DEAR SHAREHOLDERS,
BUSINESS PARTNERS
AND FRIENDS OF OUR COMPANY
At the end of 2010, Fresenius Medical Care not only looks back
at one successful business year, but a whole series:
From 2005 to 2010, we geared our corporate activities towards our growth strategy GOAL 10 – and in doing so, performed even better than we had expected. We are proud of this achievement and of the value that we have created in the past years for our patients, customers, shareholders and for the Company itself.
GOAL stands for “Growth Opportunities to Assure Leadership”. In 2010, we successfully captured these opportunities by setting up and acquiring dialysis centers in attractive growth markets, primarily in Asia and Eastern Europe, thus expanding our international network of clinics. In addition, we enhanced our integrated treatment concept with new and improved products and therapies. And we pressed ahead with the horizontal expansion of our portfolio: Together with the Galenica Group based in Switzerland, we founded a new company that will start developing and selling innovative drugs for kidney patients following approval by the anti-trust authorities. We also strengthened our position in the home therapies business – the only area of dialysis in which Fresenius Medical Care is not the market leader – among other things by acquiring the peritoneal dialysis business of Gambro, a Swedish medical technology company.
We met all the targets we had set ourselves for 2010, and established new records in the process. Thanks to organic growth of 6%, we increased our revenue by 7% year-over-year to $12.05 billion – an all-time high. This means that we also achieved the revenue target defined in GOAL 10 that has been repeatedly adjusted upwards in recent years: Back in 2006, our target was $11.5 billion. At the same time, we managed to grow our net income faster than revenue, to $979 million, up 10% over the previous year. Since 2005, our net income has increased by around 17% per year on average; our GOAL 10 target specified “more than 10%”. We raised our net cash flow to $861 million, 11% more than in 2009, and brought our debt/EBITDA ratio back down to below 2.4. We are delighted to be able to report such a positive performance in all our key operating figures.
The number of patients in our care has grown by a tenth year-over-year and by as much as almost two thirds since 2005: Fresenius Medical Care treated more than 214,000 patients in over 2,750 Company-owned clinics worldwide in the past year. The teams in our dialysis centers carried out in excess of 31 million treatments in 2010. We also covered half of the global demand for new dialysis machines with our product business.
Based on these results, we once again outperformed the dialysis market as a whole in the past year. We were able to consolidate our position as market leader and expand our worldwide market share. This was aided once again by the favorable conditions in an industry that is relatively unaffected by cyclical fluctuations. Thanks to our long-term corporate strategy and strong business partnerships, we were able to offset operational challenges resulting from macroeconomic developments, such as rising costs for energy and raw materials, to a large extent.
This excellent performance would not have been possible without the dedication of our employees, their exceptional sense of responsibility and pure enthusiasm. I would like to extend my heartfelt thanks to all of our staff for their commitment to the Company. My special thanks also go to my colleagues on the Management Board and the members of the Supervisory Board for their constructive work and mutual trust.
We also want you, our shareholders, to participate in this success. We will therefore be proposing a dividend increase of around 7% at the Annual General Meeting, bringing it up to €0.65 per ordinary share. This would be the fourteenth consecutive dividend rise and would mean that in every year of our Company’s history, our shareholders have benefited more from our Company’s growth. This proposal takes into account the profitability of our operations and the Company’s future prospects.
And what will this future look like? In September 2010, we adopted our new growth strategy GOAL 13. This carries on where GOAL 10 left off, along the four strategic paths we originally defined. Fostering the organic growth of our products and services, acquiring further dialysis clinics in attractive markets, expanding our portfolio horizontally, and strengthening our position in the home dialysis market will therefore continue to be key goals to help us further consolidate our leading market position. Based on this strategy, we aim to achieve revenue of between $12.8 billion and $13.0 billion in the current business year, corresponding to a 6 to 8% increase. Net income in 2011 should be between $1.035 billion and $1.055 billion.
In pursuing this path, our aim is always to continuously improve the quality of life for people suffering from chronic kidney failure. We know that there are challenges to be met: While the number of dialysis patients worldwide is growing, the public funds available for their care are increasingly restricted – a situation that has been compounded by the financial and economic crisis. At the same time, however, we know that we are in an excellent position to master these challenges, together with our healthcare partners: As a vertically integrated dialysis company, we can offer high-quality dialysis products and services from a single source. This means that we can provide our patients with integrated care, helping not only to improve the quality of treatment, but also to reduce costs. Global demand for integrated care concepts for dialysis patients is growing, and reimbursement is increasingly being linked to meeting defined quality targets.
The title of this annual report says a lot about why Fresenius Medical Care is the preferred partner for concepts of this kind. It is our unique “Expertise” in developing and manufacturing leading dialysis products, as an operator of the largest network of dialysis clinics in the world, and as a company that not only strives continuously to improve the quality and efficiency of its services, but can also back this performance with sophisticated clinical quality data management. And it was this expertise that enabled us to prepare ourselves so well for the new bundled reimbursement system for dialysis introduced in the U.S. at the beginning of 2011.
That’s why we look to the future with great confidence and will again apply all the Company’s know-how and resources to make sure that you, our shareholders, continue to share this confidence with us. Finally, I would like to thank you sincerely for your support and trust in Fresenius Medical Care in the past years. I am looking forward to another exciting year as part of this unique company.
Yours sincerely,
DR. BEN J. LIPPS Chief Executive Officer