Fresenius to focus on growth from 2020

Stephan Sturm, chief executive of Fresenius

Fresenius has said that 2019 will be a year of investment after a challenging year that saw cost pressures outpace revenue growth for the German healthcare group.

“2018 was not an easy year, and yet it was another successful one for Fresenius. We have further developed and enhanced our medical offering, while once again increasing both sales and earnings,” said Fresenius chief executive Stephan Sturm. “2019 will be a year of investment in growth areas such as home dialysis, biosimilars and new hospital services and therapies.”

For the fourth quarter, profits rose 6% to €504 million (US$571 million) on sales were up 7% to €8.8 billion. For the full year, profits gained 4% to €1.9 billion on revenues that were up 2% to €33.5 billion.

For this financial year Fresenius is projecting sales growth of 3% to 6% in constant currency while net income growth is expected to be flat. This is in line with guidance announced in December.

The company said that its US$2 billion acquisition of home dialysis machine manufacturer NxStage was not included in guidance because the acquisition has not yet closed. The US Federal Trade Commission rubber stamped the deal yesterday. The merger agreement’s end-date has been extended to 6 August, but it is now expected to close before the end of Q1.

Based on the expected financial results for this year, Fresenius said that it expected sales to grow at a compound rate of between 4% and 7% in 2020 to 2023.

A significant cost in the year was spending on property, plant and equipment which was €2.2 billion. This was primarily for the modernisation and expansion of dialysis clinics, production facilities as well as hospitals and day clinics. This corresponds to 6% of sales.

There were also disappointments for the performance of the company’s separately listed dialysis business, Fresenius Medical Care, especially in the US. In North America, sales decreased by 2% to €11.6 billion.

The group has also announced an up-to €1 billion share buyback programme for this year and next year.

The majority of analysts, almost two-thirds of them, have Fresenius as a “buy” or “accumuate”.

Although Fresenius shares have suffered since September and are currently showing a one-year loss of almost 17%, they were last seen up more than 5%.