Tuesday, November 02, 2021
FMC cuts thousands of jobs
Fresenius comes back from Corona low
For a long time, Fresenius groaned under the consequences of the corona pandemic. In the meantime, Germany’s largest private clinic operator is on the up again. The dialysis subsidiary FMC, on the other hand, is still under great pressure. With the upcoming restructuring, thousands of jobs will be lost.
The health company Fresenius is still grappling with the consequences of the corona crisis. While the number of treatments in the Fresenius clinics rose again in the third quarter and the liquid pharmaceuticals business picked up, the dialysis subsidiary Fresenius Medical Care is fighting the effects of the pandemic, in which many chronically ill kidney patients die, by shedding 5,000 jobs. By concentrating on two global segments, FMC wants to abolish double structures and reduce annual costs by 500 million euros by 2025, as the group announced in Bad Homburg.
The Corona pandemic has been a problem for the Fresenius Group for a long time. Fear of infection prevented many people from visiting the clinic; medical interventions did not necessarily have to be postponed. As a result, fewer drugs from the liquid drug provider Kabi were used. At FMC, the pandemic led to excess mortality among kidney patients, which depressed the number of treatments in dialysis centers. The two Dax companies are under pressure on the stock exchange, FMC shocked investors in the spring with a profit warning.
In the third quarter, at least at Fresenius, the upward trend continued. Sales rose by five percent to a good 9.3 billion and profit by two percent to 435 million euros. In the around 90 hospitals of Fresenius Helios in Germany there were more interventions again, while the clinics in Spain already recorded more treatments than before the pandemic. At the same time, the Kabi division, which sells infusions, among other things, did good business in North America and emerging countries. The service provider Vamed recorded orders at a record level.
Revenue forecast increased
Fresenius is now becoming more confident about this year: Sales should increase in the mid-single-digit percentage range instead of the low to mid-range target as previously targeted. Group boss Stephan Sturm expects the adjusted group result to be at the upper end of the forecast range. The pandemic was affecting Fresenius longer and more than expected, said Sturm. The group is on course.
Fresenius Medical Care, on the other hand, remains under great pressure. In the third quarter, the delta variant caused excess mortality among kidney patients to rise again, killing thousands of dialysis patients. The costs for safety measures for patients and employees are also high. While sales rose by one percent to 4.4 billion euros, profits fell sharply by 22 percent.
Farewell to regional structures
FMC now wants to concentrate on two global pillars: products for dialysis centers, home dialysis and intensive care medicine as well as health services for people with chronic kidney disease, which should account for 80 percent of sales. As a result, FMC is saying goodbye to previous regional structures and is further bundling administration and central services, among other things. One-off investments of 450 to 500 million euros will be incurred for the program; FMC expects the first savings to be made by the end of 2023.
“We want to make Fresenius Medical Care more agile, make better use of existing know-how, accelerate innovations and use our capital even more specifically and thus more efficiently,” said FMC boss Rice Powell. It is not yet clear where the 5,000 jobs will be cut and how many will be in Germany, said a company spokesman.
Fresenius Medical Care with a good 123,000 employees operates around 4,100 dialysis centers worldwide. In people with kidney failure, the blood must be cleaned regularly using dialysis. At the same time, FMC is a leading supplier of dialysis products such as dialysis machines, dialyzers and disposable accessories. On the stock exchange, the share prices of Fresenius and FMC rose significantly on Tuesday morning.