Fresenius Med. Care: Strong organic growth but EBIT margin below expectations, FY guidance confirmed
BUY, Fair Value EUR53.5 (+9%)
Fresenius Medical Care reported strong organic growth in Q3 at 6% (versus 5% in H1) to USD3.666m (+8% CER). This was driven by very solid high single-digit growth in dialysis services at 9% CER while products increased 4% CER. Despite a challenging environment, North America grew 6% in organic growth in Q3 and International grew 4% organic. The EBIT margin is down 140bps versus last year and was negatively impacted by the sequestration (50bps) as well as growth in corporate expenses (USD63m in Q3 versus USD47m in Q3 12). International margins were stable in the quarter at 16.7%. Nevertheless, adjusted net income was slightly higher than expectations at USD273m driven by lower interest expenses. FY guidance is confirmed with sales expected to be higher than USD14.6bn and net income expected to be likely at the bottom of the USD1.1bn-USD1.15bn range.
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