices and transfusion technology products.

• 5% organic sales growth in Q3
• Sequential EBIT margin increase by 40 bps to 17.2% in Q3
• 2014 guidance: 4 % to 6 % organic sales growth confirmed, EBIT-margin of approximately 17% expected

 
Sales were €3,760 million (Q1-3/2013: €3,742 million). In constant currency, sales increased by 4%. Organic sales growth was 3%. Acquisitions contributed 1% sales growth. Adverse currency translation effects (-4%) were mainly driven by the weaker currencies in the United States and Argentina against the Euro. In Q3/2014, sales increased by 6% (7% in constant currency) to €1,294 million (Q3/2013: €1,223 million). Organic sales growth was 5%.
 
Sales in Europe grew by 1% (organic sales growth: 2%) to €1,538 million (Q1-3/2013: €1,524 million). Sales in North America decreased by 3% (organic sales growth: 0%) to €1,118 million (Q1-3/2013: €1,158 million). Asia-Pacific sales increased by 5% (organic sales growth: 7%) to €723 million (Q1-3/2013: €689 million). Sales in Latin America/Africa increased by 3% (organic sales growth: 13%) to €381 million (Q1-3/2013: €371 million).
 
EBIT¹ was €634 million (Q1-3/2013: €695 million), a decrease of 6% in constant currency. Besides currency headwinds, EBIT was impacted by lower HES sales and the easing of drug shortages in North America. The EBIT margin of 16.9% was in line with expectations and our guidance range. In Q3/2014, EBIT¹ was €223 million (Q3/2013: €226 million), an increase of 1% in constant currency. Sequentially, the EBIT margin improved by 40 bps to 17.2% in Q3/2014.
 
Net income² was €337 million (Q1-3/2013: €367 million). In Q3/2014, net income² was €120 million (Q3/2013: €125 million).
 
Operating cash flow was €432 million (Q1-3/2013: €303 million) with a margin of 11.5% (Q1-3/2013: 8.1%). In Q3/2014, operating cash flow was €217 million (Q3/2013: €65 million) with a margin of 16.8% (Q3/2013: 5,3%).
 
Integration costs for Fenwal were €6 million (pre-tax) in Q1-3 2014. These costs are reported in the Group Corporate/Other segment.
Fresenius Kabi confirms its 2014 organic sales growth outlook of 4% to 6%. The EBIT margin is now confirmed at approximately 17%, so within the previously guided range of 16.5% to 18%.
 
Fresenius Kabi guidance excludes €40-50 million pre-tax Fenwal integration costs (€30-40 million after tax); see Group guidance
 
¹before integration costs
²Net income attributable to shareholders of Fresenius Kabi AG; before integration costs
 
Fresenius Helios
Fresenius Helios is Germany's largest hospital operator. HELIOS owns 110 hospitals, thereof 86 acute care clinics including seven maximum care hospitals in Berlin-Buch, Duisburg, Erfurt, Krefeld, Schwerin, Wiesbaden and Wuppertal and 24 post-acute care clinics. HELIOS treats more than 4.2 million patients p.a., thereof more than 1.2 million inpatients, and operates more than 34,000 beds.

• 6% organic sales growth in Q3
• Sequential EBIT margin increase of 30 bps to 10.8% in Q3
• 2014 guidance fully confirmed

 
Sales increased by 53% to €3,883 million (Q1-3/2013: €2,537 million). The strong increase is mainly due to the acquired hospitals from Rhön-Klinikum AG. The divestment of two HELIOS hospitals reduced sales growth by 2%. Organic sales growth was 4%. In Q3/2014, sales increased by 62% to €1,362 million (Q3/2013: €842 million), organic sales growth was 6%.

EBIT² grew by 41% to €397 million (Q1-3/2013: €282 million). The EBIT margin was 10.2% (Q1-3/2013: 11.1%). The margin decline is due to the consolidation of the newly acquired hospitals. In Q3/2014, EBIT¹ was €147 million (Q3/2014: €103 million). Sequentially, the EBIT margin increased by 30 bps from 10.5% in Q2/2014 to 10.8% in Q3/2014.
 
Net income^3,5 increased by 47% to €286 million (Q1-3/2013: €194 million). In Q3/2014, net income^3,4 increased by 43% to €107 million (Q3/2013: €75 million).
 
Sales of the established hospitals grew by 4% to €2,583 million. EBIT improved by 4% to €287 million. The EBIT margin was 11.1% (Q1-3/2013: 11.1%).
 
Sales of the acquired hospitals were €1,300 million, EBIT was €110 million and EBIT margin was 8.5%. Q3/2014 EBIT margin decreased by 20 bps sequentially to 8.9% due to the first time consolidation of the acquired hospital in Wiesbaden (HSK) as of June 30, 2014.
 
The integration of the acquired hospitals is progressing as planned. Integration costs are now expected to be between €60-80 million (before: approximately €80 million) in total for 2014 and 2015. Fresenius Helios confirms expected cost synergies of approximately €85 million p.a. by 2015.
 
Fresenius Helios fully confirms its 2014 outlook, and projects organic sales growth of 3% to 5%. The acquired hospitals are also expected to show 3% to 5% organic growth and to contribute sales of approximately €1.8 billion. EBIT for HELIOS including the acquired hospitals is expected to increase to €540-560 million.
 
Fresenius Helios guidance before integration costs for the hospitals acquired from Rhön-Klinikum AG and disposal gains of two HELIOS hospitals and Rhön stake. The integration costs will be reported in the Group Corporate/Other segment, see Group guidance.
 
¹2014 before integration costs
²2014 before integration costs and disposal gains (two HELIOS hospitals, Rhön stake)
³Net income attributable to shareholders of HELIOS Kliniken GmbH
⁴2014 before integration costs
⁵2014 before integration costs and disposal gains (two HELIOS hospitals, Rhön stake)
 
Fresenius Vamed

Fresenius Vamed manages projects and provides services for hospitals and other health care facilities worldwide.

• 7% organic sales growth in Q3
• Record quarterly order intake of €378 million in Q3
• 2014 guidance: flat organic sales growth expected, 5% - 10% EBIT growth expectation confirmed

 
Sales were €655 million (Q1-3/2013: €654 million). Organic sales growth was -2%, acquisitions contributed 2%. Sales in the project business decreased by 8% to €306 million (Q1-3/2013: €332 million), mainly due to project delays in Russia and Ukraine. Sales in the service business grew by 8% to €349 million (Q1-3/2013: €322 million). Sales in Q3/2014 were €257 million (Q3/2013: €233 million). Organic sales growth was 7%.
 
EBIT grew by 8% to €27 million (Q1-3/2013: €25 million) with a margin of 4.1% (Q1-3/2013: 3.8%). In Q3/2014, EBIT increased by 20% to €12 million (Q3/2013: €10 million) with a margin of 4.7% (Q3/2013: 4.3%).
 
Net income¹ increased by 13% to €18 million (Q1-3/2013: €16 million). In Q3/2014, net income¹ increased by 14% to €8 million (Q3/2013: €7 million).
 
Order intake increased by 78% to €678 million (Q1-3/2013: €380 million). Q3/2014 order intake was at a record level of €378 million, mainly driven by the modernization contract with the University Hospital Schleswig-Holstein in Germany. As of September 30, 2014, order backlog increased to €1,504 million (Dec. 31, 2013: €1,139 million).
 
Due to project delays in Russia and Ukraine Fresenius Vamed now expects flat organic sales growth (before: 5% to 10%). The EBIT growth guidance of 5% to 10% for 2014 remains unchanged.
 
¹Net income attributable to shareholders of Vamed AG
 
Analyst-/Investor Conference Call
As part of the publication of the results for the first three quarters of 2014, a conference call will be held on November 4, 2014 at 2 p.m. CET (8 a.m. EST). All journalists are cordially invited to follow the conference call in a live broadcast via the Internet at www.fresenius.com, see Press – Audio/Video Service. Following the call, a replay of the conference call will be available on our website.

Fresenius has launched a refinancing of the revolving facilities and the term loan A tranches (aggregate volume approx. €3 bn) under its 2013 senior credit agreement. The maturity will be extended by 2 years to June 28, 2020. Given the improved credit profile and favorable bank market conditions, Fresenius' proposal also includes reduced credit margins.

S&P has upgraded the corporate credit rating of Fresenius from BB+ to BBB- with a stable outlook. The upgrade reflects Fresenius' enhanced stability – derived from overall critical mass coupled with sound diversification and leading positions in non-cyclical markets – rather than a shift in its financial policy.

Moody's Investors Service has raised the outlook on the Ba1 rating for Fresenius to stable.

Fresenius continues to view itself as an active consolidator in its markets and will continue to focus on financing acquisitions primarily with debt. Minimizing the weighted average cost of capital continues to be a key aim of Fresenius' financial policy. This requires the conscious and prudent use of debt in the Group's capital structure.

Birgit Grund, Senior Vice President of Investor Relations at Fresenius for the past 24 years, plans to leave the Company on March 31, 2015, to pursue a new opportunity. Ulf Mark Schneider, CEO of Fresenius, commented: "Her significant contributions and outstanding commitment were instrumental in building the trust and credibility Fresenius enjoys within the financial community. We wish her all the best in her future endeavors."

Markus Georgi will succeed Birgit Grund as Senior Vice President of Investor Relations, effective April 1, 2015. He has worked in Investor Relations for more than 15 years and will join Fresenius from Celesio AG, where he is currently Director Investor Relations. Prior to joining Celesio in 2011, Georgi was Head of Investor Relations at CompuGroup Medical AG and before that Vice President Investor Relations & Head of Equity Capital Markets at Deutsche Telekom AG. Ulf Mark Schneider, CEO of Fresenius, said: "We are pleased to have Markus Georgi assume this important position at Fresenius. His extensive experience in Investor Relations makes him well qualified for this role. We wish him every success with his new duties."

Note to the media: Images of Birgit Grund and Markus Georgi can be requested at pr-fre@fresenius.com.

If no timeframe is specified, information refers to Q1-4/2014.
For a detailed overview of special items please see the reconciliation tables on pages 17-18 in the pdf.

 
Fiscal year 2014:

• Sales: €23.2 billion (+16% in constant currency, +14% at actual rates)
• EBIT¹: €3,158 million (+4% in constant currency, +4% at actual rates)
• Net income²: €1,086 million (+4% in constant currency, +3% at actual rates)
• 6% dividend increase to €0.44 per share proposed

 
Q4/2014:

• Sales: €6.5 billion (+20% in constant currency, +23% at actual rates)
• EBIT¹: €935 million (+7% in constant currency, +11% at actual rates)
• Net income²: €318 million (+5% in constant currency, +7% at actual rates)

 
Positive Group outlook 2015³:

• Sales growth of 7% to 10% in constant currency
• Net income⁴ growth of 9% to 12% in constant currency

 
Ulf Mark Schneider, CEO of Fresenius, said: „2014 was a challenging but successful year for Fresenius. We made significant progress on the integration of the Rhön hospitals, strengthened the Care Coordination initiatives at Fresenius Medical Care, and set new sales and earnings records for the Group. Fresenius sees significant opportunities arising from the increasing demand for affordable, high-quality health care around the globe. We remain highly optimistic about the growth prospects in all our business segments for 2015 and beyond."
 
¹Before special items
²Net income attributable to shareholders of Fresenius SE & Co. KGaA; before special items
³Based on February 20 exchange rates applied to the remainder of the year, this implies sales of ~€27 billion and net income of ~€1.27 billion, at the lower-point of the guidance range
⁴Net income attributable to shareholders of Fresenius SE & Co. KGaA; 2015 before integration costs (~€10 million before tax for hospitals acquired from Rhön-Klinikum AG), before costs for the efficiency program at Fresenius Kabi (~€100 million before tax) and before the gain from the divestment of two HELIOS hospitals (€34 million before tax); 2014 before special items

 
22nd consecutive dividend increase proposed
Based on the strong financial results, the Management Board will propose to the Supervisory Board a dividend increase of 6% to €0.44 per share (2013: €1.25 pre 1:3 share split). The total dividend distribution is expected to be €238 million.
 
Positive Group outlook for 2015
For 2015, Fresenius projects sales growth of 7% to 10% in constant currency. Net income is expected to increase by 9% to 12% in constant currency.
 
The net debt/EBITDA ratio is expected to be at approximately 3.0 at the end of 2015.
  
16% constant currency sales growth – at top end of guidance
Group sales increased by 14% (16% in constant currency) to €23,231 million (2013: €20,331 million). Organic sales growth was 4%. Currency translation had a negative effect of 2%. Acquisitions contributed 12%. Divestitures had a marginal effect on sales growth.
 
In Q4/2014, Group sales increased by 23% (20% in constant currency) to €6,520 million (Q4/2013: €5,299 million). Organic sales growth was 6%.
 
Group sales by region:

4% net income¹ growth in constant currency
Group EBITDA² increased by 5% (6% in constant currency) to €4,095 million (2013: €3,888 million). Group EBIT² increased by 4% (also 4% in constant currency) to €3,158 million (2013: €3,045 million). The EBIT margin of 13.6% (2013: 15.0%) was impacted by the first-time consolidation of the acquired Rhön hospitals, the rebasing of Medicare‘s dialysis reimbursement rate, a decline in the use of HES blood volume substitutes, and the easing of IV drug shortages in the United States. In Q4/2014, Group EBIT² increased by 11% (7% in constant currency) to €935 million (Q4/2013: €843 million) and the EBIT margin was 14.3% (Q4/2013: 15.9%).
 
Group net interest increased to -€602 million (2013: -€584 million). This was due to incremental acquisition debt partially offset by more favorable financing conditions.
 
The Group tax rate² was 28.4% (2013: 27.8%).

Noncontrolling interest was €745 million (2013: €727 million), of which 94% was attributable to the noncontrolling interest in Fresenius Medical Care.

Group net income¹ increased by 3% (4% in constant currency) to €1,086 million (2013: €1,051 million). Earnings per share¹ increased by 3% (3% in constant currency) to €2.01 (2013: €1.96³). The weighted average number of shares outstanding was 540,347,847 (2013: 536,017,9563³). In Q4/2014, Group net income¹ increased by 7% (5% in constant currency) to €318 million (Q4/2013: €298 million). Earnings per share¹ increased to €0.59 (Q4/2013: €0.553).

Group net income (including special items) attributable to shareholders of Fresenius SE & Co. KGaA increased by 6% (6% in constant currency) to € 1,067 million (2013: € 1,011 million). Earnings per share increased by 4% (5% in constant currency) to € 1.97 (2013: € 1.89³). In Q4/2014, Group net income attributable to shareholders of Fresenius SE & Co. KGaA (including special items) decreased by 10% (12% in constant currency) to €257 million (Q4/2013: €284 million). Earnings per share decreased to €0.47 (Q4/2013: €0.53³).
 
¹Net income attributable to shareholders of Fresenius SE & Co. KGaA; before special items
²Before special items
³Adjusted for 1:3 share split in 2014

 

Continued investment in growth
Spending on property, plant and equipment was €1,345 million (2013: €1,073 million). The Company primarily invested in the modernization and expansion of production facilities, dialysis clinics, and hospitals.
 
Total acquisition spending was €2,450 million (2013: €2,754 million), including €816 million for the acquisition of hospitals from Rhön-Klinikum AG and €1,495 million for acquisitions by Fresenius Medical Care.
 
11.1% cash flow margin
Operating cash flow increased by 11% to € 2,585 million (2013: € 2,320 million). The cash flow margin was 11.1% (2013: 11.4%). The margin decrease was mainly attributable to the payment for the W.R. Grace bankruptcy settlement of US$115 million¹ in Q1/2014. Operating cash flow in Q4/2014 increased to €890 million with a margin of 13.7% (Q4/2013: €754 million with a margin of 14.2%).
 
Net capital expenditure increased to €1,323 million (2013: €1,047 million). Free cash flow before acquisitions and dividends was €1,262 million (2013: €1,273 million). Free cash flow after acquisitions and dividends was -€1,348 million (2013: -€1,774 million).

¹See Annual Report 2013, page 150 f.
 
Solid balance sheet structure
The Group's total assets increased by 22% (15% in constant currency) to €39,897 million (Dec. 31, 2013: €32,758 million). This increase is mainly attributable to the first-time consolidation of hospitals acquired from Rhön-Klinikum AG and acquisitions by Fresenius Medical Care.

Current assets grew by 26% (20% in constant currency) to €10,028 million (Dec. 31, 2013: €7,972 million). Non-current assets increased by 21% (13% in constant currency) to €29,869 million (Dec. 31, 2013: € 24,786 million).

Total shareholders' equity increased by 17% (10% in constant currency) to €15,483 million (Dec. 31, 2013: €13,260 million). The equity ratio was 38.8% (Dec. 31, 2013: 40.5%).

Group debt grew by 21% (13 % in constant currency) to € 15,454 million (Dec. 31, 2013: € 12,804 million). The increase is mainly due to the acquisition of hospitals from Rhön-Klinikum AG and the acquisitions by Fresenius Medical Care.

As of December 31, 2014, the net debt/EBITDA ratio was 3.41¹ (3.26¹ at 2014 average exchange rates for both net debt and EBITDA). As of December 31, 2013, the ratio was 2.51².

¹ Pro forma acquisitions; before special items
²Pro forma excluding advances made for the acquisition of hospitals from Rhön-Klinikum AG; before special items

 
Increased number of employees
As of December 31, 2014, the number of employees increased by 21% to 216,275 (Dec. 31, 2013: 178,337). This is mainly due to the acquisition of hospitals from Rhön-Klinikum AG and acquisitions at Fresenius Medical Care.
 
Business Segments
 
Fresenius Medical Care
Fresenius Medical Care is the world's largest integrated provider of products and services for individuals undergoing dialysis because of chronic kidney failure. As of December 31, 2014, Fresenius Medical Care was treating 286,312 patients in 3,361 dialysis clinics.

• 2014 guidance achieved: US$15.8 billion sales; US$1,045 million net income
• Acquisitions strengthen Care Coordination initiative
• Outlook 2015: 5% to 7% sales increase; 0% to 5% net income growth

Sales increased by 8% (10% in constant currency) to US$15,832 million (2013: US$14,610 million). Organic sales growth was 5%. Acquisitions contributed 5%. In Q4/2014, sales increased by 12% to US$4,320 (Q4/2013: US$3,867).
 
Health care services (dialysis services and care coordination) sales increased by 10% (12% in constant currency) to US$12,250 million (2013: US$11,130 million). Dialysis product sales grew by 3% (4% in constant currency) to US$3,582 million (2013: US$3,480 million).
 
In North America, sales increased by 9% to US$10,500 million (2013: US$9,606 million). Health care services sales grew by 10% to US$9,655 million (2013: US$8,772 million). Dialysis product sales increased by 1% to US$845 million (2013: US$834 million).
 
Sales outside North America ("International" segment), grew by 6% (11% in constant currency) to US$5,265 million (2013: US$4,970 million). Health care services sales increased by 10% to US$2,595 million (2013: US$2,358 million). Dialysis product sales grew by 2% to US$2,670 million (2013: US$2,612 million)
 
EBIT was US$ 2,255 million (2013: US$2,256 million) (0% change in constant currency). The EBIT margin was 14.2% (2013: 15.4%). The decrease is mainly due to the rebasing of Medicare's dialysis reimbursement rate in the United States.
 
In Q4/2014, EBIT was US$663 million (Q4/2013: US$661 million). The EBIT margin was 15.4% (Q4/2013: 17.1%).
 
Net income² attributable to shareholders of Fresenius Medical Care AG & Co. KGaA was US$1,045 million (2013: US$1,110 million). In Q4/2014, net income was US$335 million, a decrease of 4% compared to Q4/2013. The tax rate was 26.2% (Q4/2013: 30.4%). The Q4/2014 tax rate was favorably influenced by the resolution of challenged deductions for civil settlement payments taken in prior years. The FY/2014 tax rate was 31.7% (2013: 32.0%).
 
Operating cash flow was US$1,861 (2013: US$2,035 million). The decrease was mainly attributable to the payment for the W.R. Grace bankruptcy settlement of US$115 million in Q1/2014. The cash flow margin was 11.8% (2013: 13.9%). In Q4/2014, operating cash flow was US$588 million (Q4/2013: US$589 million) with a margin of 13.6% (Q4/2013: 15.2%).
 
For 2015, Fresenius Medical Care expects sales to grow by 5% to 7%. Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA is expected to increase by 0% to 5%.

 
For 2016, Fresenius Medical Care expects an acceleration of growth with a sales increase of 9% to 12% and net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA growing by 15% to 20%.

 
The information provided is based on the exchange rates prevailing at the beginning of 2015. Savings from the global efficiency program are included, while potential acquisitions are not. The outlook includes further operating cost investments within the Care Coordination business.

 
As disclosed in the company's long-term target for 2020, Fresenius Medical Care expects sales to grow at an average annual rate of approximately 10% and net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA at an average annual rate in the high single-digits.

 
For further information, please see Fresenius Medical Care's Press Release at www.freseniusmedicalcare.com.

¹Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
²Including cost savings from the global efficiency program

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

• 4% organic sales growth, 17% EBIT margin – fully in line with 2014 guidance
• Efficiency program initiated
• Outlook 2015: 3% to 5% organic sales growth; 4% to 6% EBIT growth in constant currency
• New mid-term guidance: 5% to 8% p.a. organic sales growth; 6% to 10% p.a. EBIT growth in constant currency

Sales increased by 3% (5% in constant currency) to €5,146 million (2013: €4,996 million). Sales growth was impacted by a decline in the use of HES blood volume substitutes and easing of IV drug shortages in the United States. Organic sales growth was 4%. Acquisitions contributed 1% to sales. Adverse currency translation effects (-2%) were mainly related to the Euro's appreciation against the currencies in Argentina, Brazil, Canada and South Africa. In Q4/2014, sales increased by 11% (8% in constant currency) to €1,386 million (Q4/2013: €1,254 million).
 
Organic sales growth was 7%.

 
Sales in Europe grew by 2% (organic growth: 3%) to €2,102 million (2013: €2,053 million). Sales in North America increased by 1% (organic growth: 1%) to €1,531 million (2013: €1,522 million). Asia-Pacific sales increased by 6% (organic growth: 7%) to €987 million (2013: €927 million). Sales in Latin America/Africa grew by 6% (organic growth: 14%) to €526 million (2013: €494 million).
 
EBIT¹ was €873 million (2013: €926 million), a decrease of 4% in constant currency. EBIT¹ was impacted by lower HES sales and the easing of IV drug shortages in the United States. The EBIT margin was 17.0% (2013: 18.5%). In Q4/2014, EBIT was €239 million (Q4/2013: €231 million). The EBIT margin was 17.2% (Q4/2013: 18.4%).
 
Net income² decreased by 4% to €468 million (2013: €487 million). In Q4/2014, net income² increased by 9% to €131 million (Q4/2013: €120 million).
 
Operating cash flow increased by 31% to €641 million (2013: €488 million) with a margin of 12.5% (2013: 9.8%). In Q4/2014, operating cash flow increased to €209 million (Q4/2013: €185 million) with a margin of 15.1% (Q4/2013: 14.8%).
 
Integration costs for Fenwal were €50 million pre-tax in 2014. These costs are reported in the Group Corporate/Other segment.
 
On February 16, 2015, Fresenius Kabi sold its German oncology compounding business (CFL). CFL's 2014 sales were €77 million. The business was deconsolidated as of February 1, 2015. The transaction did not result in a material book gain or loss.
 
For 2015, Fresenius Kabi expects organic sales growth of 3% to 5%.³ EBIT growth in constant currency is expected to be in the range of 4% to 6%.³ The implied EBIT margin is 17.5% to 18.5%. Going forward, the company sees attractive value-creating growth opportunities that may be slightly dilutive to EBIT margins. Fresenius Kabi will therefore focus on EBIT growth as a key performance metric.
 
Fresenius Kabi initiated a program designed to increase production efficiency and streamline administrative structures. The company expects implementation costs of approximately €100 million before tax in 2015. Two thirds of the efficiency measures will occur in Europe and the remainder in Asia-Pacific/Latin America/Africa. Approximately 50% of total costs will be cash-effective in 2015, the balance in 2016. The program is expected to lead to initial cost savings of approximately €10 million in 2015. The targeted savings run-rate of €40 million p.a. is expected by 2018.

 
In order to reflect changes in Fresenius Kabi's size and business mix, the company has set new mid-term targets: The company expects organic sales growth of 5% to 8% p.a. and constant currency EBIT growth of 6% to 10% p.a. as a CAGR over the medium-term.

 
¹Before special items
²Net income attributable to shareholders of Fresenius Kabi AG; before special items
³Based on February 20 exchange rates applied to the remainder of the year, this implies sales of ~€5.6 billion and EBIT of ~€1,020 million.Fresenius Kabi guidance excludes ~€100 million costs before tax for the efficiency program. For segment reporting purposes, these costs will not be reported in the Fresenius Kabi segment but as special items in the Group segment Corporate/Other. This is consistent with the treatment of integration costs for Fenwal and the acquired Rhön hospitals as well as disposal gains.


 
Fresenius Helios
Fresenius Helios is Germany's largest hospital operator. HELIOS owns 110 hospitals, thereof 86 acute care clinics including seven maximum care hospitals in Berlin-Buch, Duisburg, Erfurt, Krefeld, Schwerin, Wiesbaden and Wuppertal and 24 post-acute care clinics. HELIOS treats more than 4.2 million patients per year, thereof more than 1.2 million inpatients, and operates more than 34,000 beds.

• 4% organic sales growth, EBIT of €553 million – fully in line with 2014 guidance
• Integration of acquired hospitals from Rhön-Klinikum fully on track
• Outlook 2015: 3% to 5% organic sales growth, 6% to 9% reported growth;
• EBIT of €630 to €650 million

 
Sales increased by 55% to €5,244 million (2013: € 3,393 million). The strong increase is mainly due to the first-time consolidation of the acquired hospitals from Rhön-Klinikum AG. Organic sales growth was 4% (2013: 3%). Divestitures reduced sales by 2%. In Q4/2014, sales increased by 59% to €1,361 million (Q4/2013: €856 million), organic sales growth was 5%.
 
EBIT¹ grew by 42% to € 553 million (2013: € 390 million). The EBIT margin was 10.5% (2013: 11.5%). The EBIT margin decline is due to the consolidation of the acquired hospitals. In Q4/2014, EBIT¹ was €156 million (Q4/2013: €108 million). Sequentially, the EBIT margin increased by 70 bps to 11.5%.
 
Net income² increased by 45% to €400 million (2013: €275 million). In Q4/2014, net income² increased by 41% to €114 million (Q4/2013: €81 million).
 
Sales³ of the established hospitals grew by 4% to €3,453 million. EBIT^1,3 increased by 5% to €395 million. The EBIT margin was 11.4% (2013: 11.4%3).
 
Sales of the acquired hospitals were €1,791 million, EBIT¹ was €158 million and the EBIT margin was 8.8%.
 
The integration of the acquired hospitals is fully on track. In 2014, approximately 40% of the projected near-term cost synergies of €85 million were realized. We expect to realize the remaining 60% in straight-line build-up between now and spring 2016. In 2014, integration costs were €51 million. Total integration costs are expected at the lower end of the €60 to €80 million range. We continue to believe that over the medium-term the acquired hospitals on average can be taken into the upper half of HELIOS' 12% to 15% EBIT margin target range.
 
For 2015, Fresenius Helios projects organic sales growth of 3% to 5% and reported sales growth of 6% to 9%. EBIT is expected to increase to €630 to €650 million.

 
¹2014 before special items
²Net income attributable to shareholders of HELIOS Kliniken GmbH; 2014 before special items
³2013 adjusted for divestitures
 
Fresenius Helios guidance excludes integration costs for the hospitals acquired from Rhön-Klinikum AG (~€10 million before tax) and the gain from the divestment of two HELIOS hospitals (€34 million before tax). For segment reporting purposes, these items will not be reported in the Fresenius Helios segment, but as special items in the Group segment Corporate/Other. This is consistent with the treatment of integration costs for Fenwal and the acquired Rhön hospitals as well as disposal gains.

 
Fresenius Vamed
Fresenius Vamed manages projects and provides services for hospitals and other health care facilities worldwide.

• 2% sales growth, but flat organic sales growth due to project delays in Russia and Ukraine; 7% EBIT growth in line with guidance
• €840 million order intake at all-time high
• Outlook 2015: single-digit organic sales growth; 5% to 10% EBIT growth

Sales increased by 2% to €1,042 million (2013: € 1,020 million). Due to project delays in Russia and Ukraine organic sales growth was flat. Acquisitions contributed 2%. Sales in the project business decreased by 4% to €558 million (2013: € 583 million). Sales in the service business grew by 11% to € 484 million (2013: € 437 million). In Q4/2014, sales increased by 6% to €387 million (Q4/2013: €366 million). Organic sales growth was 4%.
 
EBIT grew by 7% to €59 million (2013: €55 million) with a margin of 5.7% (2013: 5.4%). In Q4/2014, EBIT increased by 7% to €32 million (Q4/2013: €30 million). The EBIT margin was 8.3% (Q4/2013: 8.2%).
 
Net income¹ increased by 11% to €41 million (2013: €37 million). In Q4/2014, net income1 increased by 10% to €23 million (Q4/2013: €21 million).
 
Order intake increased by 13% to €840 million (2013: €744 million), reaching a new all-time high. The increase was mainly driven by the modernization contract with the University Hospital Schleswig-Holstein in Germany. As of December 31, 2014, order backlog increased to €1,398 million (Dec. 31, 2013: €1,139 million).

 
In 2015, Fresenius Vamed expects to achieve single-digit organic sales growth and EBIT growth of 5% to 10%.
 
¹Net income attributable to shareholders of VAMED AG

 
Press Conference
As part of the publication of the results for fiscal year 2014, a press conference will be held on February 25, 2015 at 10.00 a.m. CET. You are cordially invited to follow the conference call in a live broadcast over the Internet at www.fresenius.com (see Press / Audio-Video-Service). Following the meeting, a replay will be available on our website.

Fiscal year 2011:

• Sales €16.5 billion (+3% at actual rates, +6% in constant currency) 
• EBIT €2,563 million (+6% at actual rates, +9% in constant currency) 
• Net income¹ €770 million (+17% at actual rates, +18% in constant currency)

 

• Dividend increase by 10% to €0.95 per share proposed 
• Positive Group outlook 2012: 
  - Sales growth of 10% to 13% in constant currency
  - Net income¹ growth of 8% to 11% in constant currency

• 2012 sales and earnings growth in all business segments expected: 
  - Fresenius Medical Care: Sales of around US$14 billion; 
     Net income² of around US$1.14 billion 
  - Fresenius Kabi: Organic sales growth of 4% to 6%;
     EBIT margin of 19.5% to 20% 
  - Fresenius Helios: Organic sales growth of 3% to 5%, 
    EBIT of €310 million to €320 million 
  - Fresenius Vamed: Sales and EBIT growth of 5% to 10%

Ulf Mark Schneider, CEO of Fresenius, commented: "2011 was another highly successful year for Fresenius. Our group net income increased by 18% in constant currency after 23% growth in 2010. Based on these strong results we will propose the 19th consecutive dividend increase to our shareholders. We also strengthened our position as a leading global health care group with significant acquisitions in our dialysis and hospital businesses. Looking ahead, we continue to see exciting opportunities for organic and acquired growth in all of our business segments. We therefore enter 2012 full of confidence."

¹ Net income attributable to Fresenius SE & Co. KGaA; adjusted for the effects of mark-to-market accounting of the Mandatory Exchangeable Bonds (MEB) and the Contingent Value Rights (CVR) related to the acquisition of APP Pharmaceuticals. Both are non-cash items and occurred for the last time in 2011.

² Net income attributable to Fresenius Medical Care AG & Co. KGaA

 

19^th consecutive dividend increase proposed

Based on the strong financial results, the Management Board will propose to the Supervisory Board a dividend increase of 10% to €0.95 per ordinary share (2010: €0.86). The total dividend distribution is expected to be €155 million.

 

Positive Group outlook 2012

For 2012, Fresenius projects sales growth of 10% to 13%¹ in constant currency. Net income² is expected to increase by 8% to 11% in constant currency. This implies a 2010 through 2012 3-year CAGR (compounded annual growth rate) of 8% to 9% for sales and 16% to 17% for net income.

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

The net debt/EBITDA ratio is projected to be ≤3.0 at year end.

 

Sales growth of 6% in constant currency

Group sales increased by 3% (6% in constant currency) to €16,522 million (2010: €15,972 million). Organic sales growth was 4%. Acquisitions contributed a further 2%. Currency translation had a negative effect of 3%. This is mainly attributable to the average USD/EUR rate in 2011 decreasing 5% compared to 2010.

¹ Based on adjusted 2011 sales of €16,361 million due to a U.S. GAAP accounting change at Fresenius Medical Care

² Net income attributable to Fresenius SE & Co. KGaA; adjusted for the effects of mark-to-market accounting of the Mandatory Exchangeable Bonds (MEB) and the Contingent Value Rights (CVR) related to the acquisition of APP Pharmaceuticals. Both are non-cash items and occurred for the last time in 2011.

 

Sales in the business segments developed as follows:

Sales in North America were €6,762 million (2010: €7,020 million). Organic sales growth of 1% was affected by the implementation of the new Medicare end-stage renal disease prospective payment system. In Europe organic sales growth was 3% compared to strong prior year's sales. Organic sales growth reached 16% in Asia-Pacific, 13% in Latin America and 16% in Africa.

 

Excellent earnings growth

Group EBITDA grew by 6% (8% in constant currency) to €3,237 million (2010: €3,057 million). Group EBIT increased by 6% (9% in constant currency) to €2,563 million (2010: €2,418 million). The EBIT margin improved by 40 basis points to 15.5% (2010: 15.1%).

Group net interest was -€531 million (2010: -€566 million). Lower average interest rates for debt as well as currency translation had a positive effect.

The other financial result was -€100 million and includes valuation changes of the fair redemption value of the Mandatory Exchangeable Bonds (MEB) of -€105 million and the Contingent Value Rights (CVR) of €5 million. Both are non-cash items. As the CVR were delisted in March 2011, the earnings effect relates solely to Q1 2011. As the MEB came to maturity on August 14, 2011, no further effect on earnings occured after Q3 2011. Upon maturity, the bonds were mandatorily exchanged into ordinary shares of Fresenius Medical Care AG & Co. KGaA.

In Q4/2011 Fresenius SE & Co. KGaA acquired approximately 1.4 million ordinary shares of Fresenius Medical Care AG & Co. KGaA. Therefore, as of December 31, 2011, Fresenius' shareholding of Fresenius Medical Care's ordinary share capital amounted to 30.7%.

The Group tax rate¹ decreased to 30.7% inter alia due to tax-free joint-venture income and one-time effects (2010: 32.9%).

Noncontrolling interest increased to €638 million (2010: €583 million), of which 92% was attributable to the noncontrolling interest in Fresenius Medical Care.

Group net income² increased by 17% (18% in constant currency) to €770 million (2010: €660 million). Earnings per share increased by 16% to €4.73 (2010: €4.08).

Group net income³ (including special items) reached €690 million or €4.24 per share.

A reconciliation to adjusted earnings according to U.S. GAAP can be found on page 16 of this Investor News.

 

Continued investments in growth

The Fresenius Group spent €783 million on property, plant and equipment (2010: €758 million). Acquisition spending was €1,612 million (2010: €644 million). This is primarily due to Fresenius Medical Care's acquisitions of Euromedic's international dialysis service business (International Dialysis Centers), the minority stake in Renal Advantage, Inc. as well as the acquisition of American Access Care. In addition, the acquisition of Katholisches Klinikum Duisburg by Fresenius Helios was completed as of December 31, 2011.

¹ Adjusted for the effect of mark-to-market accounting of the Mandatory Exchangeable Bonds (MEB) related to the acquisition of APP Pharmaceuticals

² Net income attributable to Fresenius SE & Co. KGaA; adjusted for the effects of mark-to-market accounting of the Mandatory Exchangeable Bonds (MEB) and the Contingent Value Rights (CVR) related to the acquisition of APP Pharmaceuticals. Both are non-cash items and occurred for the last time in 2011.

³ Net income attributable to Fresenius SE & Co. KGaA

 

Cash flow development

Operating cash flow was €1,689 million (2010: €1,911 million), reflecting increased working capital requirements due to business expansion. The cash flow margin was 10.2% (2010: 12.0%). Net capital expenditure was €758 million (2010: €733 million). Free cash flow before acquisitions and dividends was €931 million (2010: €1,178 million). Given the substantial acquisition spending free cash flow after acquisitions and dividends was -€748 million (2010¹: €345 million).

 

Solid balance sheet structure

The Group's total assets increased by 12% to €26,321 million (Dec. 31, 2010: €23,577 million). In constant currency the increase was 10%. Current assets increased by 11% (10% in constant currency) to €7,151 million (Dec. 31, 2010: €6,435 million). Non-current assets increased by 12% (10% in constant currency) to €19,170 million (Dec. 31, 2010: €17,142 million).

Total shareholders' equity increased by 20% (19% in constant currency) to €10,577 million (Dec. 31, 2010: €8,844 million) mainly due to strong earnings growth as well as the maturity of the MEB. The equity ratio improved to 40.2% (Dec. 31, 2010: 37.5%).

Group debt grew by 12% (9% in constant currency) to €9,799 million (Dec. 31, 2010: €8,784 million) primarily resulting from acquisition financing. Net debt increased by 14% (12% in constant currency) to €9,164 million (Dec. 31, 2010: €8,015 million).

As of December 31, 2011, the net debt/EBITDA ratio was 2.83 (Dec. 31, 2010: 2.62) and therefore within the projected range of 2.5 to 3.0.

Number of employees increased

As of December 31, 2011, Fresenius Group increased the number of its employees by 9% to 149,351 (Dec. 31, 2010: 137,552).

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

 

Fresenius Biotech

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

Sales increased by 20% to €30.7 million (2010: €25.5 million). ATG Fresenius S sales increased by 18% to €26.7 million (2010: €22.7 million). Removab sales grew by 43% to €4.0 million (2010: €2.8 million). Fresenius Biotech's EBIT was -€30 million (2010: -€32 million).

In Q4 2011, Fresenius Biotech entered into a long-term distribution agreement with Astellas Pharma, a global leader in transplant medicine, for ATG Fresenius S in the Chinese market.

For 2012, Fresenius Biotech expects an EBIT of -€25 million to -€30 million.

 

Business Segments

Fresenius Medical Care

Fresenius Medical Care is the world's leading provider of services and products for patients with chronic kidney failure. As of December 31, 2011, Fresenius Medical Care was treating 233,156 patients in 2,898 dialysis clinics.

• EBIT margin improvement to 16.2% 
• Acquisitions in the U.S. and in Europe strengthen dialysis business 
•  Outlook 2012: Sales growth of 11% to around US$ 14 billion;
  net income¹ growth to around US$1.14 billion

Fresenius Medical Care achieved sales growth of 6% to US$12,795 million (2010: US$12,053 million). Organic sales growth was 2%. Acquisitions contributed further 3%. Currency translation had an effect of 1%.

Sales in dialysis services increased by 5% to US$9,507 million (2010: US$9,070 million). Dialysis product sales grew by 10% to US$3,288 million (2010: US$2,983 million).

In North America sales were US$8,150 million (2010: US$8,130 million). Dialysis services sales were US$7,337 million (2010: US$7,303 million). Average revenue per treatment for U.S. clinics was US$348 in 2011 compared to US$356 in 2010 reflecting the implementation of the new Medicare prospective payment system. Dialysis product sales decreased by 2% to US$813 million (2010: US$827 million) as increased sales of hemodialysis and peritoneal dialysis products could not entirely offset lower pricing of renal drugs.

Sales outside North America ("International" segment) grew by 18% to US$4,628 million (2010: US$3,923 million). Sales in dialysis services increased by 23% to US$2,170 million. Dialysis product sales increased by 14% to US$2,458 million. The growth was mainly driven by higher sales of peritoneal dialysis products, dialyzers, dialysis machines and acute care products.

EBIT increased by 8% to US$2,075 million (2010: US$1,924 million). The EBIT margin improved to 16.2% (2010: 16.0%), mainly due to the EBIT margin improvement in North America, increasing by 60 basis points to 17.6% (2010: 17.0%). This increase was mainly influenced by the development of pharmaceutical costs. In the International segment the EBIT margin improved to 17.4% (2010: 17.3%).

Net income increased by 9% to US$1,071 million (2010: US$979 million).

In 2011, Fresenius Medical Care considerably strengthened its business through acquisitions especially in North America and Europe: the acquisition of American Access Care, as well as the acquisition of International Dialysis Centers, the international dialysis service business of Euromedic. In addition Fresenius Medical Care has announced a merger agreement with Liberty Dialysis Holdings, Inc., the holding company for Liberty Dialysis and Renal Advantage. Closing is expected in Q1 2012.

In January 2012, Fresenius Medical Care placed three tranches of U.S. Dollar and Euro-denominated senior unsecured notes. Proceeds amounting to approximately US$1.81 billion are intended to be used for acquisitions, including the acquisition of Liberty Dialysis Holdings, Inc., to refinance debt and for general corporate purposes.

For 2012, Fresenius Medical Care expects sales to grow to around US$14 billion. This takes into account a change in U.S. GAAP in the presentation of U.S. dialysis service sales which will be shown net of the provision for bad debt. Based on the comparable 2011 sales of US$12,571 million the sales outlook represents an increase of 11% and between 13% and 15% based on constant currencies.

Net income is expected to grow to around US$1.3 billion and net income attributable to Fresenius Medical Care AG & Co. KGaA is expected to grow to around US$1.14 billion with operating margin forecasted to increase to approximately 16.9%.

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

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

 

Fresenius Kabi

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

• Excellent year 2011 – All targets exceeded, further EBIT margin increase
  to 20.3%
• Strong organic sales growth of 9%; 15% growth in emerging markets
• Outlook 2012: Organic sales growth of 4% to 6% on top of strong 2011 base;
  EBIT margin of 19.5% to 20%; increased mid-term guidance

Fresenius Kabi achieved 8% sales growth to €3,964 million compared to the strong previous year (2010: €3,672 million). Organic sales growth was 9%. Currency translation had a negative effect of 1%. Fresenius Kabi achieved quarterly record sales of €1,014 million in Q4 2011.

In Europe sales grew by 7% to €1,826 million (2010: €1,702 million), driven by organic growth of 6%. In North America sales increased by 3% to €1,002 million (2010: €975 million). Organic growth was 7%. In Asia-Pacific sales increased by 18% to €702 million (2010: €593 million), with excellent organic sales growth of 18%. Sales in Latin America and Africa increased by 8% to €434 million (2010: €402 million), with organic sales growth contributing 10%.

EBIT grew by 9% to €803 million (2010: €737 million). The EBIT margin improved to 20.3% (2010: 20.1%). Strong EBIT growth was achieved in all regions.

Net interest remained at previous year's level of -€278 million (2010: -€279 million).

Net income¹ increased by 20% to €354 million (2010: €294 million).

Fresenius Kabi achieved outstanding growth in 2010 and 2011. In 2012, organic sales growth is expected at 4% to 6%, implying a 2010 through 2012 3-year CAGR (compounded annual growth rate) well in the 7% to 10% mid-term guidance range. Fresenius Kabi expects an EBIT margin of 19.5% to 20% and a further increase in earnings.

For the mid-term, Fresenius Kabi slightly increases its EBIT margin target range from 18% to 20% to 18% to 21%. Fresenius Kabi confirms its mid-term annual organic sales growth guidance of 7% to 10%.

Fresenius Kabi plans to host a Capital Market Day on June 12, 2012 in Bad Homburg providing an update on the strategy and growth prospects of the company.

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

¹ Net income attributable to Fresenius Kabi AG

 

Fresenius Helios

Fresenius Helios is one of the largest private hospital operators in Germany. HELIOS owns 65 hospitals, including six maximum care hospitals in Berlin-Buch, Duisburg, Erfurt, Krefeld, Schwerin and Wuppertal. HELIOS treats more than 2 million patients per year, thereof approximately 700,000 inpatients, and operates more than 20,000 beds.

• 4% organic sales growth – 2011 outlook fully achieved
• EBIT of €270 million at the upper end of already increased guidance -
  EBIT margin increase by 80 basis points to 10.1%
• Outlook 2012: Organic sales growth of 3% to 5%,
  EBIT of €310 million to €320 million; new mid-term guidance

Sales increased by 6% to €2,665 million (2010: €2,520 million), mainly driven by organic sales growth of 4%. Acquisitions contributed 2% to overall sales growth.

EBIT grew by 15% to €270 million (2010: €235 million). The EBIT margin improved by 80 basis points to 10.1% (2010: 9.3%).

Net income¹ increased by 24% to €163 million (2010: €131 million).

The established clinics increased sales by 4% to €2,613 million. EBIT improved by 17% to €276 million. The EBIT margin was at strong 10.6%. The acquired clinics (consolidation < 1 year) achieved sales of €52 million and an EBIT of -€6 million. Restructuring of these hospitals is fully on track.

As of December 31, 2011, HELIOS fully consolidates Katholisches Klinikum Duisburg hospital (KKD). KKD operates a maximum care hospital with 1,034 beds and achieved sales of approximately €134 million in 2010.

HELIOS anticipates closing of the Damp Group acquisition at the end of the first or at the beginning of the second quarter 2012, as the Wismar Hospital was divested in the mean time to secure antitrust clearance.

For 2012, Fresenius Helios expects to achieve organic sales growth of 3% to 5%. EBIT is projected to increase to between €310 million and €320 million.

As a new mid-term goal, Fresenius Helios now targets sales of €4 billion to €4.25 billion (incl. Damp) by 2015 (before: €3.5 billion), driven by organic growth and acquisitions.

¹ Net income attributable to HELIOS Kliniken GmbH

 

Fresenius Vamed

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

• Continued sales and EBIT growth even after exceptional 2010 results and the unrest in the Middle East/North Africa region 
• Sales in Q4 2011 for the first time above €250 million 
•  Outlook 2012: Sales and EBIT growth of 5% to 10%

Fresenius Vamed's sales were €737 million (2010: €713 million). Despite the strong 2010 base and the unrest in the Middle East/North Africa region sales grew by 3%. Sales in the project business increased slightly by 1% to €494 million (2010: €487 million). Sales in the service business grew by 8% to €243 million (2010: €226 million).

EBIT grew to €44 million (2010: €41 million). The EBIT margin improved by 20 basis points to 6.0% (2010: 5.8%). Net income¹ increased to €34 million (2010: €30 million).

In Q4 2011, Fresenius Vamed achieved a record order intake of €269 million. New orders include a contract for the construction of phase 2 of the Central Hospital in Libreville, Gabon, with an order volume of €109 million. In 2011, the order intake of €604 million was slightly below the exceptional 2010 level of €625 million. Order backlog was at a new all-time high of €845 million as of December 31, 2011 (Dec. 31, 2010: €801 million).

In 2012, Fresenius Vamed expects to achieve sales and EBIT growth of 5% to 10%.

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

¹ Net income attributable to VAMED AG

 

Analyst Meeting and Audio Webcast

As part of the publication of the results for fiscal year 2011, an analyst meeting will be held at the Fresenius headquarters in Bad Homburg on February 21, 2012 at 1.30 p.m. CET (7.30 a.m. EST). All investors are cordially invited to follow the conference in a live broadcast over the Internet at www.fresenius.com see Investor Relations, Presentations. Following the meeting, a recording of the conference will be available as video-on-demand.

APP Pharmaceuticals ("APP"), a subsidiary of Fresenius Kabi, has received a warning letter dated 22 February 2012 from the New York District FDA office regarding the Company's Grand Island plant. The warning letter follows an inspection at the facility which concluded in July 2011. The Company responded on 27 July 2011 detailing the corrective and preventative actions planned to address the Agency's concerns, and since then has made significant progress in collaboration with the FDA in remedying these issues. In addition, the warning letter refers to the marketing status of five ‘grandfathered' generic products with a total annual sales volume of approx. €15 million.

The Company has full confidence in the quality of the products it has distributed from the Grand Island facility and expects to continue production at the plant. We believe that the ongoing enhancement efforts can be successfully completed without disrupting output.

Both APP and Fresenius Kabi are committed to the highest standards of quality and compliance in manufacturing across its global operations. We regard our relationship with the FDA as critical to both our past and future success, and we will continue to work constructively and expeditiously with the Agency to resolve all the issues addressed in the warning letter.

APP will respond to the FDA within the required 15 working day time frame. No material sales and earnings impact on Fresenius Kabi's U.S. business is expected, and Fresenius Kabi fully confirms its 2012 guidance.

Standard & Poor's has raised the corporate credit rating of Fresenius SE & Co. KGaA from BB to BB+.

According to Standard & Poor's, the upgrade primarily reflects the steady increase in Fresenius' revenue diversification, profitability and cash flow generation in an adverse macroeconomic environment.

In addition, the agency has upgraded the issue rating on Fresenius' Senior Notes and Euro Notes (Schuldscheindarlehen) by one notch. The rating BBB- on Fresenius' senior secured credit facilities has been confirmed.

All ratings have been assigned a stable outlook.