FRESENIUS SE & CO. KGAA Bad Homburg v.d.H.
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."
1 Before special items
2 Net income attributable to shareholders of Fresenius SE & Co. KGaA; before special items
3 Based 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
4 Net 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 ).
1 Net income attributable to shareholders of Fresenius SE & Co. KGaA; before special items
2 Before special items
3 Adjusted 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
2 Pro 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 atwww.freseniusmedicalcare.com .
1 Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
2 Including 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.
1 Before special items
2 Net income attributable to shareholders of Fresenius Kabi AG; before special items
3 Based 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. EBIT1,3 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.
1 2014 before special items
2 Net income attributable to shareholders of HELIOS Kliniken GmbH; 2014 before special items
3 2013 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%.
1 Net 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.
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Fresenius is a global health care group, providing products and services for dialysis, hospital and outpatient medical care. In 2014, Group sales were €23.2 billion.
For more information visit the Company's website at www.fresenius.com.
Follow us on Facebook and Twitter: www.facebook.com/fresenius.group and www.twitter.com/fresenius.
This release contains forward-looking statements that are subject to various risks and uncertainties. Future results could differ materially from those described in these forward-looking statements due to certain factors, e.g. changes in business, economic and competitive conditions, regulatory reforms, results of clinical trials, foreign exchange rate fluctuations, uncertainties in litigation or investigative proceedings, and the availability of financing. Fresenius does not undertake any responsibility to update the forward-looking statements in this release.
Fresenius SE & Co. KGaA
Registered Office: Bad Homburg, Germany
Commercial Register: Amtsgericht Bad Homburg, HRB 11852
Chairman of the Supervisory Board: Dr. Gerd Krick
General Partner: Fresenius Management SE
Registered Office: Bad Homburg, Germany
Commercial Register: Amtsgericht Bad Homburg, HRB 11673
Management Board: Dr. Ulf M. Schneider (Chairman), Dr. Francesco De Meo, Dr. Jürgen Götz,Mats Henriksson, Rice Powell, Stephan Sturm, Dr. Ernst Wastler
Chairman of the Supervisory Board: Dr. Gerd Krick
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