The management board’s assessment of the effect of general economic developments and those in the healthcare sector for Fresenius as well as business results and significant factors affecting operating performance
The war in Ukraine had a negative impact on the Fresenius Group’s business, both directly and indirectly. The negative impact amounted to €43 million in net income1 in 2022.
In 2022, the difficult macroeconomic environment had a negative impact on business development. This included increased uncertainties, inflation-related cost increases, staff shortages, supply chain disruptions, the continued impact of the COVID-19 pandemic, and increased energy costs. In this difficult macroeconomic environment, the Fresenius Group had to lower its revenue guidance once and its net income guidance twice.
For this reason, the Management Board believes that 2022 was a challenging fiscal year for the Fresenius Group.
Fresenius Medical Care’s revenue increased significantly by 10% (increased by 2% in constant currency) to €19,398 million (2021: €17,619 million). Net income2 attributable to shareholders of Fresenius Medical Care decreased significantly by 10% (17% in constant currency) to €913 million (2021: €1,018 million).
Fresenius Kabi achieved organic revenue growth of 3%. EBIT2 decreased by 6% (decreased by 14% in constant currency; decreased 10% in constant currency excluding the acquisitions of Ivenix and mAbxience) to €1,080 million (2021: €1,153 million).
The organic revenue growth of Fresenius Helios was 6%. EBIT2 increased by 5% (5% in constant currency) to €1,185 million (2021: €1,127 million).
The organic revenue development of Fresenius Vamed was 2%. EBIT2 decreased significantly to €20 million (2021: €101 million).
Comparison of the actual business results with the forecasts
The overall macroeconomic environment in 2022 was characterized by increased uncertainties, inflation-related cost increases, staff shortages, supply chain disruptions, and higher energy costs. This had a direct impact on customer and patient behavior. In this difficult macroeconomic environment, the Fresenius Group had to lower its Group revenue forecast once and its Group earnings forecast twice.
Revenue in fiscal year 2022 increased by 4% in constant currency and was thus in line with the adjusted expectation in July 2022. Excluding estimated COVID-19 effects4, the Fresenius Group would have achieved currency-adjusted revenue growth of 4% to 5% in the financial year.
Currency-adjusted net income2,3 decreased by 10% in fiscal year 2022, in line with the expectation that was adjusted downward for the second time in October 2022. Excluding estimated COVID-19 effects, the Fresenius Group would have achieved currency-adjusted net income growth1 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. of -16% to -12%.
1 Net income attributable to the shareholders of Fresenius SE & Co. KGaA
2 Before special items
3 Net income attributable to the shareholders of Fresenius SE & Co. KGaA, excluding acquisitions Ivenix and mAbxience
3 Net income attributable to the shareholders of Fresenius SE & Co. KGaA
4 An overview of the effect of COVID-19 is provided in the Estimated COVID-19 effects chapter.
We invested €1,886 million in property, plant and equipment (2021: €2,032 million). At 4.6%, the investments in property, plant and equipment are below the prior-year level of 5.4%, but in line with the adjusted expectation. In October 2022, we expected to spend around 5% (previously around 6%) as a percentage of revenue. Overall, the Fresenius Group was able to continue its investment programs, despite the pandemic, to a large extent.
Operating cash flow was €4,198 million and thus significantly lower than one year earlier (2021: €5,078 million) due to low earnings and higher. The cash flowCash flowFinancial key figure that shows the net balance of incoming and outgoing payments during a reporting period. margin was 10.3% (2021: 13.5%) and therefore in line with the adjusted expectation. In October 2022, we had expected to achieve a cash flow margin between 8% and 10% (previously: between 10% and 12%).
The net financial debt / EBITDA ratio was 3.581 (December 31, 2021: 3.511), excluding the already-completed acquisition of Ivenix and the completed acquisition of the majority stake in mAbxience. In October 2022, we had anticipated that the net financial debt / 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. ratio at the end of 2022 would be roughly at the level of Q3 2022 (3.64×1) and thus above the target corridor of 3.0× to 3.5× we had set ourselves (previously: ratio excluding acquisitions Ivenix and mAbxience slightly above the self-set target corridor of 3.0× to 3.5×). We have met this adjusted expectation.
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 5.1%2 (2021: 5.9%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 5.7%2 (2021: 6.5%2). In October 2022, we expected a decline of 80 to 100 basis points (previously 50 to 80 basis points) for both metrics for the full year. At the beginning of fiscal year 2022, we had anticipated that ROIC and ROOA would be at the same level as in fiscal year 2021. The change is mainly attributable to lower NOPATNOPATNet Operating Profit After Taxes (NOPAT) is calculated from operating income (EBIT), as stated in the profit and loss statement, less income taxes. and EBITEBIT (Earnings before Interest and Taxes)EBIT does include depreciation and write-ups on property, plant and equipment. EBIT is calculated by subtracting costs of revenue, selling, general and administrative expenses, and research and development expenses from revenue. and slightly higher invested capital and operating assets.
1 Both net debt and EBITDA calculated at average exchange rates; before special items, pro forma closed acquisitions / divestitures; 2022: excluding acquisitions Ivenix and mAbxience
2 Before special items For a detailed overview of special items please see 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 revenue and the associated reductions in profitability. Therefore, the table below shows management’s best estimates.
Estimated Covid-19 Effects
Download(XLS, 35 KB)| Reported growth rate in constant currency including COVID-19 effects | Estimated COVID-19 impact in constant currency | Estimated growth rate in constant currency excluding COVID-19 effects | ||||
|---|---|---|---|---|---|---|
| € in millions | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
| Revenue | 4% | 5% | 0% to -1% | 0% to -1% | 4% to 5% | 5% to 6% |
| Net income (before special items)1 | -12% | 5% | 4% to 0% | -1% to -5% | -16% to -12% | 6% to 10% |
| 1 Net income attributable to the shareholders of Fresenius SE & Co. KGaA | ||||||
Achieved Group Targets 2022
Download(XLS, 37 KB)| Guidance 2022, published February 2022 | Guidance adjustment / update, published July 2022 | Guidance adjustment / update, published October 2022 | Achieved in 2022 | |
|---|---|---|---|---|
| Group1 | ||||
| Revenue (growth, in constant currency) | Mid-single-digit percentage growth | Growth in a low-to-mid- single-digit percentage range | Confirmed | 4% |
| Net income2,5 (growth, in constant currency) | Low-single-digit percentage growth | Decline in a low-to-mid- single-digit percentage range | Decline around 10% | -10% |
| Fresenius Medical Care1,3 | ||||
| Revenue (growth, in constant currency) | Low-to-mid-single-digit percentage growth | Low-single-digit percentage growth | Confirmed | 2% |
| Net income4 (growth, in constant currency) | Low-to-mid single-digit percentage growth | Decline at around a high-teens percentage range | Decline in the high-teens to mid-twenties percentage range | -17% |
| Fresenius Kabi1 | ||||
| Revenue (growth, organic) | Low-single-digit percentage growth | Confirmed | Confirmed | 3% |
| EBIT5 (growth, in constant currency) | Decline in high-single- to low-double-digit percentage range | Confirmed | Confirmed | -10% |
| Fresenius Helios1 | ||||
| Revenue (growth, organic) | Low-to-mid-single-digit percentage growth | Confirmed | Confirmed | 6% |
| EBIT (growth, in constant currency) | Mid single-digit percentage growth | Confirmed | Confirmed | 5% |
| Fresenius Vamed1 | ||||
| Revenue (growth, in constant currency) | High-single- to low-double-digit percentage growth | Confirmed | Growth in a mid-single-digit percentage range | 2% |
| EBIT | Returning to absolute pre-COVID levels (2019: €134 m) | Confirmed | Around €100 million | €20 million |
| 1 Before special items | ||||
| 2 Net income attributable to the shareholders of Fresenius SE & Co. KGaA, 2022: excluding acquisitions Ivenix and mAbxience | ||||
| 3 Targets are based on 2021 results. 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 | ||||
| 5 2022: excluding acquisitions Ivenix and mAbxience | ||||