Overall business development

The management board’s assessment of the effect of general economic developments and those in the health care sector for Fresenius as well as business results and significant factors affecting operating performance

We have demonstrated our special responsibility as part of the health care system, even under the difficult circum­stances of the current COVID-19 pandemic. With our products, ser­vices, and therapies, we have made a significant contribution worldwide to combat the COVID-19 pandemic. For example, our dialysis clinics and hospitals took extensive measures to ensure that patients received the best possible care throughout. Despite partial government compensation, the COVID-19 pandemic had an overall negative effect on the 2020 financial year figures, in particular due to restrictions imposed by the authorities in many of the Group’s key markets.

The downturn in the global economy had only an insignificant overall impact on our industry in 2020.

The Management Board is of the opinion that Fresenius has proven to be stable and resilient in the face of the enormous challenges in 2020 and our significant contributions to the fight against and containment of the COVID-19 pandemic. This has particularly benefited our patients, whom we have been able to continue to care for reliably despite ongoing and, in some cases, significant constraints. We achieved the Group sales and earnings targets for the year 2020, which had been adjusted to reflect the effects of COVID-19. Hence, the Management Board is of the opinion that 2020 was a successful year for the Fresenius Group from a financial perspective.

Fresenius Medical Care’s sales in constant currency increased by 5% to € 17,859 million (2019: € 17,477 million). Net income1 attributable to shareholders of Fresenius Medical Care increased by 10% (12% in constant currency) to € 1,359 million (2019: € 1,236 million).

Fresenius Kabi achieved organic sales growth of 4%. EBITEBIT (Earnings before Interest and Taxes)EBIT does include depreciation and write-ups on property, plant and equipment. EBIT is calculated by subtracting cost of sales, selling, general and administrative expenses, and research and development expenses from sales.1 decreased by 9% (decreased by 6% in constant currency) to € 1,095 million (2019: € 1,205 million).

Organic sales growth of Fresenius Helios was 4%. EBIT remained on the prior year’s level (0% in constant currency) at € 1,025 million (2019: € 1,025 million).

Organic sales development of Fresenius Vamed was - 8%. EBIT decreased by 78% (79%2) to € 29 million (2019: € 134 million).

Comparison of the actual business results with the forecasts

Our assumption that demand for our products, services, and therapies would remain strong in 2020 was confirmed. However, the COVID-19 pandemic had impacts on individual product categories and services. The respective effects can be found in the notes on the results of operations.

The overview below shows how the outlook for the Group and the business segments has developed in 2020. At the time the outlook for 2020 was published in February 2020, the effects of the COVID-19 pandemic had not been taken into account. A reliable assessment and quantification of positive and negative effects was not yet possible at that time. Therefore, the original guidance excluding effects from the COVID-19 pandemic remained in place until the publication of the half-year results. The adjusted guidance published in July 2020 included COVID-19 effects estimated for the full year.

We achieved our Group sales and net income1,3 guidance including estimated COVID-19 effects. We also would have achieved our original guidance excluding estimated COVID-19 effects for Group sales and Group net income3.

Sales in 2020 grew by 5% in constant currency, at the upper end of the guidance range of 3% to 6%. Excluding estimated COVID-19 effects4, the Fresenius Group would have achieved currency-adjusted sales growth of 7% to 8% in 2020, thus the upper end of the original guidance range.

Currency-adjusted net income3 before special items decreased by 3% in 2020, within the guidance range of - 4% to + 1%. Excluding estimated COVID-19 effects4, the Fresenius Group would have achieved the original guidance range with currency-adjusted net income3 growth before special items of 2% to 6%.

Fresenius invested € 2,398 million in property, plant and equipment (2019: € 2,463 million). At 6.6%, the investments in property, plant and equipment are below the prior-year level of 7.0% as a percentage of sales. The effects of the COVID-19 pandemic led to temporary delays in some projects. Overall, the Fresenius Group was able to continue its investment programs to a large extent and achieve the targeted range of 6% to 7% of sales.

Operating cash flow increased to € 6,549 million and was significantly above the previous year’s figure due to substantial advance payments for Medicare patients under the CARES Act and tax deferrals in North America (2019: € 4,263 million). Even excluding these COVID-19-related special effects, operating cash flow was higher than in the previous year. The cash flow margin was 18.1% (2019: 12.0%) and therefore above our expec­tations. We had expected to achieve a cash flow margin between 12% and 14%.

Group net debt / EBITDA was 3.445 (December 31, 2019: 3.615), and therefore in line with our expected target. The improvement in the leverage ratio is attributable to the excellent cash flow development, which more than offset the weight of COVID-19 effects on EBITDA.

1 Before special items
2 In constant currency
3 Net income attributable to the shareholders of Fresenius SE & Co. KGaA
4 An overview on the effect of COVID-19 is provided here.
5 Both net debt and EBITDAEBITDA (Earnings before Interest, Taxes, Depreciation and Amortization)EBITDA is calculated from EBIT by adding depreciations recognized in income and deducting write-ups recognized in income, both on intangible assets as well as property, plant and equipment. calculated at average exchange rates; before special items, pro forma closed acquisitions/divestitures

For a detailed overview of special items please see the reconciliation tables on results of operations, financial position, assets and liabilities.

Group ROICROIC (Return on Invested Capital)Calculated by: (EBIT - taxes) / Invested capital. Invested capital = total assets + accumulated amortization of goodwill - deferred tax assets - cash and cash equivalents - trade accounts payable - accruals (without pension accruals) - other liabilities not bearing interest. was 6.5%1 (2019: 6.7%1), and Group ROOAROOA (Return on Operating Assets)Calculated as the ratio of EBIT to operating assets (average). Operating assets = total assets - deferred tax assets - trade accounts payable - cash held in trust - payments received on account - approved subsidies. was 7.3%1 (2019: 7.6%1). The change is mainly driven by higher average operating assets and higher invested capital (ROIC).

1 Pro forma closed acquisitions /divestitures; before special items

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Achieved group targets 2020
Guidance 2020, published February 20201 Guidance adjustment / update, published July 20202 Guidance adjustment / update, published October 20202 Achieved in 2020
Sales growth (in constant currency) +4% to +7% +3% to +6% 5%
Net income3 growth (in constant currency) +1% to +5% -4% to +1% - 3%
Fresenius Medical Care
Sales growth (in constant currency) Mid-to-high single-digit %-range 5%
Net income4,5 (growth, in constant currency) Mid-to-high single-digit %-range 12%
Fresenius Kabi
Sales growth (organic) +3% to +6% +2% to +5% 4%
EBIT growth (in constant currency) - 4% to 0% -6% to -3% - 6%
Fresenius Helios
Sales growth (organic) +3% to +6% +1% to +4% 4%
EBIT growth (in constant currency) +3% to +7% Broadly stable 0%
Fresenius Vamed
Sales growth (organic) +4% to +7% ~ -10% - 8%
EBIT growth (in constant currency) +5% to +9% ~ -50% Positive absolute EBIT +€ 29 million
1 Before special items, excluding COVID-19 effects
2 Before special items, including expected COVID-19 effects 
3 Net income attributable to shareholders of Fresenius SE & Co. KGaA 
4 Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA 
5 Special items are effects that are unusual in nature and have not been foreseeable or not foreseeable in size or impact at the time of giving guidance.
Estimated COVID-19 effects 2020

The Fresenius Group was affected by the impact of the COVID-19 pandemic. In an environment with direct, but also many indirect effects of COVID-19, it is not possible to provide precise information on the financial impact on the consolidated income statement. This applies in particular to the impact of lost revenues and the associated reductions in profitability. Therefore, the table below shows management’s best estimates.

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Estimated COVID-19 effects 2020
€ in millions Reported growth rate in constant currency including COVID-19 effects Estimated COVID-19 impact in constant currency
Sales 5% -2% to -3%
Net income (before special items)1 -3% -5% to -9%
1 Net income attributable to shareholders of Fresenius SE & Co. KGaA

For a detailed overview of special items please see the reconciliation tables on results of operations, financial position, assets and liabilities.

Health care industry

Results of operations