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To our shareholders

Photo Dr. Ulf M. Schneider

To Our Shareholders:

2013 was another very successful year for Fresenius. We exceeded 20 billion euros in sales and 1 billion euros in net income for the first time ever. On a constant-currency basis, sales increased by 8 percent and net income before special items by 14 percent. We met all of our financial forecasts and strategic objectives.

This was no simple task given the significant obstacles we faced in key markets. Fresenius Medical Care felt the effects of the U.S. budget impasse which led to a 2% reduction in reimbursement rates. Fresenius Kabi weathered above-average price cuts in China, restrictions placed on the use of blood volume substitutes by the E.U. and plant remediation costs in the United States and India to meet FDA requirements. At the same time, Fresenius Helios and Fresenius Vamed continued their excellent performance.

With Fresenius Helios’ acquisition of hospitals from Rhön-Klinikum AG we created Europe’s largest hospital operator. Following our unsuccessful takeover bid for Rhön-Klinikum in 2012, we took the opportunity to buy 40 of its hospitals and 13 of its medical clinics. The capital markets reacted positively to the acquisition and our partners in the health care industry have shown great interest in our vision of offering patients innovative care in a comprehensive clinic network.

Everything we accomplished in 2013 was thanks to the strong dedication and extraordinary efforts of our employees. I would like to express my sincerest gratitude for their exceptional commitment.

Let’s look ahead to 2014 and beyond. We plan to take advantage of major trends in global health care and have established clear priorities for our business segments:

  • Fresenius Medical Care will have to absorb reductions in U.S. reimbursement rates. As a vertically integrated company that offers both dialysis products and services, Fresenius Medical Care is ideally positioned to counter the cuts by reducing costs. Bringing life-saving dialysis therapies to developing and emerging countries offers the best growth opportunities and remains a key objective.
  • Fresenius Kabi will focus on introducing new products and expanding its geographic portfolio. Asia and Latin America offer particularly attractive growth prospects. In the United States we expect drug shortages to ease, resulting in a normalization of the product supply.
  • Fresenius Helios will quickly integrate the newly acquired hospitals and take advantage of the synergies created by the expanded hospital network. Further improving our quality standards and metrics will remain a key priority and is a cornerstone of our commitment to patient safety.
  • Fresenius Vamed will continue its proven strategy of assisting health care facilities throughout their lifespan. As developing and emerging economies upgrade their health care infrastructure our project and service management is in high demand.

We have set ambitious goals for 2014. On a constant-currency basis, Group sales are expected to increase by 12 percent to 15 percent, and Group net income before special items by 2 percent to 5 percent. Our forecast reflects reductions in dialysis reimbursements in the U.S. as well as our expectation that our U.S. competitors’ supply constraints of intravenous drugs will ease. We will continue to improve productivity, optimize quality and processes, and take advantage of synergies created by the scope of our business.

In addition, we have defined stretch mid-term financial goals. For 2017, we are targeting Group sales of approximately 30 billion euros and Group net income of 1.4 to 1.5 billion euros. All of our business segments are expected to contribute to this growth. Getting there will require continued organic growth and small to mid-sized acquisitions.

I am convinced that our diversified health care group is very well positioned to achieve these goals. We remain optimistic regarding the fundamentals of our markets. Demand for health care products and services continues to grow – in industrial as well as in developing countries. Our growth is based on medical progress, increasing quality and international expansion. While pursuing these opportunities, we honor and respect our social responsibility and our commitment to patients around the world.

We have good reason to look ahead with optimism as we continue to offer our patients the best-possible therapies. We appreciate your trust and support.

Dr. Ulf M. Schneider
Chairman of the Management Board

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