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  FRESENIUS SE & CO. KGaA

   

   

   

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  • Annual Report 2020 (PDF, 10 MB)
  • Factsheet FY/20 (PDF, 452 KB)

Sales

Group sales increased by 2% (5% in constant currency) to €36,277 million (2019: €35,409 million).

The impact of the COVID-19 pandemic had a negative effect¹ of an estimated 2 to 3 percentage points on currency-adjusted sales growth. In detail, COVID-19 effects on sales of the business segments² are as follows:

¹ An overview of the effect of COVID-19 is provided on page 63
² The following description of sales relates to the respective external sales of the business segments. Consolidation effects and corporate entities are not taken into account. Therefore, aggregation to total Group sales is not possible.

• Sales of Fresenius Medical Care increased by 2% (5% in constant currency) to €17,859 million (2019: €17,477 million). Organic sales growth was 3%. Currency translation effects lowered sales by 3%. The sales increase was driven by organic growth despite lower reimbursement for calcimimetics and slower growth in number of treatments due to higher mortality rates among patients affected by COVID-19 as well as the absence in 2020 of a revenue recognition adjustment for accounts receivable in legal dispute previously recorded in the prior year (2%). In 2020, Fresenius Medical Care experienced a higher demand of products for acute care treatments, in-center disposables, renal pharmaceuticals, home hemo­dialysis products and peritoneal dialysis products. Overall, we achieved our revenue targets in 2020 despite the COVID-19 pandemic.

• Fresenius Kabi increased sales by 1% to €6,976 million (2019: €6,919 million). Organic sales growth was 4%. Negative currency translation effects (3%) were mainly related to the devaluation of the U.S. dollar, the Brazilian real, and the Argentine peso against the euro.
  
  Sales in the United States and Europe were negatively impacted by fewer elective treatments due to COVID-19. In both regions, the exceptional increase in demand for essential medicines and medical devices for the treatment of COVID-19 patients already weakened early in Q2, and to that extent could not fully offset the dampened demand for medicines used for elective treatments.
  
  In North America, supply constraints for individual products due to temporary production restrictions put an additional strain on sales.
  
  In Asia-Pacific, Fresenius Kabi already experienced negative effects due to COVID-19 at the beginning of the year. This was followed by a gradual recovery of the Chinese business driven by an increase in elective treatments. However, sales in China remained at the previous year’s level on a full-year basis.
  
  Estimated COVID-19 effects had a slightly negative overall impact on Fresenius Kabi’s sales growth.

• Fresenius Helios increased sales by 6% (7%¹) to €9,818 million (2019: €9,234 million). Organic sales growth was 4%.
  
  Fresenius Helios’ sales in 2020 were negatively impacted by bed capacities kept free and postponed elective treatments due to COVID-19. Overall, COVID-19 effects had a slightly negative impact on organic sales development in 2020.
  
  Sales of Helios Germany increased by 7% to €6,340 million (2019: €5,940 million). Organic sales growth of 6% was positively impacted by regular price increases for flat rates per case (DRG) in Germany and a positive case mix. In addition, Fresenius Helios recorded strong case number growth in the months January to February 2020.
  
  At Helios Germany, the law to ease the financial burden on hospitals, which was in force until September 30, 2020, mitigated most of the negative effects in the first three quarters. In the fourth quarter, a follow-up regulation was implemented with narrowed criteria for hos­pitals obtaining the financial support. Overall, COVID-19 effects had a slightly negative impact on organic sales growth at Helios Germany in 2020.
  
  Helios Spain increased sales by 6% (organic growth: 2%) to €3,475 million (2019: €3,292 million), mainly due to the expansion of the market presence in Colombia with the acquisitions of 3 hospitals.
  
  At Helios Spain, COVID-19 effects had a significant negative impact on organic sales growth in 2020.Forgone elective treatments and bed capacities held vacant as part of authority-ordered measures led to significantly negative sales effects, particularly in the first half of the year. In the third and fourth quarter, organic growth increased significantly, driven by a strong recovery of elective treatments as well as an increase in outpatient treatments. Spain does not have a comparable compensation process to the so-called Rettungsschirm in Germany, with corresponding compensation regulations.

• Fresenius Vamed’s sales decreased by 6% (- 6%¹) to €2,068 million (2019: €2,206 million). Sales in the project business decreased by 22% to €633 million (2019: €807 million).
  
  In the project business, there were significant delays and partial cancellations due to travel restrictions, restricted supply chains, interrupted project execution, and imposed construction site stops, which also impacted sales in the second half of the year in particular.
  
  Sales in the service business grew by 3% to €1,435 million (2019: €1,399 million). Fresenius Vamed’s service business was negatively impacted by COVID-19 in 2020 due to underutilization of post-acute capacity based on the lower number of referrals from acute care hospitals. In addition, treatment of rehabilitation patients occurred only with capacity limitations due to authority-mandated restrictions. Government compensation payments were only able to mitigate the resulting negative effects to a limited extent. In contrast, the technical service business was robust.
  
  Overall, estimated COVID-19 effects had a very significant negative impact on Fresenius Vamed‘s sales development. Order intake in the project business decreased due to COVID-19 to €1,010 million (2019: €1,314 million). Fresenius Vamed increased its order backlog by 7% to €3,055 million (December 31, 2019: €2,865 million). Fresenius Vamed is the only business segment within the Fresenius Group whose business is also sig­nificantly influenced by order intake and order backlog.
  
  Beyond this, there were no other significant effects from changes in the product mix and no significant price effects in the Group in 2020.
  
  Currency translation effects had a negative impact of 3%. These resulted in particular from the devaluation of the U.S. dollar and various Latin American currencies, mainly the Brazilian real and the Argentine peso, against the euro.

¹In constant currency

Earnings structure

In 2020, Group net income¹ before special items decreased by 4% (- 3% in constant currency) to €1,796 million (2019: €1,879 million). COVID-19 had an estimated effect of - 5 to - 9 percentage points on Group net income growth. In 2020, earnings per share¹ before special items decreased by 4% (- 3% in constant currency) to €3.22 (2019: €3.37). The weighted average number of shares was 557.5 million.

Reported Group net income¹ decreased by 9% (- 8% in constant currency) to €1,707 million (2019: €1,883 million). An impairment of goodwill and brand names at Fresenius Medical Care Latin America had a negative impact. The impairment was due to the macroeconomic downturn in several countries in the region and the resulting increase in risk premiums. In addition, the change in the valuation of the biosimilarsBiosimilarsA biosimilar is a drug that is “similar” to another biologic drug already approved. contingent purchase price liabilities (appre­ciation), which was due to the higher prospects of success of individual projects also had a negative impact. Reported earnings per share¹ decreased by 9% (- 8% in constant currency) to €3.06 (2019: €3.38). Inflation effects did not have a significant impact on our results of operations.

Group 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. before special items remained on the previous year’s level (increased by 2% in constant currency) at €7,132 million (2019: €7,104 million). Group EBITDA reported was €7,100 million (2019: €7,083 million).

Group 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. before special items decreased by 2% (0% in constant currency) to €4,612 million (2019: €4,688). Group EBIT reported decreased by 5% (- 3% in constant currency) to €4,358 million (2019: €4,631 million).

EBIT development by business segment was as follows:

The presentation of the business segments’ earnings development is provided before special items. The special items are reported in the Group Corporate/Other segment.

• Fresenius Medical Care’s EBIT¹ increased in constant currency by 8% to €2,499 million (2019: €2,356 million). The increase was primarily driven by a revenue recognition adjustment for accounts receivable in legal dispute in 2019, and current year impacts from COVID-19-related meeting and travel savings in the North America Segment. EBIT was negatively impacted by additional costs – particularly in North America – for the installation of dialysis clinics exclusively for COVID-19 patients, for organizational changes in the existing dialysis clinics and additional personnel expenses as well as additional costs in the production facilities to protect employees and safeguard production activities. However, these expenses were mainly covered by the U.S. reimbursement program under the CARES Act. At the same time, we experienced a higher mortality rate amongst patients, due to the COVID-19 pandemic. In total, Fresenius Medical Care‘s earnings were immaterially impacted by the effects of COVID-19. The EBIT margin¹ increased to 14.0% (2019: 13.5%). EBIT reported increased by 4% in constant currency to €2,304 million (2019: €2,270 million), and the EBIT marginEBIT marginEBIT margin is calculated as the ratio of EBIT to sales. was 12.9% (2019: 13.0%).

• Fresenius Kabi’s EBIT¹ decreased by 9% (- 6% in constant currency) to €1,095 million (2019¹: €1,205 million). The decline is driven by headwinds leading to some underutilized production capacities in the US, coupled with selective supply constraints due to temporary manufacturing issues, incremental COVID-19 related expenses, competitive pressure, a negative effect due to the bankruptcy of a customer as well as planned SG & A spending ahead of the launch of the company’s first US biosimilar. Due to lower share-based compensation as a result of the current capital market situation, lower administrative costs due to reduced travel, and postponed projects, the estimated COVID-19 effects had a insignificant impact on EBIT development. The EBIT margin¹ was 15.7% (2019: 17.4%).

¹ Before special items

For a detailed overview of special items please see the reconciliation tables.

• The EBIT of Fresenius Helios remained on the prior year’s level (0% in constant currency) at €1,025 million (2019: €1,025 million). The EBIT margin was 10.4% (2019: 11.1%).
  COVID-19 effects had a moderate negative impact on EBIT development. The EBIT of Helios Germany increased by 4% to €602 million (2019: €577 million).
• The EBIT margin was 9.5% (2019: 9.7%). Due to the comprehensive financial support provided by the German government, COVID-19 effects had an overall insignificant impact on the EBIT development. The EBIT of Helios Spain decreased by 5% (- 5% in constant currency) to €420 million (2019: €443 million). The EBIT margin was 12.1% (2019: 13.5%). COVID-19 effects had a very significant negative impact on EBIT development due to forgone or postponed elective treatments combined with higher costs for extensive mea­sures to combat the pandemic.
• The EBIT of Fresenius Vamed decreased by 78% (- 79% in constant currency) to €29 million (2019: €134 million). The EBIT margin was at 1.4% (2019: 6.1%). Capacities at the rehabilitation clinics remained unused due to significantly lower allocations from the acute care hospitals and authority restrictions up to and including facility closures. Project business incurred additional costs due to project postponements. Estimated COVID-19 effects therefore had a very significant negative impact on EBIT development.

Development of other major items in the statement of income

Group gross profit remained on the prior year’s level at €10,316 million (2019: €10,348 million, increased by 2% in constant currency). The gross margin decreased to 28.4% (2019: 29.2%). The cost of sales increased by 4% to €25,961 million (2019: €25,061 million). Cost of sales as a percentage of Group sales increased to 71.6% (2019: 70.8%).

Selling, general, and administrative expenses consisted primarily of personnel costs, marketing and distribution costs, and depreciation and amortization. These expenses including other operating income and expenses increased by 2% to - €5,211 million (2019: - €5,101 million). The increase is mainly due to the rise in personnel costs as a result of the increased number of employees. Selling, general, and administrative expenses as a percentage of Group sales was 14.4% and remained on the prior year’s level (2019: 14.4%). R & D expenses increased by 16% to €751 million (2019: €645 million). The increase resulted from higher expenses at Fresenius Medical Care and ­Fresenius Kabi. Depreciation and amortization was €2,520 million¹ (2019: €2,416 million¹). The ratio as a percentage of sales was 6.9%¹ (2019: 6.8%¹). Group per­sonnel costs increased to €15,128 million (2019: €14,355 million). The personnel cost ratio was 41.7% (2019: 40.5%).

¹ Before special items

For a detailed overview of special items please see the reconciliation tables.

Group financial result before special items was - €654 million (2019: - €714 million), mainly due to refinancing activities as well as lower interest rates. Group financial result reported was - €659 million (2019: - €719 million).

The Group tax rate before special items was 23.1% (2019: 23.3%) and thus in line with expectations. Group tax rate reported was 24.2% (2019: 22.6%).

Noncontrolling interests before special items was - €1,248 million (2019: - €1,170 million), of which 96% was attributable to the noncontrolling interests in Fresenius Medical Care.

Reconciliation Fresenius Group

To present the underlying operational business performance and in order to compare the results with the scope of the guidance provided for fiscal year 2020, key figures are presented before special items.

2020 net income includes special items from goodwill impairment at Fresenius Medical Care in Latin America and revaluations of contingent biosimilars purchase price liabilities. Consolidated results for 2019 include special items from transaction-related expenses (e.g., NxStage), revaluations of biosimilars contingent purchase price liabilities, gains/losses related to divestitures of Care Coordination activities at Fresenius Medical Care (FMC), and expenses associated with the cost optimization program at FMC.

The special items shown within the reconciliation tables are reported in the Group Corporate/Other segment.

Reconciliation Business Segments