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Fresenius SE & Co. KGaA

Investor Presentation Feb 24, 2017

166_ip_2017-02-24_88f6c7a6-58e2-4831-90f4-5f1ed66c0723.pdf

Investor Presentation

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Roadshow – Frankfurt

Bad Homburg, 24 February 2017

This presentation 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 contained in this presentation.

Fresenius Group: FY/2016 Highlights

HELIOS internationalization: Acquisition of Quirónsalud

All business segments contributed to solid organic growth

Continued double-digit earnings growth

Positive outlook for 2017

Ambitious new mid-term targets

Fresenius Group: 24th Consecutive Dividend Increase

Dividend growth aligned to EPS growth Pay-out ratio: 22%

1 Proposal

Fresenius Group: FY/2016 Key Financials

Constant currency growth rates

2015 EBIT before special items

Net income attributable to shareholders of Fresenius SE & Co. KGaA; 2015 before special items

Fresenius Group: Profit and Loss Statement

€m Q4/2016 Q4 YoY1
Δ
FY/2016 FY YoY1
Δ
Sales 7,738 6% 29,083 6%
EBIT2 1,235 11% 4,327 10%
Net interest -149 -8% -582 5%
Income taxes2 -305 -9% -1,051 -8%
Net income2,3 439 7% 1,593 13%

1 Constant currency growth rates

2 2015 before special items

3 Net income attributable to shareholders of Fresenius SE & Co. KGaA

For a detailed overview of special items please see the reconciliation tables on slides 49–50.

Fresenius Group: FY/2016 Key Financials

2015 EBIT before special items

Fresenius Kabi: Organic Sales Growth by Regions

Total sales 1,550 3% 6,007 5%
Asia-Pacific/Latin
America/Africa
442 7% 1,702 10%
Latin America/Africa 155 8% 594 14%
Asia-Pacific 287 6% 1,108 8%
North America 542 -1% 2,170 3%
Europe 566 4% 2,135 3%
€m Q4/2016 Organic
Growth
FY/2016 Organic
Growth

Fresenius Kabi: EBIT

€m Q4/2016 Q4 YoY1
Δ
FY/2016 FY YoY1
Δ
Europe 100 8% 343 0%
Margin 17.7% 60 bps 16.1% -50 bps
North America 168 -15% 837 5%
Margin 31.0% -490 bps 38.6% 50 bps
Asia-Pacific/Latin America/Africa 103 21% 348 19%
Margin 23.3% 230 bps 20.4% 230 bps
Corporate and
Corporate R&D
-63 -2% -304 -16%
Total EBIT 308 -1% 1,224 5%
Margin 19.9% -100 bps 20.4% 40 bps

1 Constant currency growth rates

2015 before special items

Margin growth at actual rates

For a detailed overview of special items please see the reconciliation tables on slides 49–50.

Fresenius Kabi (1/2): Expected Organic Sales Growth 2017

North America

Mid-single-digit

  • Comps remain tough, following two exceptional years
  • Outlook assumes gradual further easing of IV drug shortages, more competition on some key molecules and continued price pressure
  • Vigorous launch activity in 2017: >10 product launches expected

Europe

Low to mid-single-digit

• Improving contract manufacturing business

Fresenius Kabi (2/2): Expected Organic Sales Growth 2017

Emerging Markets

Likely double-digit

  • China: new tender policy implementation expected to be mostly completed end of H1/2017; low to mid single digit price decline and continued double-digit volume growth projected
  • Asia-Pacific excl. China: ongoing recovery healthy growth expected
  • Latin America /Africa: Continued strong growth expected

Fresenius Helios

HELIOS Kliniken

  • German Hospital Structures Act considered neutral for 2017 HELIOS results
  • Continued favorable reimbursement environment; DRG inflator set at 2.50%
  • Niederberg contributed positively in 2016

  • FY/16 in line with outlook:

  • − Sales of €2,540 m (+16%, 6% org.)
  • − EBITDA2 of €461 m (+16%)
  • Successful financing: Cost of debt ~1.7%
  • Consolidation since February 1, 2017

1 Organic sales growth

2 Before special items; primarily relating to the transaction

€m Q4/2016 Δ
Q4 YoY
FY/2016 Δ
FY YoY
Total sales 1,461 4% 5,843 5%
EBIT
Established clinic portfolio
173 3% 679 6%
Margin 12.0% 10 bps 11.7% 20 bps
Acquisitions / Divestitures
(consolidation / deconsolidation
<1 yr) Margin
2
10.0%
--
--
3
6.0%
--
--
Total EBIT
Margin
175
12.0%
4%
10 bps
682
11.7%
7%
20 bps

2015 before special items

For a detailed overview of special items please see the reconciliation tables on slides 49–50.

Fresenius Vamed

  • Strong Q4/16: 10% organic sales growth and 12% EBIT growth
  • €1,017 m order intake at all-time high, providing a solid basis for growth in FY/2017
  • Further expansion of geographic presence primarily in emerging and developing countries
€m Q4/
2016
Δ
Q4
YoY
FY/
2016
Δ
FY
YoY
Project
business
269 11% 594 3%
Service
business
151 4% 566 4%
Total sales 420 10%2 1,160 5%2
Total
EBIT
38 12% 69 8%
Order intake1 343 -20% 1,017 13%

1 Project business only

2 Organic sales growth

Fresenius Group: Cash Flow

Operating CF Capex
(net)
Free Cash Flow1
€m Q4/2016 LTM Margin Q4/2016 LTM Margin Q4/2016 LTM Margin
345 16.5% -115 -5.4% 230 11.1%
185 10.6% -173 -5.9% 12 4.7%3
5 2.3% -5 -0.9% 0 1.4%
Corporate/Other 8 n.a. -1 n.a. 7 n.a.
Excl. FMC 543 13.3%2 -294 -5.4% 249 7.9%2
1,315 12.3% -551 -5.5% 764 6.8%

1 Before acquisitions and dividends

2 Margin incl. FMC dividend

3 Understated: 5.4% excluding €43 million of capex commitments from acquisitions

Fresenius Group: 2017 Financial Outlook by Business Segment

€m except otherwise stated 20161 Base 2017e1
Sales growth
(organic)
6,007 5% –
7%
EBIT growth
(cc)
1,171 5% –
7%
Sales growth (organic) 2
5,843
3% –
5%
Sales (reported) 2
5,843
~€8.6 billion
thereof Quirónsalud3 ~€2.5 billion
EBIT 2
683
1,020 –1,070
thereof Quirónsalud3: EBIT of €300
to €320m (EBITDA €480 to €500m,
amortization €80m, depreciation
€100m)
Sales growth
(organic)
1,160 5% –
10%
EBIT growth 69 5% –
10%

1 All data according to IFRS; for a detailed reconciliation of US-GAAP to IFRS please see slides 49-50.

2 Helios Kliniken Germany, excluding Quirónsalud

3 11 months consolidated

€m except otherwise stated 20161 Base 2017e1
Sales growth
(cc)
29,471 15% –
17%
Net income2
growth
(cc)
1,560 17% –
20%

1 All data according to IFRS; for a detailed reconciliation of US-GAAP to IFRS please see slides 49-50. 2 Net income attributable to shareholders of Fresenius SE & Co.KGaA

Development Legacy Business Market Opportunities

  • Organic growth
  • Development of I.V. generics and nutrition products
  • Leverage on market access
  • Filling the blanks: roll-out of existing product portfolio
  • Bolt-on acquisitions

  • Enter new geographic markets

  • Enteral Nutrition for outpatients (e.g. digital tool)
  • Extension of product portfolio via acquisitions: New market segments, (e.g. OTC, Biosimilars), new therapeutic areas

HELIOS Kliniken Quirónsalud

  • Integrated clusters
  • Expanded use of telemedicine
  • Digital innovations
  • Treating patients as consumers
  • Selective acquisitions in Germany

  • Quality and technology leadership

  • Cross-selling opportunities with ORPs
  • Greenfield projects
  • Further market consolidation

Incremental pre-tax synergies of ~€50m p.a.

Building European platform for international patients

Further international expansion

Marketing of Existing
Value Chain
Strengthening and Extension
of Value Chain
Expansion of
Geographic Presence
Integrated project and

service business model
High-end services
Further market

penetration in existing
-
Life cycle models

Total operational
target markets
-
PPP models
management of health
care facilities

New international market
entries

Fresenius Group: Ambitious Mid-Term Targets

1 Mid-point of the 2017 sales guidance, adjusted for current exchange rates

2 Mid-point of the 2017 net income guidance, adjusted for current exchange rates

3 Calculated on the basis of the mid-point of the 2020 target range

At current exchange rates; excluding strategic acquisitions; at current IFRS rules

Attachments

Fresenius Group: Profit and Loss Statement

Growth Q4 YoY Growth
FY YoY
€m Q4/2016 actual
rates
constant
rates
FY/2016 actual
rates
constant
rates
Sales 7,738 7% 6% 29,083 5% 6%
EBIT1 1,235 11% 11% 4,327 9% 10%
Net interest -149 -9% -8% -582 5% 5%
Income taxes1 -305 -9% -9% -1.051 -7% -8%
Net income2 439 6% 7% 1,593 12% 13%

1 2015 before special items

2 Net income attributable to shareholders of Fresenius SE & Co. KGaA; before special items

For a detailed overview of special items please see the reconciliation tables on slides 49–50.

Financial Results by Business Segment

Q4/2016 Δ
Q4 YoY
Sales US\$4,687 m 8%
EBIT US\$786 m 19%
Sales €1,550 m 2%
EBIT1 €308 m -3%
Sales €1,461 m 4%
EBIT €175
m
4%
Sales €420 m 9%
EBIT €38
m
12%

1 2015 before special items

For a detailed overview of special items please see the reconciliation tables on slides 49–50.

Fresenius Group: Overview – Calculation of Noncontrolling Interest

€m FY/2016 FY/2015
Earnings before tax and noncontrolling
interest
3,745 3,262
Taxes -1,051 -965
Noncontrolling
interest, thereof
-1,101 -939
Fresenius Medical Care net income not attributable to
Fresenius (Q1–4/16: ~69%)
-776 -641
Noncontrolling
interest holders in Fresenius Medical Care
(Q1–4/16: US\$306 m according to Fresenius Medical Care's
Financial Statements)
-276 -256
Noncontrolling interest
holders
in Fresenius Kabi (-€36 m),
Fresenius Helios (-€2 m), Fresenius Vamed
(-€1 m) and due
to Fresenius Vamed's
23% external
ownership
(-€10 m)
-49 -42
Net income
attributable
to
Fresenius SE & Co. KGaA
1,593 1,358
€m FY/2016 LTM Margin FY/2015 LTM Margin Δ
YoY
Operating Cash Flow 3,574 12.3% 3,327 12.0% 7%
Capex
(net)
-1,603 -5.5% -1,462 -5.2% -10%
Free Cash Flow
(before acquisitions and dividends)
1,971 6.8% 1,865 6.8% 6%
Acquisitions (net) -485 -32 --
Dividends -738 -639 -15%
Free Cash Flow
(after acquisitions and dividends)
748 2.6% 1,194 4.3% -37%
Operating CF
Capex
(net)
Free Cash Flow1
€m FY/2016 LTM Margin FY/2016 LTM Margin FY/2016 LTM Margin
991 16.5% -323 -5.4% 668 11.1%
622 10.6% -349 -5.9% 273 4.7%3
27 2.3% -11 -0.9% 16 1.4%
Corporate/Other 1 n.a. -6 n.a. -5 n.a.
Excl. FMC 1,717 13.3%2 -689 -5.4% 1,028 7.9%2
3,574 12.3% -1.603 -5.5% 1,971 6.8%

1 Before acquisitions and dividends

2 Margin incl. FMC dividend

3 Understated: 5.4% excluding €43 million of capex commitments from acquisitions

Fresenius Group: Leverage Ratio*

*At annual average FX rates for both EBITDA and net debt

1 Pro forma acquisitions; before special items

2 Adjusted due to debt issuance cost restatement (U.S. GAAP standard ASU 2015-03)

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

4 Before special items

5 Pro forma acquisitions

6 Pro forma Quirónsalud: 3.1

7 Calculated at expected annual average exchange rates, for both net debt and EBITDA; without large unannounced acquisitions

Fresenius Group: Consistent Cash Generation And Proven Track Record of Deleveraging

CFFO margin FCF margin (before acquisitions & dividends)

Capex in % of sales

1 Net debt at year-end exchange rate; EBITDA at LTM average exchange rates 2 Pro forma Quirónsalud: 3.2

Net Debt / EBITDA1

Fresenius Group: Solid Balance Sheet Structure

Fresenius Group Debt Maturity Profile1 December 31, 2016 Pro Forma2

1 Based on utilization of major financing instruments

2 Pro Forma the acquisition of Quironsalud: €2.6bn Senior Notes, €1.2bn Incremental facilities, € 1.0bn Schuldschein loans and €500 million Synthetic Convertible bonds

Fresenius Group: Components of the Debt Financing for the Acquisition of Quirónsalud

Maturity profile

Average maturity 7.0 years.

Financing mix

Fresenius Kabi: Organic Sales Growth by Product Segment

Total sales 1,550 3% 6,007 5%
Transfusion Technology
Medical Devices/ 262 -9% 1,039 1%
Clinical Nutrition 403 7% 1,576 7%
Infusion Therapy 225 7% 861 6%
IV Drugs 660 5% 2,531 5%
€m Q4/2016 Organic
Growth
FY/2016 Organic
Growth

Fresenius Kabi: Profit and Loss Statement

€m 2016 2015 Remarks 2016
Sales 6,007 5,950 5% organic growth
EBITDA
margin %
1,479
24.6
1,446
24.3
EBIT
margin %
1,224
20.4
1,189
20.0
Net interest -149 -184
Earnings before taxes
and noncontrolling
interest
1,075 1,005
Income taxes
Tax rate %
-323
30.0
-306
30.4
Noncontrolling
interest
-36 -30
Net income1 716 669

2015 before special items

1 Attributable to shareholders of Fresenius Kabi AG

Fresenius Kabi: Cash Flow Statement

€m 2016 2015 Remarks 2016
Net income1
(incl. noncontrolling
interest)
752 610
Depreciation / amortization 255 257
Change in working capital -16 46
Cash flow from operations
Margin %
991
16.5
913
15.3
CAPEX, net -323 -324 66% discretionary (2015: 67%)
34% non-discretionary (2015: 33%)
Cash flow
before acquisitions and
dividends
668 589
Acquisitions, net -114 -16
Free cash flow
(before dividends)
554 573

1 After special items

Fresenius Kabi: Balance Sheet

€m 2016 2015 Remarks 2016
Accounts receivable 769 747 DSO 2016: 47 days
(2015: 46)
Inventories 1,354 1,202 SOI 2016: 152 days
(2015: 135)
Fixed assets 7,637 7,277 Goodwill (Dec 31, 2016): €5.2 bn
Other assets 1,365 1,169
Total assets 11,125 10,395
Debt 5,155 5,234
Other liabilities 2,256 2,053
Equity (incl. noncontrolling
int.)
3,714 3,108
Total liabilities and
shareholders' equity
11,125 10,395

Fresenius Helios: Strong Sales Growth

€m Q4/2016 Δ
Q4 YoY
FY/2016 Δ
FY YoY
Established
clinic
portfolio
1,441 2% 5,793 4%
Acquisitions
(consolidation <1 yr)
20 n.a. 50 n.a.
Total Sales 1,461 4% 5,843 5%

For a detailed overview of special items please see the reconciliation tables on slides 49–50.

Fresenius Helios: Performance Indicators

FY/2016 FY/2015 Change
No. of hospitals
Acute care clinics
-
Post-acute care clinics
112
88
24
111
87
24
1%
1%
0%
No. of beds
-
Acute care clinics
-
Post-acute care clinics
34,706
29,618
5,088
34,076
28,914
5,162
2%
2%
-1%
Admissions
-
Acute care (inpatient)
1,229,125 1,193,423 3%
Occupancy
-
Post-acute care
82% 82%
Average length of stay (days)
Acute care1
-
-
Post-acute care
6.4
26.1
6.4
26.4
Bad debt of sales 0.3% 0.2%

1 German average (2015): 7.3

Fresenius Helios: Profit & Loss Statement

€m 2016 2015 Remarks 2016
Sales 5,843 5,578 4% organic sales growth
EBITDA
Margin %
Depreciation / amortization
877
15.0
-195
831
14.9
-191
EBIT
Margin %
682
11.7
640
11.5
Net interest -37 -48
Earnings before taxes and
noncontrolling
interest
645 592
Income taxes
Tax rate %
-100
15.5
-108
18.2
Noncontrolling
interest
-2 -1
Net income1 543 483

Before special items

1 Attributable to shareholders of HELIOS Kliniken GmbH

Fresenius Helios: Cash Flow

€m 2016 2015 Remarks 2016
Net income1
(incl. noncontrolling
interest)
545 508
Depreciation / amortization 195 191
Change in working capital -118 -80
Cash flow from operations
Margin %
622
10.6
618
11.1
CAPEX, net -349 -271
Cash flow
before acquisitions and dividends
273 347
Acquisitions, net -48 47
Free cash flow (before dividends) 225 394

1 After special items

Fresenius Helios: Balance Sheet

€m 2016 2015 Remarks 2016
Accounts receivable 749 653 DSO 2016: 47 days (2015: 43)
Property, plant and equipment
(net)
2,629 2,538
Goodwill 4,544 4,443
Other assets 779 796
Total assets 8,701 8,430
Debt 1,406 1,282 Incl. debt from 2005 HELIOS
acquisition (€600 m)
Other liabilities 1,440 1,514
Equity
(incl. noncontrolling
interest)
5,855 5,634
Total liabilities and
shareholders' equity
8,701 8,430

Fresenius Vamed: Sales and EBIT in Line with Expectations

€m Q4/2016 Growth
Q4 YoY
FY/2016 Growth
FY YoY
Project business 269 11% 594 3%
Service business 151 4% 566 4%
Total sales 420 9% 1,160 4%
Total EBIT
Margin
38
9.0%
12%
20 bps
69
5.9%
8%
20 bps
Order intake1 343 -20% 1,017 13%
Order backlog1 1,961 19%

1 Project business only

Fresenius Vamed: Profit & Loss Statement

€m 2016 2015 Remarks 2016
Sales 1,160 1,118 5% organic growth
EBITDA 80 75
Margin % 6.9 6.7
EBIT 69 64
Margin % 5.9 5.7
Net interest -2 -3
Earnings before taxes
and noncontrolling
interest
67 61
Income taxes -21 -16
Tax rate % 31.0 26.2
Noncontrolling
interest
-1 -1
Net income1 45 44
ROE (before taxes) % 19.6 19.4

1 Attributable to shareholders of Vamed AG

Fresenius Vamed: Cash Flow

€m 2016 2015 Remarks 2016
Net income
(incl. noncontrolling
interest)
46 45
Depreciation / amortization 11 11
Change in working capital -30 -3
Cash flow from operations
Margin %
27
2.3
53
4.7
CAPEX, net -11 -11
Cash flow (before acquisitions and dividends) 16 42
Acquisitions, net 0 -4
Free cash flow
(before dividends)
16 38

Fresenius Vamed: Balance Sheet

€m 2016 2015 Remarks 2016
Accounts receivable 209 198 DSO 2016: 66 days
(2015: 65)
Property, plant and equipment 72 71
Intangible assets 103 104
Other assets 724 615
Total assets 1,108 988
Debt 176 161
Other liabilities 591 513
Equity (incl. noncontrolling
interest)
341 314
Total liabilities and
shareholders' equity
1,108 988
€m except
otherwise
stated 2016 according to
U.S. GAAP
Δ 2016 according to
IFRS
Sales
EBIT
6,007 -- 6,007
1,224 -53 1 1,171
Sales 5,843 2 -- 5,843 2
EBIT 682 2 1 683 2
Sales 1,160 -- 1,160
EBIT 69 -- 69

1 Under IFRS, research and development expenses include non-recurring valuation losses on capitalized development expenses. These relate to in-process R&D of product approval projects which were bought with the acquisition of Fresenius Kabi USA, Inc. Under US-GAAP these expenses were already recognized at the time of acquisition. Moreover differences stem from the timing of accruals.

2 Helios Kliniken Germany, excluding Quirónsalud

€m 2016 according to
U.S. GAAP
Δ 2016 according
to IFRS
Sales 29,083 388 1 29,471
Net income2 1,593 33 3 1,560

1 Under U.S. GAAP, certain value adjustments for receivables at Fresenius Medical Care North America were directly deducted from sales.

2 Net income attributable to shareholders of Fresenius SE & Co.KGaA

3 Under IFRS, research and development expenses include non-recurring valuation losses on capitalized development expenses. These relate to in-process R&D of product approval projects which were bought with the acquisition of Fresenius Kabi USA, Inc. Under US-GAAP these expenses were already recognized at the time of acquisition. Moreover differences stem from the timing of accruals.

Fresenius Group: Key Figures According to IFRS

€m FY/2016
U.S. GAAP
FY/2016
IFRS
Sales 29,083 29,471
EBIT 4,327 4,302
Net interest -582 -582
Net income 1,5931 1,5601
Operating cash flow 3,574 3,585
Balance sheet
total
46,447 46,697

1 Net income attributable to shareholders of Fresenius SE & Co. KGaA

Reconciliation according to U.S. GAAP Q4 2016/ Q4 2015

The Group's U.S. GAAP financial results as of December 31, 2016 do not include special items, whereas the U.S. GAAP financial results as of December 31, 2015 include special items. Net income attributable to shareholders of Fresenius SE & Co.KGaA was adjusted for these special items. The table below shows the special items and the reconciliation from net income (before special items) to earnings according to U.S. GAAP.

Net income attributable
to shareholders of Fresenius SE & Co. KGaA
414 -55 0 0 359
Noncontrolling interest -278 -278
Net income 692 -55 0 0 637
Income taxes -280 -280
Net income
before
taxes
972 -55 0 0 917
Interest result -137 -137
EBIT 1,109 -55 0 0 1,054
Sales 7,257 7,257
€m Q4/2015
before special
items
efficiency
program
KABI
integration
costs for
acquired Rhön
hospitals
disposal gains
from two
HELIOS
hospitals
Q4/2015
according to
U.S.
GAAP
(incl. special
items)

The special items are reported in the Group Corporate/Other segment.

Reconciliation according to U.S. GAAP FY 2016/FY 2015

The Group's U.S. GAAP financial results as of December 31, 2016 do not include special items, whereas the U.S. GAAP financial results as of December 31, 2015 include special items. Net income attributable to shareholders of Fresenius SE & Co.KGaA was adjusted for these special items. The table below shows the special items and the reconciliation from net income (before special items) to earnings according to U.S. GAAP.

Net income attributable
to shareholders of Fresenius SE & Co. KGaA
1,423 -89 -10 34 1,358
Noncontrolling interest -939 -939
Net income 2,362 -89 -10 34 2,297
Income taxes -983 16 2 -965
Net income
before
taxes
3,345 -105 -12 34 3,262
Interest result -613 -613
EBIT 3,958 -105 -12 34 3,875
Sales 27,626 27,626
€m FY/2015
before special
items
efficiency
program
KABI
integration
costs for
acquired Rhön
hospitals
disposal gains
from two
HELIOS
hospitals
FY/2015
according to
U.S.
GAAP
(incl. special
items)

The special items are reported in the Group Corporate/Other segment.

Financial Calendar / Contact

Financial Calendar 2017

03.05.2017 Report on 1st
quarter 2017
12.05.2017 Annual General Meeting, Frankfurt/Main
01.08.2017 Report on 2nd
quarter 2017
02.11.2017 Report on 3rd
quarter 2017

Please note that these dates could be subject to change.

Contact

Investor Relations Fresenius SE & Co. KGaA phone: +49 6172 608-2485 e-mail: [email protected] For further information and current news: www.fresenius.com

Follow us on Twitter www.twitter.com/fresenius\_ir and LinkedIn: www.linkedin.com/company/fresenius-investor-relations

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