Fresenius Medical Care Ag · XETR:FME
Fresenius Medical Care — Q2 2018 Earnings Presentation
40 slides from Fresenius Medical Care's earnings presentation, Jul 31, 2018
Slide 1: Q2 2018 Conference call
Q2 2018 Conference call | July 31, 2018 Rice Powell - CEO Mike Brosnan - CFO © │ Conference Call │ Q2 2018 1
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 uncer
Slide 3: Agenda – Q2 2018
AGENDA – Q2 2018 Business update 1 Financials & outlook 2 Q&A 3 © │ Conference Call │ Q2 2018 3
Slide 4: Q2 2018: On track to achieve 2018 targets
Q2 2018: On track to achieve 2018 targets +3% Clinics: 3,815 +3% Patients: 325,188 +3% Treatments: 12,410,835 Quality remains on a consistently high level © │ Conference Call │ Q2 2018 4
Slide 5: Q2 2018: Quality outcomes remain on high level
Q2 2018: Quality outcomes remain on high level1 North America EMEA Latin America Asia-Pacific Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 % of patients 2018 2017 2018 2017 2018 2017 2018 2017 Kt/V > 1.2 98 98 95 95 91 93 96 96 Hemoglobin = 10–12 g/dl 73 73 82 78 52 51 57 58 Calcium = 8.4–10.2 mg/dl 85 84 79 74 78 78 74
Slide 6: Q2 2018: Highlights
Q2 2018: Highlights Results continue to be impacted by strong currency headwinds Solid organic growth across the board, North America products business continues strong performance Care Coordination margin improvement and revenue decline as expected Calcimimetics continue to evolve Efficie
Slide 7: Q2 2018: Reconciliation adjustments
Q2 2018: Reconciliation adjustments Reconciliation of non-IFRS financial measures to the most directly comparable IFRS financial measures Growth Growth € million Q2 2017 Q2 2018 in % in %cc Revenue 4,471 4,214 (6) 2 Effect from IFRS 15 implementation (131) Revenue on a comparable basis 4,340 4,214 (
Slide 8: Q2 2018: Net income growth as expected
Q2 2018: Net income growth as expected1 Q2 2018 Q2 2017 Growth Growth € million € million in % in %cc Revenue 4,214 4,471 (6) 2 Revenue on a comparable basis 4,214 4,340 (3) 5 Revenue adjusted 4,214 4,342 (3) 5 EBIT 1,401 583 140 162 EBIT on a comparable basis 568 583 (3) 4 EBIT adjusted 568 591 (4)
Slide 9: Q2 2018: Organic growth across all regions
Q2 2018: Organic growth across all regions North America € million EMEA € million Revenue 2,971 0%cc Revenue 652 +5%cc Organic growth +3% Organic growth +4% Asia-Pacific € million Latin America € million Revenue 422 +7%cc Revenue 164 +11%cc Organic growth +6% Organic growth +10% Contributions from a
Slide 10: Q2 2018 Services: Organic growth accelerated
Q2 2018 Services: Organic growth accelerated Same Organic market Q2 2018 Q2 2017 Growth Growth growth growth Revenue € million € million in % in %cc in % in % Total 3,385 3,649 (7) 1 3 3 North America 2,761 3,017 (8) (1) 2 2 of which Care Coordination 529 698 (24) (18) (22) - EMEA 315 310 2 5 3 3 As
Slide 11: Q2 2018 Products: Solid growth continued
Q2 2018 Products: Solid growth continued Q2 2018 Q2 2017 Growth Growth € million € million in % in %cc Total Health Care Products 829 822 1 6 Dialysis Products 811 801 1 6 North America 210 208 1 10 EMEA 319 311 2 5 Asia-Pacific 231 226 2 6 Latin America 46 52 (12) 2 Non-Dialysis Products 18 21 (8)
Slide 12: Conclusion
Conclusion Solid underlying business growth, acceleration in H2 as forecasted NxStage closing H2 of 2018 On track to deliver on revenue and net income growth target © │ Conference Call │ Q2 2018 12
Slide 13: Agenda – Q2 2018
AGENDA – Q2 2018 Business update 1 Financials & outlook 2 Q&A 3 © │ Conference Call │ Q2 2018 13
Slide 14: Q2 2018: Revenue growth on track
Q2 2018: Revenue growth on track Revenue on a comparable basis, € million – target: 5-7%cc growth 5%cc 4,542 4,471 200 131 4,340 328 2 4,214 Q2 2017 IFRS 15 Q2 2017 VA Business Q2 2018 cc FX Q2 2018 reported on a Agreement growth cc on a reported comparable comparable basis basis © │ Conference Call
Slide 15: Q2 2018: Net income growth
Q2 2018: Net income growth Net income on a comparable basis, € million – target: 13–15%cc growth 22%cc 994 327 686 269 58 19 Q2 2017 Business growth cc Q2 2018 cc FX Gain related to Q2 2018 reported reported & on a comparable divestures of Care comparable basis basis Co. activities Net income adjust
Slide 16: Q2 2018: Regional margin profile
Q2 2018: Regional margin profile North America (70% of EBIT1,2) Solid Dialysis business margin of 17.1% reflects – Negative: lower revenue from commercial payors, higher implicit price concessions (IFRS 15), the implementation of the PAMA oral-only provision as well as increased property and other
Slide 17: Q2 2018: Regional margin profile
Q2 2018: Regional margin profile EMEA (16% of EBIT1,2) Operating profit margin development reflects 113 105 – Negative: lower income from equity method 17.6% investees, higher personnel costs in certain 16.1% countries, increased bad debt expense Q2 2017 Q2 2018 Asia-Pacific (12% of EBIT1,2) Ope
Slide 18: Q2 2018: Cash flow & net leverage ratio
Q2 2018: Cash flow & net leverage ratio Q2 2018 Q2 2017 in € million in € million Operating cash flow 656 883 in % of revenue 15.6% 19.7% Capital expenditures, net (227) (193) Free cash flow 429 690 Free cash flow, after acquisitions and investments 1,927 508 Days sales outstanding (DSO) at 82 days
Slide 19: Global Efficiency Program
Global Efficiency Program GEP II – sustained savings 2018 - 2020 100–200 ~60% EUR m 20% Procurement 5% Supply Chain Management 25% Shared Services ~30% 40% Operational Excellence ~10% 10% Capital Efficiency 2018 2019 2020 Sustained savings © │ Conference Call │ Q2 2018 19
Slide 20: Basis for targets 2018
Basis for targets 2018 Reconciliation of non-IFRS financial measures to the most directly comparable IFRS financial measures. € million 2017 Targets 2018 Revenue 17,784 Effect from IFRS 15 implementation (486) Sound H2 20171 (559) Revenue on a comparable basis 16,739 Growth: 5-7%cc Net income2 1,280
Slide 21: Outlook
Outlook1 Targets 2018 2017 base (in € million) Revenue growth 5 to 7% 16,739 on a comparable basis Net income growth 13 to 15% 1,242 on a comparable basis Net income growth adjusted 7 to 9% 1,162 Targets 2020 2020 (2014-2020, avg. % p.a.) (in € billion) Revenue growth ~10% 24 Net income growth high
Slide 22: Agenda – Q2 2018
AGENDA – Q2 2018 Business update 1 Financials & outlook 2 Q&A 3 © │ Conference Call │ Q2 2018 22
Slide 23: Your questions are welcome
Your questions are welcome Conference call | July 31, 2018 Rice Powell - CEO Mike Brosnan - CFO © │ Conference Call │ Q2 2018 23
Slide 24: H1 2018: Profit and loss
H1 2018: Profit and loss1 H1 2018 H1 2017 Growth Growth € million € million in % in %cc Revenue 8,189 9,019 (9) 0 Revenue on a comparable basis 8,189 8,749 (6) 3 Revenue adjusted 8,189 8,651 (5) 4 EBIT 1,898 1,235 54 68 EBIT margin in % 23.2 13.7 9.5pp 9.3pp EBIT on a comparable basis 1,078 1,235 (1
Slide 25: H1 2018 Services
H1 2018 Services Same Organic market H1 2018 H1 2017 Growth Growth growth growth Revenue € million € million in % in %cc in % in % Total 6,594 7,418 (11) (1) 2 3 North America 5,351 6,182 (13) (3) 2 2 of which Care Coordination 1,045 1,389 (25) (16) 21 - EMEA 629 613 3 5 2 3 Asia-Pacific 375 360 4 1
Slide 26: H1 2018 Products
H1 2018 Products Q2 2018 Q2 2017 Growth Growth € million € million in % in %cc Total Health Care Products 1,595 1,601 0 6 Dialysis Products 1,557 1,560 0 7 North America 395 418 (5) 6 EMEA 621 601 3 6 Asia-Pacific 439 435 1 7 Latin America 95 97 (2) 13 Non-Dialysis Products 38 41 (7) (7) 73% 4 1 EME
Slide 27: H1 2018: Revenue reconciliation
H1 2018: Revenue reconciliation Revenue on a comparable basis, € million – target: 5-7%cc growth 3%cc 9,019 9,035 270 8,749 384 98 846 8,189 H1 2017 IFRS 15 H1 2017 VA Business H1 2018 cc FX H1 2018 reported on a Agreement growth cc on a reported comparable comparable basis basis © │ Conference Call
Slide 28: H1 2018: Net income reconciliation
H1 2018: Net income reconciliation Net income on a comparable basis, € million – target: 13–15%cc growth 13%cc 1,273 651 674 577 52 74 H1 2017 Business growth cc H1 2018 cc FX Gain related to H1 2018 reported reported & on a comparable divestures of Care comparable basis basis Co. activities Net inc
Slide 29: H1 2018: Reconciliation adjustments
H1 2018: Reconciliation adjustments Reconciliation of non-IFRS financial measures to the most directly comparable IFRS financial measures Growth Growth € million H1 2017 H1 2018 in % in %cc Revenue 9,019 8,189 (9) 0 Effect from IFRS 15 implementation (270) Revenue on a comparable basis 8,749 8,189 (
Slide 30: Q2 2018: Profit and loss
Q2 2018: Profit and loss1 Q2 2018 Q2 2017 Growth Growth € million € million in % in %cc Revenue 4,214 4,471 (6) 2 Revenue on a comparable basis 4,214 4,340 (3) 5 Revenue adjusted 4,214 4,342 (3) 5 EBIT 1,401 583 140 162 EBIT margin in % 33.3 13.0 20.3pp 20.6pp EBIT on a comparable basis 568 583 (3)
Slide 31: Debt and EBITDA
Debt and EBITDA Reconciliation of non-IFRS financial measures to the most comparable IFRS measure € million Debt FY 2016 FY 2017 H1 2018 Short term debt 572 760 873 + Short term debt from related parties 3 9 3 + Current portion of long-term debt and 724 884 898 capital lease obligations + Long-term
Slide 32: Cash Flow and Capital Expenditures
Cash Flow and Capital Expenditures Reconciliation of non-IFRS financial measures to the most comparable IFRS measure € million Cash Flow Q2 2017 Q2 2018 H1 2017 H1 2018 Acquisitions, investments and net purchases of (191) (164) (352) (345) intangible assets - Proceeds from divestitures 9 1,662 10 1,
Slide 33: Day sales outstanding (DSO)
Day sales outstanding (DSO) in days 160 140 Asia-Pacific 120 Latin America EMEA 100 85 82 81 77 74 74 75 Total 80 60 North America 40 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 2016 and 2017 quarters adjusted for IFRS 9 & 15 implementation © │ Conference Call │ Q2 2018 33
Slide 34: H1 2018: Patients, treatments, clinics
H1 2018: Patients, treatments, clinics Patients Treatments Clinics as of June 30, 2018 H1 2018, in million as of June 30, 2018 North America 199,527 15,134,388 2,439 Growth in % 3 3 4 EMEA 63,589 4,794,593 758 Growth in % 4 4 4 Asia-Pacific 30,578 2,143,059 385 Growth in % 2 2 (1) Latin America 31,4
Slide 35: U.S. dialysis days per quarter
U.S. dialysis days per quarter Q1 Q2 Q3 Q4 Full year 2015 76 78 79 79 312 2016 78 78 79 79 314 2017 77 78 79 79 313 2018 77 78 78 80 313 © │ Conference Call │ Q2 2018 35
Slide 36: Exchange rates
Exchange rates H1 2017 FY 2017 H1 2018 €:$ Period end 1.141 1.199 1.166 Average 1.083 1.130 1.210 €:CNY Period end 7.739 7.804 7.717 Average 7.445 7.629 7.709 €:RUB Period end 67.545 69.392 73.158 Average 62.806 65.938 71.928 €:ARS Period end 18.956 22.639 33.603 Average 17.028 18.754 26.103 €:BRL P
Slide 37: Definitions
Definitions cc Constant currency HD Hemo dialysis PD Peritoneal dialysis Net income Net income attributable to shareholders of FME Sound H2 2017 Contribution of Sound Physicians on the profit and loss statement in the second half year 2017 U.S. Tax Reform U.S. Tax Reform: impacts from U.S. tax refor
Slide 38: Financial calendar 2018
Financial calendar 20181 Oct 30 Report on 3rd quarter 2018 Aug 28 Commerzbank Sector Conference, Frankfurt Sep 05 Goldman Sachs Medtech & Healthcare Services Conference, London Sep 06 Wells Fargo Securities Healthcare Conference, Boston Sep 12 Bank of America Merrill Lynch Global Healthcare Conferen
Slide 39: Contacts
Contacts FME Investor Relations Ticker: FME or FMS (NYSE) Else-Kröner-Str. 1 WKN: 578 580 61352 Bad Homburg v.d.H. ISIN: DE00057858002 Germany Dr. Dominik Heger Head of Investor Relations and Corporate Communications Tel.: +49–(0) 6172–609–2601 Email: dominik.heger@fmc-ag.com Robert Adolph Direc
Slide 40: Constant currency
Constant currency: Changes in revenue, operating income, net income attributable to shareholders of FMC AG & Co. KGaA and other items include the impact of changes in foreign currency exchange rates. We use the non-IFRS financial measure “at constant exchange rates” or constant currency in our filin
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