By Ludwig Burger
FRANKFURT (Reuters) – German healthcare group Fresenius SE will slash costs and proceed with plans to cede strategic control over struggling dialysis group Fresenius Medical Care (FMC) as its new CEO seeks to simplify the diversified healthcare group, it said.
Fresenius also said it expected its 2023 earnings before interest, taxes (EBIT) and special items to come in between flat and down by a “high-single-digit” percentage, when adjusted for currency changes, after 2022 adjusted EBIT declined 6% to 4 billion euros ($4.3 billion).
The company said in a statement it would proceed with plans to exclude FMC from its regular financial reporting by changing its legal form to that of a stock corporation from KGaA, likely by the end of this year.
It is also targeting annual structural cost savings of around 1 billion euros before interest and tax by 2025.
“The new structure will greatly benefit both companies: Fresenius Medical Care needs an operational turnaround, to improve its performance and focus on its core business,” Fresenius Chief Executive Michael Sen said.
“Fresenius needs to simplify its complex corporate structures and commit to its Operating Companies and to maximizing value from its investments,” he added.
In a separate statement, FMC said full-year net income dropped 31% to 673 million euros, below an analyst consensus of 681 million euros posted on the company’s website, marking the fourth consecutive annual decline.
FMC has been hit hard by a high death rate from COVID-19 among its patients. As additional headwinds, U.S. staff shortages and cost inflation forced it to slash its annual outlook last July and again in October 2022.
It had said excess patient mortality from COVID-19 was abating but would still pose a 100 million euro burden on 2022 operating income.
($1 = 0.9395 euros)
(Reporting by Ludwig Burger; Additonal reporting by Christoph Steitz; Editing by Mark Potter)
