In 2010, Fresenius Medical Care again increased its revenue significantly by 7% to $12.05 BN. This figure was the same in constant currency terms. The Company’s organic growth was 6%, while acquisitions after deducting divestitures accounted for 1% of revenue growth. Both the North American and International segments contributed to boosting our revenue in 2010. North America remains our most important market: We generated 67% of our total revenue in this segment in the year under review, similar to the previous year.

Revenue in North America rose by 7% to $8.13 BN in the past fiscal year. Organic revenue growth was 6%, while acquisitions were up slightly by 1%. As in previous years, dialysisDialysisForm of renal replacement therapy where a semipermeable membrane – in peritoneal dialysis the peritoneum of the patient, in hemodialysis the membrane of the dialyzer – is used to clean a patient’s blood. services accounted for by far the largest proportion of revenue in North America, at 90%.

Revenue from dialysis services in North America was up 7% to $7.30 BN. Organic revenue growth also amounted to 7%. The average revenue per treatment in the U.S., our largest market, rose by 3% in the year under review, from $347 to $356. This was due primarily to an increase in the reimbursement rates, especially among private insurers.

The 1% growth in revenue from dialysis products in North America to $827 M can mainly be attributed to improved sales of bloodline systems, solutions, concentrates, and dialysis machines. This was partially offset by lower revenues from pharmaceuticals.

Operations in the International segment, which includes all regions outside North America, also developed very positively. Revenues in 2010 rose by 8% to $3.92 BN. Organic growth was 5%, while acquisitions after deducting divestitures were up by 3%. As a result of the strong expansion of our clinic network, the emphasis has also shifted towards services in the International segment. Still, business with dialysis products continues to dominate here, generating 55% of revenue. One reason why services in the International segment account for a lower share of revenue than in North America is the different structures and stages of development of healthcare systems in this region. In some countries, we have not been able to operate our own dialysis clinics to date because the necessary economic and legal structures, such as appropriate reimbursement structures or functioning healthcare systems, are not yet in place.

Revenue from dialysis services in the International segment grew by 14% over the previous year to $1.77 BN. In constant currency terms, this represents an increase of 13%. Acquisitions accounted for 8% of revenue growth, while organic growth was 6%. Revenue from dialysis products in the year under review rose by 4% to $2.16 BN. Adjusted for currency effects, it was also 4%. Improved sales in many areas of the product portfolio (such as dialyzers, solutions, and concentrates) were in part offset by lower revenues from pharmaceuticals.

At the end of 2010, we operated 2,757 dialysis clinics, 8% more than in 2009. We treated 214,648 dialysis patients in the year under review, an increase of 10%. The number of treatments rose by 8% to around 31.67 M.

The largest business region in the International segment is Europe/Middle East/Africa (EMEA). Revenue in this region rose by 3% to $2.55 BN in 2010. Currency adjusted revenue growth was 6%, helping us to further consolidate our market position. The region’s share of total revenue was 21% (2009: 22%). By the end of the year under review, we had treated over 38,000 patients in 499 dialysis facilities, 5,600 patients (or 17%) more than in the previous year. In 2010, we generated revenue of $1.08 M from dialysis services in this region, up 11% over the preceding year. In constant currency terms, this represents a 13% increase. Revenue from dialysis products amounted to $1.47 BN, a 2% drop; adjusted for currency, however, it represented an 1% increase.

Business also developed very favorably in Latin America. We grew our revenue here by 16% to $597 M, a 9% increase adjusted for currency effects. The share of total revenues remained constant as in the previous year. Revenue from dialysis services grew by 15% (9% after currency adjustment) to $400 M. We generated revenue from dialysis products of $197 M, up 18% over the previous year (9% in constant currency terms). By the end of 2010, over 22,000 patients had received dialysis treatment in the 193 clinics in this business region.

The Asia-Pacific region recorded revenue growth of 22% to $777 M. Adjusted for currency fluctuations, this corresponded to a 15% increase. The region accounted for 7% of total revenue in 2010, compared to 5% in the previous year. Revenue from dialysis services soared by 25% (20% after currency adjustment) to $284 M. Revenue from dialysis products grew by 20% (12% in constant currency terms) to $493 M.

Operating income (EBIT)

Earnings before interest and taxes (EBITEBIT (Earnings Before Interest and Taxes)This is used to assess the company’s earnings position. More precisely, it is the operating result before earnings from financial activities and investments.) rose in 2010 by 10% to $1.92 BN. The operating marginOperating marginEarnings before interest and taxes (EBIT) divided by revenues. was 16.0%, higher than the preceding year’s figure of 15.6%, primarily due to the Company’s improved operating margin in North America.

Operating income in the North America segment rose by 11% in 2010 to $1.39 BN. The operating margin was 17.0%, compared to 16.4% in 2009. This increase was largely a result of higher reimbursement rates and the rise in prices for pharmaceuticals.

In the International segment, we recorded a 6% increase in operating income to $678 M. The operating margin decreased from 17.5 to 17.3%. The reasons for this were the lower gross profit margins for newly acquired dialysis clinics, and the impact of high inflation in Venezuela. In addition, a valuation adjustment for inventories was carried out in 2009, which had a positive effect on earnings in that year. Economies of scale resulting from revenue growth as well as favorable currency effects had a positive effect.

In the year under review, corporate costs rose as expected driven by higher costs in connection with acquisitions and higher research and development expenditures. The total corporate operating expenditure in 2010 amounted to $140 M, compared to $131 M in the year before.

Earnings before taxes

Pre-tax earnings rose to $1.64 BN, an increase of 13% over the previous year’s figure of $1.46 BN.

Net income

Net income (net income attributable to Fresenius Medical Care AG & Co. KGaA) increased in 2010 by 10% to $979 M, compared to $891 M in 2009.

Gross profit

Gross profit in 2010 amounted to $4.14 BN, up 8% over the previous year. The gross profit margin was 34.4%, slightly higher than the previous year’s figure of 34.1%. The increase in the margin is largely the result of the improved gross profit margin in North America, and is partly offset by a decline in the International segment.

Selling, general and administrative expenses rose by 7% to $2.12 BN (2009: $1.98 BN). These costs corresponded to 17.6% of revenue, as in the previous year.

Depreciation and amortization in 2010 increased to $503 M compared to $457 M in 2009. This rise is a result of higher investment activity in both North America and the International segment.

Research and development costs rose from $94 M in the previous year to $97 M, mostly due to additional research and development programs in the area of hemodialysis equipment and extracorporeal critical care therapies.

Net interest

Net interest expenses in 2010 amounted to $280 M, compared to $300 M in 2009. This positive outcome is largely due to lower average short-term interest rates. Detailed information on our financial situation can be found starting here and in note 9 of the financial report.

Tax rate

Income tax in 2010 amounted to $578 M, compared to $491 M in 2009. This corresponds to an effective tax rate of 35.2% (2009: 33.7%). This increase was mainly due to higher unrealized tax advantages, lower tax effects from internal financing, and the effect of the non-deductible losses in Venezuela as a result of inflation-adjusted accounting. These effects were partly offset by the reversal of valuation allowances for deferred taxes on the assets side for tax losses carried forward.

Earnings per share

The earnings per share (EPS) rose by 9% in 2010 to $3.25 per ordinary share, compared with $2.99 year-on-year. These figures also apply to ordinary ADR (American Depository Receipt). The average weighted number of shares outstanding in 2010 was around 300.7 M (2009: 298.3 M), of which 296.8 M were ordinary shares (2009: 294.4 M ordinary shares). The increase in the number of shares outstanding resulted from stock options being exercised. Details on how earnings per share are derived can be found here.

Value added statement

The value added statement reflects Fresenius Medical Care’s total economic output in 2010. All outlays, such as the consumption by value of purchased goods and services as well as depreciation and amortization, have been deducted from the Company’s performance. The value added of Fresenius Medical Care in 2010 was $5.9 BN, up 7.94% over the previous year’s $5.5 BN. The bulk of this, 67% or $4 BN, was paid to staff, while 10% went to the public sector. Lenders received around 5%, or $305 M, while some 6%, or $348 M, went to shareholders and other partners. This left $718 M of the value added which was reinvested in the Company.

Order volume is not a significant indicator for Fresenius Medical Care as three-quarters of our business model are related to services that are performed regularly. Our product business mainly comprises single-use products and is not defined by project-related orders that could lead to significant changes in order volumes in the reporting period. As a result, Fresenius Medical Care does not report on the basis of this financial indicator. The stability of our order situation in general can be seen from the growth in patient and treatment figures described above. Our 8% increase in treatments and 10% growth in patient numbers is approximately in line with the dialysis market. Another factor contributing to the stability of our order volume is the fact that the majority of treatment costs are paid by public institutions and healthcare systems.