Tuesday, November 02, 2021
Many dialysis patients die
Corona forces FMC to brake sharply
The corona pandemic, which is worsening again, is forcing the health company FMC to take radical steps. The company now wants to take countermeasures in red pencil. Every fifth digit is to be omitted and the structure is to be tightened significantly.
The corona pandemic is becoming a major stress test for the dialysis company Fresenius Medical Care. Because of the spread of the highly contagious Delta variant, more FMC dialysis patients are dying from Covid-19. “This resulted in a significantly stronger Covid-19 effect on our business than we had forecast at the beginning of the year,” said FMC boss Rice Powell. He spoke of an unprecedented situation that continues to cost many lives every day. The subsidiary of the health care group Fresenius is now to be made weatherproof with a simpler operating model, which should significantly reduce costs. Around 5000 of the more than 125,000 jobs will be lost worldwide.
Where the positions are to be deleted and how many of them may be in Germany has not yet been determined, explained Powell. In the future, FMC wants to focus its operating model on just two global segments. The previously decentralized business with products for dialysis centers, home dialysis and intensive care medicine will be bundled in one. The other segment comprises the health services business, which accounts for around 80 percent of Group sales.
The previous operating model is currently still divided into four world regions with some cross-sectional functions. In the past, the structures of FMC were very regional, said Powell. “That is an obstacle for us now.” It also led to high administrative costs.
Powell expects the realignment to result in greater cost efficiency and additional growth opportunities. FMC expects annual costs to be reduced by 500 million euros by 2025. However, one-off investments of around 450 to 500 million are required for this. Net savings are expected for the first time in 2023.
In 2021, FMC expects sales and net income to be at the lower end of the forecast range. Accordingly, adjusted for currency effects, there is a risk of a collapse in adjusted net profit of up to 25 percent. In the third quarter it fell by 21 percent to 277 million euros. Sales rose by one percent to 4.4 billion.
The parent company Fresenius, on the other hand, increased its targets despite Corona pollution. Things are going better than expected at the infusion manufacturer Fresenius Kabi and the hospital chain Helios, which is counting on increasing treatments in its houses again. Fresenius now anticipates a currency-adjusted increase in sales in the mid-single-digit percentage range instead of a growth in the low to mid-single-digit percentage range. Group earnings are now expected to rise at the upper end of the forecast range, which envisages growth in the low single-digit percentage range.
In the third quarter, Fresenius sales climbed five percent to 9.3 billion euros. Adjusted for currency effects, there was also an increase of five percent; without corona charges, the company would have achieved growth of up to eight percent. The group profit increased by two percent to 435 million euros.