Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Fresenius SE & Co KGaA (FSNUF, Financial) reported high single-digit revenue growth and double-digit increases in EBIT for Q2 2024.
- The company achieved significant cost savings ahead of plan, contributing to margin expansion and EPS growth.
- Fresenius SE & Co KGaA's leverage ratio improved, with S&P revising its credit outlook from negative to stable.
- Kabi's growth businesses, including nutrition, medtech, and biopharma, saw strong revenue growth, particularly with a 19% increase in Q2.
- The company is optimistic about reaching the upper half of its EBIT guidance range for the full year 2024.
Negative Points
- Helios Germany's margins were on the softer side, with underlying margins closer to 6% excluding relief payments.
- China's market remains soft due to economic weakness and an ongoing anti-corruption campaign, impacting growth expectations.
- There are concerns about the sustainability of growth in the second half of 2024, with potential risks including the impact of energy relief funding tapering off.
- Kabi Pharma experienced some margin pressure due to ramp-up costs and competitive pressures in the US and China.
- The company faces challenges in maintaining growth momentum in the biosimilars market, with competition and market dynamics affecting uptake.
Q & A Highlights
Q: Could you discuss the momentum in Helios Germany, given the softer margins and underlying margin calculations?
A: Michael Sen, CEO of Fresenius Kabi, explained that Helios Germany's performance is supported by energy relief funds, which are expected to fade. The company has outlined measures to maintain margins, including a EUR130 million cost-saving plan. Sara Hennicken, CFO, added that energy relief funding will start to fade by Q3, and Helios Germany will need to run faster to maintain margins.
Q: How is Fresenius tackling the US market for Tyenne, and is there flexibility to pay down debt to reduce interest charges?
A: Michael Sen stated that Fresenius has clarity on its commercial strategy for Tyenne, with a multi-access strategy covering Part D and Part B. Sara Hennicken mentioned that the company is using strong cash flow to repay long-term maturities and short-term borrowings, which will reduce interest expenses.
Q: Can you explain the guidance for EBIT growth, considering the strong first half of the year?
A: Michael Sen noted that Q3 is seasonally weaker due to the hospital business, and there are risks such as the situation in China. The company is optimistic but acknowledges the need to compensate for challenges like the China market. Sara Hennicken added that milestone payments and energy relief won't repeat in the second half, impacting growth.
Q: What is the impact of the anti-corruption campaign in China on Fresenius' business, and what are the expectations for Kabi Pharma margins?
A: Michael Sen explained that the anti-corruption campaign and general economic weakness in China are affecting the business. The company remains positive about China's fundamentals but acknowledges ongoing challenges. Sara Hennicken noted that Kabi Pharma's margin volatility is due to market conditions and production costs, but the company expects to maintain a strong margin.
Q: How is Fresenius progressing with its strategic portfolio adjustments, and what are the cost-saving initiatives?
A: Michael Sen stated that the major strategic portfolio adjustments are complete, with a focus on organic growth and operational excellence. Sara Hennicken highlighted that the company is ahead of schedule on cost-saving initiatives, with a focus on procurement, complexity reduction, and process optimization.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
