The healthcare group has been in crisis for years. Now the new CEO Michael Sen wants to turn things around – also with a separation from the dialysis subsidiary FMC. The problem child remained a burden.
The crisis-ridden healthcare group Fresenius is showing the first successes of the new strategy and the forced austerity program. Germany’s largest hospital operator and medical manufacturer had a surprisingly dynamic start to the new year. “The course has been set, our productivity measures are taking effect,” said the new Fresenius boss Michael Sen in Bad Homburg.
Meanwhile, the Dax group is driving the detachment from the ailing dialysis subsidiary Fresenius Medical Care (FMC), whose profit collapsed again at the beginning of the year.
The former Siemens manager Sen, who has been in office since last October, had prescribed a new strategy for Fresenius, including higher savings targets and tighter targets for profitability. The costs in administration, for example, are to be reduced, processes improved and peripheral areas sold. From 2025, Fresenius wants to save around one billion euros a year. Savings of around 130 million euros were achieved in the first quarter.
At the beginning of the year, Fresenius sales grew by 5 percent year-on-year to EUR 10.2 billion. The operating result adjusted for special effects fell by nine percent to 908 million euros, among other things due to higher costs – less than feared by analysts. The bottom line was 346 million euros in profit, 16 percent less than a year earlier.
FMC profit in day-to-day business collapses
However, the problem child FMC weighed on Fresenius again. The dialysis subsidiary benefited from a strong product business in intensive care medicine, a reduction in the shortage of staff in the USA and initial successes in restructuring. However, profits in day-to-day business collapsed by a quarter as sales increased. The bottom line was a profit of 86 million euros – 45 percent less than in the same period last year.
FMC has already triggered several profit warnings at the parent company Fresenius. A high mortality rate among corona patients, rising costs during the pandemic and a shortage of nurses had affected the dialysis provider. With a demerger, Sen is now setting the course for a possible complete separation from FMC in the future.
At an extraordinary general meeting on July 14, a decision is to be taken on the conversion of the legal form from a limited partnership to a stock corporation. This means that Fresenius no longer has to include FMC in its entirety in the balance sheet, but can take the dialysis subsidiary into account in accordance with the participation of around one third. Fresenius already treats FMC only as a financial investment.
Focus on Helios and Kabi
Sen wants to turn the tide by concentrating on the clinic company Helios and the subsidiary Kabi, which specializes in clinical nutrition and generic drugs, among other things. At the start of the year, Kabi increased its sales significantly. Sales at the clinic operator Helios also grew due to the increasing number of treatments. Meanwhile, the fertility treatment business is recovering from setbacks in the coronavirus pandemic.
The service company Vamed also regards Fresenius only as an investment. In the first quarter, the Austrian company struggled with weak project business, and the bottom line was that the numbers were in the red. In the meantime, an extensive renovation program has been initiated.
Source: Stern
