Share Price Development
The Fresenius Medical Care share performed well again in 2010. The price of the ordinary share rose by 17%, closing the year at €43.23. This put it in the upper middle range of shares included in the DAX. Following a sustained upward trend in the first few months of the year under review, it moved sideways during long periods of the second half of the year, but was unable to keep pace with the DAX in the fourth quarter. The biggest factors influencing our share price were the discussions about the U.S. healthcare reform and the final definition of the bundled reimbursement rates for Medicare and Medicaid patients from January 1, 2011 together with the effects that this will have on businesses in the healthcare industry. Our share price performance was supported by the Company’s positive sales and earnings development: We once again posted record revenue and profit figures in 2010; see also “Results of Operations” chapter.
Fresenius Medical Care’s ordinary share recorded its year-high on October 1, 2010 and its year-low on January 28, 2010. It is classified as a defensive share – an assumption reflected by its low volatility. The range in which the share was traded last year remained extremely narrow, with a difference between the lowest and highest price of just 21%. Its day-to-day fluctuations were also lower in percentage terms than those of the DAX average.
The exchange rate of the euro against the U.S. dollar continued to play an important role in the development of our share price in 2010. An appreciation of local currencies (especially the euro) to the U.S. dollar is advantageous for Fresenius Medical Care in reporting terms, as we maintain our financial accounting in U.S. dollars so that when our balance sheet items and earnings (in local currencies) are translated, this results in higher U.S. dollar values. On the other hand, the appreciation of the euro also means that several conventional valuations, which are usually calculated in U.S. dollars, are less favorable when translated into euros. This is significant as many investors base their decisions on the euro share price first and foremost.
In 2010, the price of Fresenius Medical Care shares traded on the New York Stock Exchange in the form of American Depositary Receipts (ADR) increased by 9%. Each ordinary or preference ADR corresponds to one Fresenius Medical Care ordinary or preference share. The development of the ADR is generally tied to that of the ordinary and preference shares, taking into account changes in the euro/U.S. dollar exchange rate. The currency devaluation of the U.S. dollar against the euro of approximately 5% in 2010 therefore had a slightly negative effect on the notation of our ADR; further information on currency rates can be found in the “Economic environment” section.
However, Fresenius Medical Care’s shares performed significantly better than securities in its peer group, the healthcare sector. The value of the Dow Jones Euro Stoxx Healthcare index, for instance, comprising Europe’s leading and largest companies in the industry, grew by only 6% last year.
The price of Fresenius Medical Care’s preference shares normally develops in line with that of the Company’s ordinary shares. However, as the vast majority of preference shareholders took advantage of the opportunity to convert their preference shares into ordinary shares in February 2006, the number of outstanding preference shares, and therefore the volume of shares traded, is now extremely low. As a result, any further statements on the price development of our preference shares would be speculative.
On December 31, 2010, Fresenius Medical Care’s market capitalization totalled €13.14 BN, an increase of more than €2 BN compared to the previous year’s value of €11.05 BN. The average trading volume of our shares was 0.83 M per trading day (2009: 1.04 M). The trading volumes of our preference shares remained at a very low rate of just 1,200 per trading day (2009: 1,144), as expected. Due to the extremely small number of outstanding preference shares, their daily fluctuation range is much more pronounced than that of ordinary shares.
In 2010, our ordinary shares further consolidated its position in the rankings published by Deutsche Börse. Our weighting in the DAX increased compared to the previous year, up from 1.31 to 1.36%. These rankings serve as a basis for decisions regarding the composition of the DAX. They are drawn up on a monthly basis according to the trading volume and market capitalization relating to the free float. In terms of market capitalization, we gained two ranks in 2010, and are now ranked 20th. With regard to the trading volume, however, we fell three ranks from 26th to 29th. The Fresenius Medical Care share is included in a number of other important international stock indices, for example, the Dow Jones, MSCI and FTSE. For the second consecutive year, our ordinary share was represented in the Dow Jones Euro Stoxx Sustainability index, which considers economic as well as ecological and social criteria.