Industry Brief - Fresenius Reports Q314 Results And Confirms FY14 Outlook

10 No v 20 14

Ge rmany

Me dical De vice s

Fre s e nius

For the rs t nine months of FY2014 (ending December 31 2014), Fresenius g enerated s g roup s ales increas e of 11% (14% in cons tant currency [CC]) to
EUR16,711mn (USD20,880mn), compared with EUR15,032mn in the rs t nine months of FY13. Org anic s ales g rowth was 4%, and acquis itions contributed
11%. Dives titures reduced s ales g rowth by 1%. In Q314, Group s ales increas ed by 18% (20% in cons tant currency) to EUR5,978mn (USD7,468mn),
compared with EUR5,045mn in Q313. Org anic s ales g rowth was 6%.
In the rs t nine months , org anic s ales g rowth was 4% in North America and 3% in Europe, 5% in As ia-Pacic, and 10% in Latin America. In Africa, a decline in
s ales was mainly due to uctuations in the project bus ines s at Fresenius Vamed. Advers e currency trans lation effects weig hed on Fres enius s ales in Latin
America (-17%), As ia-Pacific (-4%), Africa (-5%) and North America (-3%).
Group EBITDA g rew by 3% (5% CC) to EUR2,905mn (USD3,630mn) in the rs t nine months of FY14, compared with EUR2,824mn in the prior year period.
Group EBIT increas ed by 1% (3% CC) to EUR2,223mn (USD2,777mn). The EBIT marg in was 13.3%, compared with 14.6% in the prior-year period. In Q314,
Group EBIT was EUR820mn (USD1,024mn), and the EBIT marg in was 13.7%.
Group net income increas ed by 2% (4% CC) to EUR768mn (USD959mn) in the nine-month period, from EUR753mn in FY13. EPS increas ed by 1% (2% CC) to
EUR1.42 (USD1.77). The weig hted averag e number of s hares outs tanding was 539,976,138, compared with 535,366,314 in the prior year period. In Q314,
Group net income increas ed by 4% (5% CC) to EUR281mn (USD351mn).
Fresenius Medical Care
Fresenius Medical Care (FMC) is a provider of s ervices and products for patients with chronic kidney failure. As of September 30 2014, FMC was treating
283,135 patients in 3,349 dialys is clinics worldwide.
Sales of FMC products increas ed by 7% (8% CC) to USD11,511mn in the rs t nine months of FY14, compared with USD10,743mn in the prior year period.
Org anic s ales g rowth was 5%. Acquis itions contributed 4%, while dives titures reduced s ales g rowth by 1%. In Q314, s ales increas ed by 12% to USD4,113mn
(Q313: USD3,666mn).
Sales in dialys is s ervices increas ed by 8% (10% CC) to USD8,928mn compared with USD8,235mn in the rs t nine months of FY13. Dialys is product s ales
g rew by 3% (3% CC) to USD2,583mn (nine months of FY13: USD2,508mn).
In North America, s ales g rew by 7% to USD7,624mn. Dialys is s ervices s ales increas ed by 8% to USD7,015mn, while dialys is product s ales decreas ed by 1%
to USD609mn. Sales outs ide North America increas ed by 6% (9% CC) to USD3,843mn. Sales in dialys is s ervices increas ed by 9% to USD1,913mn, and
dialys is product s ales increas ed by 3% to USD1,930mn.
EBIT in the FMC bus ines s was USD1,591mn, repres enting an EBIT marg in of 13.8%, compared with 14.8% in the rs t nine months of FY13. Nine-month FY14
EBIT was impacted by s eques tration and rebas ing of Medicare's reimburs ement rate in the US. In Q314, EBIT increas ed by 6% to USD590mn; Q314 EBIT
marg in was 14.3%, compared with 15.2% in Q313.
Net income attributable to s hareholders of FMC was USD710mn, compared with USD761mn in the rs t nine months of FY13. In Q314, net income was
USD271mn (Q313: USD273mn).
FMC conrmed its outlook for the full FY14. The bus ines s expects s ales of approximately USD15.2bn, trans lating into a g rowth rate of around 4%. This
outlook excludes s ales of approximately USD500mn from acquis itions completed during the rs t nine months of FY14. Net income attributable to
s hareholders of FMC is expected to be unchang ed between USD1.00bn to USD1.05bn. The company has initiated a g lobal eciency prog ramme des ig ned
to enhance its performance over a long -term period. Potential cos t s aving s before income taxes of up to USD60mn g enerated from this prog ramme are not
included in the outlook for FY14.
Fresenius Kabi
Fresenius Kabi offers infus ion therapies , intravenous ly adminis tered g eneric drug s and clinical nutrition for s erious ly and chronically ill patients in the
hos pital and outpatient environments . The company is als o a leading s upplier of medical devices and trans fus ion technolog y products .
Sales in the rs t nine months of FY14 were EUR3,760mn (USD4,696mn), compared with EUR3,742mn in the prior-year. In cons tant currency, s ales increas ed
by 4%. Org anic s ales g rowth was 3%; acquis itions contributed 1% s ales g rowth. Advers e currency trans lation effects (-4%) were mainly driven by weaker
currencies in the US and Arg entina ag ains t the euro. In Q314, s ales increas ed by 6% (7% CC) to EUR1,294mn (USD1,616mn). Org anic s ales g rowth was 5% in
Q314.
Sales in Europe g rew by 1% (org anic s ales g rowth: 2%) to EUR1,538mn (USD1,920mn), compared with EUR1,524mn in the rs t nine months of FY13. Sales in
North America decreas ed by 3% (org anic s ales g rowth: 0%) to EUR1,118mn (USD1,396mn), As ia-Pacic s ales increas ed by 5% (org anic s ales g rowth: 7%) to
EUR723mn (USD903mn), and s ales in Latin America/Africa increas ed by 3% (org anic s ales g rowth: 13%) to EUR381mn (USD476mn).
EBIT was EUR634mn (USD792mn), a decreas e of 6% in cons tant currency compared with the rs t nine months of FY13. Bes ides currency headwinds , EBIT
was impacted by lower hydroxyethyl s tarch (HES) s ales and the eas ing of drug s hortag es in North America. The EBIT marg in of 16.9% was in line with

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expectations and the Group's g uidance rang e. In Q314, EBIT was EUR223mn (USD278mn), an increas e of 1% CC. Sequentially, the EBIT marg in improved by
40 bas is points to 17.2% in Q314.
Fres enius Kabi g enerated net income of EUR337mn (USD421mn) in the rs t nine months of FY14, compared with EUR367mn in the prior year period. In Q314,
net income was EUR120mn (USD150mn). Integ ration cos ts for Fenwal were EUR6mn pre-tax (USD7mn) in the firs t nine months of FY14.
Fres enius Kabi conrmed its FY14 org anic s ales g rowth outlook of 4-6%. The EBIT marg in is now conrmed at approximately 17%, s o within the previous ly
g uided rang e of 16.5-18.0%. Fres enius Kabi g uidance excludes EUR40mn to EUR50mn pre-tax Fenwal integ ration cos ts (EUR30mn to EUR40mn after tax).
Fresenius Helios
Fresenius Helios is Germany's larg es t hos pital operator. Helios owns 110 hos pitals , of which are 86 acute care clinics , including s even maximum care
hos pitals in Berlin-Buch, Duis burg , Erfurt, Krefeld, Schwerin, Wies baden and Wuppertal, and 24 pos t-acute care clinics . Helios treats more than
4.2mn patients annually, of which over 1.2mn are in-patients , and operates more than 34,000 hos pital beds .
The bus ines s ' s ales increas ed by 53% to EUR3,883mn (USD4,848mn) in the rs t nine months of FY14, compared with EUR2,537mn in the prior-year period.
The s trong increas e was mainly due to acquired hos pitals from Rhn-Klinikum. The dives tment of two Helios hos pitals reduced s ales g rowth by 2%, while
org anic s ales g rowth was 4%. In Q314, s ales increas ed by 62% to EUR1,362mn (USD1,701mn); org anic s ales g rowth was 6%.
EBIT g rew by 41% to EUR397mn (USD496mn) in the nine-month period. The EBIT marg in was 10.2%, compared with 11.1% in the prior-year period. The
marg in decline was due to the cons olidation of the newly acquired hos pitals . In Q314, EBIT was EUR147mn (USD184mn). Sequentially, the EBIT marg in
increas ed by 30 bas is points from 10.5% in Q214 to 10.8% in Q314.
Net income increas ed by 47% to EUR286mn (USD357mn) in the nine-month period. In Q314, net income increas ed by 43% to EUR107mn (USD134mn).
Fres enius Helios fully conrmed its FY14 outlook, and projects org anic s ales g rowth of 3-5%. Acquired hos pitals are als o expected to s how 3-5% org anic
g rowth and to contribute s ales of approximately EUR1.8bn (USD2.2bn). EBIT for Helios including the acquired hos pitals is expected to increas e to
EUR540mn to EUR560mn.
Fresenius Vamed
Fres enius Vamed manag es projects and provides s ervices for hos pitals and other healthcare facilities worldwide.
Sales were EUR655mn (USD818mn) in the rs t nine months of FY14, compared with EUR654mn in the rs t nine months of FY13. Org anic s ales declined 2%,
while acquis itions contributed 2%. Sales in the project bus ines s decreas ed by 8% to EUR306mn (USD382mn), mainly due to project delays in Rus s ia and
Ukraine. Sales in the s ervice bus ines s g rew by 8% to EUR349mn (USD436mn) in the nine-month period. Sales in Q314 were EUR257mn (USD321mn), with
org anic s ales g rowth of 7%.
EBIT g rew by 8% to EUR27mn (USD34mn), with a marg in of 4.1% (3.8% in the prior-year period). In Q314, EBIT increas ed by 20% to EUR12mn (USD15mn) with
a marg in of 4.7%. Net income increas ed by 13% to EUR18mn (USD22mn). In Q314, net income increas ed by 14% to EUR8mn (USD10mn).
Order intake increas ed by 78% to EUR678mn (USD847mn) in the rs t nine months of FY14. Q314 order intake was at a record level of EUR378mn
(USD472mn), mainly driven by the modernis ation contract with the Univers ity Hos pital Schles wig -Hols tein in Germany. As of September 30 2014, order
backlog increas ed to EUR1,504mn (USD1,878mn).
Due to project delays in Rus s ia and Ukraine, Fres enius Vamed now expects at org anic s ales g rowth (before: 5-10%). The EBIT g rowth g uidance of 5-10% for
FY14 remains unchang ed.
Group Guidance
Bas ed on the g roup's nancial res ults for the rs t nine months of FY14, the company conrmed it full-year g uidance. FY14 s ales are expected to increas e by
14-16% over FY13, and net income is expected to increas e by 2-5% (both in cons tant currency). The company's net debt/EBITDA ratio is expected to be
approximately 3.25 at the end of FY14.

This mate rial is pro te cte d by inte rnatio nal co pyrig ht laws , and us e o f this is s ubje ct to o ur Te rms & Co nditio ns .
20 15 Bus ine s s Mo nito r Inte rnatio nal Ltd