The healthcare group is once again burdened by the weak development at the dialysis subsidiary Fresenius Medical Care.
(Photo: dpa)
Frankfurt The healthcare group Fresenius started the year with a significant drop in profits. The operating result (EBIT) fell in the first quarter by nine percent to 908 million euros, as the company announced on Tuesday. On average, however, analysts had expected a sharper decline to 837.5 million euros. The stock market reacted positively. Fresenius shares rose by more than six percent in the morning.
Above all, the weak development of the dialysis subsidiary Fresenius Medical Care (FMC) burdened the Dax group. The operating result of the dialysis subsidiary collapsed by a quarter. Although Fresenius increased sales by five percent to 10.2 billion euros. The bottom line, however, was that earnings fell by 16 percent to 346 million euros.
CEO Michael Sen confirmed the group’s annual forecast. Fresenius is expected to grow organically in the low to mid single-digit percentage range. Currency-adjusted operating profit (EBIT) is expected to remain roughly stable or decline in the single-digit percentage range.
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FMC: The problem daughter is spun off
FMC continues to struggle with staff shortages and continues to fall behind in dialysis treatments in the US. Fresenius controls the largest subsidiary through a partnership limited by shares. By the end of the year, it is to be converted into a normal stock corporation – then Fresenius will no longer have to account for the problem child in full. Fresenius boss Michael Sen wants to hold on to the 32 percent stake for the time being.
The deconsolidation of FMC is on schedule, said Sen. The company had expected the decline in operating profit and justified it with significantly higher inflation effects and increased costs for personnel, materials, logistics and energy.
Fresenius plans restructuring of Vamed
In addition, a very negative development at the smallest Fresenius subsidiary Vamed burdened the consolidated profit. Vamed offers services such as building management for hospitals. There were negative one-off effects there, and the project business was weak in some cases. Restructuring measures are planned.
Fresenius boss Sen has placed the operational focus at Fresenius on the Kabi drug division and the hospital subsidiary Helios. While Kabi’s sales increased disproportionately by eight percent to a good two billion euros, the operating result fell slightly by one percent to 289 million euros due to increased costs.
The hospital subsidiary Helios increased sales by five percent to 3.1 billion euros, the operating result rose disproportionately by two percent to 311 million euros. The Jefferies analysts rated Fresenius’ quarterly figures as solid, with the exception of the development at Vamed. They view the strong sales growth at Kabi positively.
In order for the efficiency program to take effect, Fresenius must reduce its debt
The Fresenius Group has launched an extensive cost and efficiency program. According to the company, with 130 million euros in structural cost savings at EBIT level, 25 percent of the savings planned for this year have already been achieved in the first quarter. However, the measures also incurred one-off costs of 50 million euros.
The management also wants to part with less profitable businesses. Because the high level of debt restricts the scope for action. In the first quarter, net financial liabilities increased by two percent to 25.4 billion euros. The gearing rose to 3.79 times Ebitda, which is outside the range of 3.0 to 3.5 set by the company.
More: New Fresenius boss Michael Sen sharply criticizes former leadership.