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 many important contributions to high-quality and affordable medical care worldwide. In this way, we stand by the side of our patients – and live up to our social responsibility. For example, our dialysisDialysisForm of renal replacement therapy where a semipermeable membrane – in peritoneal dialysis the peritoneum of the patient, in hemo dialysis the membrane of the dialyzer – is used to clean a patient’s blood. 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 2021 fiscal year figures, in many of the Group’s key markets.
The global economy had only an insignificant overall impact on our industry in 2021. Over the course of the year, we experienced increased cost inflation effects, including rising raw material and transport prices, higher energy costs, bottlenecks in the supply chains, and higher price levels for medical products to protect our employees and patients (e.g., protective clothing, medical masks).
The Management Board is of the opinion that Fresenius has proven to be stable and resilient in the face of the enormous challenges in 2021 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 the challenges posed by the pandemic. We achieved the Group’s improved sales and earnings targets for the year 2021. Hence, the Management Board is of the opinion that 2021 was a successful year for the Fresenius Group from a financial perspective.
Fresenius Medical Care’s sales decreased by 1% (increased by 2% in constant currency) to €17,619 million (2020: €17,859 million). Net income1 attributable to shareholders of Fresenius Medical Care decreased by 25% (23% in constant currency) to €1,018 million (2020: €1,359 million).
Fresenius Kabi achieved organic sales growth of 4%. EBIT1 increased by 5% (7% in constant currency) to €1,153 million (2020: €1,205 million).
The organic sales growth of Fresenius Helios was 7%. EBIT1 increased by 10% (10% in constant currency) to €1,127 million (2020: €1,025 million).
The organic sales development of Fresenius Vamed was 11%. EBIT1 increased to €101 million (2020: €29 million).
1 Before special items
Comparison of the actual business results with the forecasts
Our assumption that demand for our products, services, and therapies would remain strong in 2021 was confirmed. However, the COVID-19 pandemic had impacts on individual product categories and services.
The overview Achieved group targets shows how the outlook for the Group and the business segments has developed in 2021.
Following a strong Q2/2021 and given the progress of the Group-wide cost and efficiency program, through which initial savings were already achieved in 2021, Fresenius raised its earnings outlook for 2021 in July 2021.
Negative COVID-19 effects then intensified in Q3/2021 compared to the previous quarter due to the significant increase in excess mortality among Fresenius Medical Care patients. Nevertheless, in November 2021, following good financial performance in Q3/2021 and given the progress made in the Group-wide cost and efficiency program, the outlook for Group sales was raised and the outlook for Group net income1,2 improved.
We achieved our raised or improved guidance for Group sales and net income1,2 including expected COVID-19 effects.
Sales in 2021 grew by 5% in constant currency, thus in line with expectations. Excluding estimated COVID-19 effects3, the Fresenius Group would have achieved currency-adjusted sales growth of 5% to 6% in 2021.
Currency-adjusted net income2 before special itemsBefore special itemsIn order to measure the operating performance extending over several periods, key performance measures are adjusted by special items, where applicable. Adjusted measures are labelled with “before special items”. A reconciliation table is available within the respective quarterly or annual report and presents the composition of special items. increased by 5% in 2021, thus above our expectations. Excluding estimated COVID-19 effects3, the Fresenius Group would have achieved a currency-adjusted net income2 growth before special items of 6% to 10%.
1 Before special items
2 Net income attributable to the shareholders of Fresenius SE & Co. KGaA
3 An overview on the effect of COVID-19 is provided on the table below
Fresenius invested €2,032 million in property, plant and equipment (2020: €2,398 million). At 5.4%, the investments in property, plant and equipment are below the prior-year level of 6.6% and below the target of around 6% as a percentage of sales. Overall, the Fresenius Group was able to continue its investment programs, despite the pandemic, to a large extent.
Operating cash flow was €5,078 million and thus significantly below the previous year’s figure due to substantial advance payments for Medicare patients under the CARES Act and tax deferrals in North America in 2020 (2020: €6,549 million). The cash flowCash flowFinancial key figure that shows the net balance of incoming and outgoing payments during a reporting period. margin was 13.5% (2020: 18.1%) and therefore above expectations. We had expected to achieve a cash flow margin between 10% and 12%.
Group net debt / EBITDA was 3.511 (December 31, 2020: 3.444), hence in line with our expectations. We had expected the leverage ratio at the end of 2021 to be around the upper end of the self-imposed target corridor of 3.0× to 3.5×. Due to negative COVID-19 effects on 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., in particular the increased excess mortality of dialysis patients and the associated lower earnings contributions from Fresenius Medical Care the leverage ratio increased in comparison to prior year.
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 5.9%2 (2020: 6.5%2), 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 6.5%2 (2020: 7.3%2), thus both ratios were broadly in line with expectations. We had anticipated that ROIC would be 40 to 70 basis points and ROOA 50 to 100 basis points below the 2020 level. The change is mainly driven by by lower 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. and NOPATNOPATNet Operating Profit After Taxes (NOPAT) is calculated from operating income (EBIT), as stated in the profit and loss statement, less income taxes. as well higher opating assets and slightly higher invested capital.
1 Both net debt and EBITDA calculated at average exchange rates; before special items, pro forma closed acquisitions/divestitures
2 Before special items
For a detailed overview of special items please see the reconciliation tables in chapter Results of operations.
Estimated COVID-19 effects
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.
Estimated Covid-19 EffectsDownload(XLS, 36 KB)
|Reported growth rate
in constant currency
including COVID-19 effects
|Estimated growth rate
in constant currency
excluding COVID-19 effects
|€ in millions||2021||2020||2021||2020||2021||2020|
|Sales||5%||5%||0% to -1%||-2% to -3%||5% to 6%||7% to 8%|
|Net income (before special items)1||5%||-3%||-1% to -5%||-5% to -9%||6% to 10%||2% to 6%|
|1 Net income attributable to the shareholders of Fresenius SE & Co. KGaA|
Achieved Group Targets 2021Download(XLS, 37 KB)
adjustment / update,
/ update, published
|Sales (growth, in constant currency)||Low-to-mid single-digit percentage growth||Mid single-digit percentage growth||5%|
|Net income2 (growth, in constant currency)||At least broadly stable||Low single-digit percentage growth||Around top-end of low single-digitperentage growth||5%|
|Fresenius Medical Care3|
|Sales (growth, in constant currency)||Low-to-mid single-digit percentage growth||Confirmed; expected to be at the lower end of the guidance range||2%|
|Net income4 (growth, in constant currency)||High-teens to mid-twenties percentage decline||Confirmed; expected to be at the lower end of the guidance range||-23%|
|Sales (growth, organic)||Low-to-mid single-digit percentage growth||4%|
|EBIT (growth, in constant currency)||Stable-to-low single-digit percentage growth||Low single-digit percentage growth||Around top end of low single-digit percentage guidance range||7%|
|Sales (growth, organic)||Low-to-mid single-digit percentage growth||Mid single-digit percentage growth||7%|
|EBIT (growth, in constant currency)||Mid-to-high single-digit percentage growth||High single-digit percentage growth||10%|
|Sales (growth, organic)||Mid-to-high single-digit percentage growth||11%|
|EBIT||High double-digit € million amount||€101 million|
|1 Before special items|
|2 Net income attributable to the shareholders of Fresenius SE & Co. KGaA|
|3 Targets are based on 2020 results excluding goodwill and brand name impairment in the Latin America segment of €195 million. The targets include the expected impact of COVID-19, are in constant currency and exclude special items. Special items include costs related to FME25 as well as other effects that are unusual in nature and were not foreseeable at the time the outlook was prepared, or whose magnitude or impact was not foreseeable.|
|4 Net income attributable to the shareholders of Fresenius Medical Care AG & Co. KGaA|
|For a detailed overview of special items please see the reconciliation tables in chapter Results of operations.|