The Management Board makes strategic and operational management decisions based on our Group-wide performance indicators for growth, profitability, liquidity, capital efficiency, and capital management. The most important financial performance indicators for us are explained below and a definition is provided in the glossary of financial terms. There were no changes in the financial performance indicators in fiscal year 2022 compared with the previous year.
The Management Board has revised the financial management system for the fiscal year 2023. As part of the new Fresenius Financial Framework, we have defined ambition levels (growth bands, amongst others 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. margin) for the business segments. These serve as an ambition level for the internal management of our business sectors and are benchmarked against leading competitors. The new Fresenius Financial Framework will be rolled out in fiscal year 2023.
The key figures for the financial performance indicators for 2023 of the Group and the business segments can be found in the outlook.
Financial performance indicators 2022
Financial performance indicators 2023
Growth
For Fresenius, currency-adjusted revenue growth, in particular organic revenue growth in the Group and in the business segments, is of central importance for managing revenue growth. It shows the growth of our business that comes from our own resources and not from acquisitions, divestitures, or currency translation effects. Currency translation effects are the difference between revenue in the reporting period at the exchange rates of the reporting period, less revenues in the reporting period at the exchange rates of the comparative period.
A portfolio effect takes place in the case of an acquisition or divestment. Any portfolio effect is excluded for 12 months after the end of the relevant transaction in the reporting or comparative period, after which both current and prior periods fully reflect the portfolio change.
In the new Fresenius Financial Framework, organic revenue growth represents the key performance indicator for the Group’s growth and that of the business segments. With the new Fresenius Financial Framework, we have defined annual organic revenue growth ranges (ambition levels) for the operating companies. No annual ambition levels were defined for organic sales growth of the investment companies.
Ambition level of annual organic revenue growth
Download(XLS, 35 KB)| OPERATING COMPANIES | Organic revenue growth p.a. |
|---|---|
| Fresenius Kabi | 4% – 7% |
| Fresenius Helios | 3% – 5% |
Profitability
We measured the earnings performance of the segments in fiscal year 2022 using earnings before interest and taxes (EBIT) and EBIT growth in constant currency. At Group level, we primarily used net income1,2 and its currency-adjusted growth.
In order to better compare operating performance over several periods, we have adjusted the earnings figures for special items where appropriate.
As part of the new Fresenius financial framework, we have defined annual margin bands (ambition levels) for the business segments. These serve as an ambition level for the internal management of our business sectors and are benchmarked against leading competitors. The annual EBIT marginEBIT marginEBIT margin is calculated as the ratio of EBIT to revenue. is defined as earnings before interest and taxes divided by revenue. To improve comparability of operating performance over several periods, the earnings figure is adjusted for special items where necessary.
Ambition level of annual EBIT margin bands
Download(XLS, 35 KB)| EBIT margin bands p.a. | |
|---|---|
| OPERATING COMPANIES | |
| Fresenius Kabi | 14% – 17% |
| Fresenius Helios | 9% – 11% |
| INVESTMENT COMPANIES | |
| Fresenius Medical Care | 10% – 14% |
| Fresenius Vamed | 4% – 6% |
For Fresenius Medical Care and Fresenius Vamed, we present the annual margin band that reflects our expectation as the major shareholder.
At Group level, we primarily use earnings before interest and taxes (EBIT) and EBIT growth in constant currency. To improve comparability of operating performance over several periods, the earnings figure is adjusted for special items where necessary.
1 Net income attributable to the shareholders of Fresenius SE & Co. KGaA
2 Before special items
Liquidity and dividend
Within the Group, cash flowCash flowFinancial key figure that shows the net balance of incoming and outgoing payments during a reporting period. margin is used as the main liquidity indicator in fiscal year 2022.
With the new Fresenius Financial Framework, we will in future manage our business according to the cash conversion rate (CCR), which is defined as the ratio of adjusted free cash flow (cash flow before acquisitions and dividends; before interest, tax, and special items) to operating income (EBIT) 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.. This allows us to assess our ability to generate cash and pay dividends, among other things. The ambition level for the CCR is around 1.0, considering the growth profile of the respective year.
With the new Fresenius Financial Framework Fresenius aims to generate attractive and predictable dividend yields. In line with its progressive dividend policy, the Company aims to increase the dividend in line with earnings per share growth (before special items, in constant currency) but at least maintain the dividend at the prior-year's level. For fiscal year 2022, we will propose to the Annual General Meeting a dividend at the prior-year level of €0.92 per share (2021: €0.92). The payout to the shareholders of Fresenius SE & Co. KGaA will amount to €518 million or 30% of consolidated net income. Based on this proposal and the year-end share price, the dividend yield is 3.5%.
Capital efficiency
We work as profitably and efficiently as possible with the capital provided to us by shareholders and lenders. In order to manage this, we primarily calculate the return on invested capital (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.) and the return on operating assets (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.) for fiscal year 2022.
Under the new Fresenius Financial Framework, the Group's capital efficiency will in future be managed on the basis of return on invested capital (ROIC). This serves as an ambition level for the internal management of our Group. We aim to achieve a ROIC of between 6% and 8%.
Capital management
We use the ratio of 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. as the key parameter for managing the capital structure. This measure indicates the degree to which a company is able to meet its payment obligations. Our business segments usually hold leading positions in growing and mostly non-cyclical markets. Since the majority of our customers are of high credit quality, they generate mainly stable, predictable cash flows. According to the management assessment, the Group is therefore able to use debt to finance its growth to a greater extent than companies in other industries.
In the context of the new Fresenius Financial Framework, we will continue to manage our capital structure using the ratio of net debt to EBITDA. The self-imposed target corridor for the leverage ratio remains unchanged at 3.0× to 3.5×.
Non-financial performance targets
In fiscal year 2022, sustainability was included as a non-financial performance target in the Management Board compensation system. Based on the ESG key performance indicators (KPIs) identified in fiscal year 2021, the business segments worked on transparent reporting, performance measurement, and target setting to manage sustainability performance in future. The focus continued to be on the topics of quality, employees, innovation, compliance and the environment, which are essential for Fresenius. These are derived from the company’s materiality analysis. We use a proprietary ESG scoring methodology to qualitatively measure the achievement of targets for the Management Board compensation. From fiscal year 2023, the qualitative measurement of fiscal years 2021 and 2022 will be replaced by quantitative ESG KPIs in the Management Board short-term variable remuneration (Short-term Incentive – STI). The KPIs cover the key sustainability topics of medical quality / patient satisfaction and employees.
The topic of employees is measured with the key figure of the Employee Engagement Index (EEI) for the Fresenius Group. The indicator measures how positively employees identify with their employer, how committed they feel, and how engaged they are at work. The key figure can be reported in relation to a business segment or for the entire Group. The EEI of the Fresenius Group is weighted according to the number of employees in the business segments The EEI is measured on a scale between 1 and 6.
The Medical Quality / Patient Satisfaction topic is made up of four equally weighted key performance indicators defined at business segment level. The four key figures are based on their respective materiality for the business model.
- Fresenius Medical Care: Net Promoter Score
- Fresenius Kabi: Audit & Inspection Score
- Fresenius Helios: Inpatient Quality Indicator
- Fresenius Vamed: Patient Satisfaction Score
The patient Net Promoter Score (NPS) is designed to ensure that Fresenius Medical Care maintains excellent patient relationships and that the opinions of patients are used to provide strategic insights to improve patient relationships. Improving the Net Promoter ScoreNet Promoter Score (NPS)The Net Promoter Score is designed to ensure that Fresenius Medical Care maintains excellent patient relationships and that the patient voice is used to provide strategic insights to improve patient relationships. Improving the Net Promoter Score leads to better service, higher quality of care, improved quality of life and loyalty to remain with Fresenius Medical Care as the provider of choice. leads to better service, higher quality of care, improved quality of life and loyalty to Fresenius Medical Care as the provider of choice. The patient Net Promoter Score is measured on a scale between -100 and +100 points.
The Audit & Inspection Score at Fresenius Kabi is based on the number of critical and serious non-conformances from regulatory GMP inspections and the number of serious non-conformances from TÜV ISO 9001 audits in relation to the total number of inspections and audits performed. The score shows how many deviations were identified on average during the inspections and audits considered. The Audit & Inspection Score is measured as a percentage (scale >0%).
The Inpatient Quality Indicator at Fresenius Helios comprises the measurement of a set of standardized German inpatient quality indicators (G-IQI). These are based on routinely collected hospital billing data from hospital information systems. The number of indicators achieved compared to the total number of indicators is calculated to measure the overall success rate. There is individual target setting and measurement of target achievement in the two Helios segments Helios Germany and Helios Spain. Subsequently, target achievement is consolidated at Helios company level with equal weighting (50% each) for Executive Board compensation. The Inpatient Quality IndicatorInpatient Quality IndicatorThe Inpatient Quality Indicator at Fresenius Helios comprises the measurement of a set of standardized ¬German inpatient quality indicators (G-IQI). These are based on routinely collected hospital billing data from hospital information systems. The number of indicators achieved compared to the total number of indicators is calculated to measure the overall success rate. There is individual target setting and measurement of target achievement in the two Helios segments Helios Germany and Helios Spain. Subsequently, target achievement is consolidated at Helios company level with equal weighting (50% each) for Executive Board compensation. is measured on a scale of 0% to 100%.
Fresenius Vamed measures the level of patient satisfaction in the Vamed healthcare facilities and the overall patient satisfactionPatient satisfactionFresenius Vamed measures the level of patient satisfaction in the VAMED healthcare facilities and the overall patient satisfaction with the services offered in the VAMED healthcare facilities. Each patient receives a questionnaire at or immediately after discharge, which contains 16 standardized questions that are evaluated for the patient satisfaction target. with the services offered in the Vamed healthcare facilities. At or immediately after the point of discharge, each patient receives a questionnaire, which contains 16 standardized questions that are evaluated for the patient satisfaction target. Patient Satisfaction is measured on a scale from 1 (very satisfied) to 5 (not satisfied).
Investment and acquisition process
Against the backdrop of debt, Fresenius pursues a targeted capital allocation with a focus on deleveraging. Our investments and acquisitions are carried out using a detailed coordination and evaluation process. As a first step, the Management Board sets the Group’s investment targets and the budget based on investment proposals. In the next step, the respective business segments and the internal Acquisition & Investment Council (AIC) determine the proposed projects and measures, taking into account the overall strategy, the total investment budget, and the required and potential return on investment. We evaluate investment projects based on commonly used methods, such as internal rate of return (IRR) and net present value (NPV). Within the framework of the due diligence process, opportunities and risks associated with the potential acquisition target are analyzed and assessed. To this end, we review the business model, the key financial figures and tax issues, and the resulting company valuation. In addition, we comprehensively analyze the market and competitive environment, the regulatory framework and the legal aspects. The audit also covers various issues relating to compliance, production, research and development, quality, information technology, human resources, and the environment. Based on investment volume, a project is submitted for approval to the executive committees or respective managements of the business segments, to the Group Management Board of Fresenius Management SE, and / or, if applicable, also additionally the consent of its Supervisory Board.
You can find more details on our key performance indicators in our interactive tool on our website at www.fresenius.com/interactive-tool.
Group1
Download(XLS, 36 KB)| Targets 20222 | 2022 | 2021 | 2020 | 2019 | 2018 | |
|---|---|---|---|---|---|---|
| Revenue growth (in constant currency) | Growth in a low-to-mid- single-digit percentage range | 4% | 5% | 5% | 6% | 6% |
| Net income3 growth (in constant currency) | Decline of around 10%6 | -10% | 5% | -3% | 0% | 7% |
| Liquidity and capital management | ||||||
| Operating cash flow margin | 8% to 10% | 10.3% | 13.5% | 18.1% | 12.0% / 9.9%4 | 11.2% |
| Net debt / EBITDA5 | Roughly on the same level as in Q3 / 22 (3.64x)6 | 3.58x | 3.51× | 3.44× | 3.61× / 3.14×4 | 2.71× |
| Capital efficiency | ||||||
| Return on invested capital (ROIC)7 | Decrease by 80 to 100 basis points compared to 2021 level | 5.1% | 5.9% | 6.5% | 6.7% / 7.4%4 | 8.3% |
| Return on operating assets (ROOA)7 | Decrease by 80 to 100 basis points compared to 2021 level | 5.7% | 6.5% | 7.3% | 7.6% / 8.2%4 | 9.0% |
Business Segments1
Download(XLS, 37 KB)| Targets 20222 | 2022 | 2021 | 2020 | 2019 | 2018 | |
|---|---|---|---|---|---|---|
| Fresenius Medical Care | ||||||
| Revenue growth (in constant currency) | Low-single-digit percentage growth | 2% | 2% | 5% | 5% | 4% |
| Net income growth8,9 (in constant currency) | Decline in the high teens to mid-twenties percentage range | -17% | -23% | 12% | -2% | 4% |
| Fresenius Kabi | ||||||
| Revenue growth (organic) | Low-single-digit percentage growth | 3% | 4% | 4% | 4% | 7% |
| EBIT growth (in constant currency) | Decline in high-single- to low-double-digit percentage range6 | -10% | 7% | -6% | 3% | 2% |
| Fresenius Helios | ||||||
| Revenue growth (organic) | Low-to-mid-single-digit percentage growth | 6% | 7% | 4% | 5% | 3% |
| EBIT growth (in constant currency) | Mid-single-digit percentage growth | 5% | 10% | 0% | -4% | 0% |
| Fresenius Vamed | ||||||
| Revenue growth (organic) | Growth in mid-single-digit percentage range | 2% | 11% | -8% | 16% | 16% |
| EBIT (growth in constant currency) | Around €100 million | +€20 million | + €101 million | + €29 million | 19% | 45% |
| 1 Growth rates are based on the assumptions of the respective annual forecasts and are adjusted for special items and, if applicable, other effects affecting the underlying growth (adjustments to new accounting standards, acquisitions / divestments, acquisition costs, or cost-saving programs). | ||||||
| 2 Including expected COVID-19 effects (updated October 2022) | ||||||
| 3 Net income attributable to shareholders of Fresenius SE & Co. KGaA | ||||||
| 4 Excluding IFRS 16 effect | ||||||
| 5 Both net debt and EBITDA calculated at LTM average exchange rates; before special items, pro forma closed acquisitions / divestitures | ||||||
| 6 Excluding acquisitions of Ivenix and mAbxience | ||||||
| 7 Before special items, pro forma acquisitions | ||||||
| 8 Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA | ||||||
| 9 Special items are effects (when consolidated at the Fresenius Group: special items), that are unusual in nature and were not foreseeable or not foreseeable in size or impact at the time of giving guidance. | ||||||