Fresenius Medical Care Ag · XETR:FME
Fresenius Medical Care — Q4 2019 Earnings Presentation
45 slides from Fresenius Medical Care's earnings presentation, Feb 20, 2020
Slide 1: Q4 2019 Conference Call
Q4 2019 CONFERENCE CALL FEBRUARY 20, 2020 Rice Powell - CEO Helen Giza - CFO © Copyright
Slide 2: Safe harbor statement
Safe harbor statement: This presentation includes certain forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Act of 1934, as amended. Forward-looking statements are inherently subject to risks and uncert
Slide 3: FY 2019 | Foundation for Continued Growth
FY 2019 | FOUNDATION FOR CONTINUED GROWTH > Solid Q4 performance > Full year guidance achieved > Investments in home dialysis and growth markets as planned > Cost optimization initiatives as planned > 23rd consecutive dividend increase proposed > Outlook 2020 confirmed © │ Conference Call │ Q4 2019
Slide 4: FY 2019 | Growth Continued
FY 2019 | GROWTH CONTINUED +2% Clinics +4% Patients 3,994 345,096 Quality remains +4% Treatments on a consistently 52,148,107 high level © │ Conference Call │ Q4 2019 02/20/2020 Page 4
Slide 5: Organic Growth Drivers Intact
ORGANIC GROWTH DRIVERS INTACT 5 Dialysis patients CAGR (2019 – 2025e) in 2025e: 4 ~4.9 million Global patient Globally ~6% number grew by Asia-Pacific ~7-9% 6% in 2019 Patients in millions 3 North America Latin America ~3-4% Patient growth driven by: EMEA 2 ▪ age, lifestyle and higher life expectanc
Slide 6: Home Strategy on Track
HOME STRATEGY ON TRACK DIALYSIS TREATMENTS U.S. Target 2022: 15%+ of treatments in the U.S. performed in a home setting 12% +17% ▪ Invested into expansion of 13% 15%+ home treatments: Home training facilities, educational staff and materials along with scaling the distribution infrastructure 88% 87%
Slide 7: Agenda
1 BUSINESS UPDATE AGENDA 2 FINANCIALS & OUTLOOK 3 Q&A
Slide 8: Q4 2019 | Quality Outcomes Remain Key
Q4 2019 | QUALITY OUTCOMES REMAIN KEY NORTH AMERICA EMEA LATIN AMERICA ASIA-PACIFIC % of patients Q4 2019 Q4 2018 Q4 2019 Q4 2018 Q4 2019 Q4 2018 Q4 2019 Q4 2018 Kt/V ≥ 1.2 97 97 94 95 91 91 95 96 Hemoglobin = 10–12 g/dl 71 72 82 82 50 53 56 58 Calcium = 8.4–10.2 mg/dl 81 86 79 81 76 75 74 74 Albumi
Slide 9: FY 2019 | Delivered on Guidance
FY 2019 | DELIVERED ON GUIDANCE 2019 2018 Growth Growth Guidance 2019 € million € million in % in %cc in %cc Revenue 17,477 16,547 6 2 Revenue adjusted 17,329 16,026 8 5 3-7 Operating income 2,270 3,038 (25) (28) Operating income adjusted 2,296 2,292 0 (4) Net income 1,200 1,982 (39) (42) Net income
Slide 10: Q4 2019 | The Growth Story Continues
Q4 2019 | THE GROWTH STORY CONTINUES Q4 2019 Q4 2018 Growth Growth € million € million in % in %cc Revenue 4,580 4,300 7 4 ▪ 5.2% organic Revenue adjusted 4,546 4,294 6 4 revenue growth ▪ Continued tailwind from FX effects Operating income 616 613 1 (2) ▪ Revenue and net Operating income adjusted 65
Slide 11: Q4 2019 | All Regions Contribute to Growth
Q4 2019 | ALL REGIONS CONTRIBUTE TO GROWTH NORTH AMERICA € million Revenue 3,174 3%cc NORTH AMERICA Organic growth 5% EMEA 69% 16% EMEA €m € million 4,580 ASIA-PACIFIC Revenue 709 4%cc 11% +5% Organic growth 3% (Organic) ASIA-PACIFIC € million LATIN AMERICA 4% Revenue 499 7%cc Organic growth 6% ▪ St
Slide 12: Q4 2019 Services | Strong Underlying Growth Continued
Q4 2019 SERVICES | STRONG UNDERLYING GROWTH CONTINUED Same market Organic Q4 2019 Q4 2018 Growth Growth treatment € million € million in % in %cc growth in % growth Revenue in % Drivers Health Care Services 3,607 3,413 6 3 5 3 + Same market North America 2,893 2,746 5 2 5 3 treatment growth of which
Slide 13: Q4 2019 Products | Strong Underlying Growth Continued
Q4 2019 PRODUCTS | STRONG UNDERLYING GROWTH CONTINUED Organic Q4 2019 Q4 2018 Growth Growth € million € million in % in %cc growth Revenue in % Health Care Products 973 887 10 8 4 Drivers Dialysis Products 953 869 10 8 4 North America 281 235 20 16 4 + Home HD products EMEA 337 330 2 2 2 + HD soluti
Slide 14: Dividend Increase Proposed
DIVIDEND INCREASE PROPOSED DIVIDEND PER SHARE IN EUR 1.20 DIVIDEND PROPOSAL 2019 1.17 CAGR+10.7% ▪ 23rd consecutive dividend increase proposed 1.06 ▪ Dividend proposal with focus on dividend continuity despite lower net 0.96 income SHARE BUYBACK ON TRACK 0.80 ▪ Volume up to €1bn ▪ Shares repurchased
Slide 15: Global Sustainability Program Initiated
GLOBAL SUSTAINABILITY PROGRAM INITIATED Supervisory Management Board Sustainability Board Decision Board GLOBAL ENVIRONMENTAL & SOCIAL GOVERNANCE Global ▪ 8 materiality areas identified and will Sustainability Initiative be addressed ▪ Responsibility with the Sustainability Decision Board, headed by
Slide 16: 2020 | Growth Mode to Continue
2020 | GROWTH MODE TO CONTINUE FOCUS ON > Leverage on our investments OPPORTUNITIES in home dialysis and ▪ Faster shift to home dialysis developing markets ▪ Faster rollout of 4008A > U.S. President’s Executive ▪ Beneficial reimbursement environment Order > Prepare for Medicare Advantage opportunity
Slide 17: Agenda
1 BUSINESS UPDATE AGENDA 2 FINANCIALS & OUTLOOK 3 Q&A
Slide 18: Financial Update: Key Priorities
FINANCIAL UPDATE KEY PRIORITIES > Simplify guidance and reduce complexity of financial reporting > Deliver global efficiency results > Complete share buyback of up to €1bn > Manage capital allocation and optimize working capital > Expand contribution of cashflow from operations © │ Conference Call │
Slide 19: Q4 2019 | Regional Margin Profile
Q4 2019 | REGIONAL MARGIN PROFILE NORTH AMERICA (72% OF OPERATING INCOME) 552 513 515 DIALYSIS BUSINESS MARGIN OF 16.7% 492 + Higher utilization of oral based ancillaries + Prior year discontinuation of a non-IFRS policy 18.5% − Revenue recognition adjustment for accounts 15.5% 17.6% receivable in l
Slide 20: Q4 2019 | Regional Margin Profile
Q4 2019 | REGIONAL MARGIN PROFILE 114 97 Operating income margin development reflects EMEA + Reduction of a contingent consideration liability (Xenios) 14.1% 14.4% 14.6% 16.1% (16% of Operating income) − Higher personnel expense Q4 2018 Q4 2019 Operating income margin development reflects 86 75 ASIA
Slide 21: Q4 2019 | Group Operating Income Development
Q4 2019 | GROUP OPERATING INCOME DEVELOPMENT 655 Relevant margin drivers 613 636 616 Reported: + Higher utilization of oral based ancillaries + Higher margin in Care Coordination − Lower operating margins in Asia-Pacific and 14.8% North America 14.3% 14.4% 13.5% − Unfavorable impact from Corporate c
Slide 22: FY 2019 | Cash Flow, Net Leverage Ratio & Current Ratings
FY 2019 | CASH FLOW, NET LEVERAGE RATIO & CURRENT RATINGS Q4 2019 Q4 2018 2019 2018 € million € million € million € million Operating cash flow 771 698 2,567 2,062 in % of revenue 16.8 16.2 14.7 12.5 Capital expenditures, net (337) (301) (1,113) (1,003) Free cash flow 434 397 1,454 1,059 Free cash f
Slide 23: Outlook | Targets Confirmed
OUTLOOK | TARGETS CONFIRMED PREVIOUS REPORTING VIEW Constant currency TARGETS 2020 Revenue growth adjusted Mid to high single digit growth rate Net income growth adjusted Mid to high single digit growth rate Excluding effects to make the business performance comparable, such as: > NxStage acquisitio
Slide 24: 2019 Basis for Simplified Reporting View 2020
2019 BASIS FOR SIMPLIFIED REPORTING VIEW 2020 REVENUE, € MILLION NET INCOME, € MILLION 17,329 263 17,477 1,369 -115 1,236 -63 -70 Revenue NxStage IFRS 16 2019 Net income NxStage IFRS 16 2019 Net FY 2019 operations Revenue FY 2019 operations income adjusted basis for adjusted basis for targets 2020 t
Slide 25: Simplified 2020 Targets
SIMPLIFIED 2020 TARGETS REVENUE NET INCOME (constant currency) (constant currency) Mid to high Mid to high single digit single digit growth rate growth rate Excluding special items: Special items are effects that are unusual in 2019: EUR 17,477m 2019: EUR 1,236m nature and have not been foreseeable
Slide 26: Agenda
1 BUSINESS UPDATE AGENDA 2 FINANCIALS & OUTLOOK 3 Q&A
Slide 27: Your Questions Are Welcome!
Your Questions Are Welcome! © │ Conference Call │ Q4 2019 02/20/2020 Page 27
Slide 28: Q4 2019 | Revenue and Net Income Growth
Q4 2019 | REVENUE AND NET INCOME GROWTH REVENUE ADJUSTED, € MILLION – TARGET: 3% TO 7%CC GROWTH 4%cc 74 4,580 90 162 4,456 -40 4,300 4,294 -6 Q4 2018 revenue H1 Sound Q4 2018 revenue Growth cc Q4 2019 revenue FX IFRS 16 NxStage operations Q4 2019 revenue reported adjusted adjusted reported NET INCOM
Slide 29: FY 2019 | Revenue and Net Income Growth
FY 2019 | REVENUE AND NET INCOME GROWTH REVENUE ADJUSTED, € MILLION – TARGET: 3% TO 7%CC GROWTH 5%cc 263 17,477 552 751 16,777 -115 16,547 16,026 -521 FY 2018 revenue H1 Sound FY 2018 revenue Growth cc FY 2019 revenue FX IFRS 16 NxStage operations FY 2019 revenue reported adjusted adjusted reported
Slide 30: Q4 2019 | Profit and Loss
Q4 2019 | PROFIT AND LOSS Q4 2019 Q4 2018 Growth Growth € million € million in % in %cc Revenue 4,580 4,300 7 4 Revenue adjusted 4,546 4,294 6 4 Operating income 616 613 1 (2) Operating income margin in % 13.5 14.3 (0.8)pp (0.9)pp Operating income adjusted 655 636 3 0 Operating income adjusted margi
Slide 31: FY 2019 | Profit and Loss
FY 2019 | PROFIT AND LOSS 2019 2018 Growth Growth € million € million in % in %cc Revenue 17,477 16,547 6 2 Revenue adjusted 17,329 16,026 8 5 Operating income 2,270 3,038 (25) (28) Operating income margin in % 13.0 18.4 (5.4)pp (5.5)pp Operating income adjusted 2,296 2,292 0 (4) Operating income ad
Slide 32: 2019 | Reconciliation Adjustments
2019 | RECONCILIATION ADJUSTMENTS RECONCILIATION OF NON-IFRS FINANCIAL MEASURES TO THE MOST DIRECTLY COMPARABLE IFRS FINANCIAL MEASURES Q4 2019 Q4 2018 2019 2018 € million € million € million € million Revenue 4,580 4,300 17,477 16,547 IFRS 16 implementation 40 115 NxStage operations (74) (263) H1 S
Slide 33: Debt
DEBT RECONCILIATION OF NON-IFRS FINANCIAL MEASURES TO THE MOST DIRECTLY COMPARABLE IFRS FINANCIAL MEASURES 2019 2019 2018 2017 € million, excl. IFRS 16 € million € million € million Debt Short term debt 1,150 1,150 1,205 760 + Short term debt from related parties 22 22 189 9 + Current portion of lon
Slide 34: EBITDA
EBITDA RECONCILIATION OF NON-IFRS FINANCIAL MEASURES TO THE MOST DIRECTLY COMPARABLE IFRS FINANCIAL MEASURES 2019 2019 2018 2017 € million, excl. IFRS 16 € million € million € million Net income 1,509 1,439 2,226 1,554 + Income tax expense 429 402 511 443 − Interest income (62) (62) (147) (51) + Int
Slide 35: Acquisitions & Investments and Capital Expenditures
ACQUISITIONS & INVESTMENTS AND CAPITAL EXPENDITURES RECONCILIATION OF NON-IFRS FINANCIAL MEASURES TO THE MOST DIRECTLY COMPARABLE IFRS FINANCIAL MEASURES Q4 2019 Q4 2018 2019 2018 € million € million € million € million Acquisitions and investments Acquisitions and investments, net of cash acquired,
Slide 36: Q4 YTD 2019 | Effects According to IFRS 16
Q4 YTD 2019 | EFFECTS ACCORDING TO IFRS 16 EFFECTS INCLUDING NXSTAGE Balance Sheet Dec 31, 2019 Profit and loss Q4 YTD 2019 Cash flow statement Q4 YTD 2019 € million statement € million € million Assets 4,356 Revenue (115) Cash provided by 620 operating activities Right-of-use assets 4,361 Profit fr
Slide 37: FY 2019 | Services
FY 2019 | SERVICES Same market Organic FY 2019 FY 2018 Growth Growth treatment growth Revenue € million € million in % in %cc in % growth in % Health Care Services 13,872 13,264 5 1 5 4 North America 11,157 10,725 4 (1) 4 4 of which Care Coordination 1,184 1,636 (28) (31) (1) EMEA 1,354 1,274 6 7 6
Slide 38: FY 2019 | Products
FY 2019 | PRODUCTS Organic FY 2019 FY 2018 Growth Growth Revenue € million € million in % in %cc growth in % Total Health Care Products 3,605 3,283 10 8 5 Dialysis Products 3,529 3,209 10 8 5 North America 1,038 845 23 16 6 EMEA 1,263 1,239 2 2 2 Asia-Pacific 997 913 9 8 8 Latin America 210 197 6 12
Slide 39: 2019 Base for Guidance 2020
2019 BASE FOR GUIDANCE 2020 FY 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2019 € million € million € million € million € million Revenue before special items 17,477 4,133 4,345 4,419 4,580 Net income before special items 1,236 286 250 332 368 © │ Conference Call │ Q4 2019 02/20/2020 Page 39
Slide 40: Return on Invested Capital (ROIC)
RETURN ON INVESTED CAPITAL (ROIC) ▪ Long-term value 12.4% rep. creation based on accretive acquisitions and organic growth 8.6% 7.8% 8.0% adj. 8.0% adj. ▪ 2018 positive 7.1% impact from 6.1% rep. Sound divestiture ▪ 2019 negative 2015 2016 2017 2018 2019 impact from NxStage acquisition • For the yea
Slide 41: Global Efficiency Program II
GLOBAL EFFICIENCY PROGRAM II SUSTAINED SAVINGS 2018 - 2020 150 - 200 ~60% EUR m 20% Procurement ▪ Projects already positively 5% Supply Chain Management contributed in the first year of 25% Shared Services the program ~25% ▪ 60% sustained savings 40% Operational Excellence expected as exit rate 2020
Slide 42: Exchange Rates, U.S. Dialysis Days per Quarter, Definitions
EXCHANGE RATES, U.S. DIALYSIS DAYS PER QUARTER, DEFINITIONS EXCHANGE RATES U.S. DIALYSIS DAYS PER QUARTER Euro vs. 2019 2018 2017 Q1 Q2 Q3 Q4 Full year €:$ Period end 1.123 1.145 1.199 2020 77 78 79 79 313 Average 1.119 1.181 1.130 2019 76 78 79 80 313 2018 77 78 78 80 313 €:CNY Period end 7.821 7.8
Slide 43: FY 2019 | Patients, Treatments, Clinics
FY 2019 | PATIENTS, TREATMENTS, CLINICS Patients Treatments Clinics Patients Treatments Clinics as of December 12M 2019 as of December as of December 12M 2018 as of December 31, 2019 31, 2019 30, 2018 31, 2018 North America 211,064 32,138,448 2,579 204,107 30,846,876 2,529 Growth in % 3 4 2 3 3 6 EM
Slide 44: Financial Calendar 2020
FINANCIAL CALENDAR 2020 REPORTING DATES & AGM May 6 Q1 Earnings Release and Conference Call May 19 Annual General Meeting, Frankfurt am Main July 30 Q2 Earnings Release and Conference Call October 29 Q3 Earnings Release and Conference Call CONFERENCES & MEET THE MANAGMENT March 4 Credit Suisse 2020
Slide 45: Contacts
CONTACTS FME INVESTOR RELATIONS Else-Kröner-Str. 1 61352 Bad Homburg v.d.H. DR. DOMINIK HEGER ROBERT ADOLPH PHILIPP GEBHARDT Germany Head of Investor Relations, Vice President Director Strategic Development & Investor Relations Investor Relations Communications | EVP TICKER: FME or FMS (NYSE) +49(0)
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