Fresenius Q32024 $FRE (+2.55%)

Financial performance:

• Sales: Fresenius achieved sales of €5.3 billion in the third quarter of 2024, representing strong organic growth of 9%.
• EBIT: EBIT amounted to €552 million in the third quarter, up 9% year-on-year.
• Net profit: Excluding FMC, net profit reached 312 million euros, an increase of 7%.

Key points of the income statement:

• Sales growth was mainly driven by the Kabi and Helios segments, with EBIT growth indicating operational improvements.

Cash flow overview:

• Operating cash flow (OCF): OCF increased to EUR 763 million in the third quarter of 2024, compared to EUR 603 million in the prior-year quarter.
• Free cash flow (FCF): FCF improved significantly and reached 623 million euros, compared to just 102 million euros in the previous year.

Key figures and profitability metrics:

• Net debt/EBITDA: The leverage ratio fell to 3.24x, a decrease of 52 basis points since the end of 2023.
• Interest expenses: Interest expenses increased to 116 million euros in the third quarter of 2024, compared to 102 million euros in the same quarter last year.
• Tax rate: The effective tax rate was 24.5% in the third quarter.

Segment development:

• Kabi: Sales increased by 8%, excluding the impact of currency fluctuations.
• Helios: The Helios segment recorded sales growth of 5 %.

Competitive position:

• Fresenius is implementing its strategy #FutureFresenius to optimize the portfolio and further improve the operating model.

Management forecasts and assessments:

• The company has raised its guidance for the financial year 2024 and now expects to reach the upper end of the EBIT growth range.
• Management remains optimistic of achieving mid to high single-digit organic sales growth.

Risks and opportunities:

• Risks: The economic weakness in China and regulatory changes pose challenges.
• Opportunities: Biopharma continues to show momentum and contribute positively to EBIT.

Summary of results:

Strengths:

• Strong organic sales growth of 9%.
• Significant improvement in free cash flow.
• Operational improvements led to EBIT growth.
• Successful deleveraging measures reduced the debt ratio.
• Positive forecast adjustment for the 2024 financial year.

• Challenges:
• Continued weakness in the Chinese market.
• Higher interest expenses burden profitability.
• Seasonal weaknesses in the hospital business impacted Q3 results.
• Regulatory hurdles in the USA make capacity expansions more difficult.
• Possible impact of elective surgery on parts of the portfolio.