After a slump in profits in 2022, the health and clinic group Fresenius is pushing ahead with the detachment from its troubled dialysis subsidiary Fresenius Medical Care (FMC). The Dax group announced that the competent bodies had approved the demerger by changing the legal form of FMC to a stock corporation.
The resolution is to be passed at an extraordinary general meeting in July, and implementation is expected by the end of the year. “2023 is the year in which we set the course for the coming years or even decades,” said Fresenius CEO Michael Sen.
Last year, Fresenius, Germany’s largest hospital operator, suffered a slump in profits, as the group further announced. The prospects for this year are also bleak: at best, Fresenius predicted a stable result. The highly indebted group now wants to save more, especially at FMC. Current efficiency programs would be intensified, it said. From 2025, around one billion euros should be saved annually.
Sales increase, profits decrease
The Fresenius Group had a hard time struggling last year. Inflation, rising costs, staff shortages and supply chain problems weighed heavily. Although sales rose by nine percent year-on-year to around 40.8 billion euros, adjusted operating profit fell by six percent. Including exchange rate effects, the minus was eleven percent. The consolidated result adjusted for special effects fell by a nominal seven percent to 1.7 billion euros.
The biggest burden was the dialysis subsidiary FMC, where profits dropped by ten percent in 2022. The slump at the clinic service provider Vamed was even more serious, but things were also mixed at the liquid medicine specialist Kabi, while Fresenius was able to grow in its clinic business over the year.
As recently announced, Fresenius now wants to react to the weakness of FMC and no longer fully account for the problem child. Fresenius currently holds around a third of the dialysis subsidiary. Due to the organization of the two companies as limited partnerships on shares, however, the results of FMC are fully included in the Fresenius balance sheet. The dialysis subsidiary is suffering from a shortage of nurses in the USA, supply chain problems and rising wages and material costs. In addition, many dialysis patients died from Corona. For Fresenius, FMC increasingly became a brake pad.
With the change of form, the group would be rid of this burden in the future, since FMC should only be considered as an investment. The unbundling would also pave the way for a possible later sale of FMC, which the former Fresenius boss Stephan Sturm had brought into play.
Focus on medicines and clinics
Fresenius intends to focus on the pharmaceutical and medical products (Kabi) and clinics (Helios) divisions in the future, it said. Speculations about a planned sale of the Spanish clinic chain Quironsalud were rejected by Fresenius boss Sen on Tuesday evening. It remains part of the strategy.
Fresenius has seen turbulent times. After several profit warnings, CEO Stephan Sturm resigned in the fall, followed by Sen. at FMC on October 1. Carla Kriwet took over the helm at the same time, but threw it down in December – apparently in a dispute over the strategy. She was succeeded by Helen Giza as the new FMC boss. Fresenius’ broad positioning with the pillars of dialysis, clinics, medicines and project business has been criticized by investors.
Fresenius is preparing for another difficult year in 2023. The operating result adjusted for currency influences and special effects should only remain stable in the best case, in the worst case a decline in the high single-digit percentage range cannot be ruled out.
