Following healthy sales and earnings growth in the second quarter of 2021 despite the negative effects of the Covid-19 pandemic, Fresenius has opted to raise its group earnings guidance.
The move comes after the group’s Fresenius Medical Care arm saw patient excess mortality rates significantly reduce, while Fresenius Kabi enjoyed strong performances in its emerging markets business.
Meanwhile, the group’s German hospital operating division, Fresenius Helios Germany, saw a gradual increase in elective treatment volumes; and Fresenius Helios in Spain saw outstanding sales and earnings growth after a weak prior-year quarter.
Fresenius Vamed also returned to growth numbers after a strong performance in its service business, and initiatives aimed at improving efficiency all across the group are already expected to have a positive financial effect in 2021.
Fresenius CEO, Stephan Sturm, commented: “Overall, our interim result for the 2021 business year is very strong. We have achieved very healthy sales and earnings growth, despite the ongoing impact of the pandemic. Our businesses are developing well, and we are making good progress on our initiatives for profitable growth and increased efficiency.
“The increased vaccination rates in many of our important markets are encouraging, but of course the pandemic is not over yet. We must remain vigilant and will continue to monitor the infection situation very closely. Nevertheless, there are reasons for us to be optimistic: Our growth drivers are intact, good health is and will remain of paramount importance to everyone. We will continue the review of our structures, and to drive efficiency measures along with our growth initiatives. The resulting benefits will allow us to sustainably develop our healthcare group even more successfully.”
In the group’s latest investor news statement, Fresenius declared that negative effects from the pandemic have receded during the second quarter of 2021, in line with expectations.
However, the statement warns that this is best solely on assumption and is subject to uncertainty, with rising Covid case numbers and potential virus mutations having the ability to threaten this progress.
Despite the uncertainty, the strong second quarter performance across the group and progress in implementing its efficiency measures have prompted Fresenius to raise its earnings guidance for the 2021 academic year.
Fresenius now projects net income to rise in a low single digit percentage range in constant currency, having previously forecast a broadly stable net income development in constant currency.
Sales growth is still expected to come in the form of a low-to-mid single-digit percentage range in constant currency, while net income for the group excluding Fresenius Medical Care is forecast to grow in a high single-digit percentage range.
The group declares that the guidance reflects ongoing pandemic-related headwinds in the second half of the year, and negative pricing effects relating to tender activity at Fresenius Kabi in China, plus noticeable inflation effects in selected markets.
Net debt is expected to fall around the top-end of the self-imposed target range of 3.0x to 3.5x by the end of the 2021 financial year.
Some of the group-wide efficiency initiatives to help increase profitability are expected to result in cost savings in excess of €100 million per annum after tax and minority interest in 2023, with some potential to increase further.
While an operating model review his expected at Fresenius Medical Care in the autumn of this year, three of the group’s other business segments, namely Fresenius Kabi, Fresenius Helios and Fresenius Vamed, have already announced some of their operational changes.
Fresenius Kabi has improved efficiency by optimising its production network, reducing product portfolio complexity, centralised worldwide purchasing and reviewing its organisational and cost structures. Meanwhile, Fresenius Helios is focusing its strategic review of the hospital portfolio and ambulatory care network as well as on the reduction of general and administrative costs.
Fresenius Vamed has looked to implement structural and organisational measures which include optimising its global subsidiary structure, conducting a review of its assets and shareholdings portfolio and optimising procurement and general and administrative costs.
The global group has confirmed that activities specific to the business segments will be complemented and supported by initiatives on a Fresenius group level, for example, the implementation of new ways of working at the corporate headquarters as well as a group-wide review of the IT operating model.
Further information can be found in the Fresenius investor report here.
