Fresenius SE & Co KGaA (FSNUF) Q2 2024 Earnings Call Highlights: Strong Revenue Growth and ...

GuruFocus News
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In This Article:

  • Group Revenue: Grew by 8% organically to EUR5.4 billion.

  • EBIT (Earnings Before Interest and Taxes): EUR660 million, up 15% in constant currency.

  • EPS (Earnings Per Share): Increased by 15% in constant currency.

  • Interest Expense: EUR108 million for Q2, with a full-year expectation of EUR420 million to EUR440 million.

  • Operating Cash Flow: Increased by more than 370% year-over-year.

  • Net Debt to EBITDA Ratio: Ended the quarter at 3.4 times.

  • Kabi Revenue Growth: 11% year-over-year in organic terms.

  • Kabi EBIT Margin: Reached 15% of revenues.

  • Kabi EBITDA Margin: North of 22%.

  • Helios Revenue Growth: 6% organically to EUR3.2 billion.

  • Helios EBIT Margin: 11.1%, with Helios Spain at 14.9%.

  • Free Cash Flow: Improved from negative EUR556 million to positive EUR655 million year-over-year.

  • Net Debt: Reduced from EUR13.3 billion to EUR12.4 billion since the start of 2024.

  • ROIC (Return on Invested Capital): Achieved 6%, entering the structural band of 6% to 8%.

Release Date: July 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Fresenius SE & Co KGaA (FSNUF) reported high single-digit revenue growth and double-digit increases in EBIT for Q2 2024.

  • The company achieved significant cost savings ahead of plan, contributing to margin expansion and EPS growth.

  • Fresenius SE & Co KGaA's leverage ratio improved, with S&P revising its credit outlook from negative to stable.

  • Kabi's growth businesses, including nutrition, medtech, and biopharma, saw strong revenue growth, particularly with a 19% increase in Q2.

  • The company is optimistic about reaching the upper half of its EBIT guidance range for the full year 2024.

Negative Points

  • Helios Germany's margins were on the softer side, with underlying margins closer to 6% excluding relief payments.

  • China's market remains soft due to economic weakness and an ongoing anti-corruption campaign, impacting growth expectations.

  • There are concerns about the sustainability of growth in the second half of 2024, with potential risks including the impact of energy relief funding tapering off.

  • Kabi Pharma experienced some margin pressure due to ramp-up costs and competitive pressures in the US and China.

  • The company faces challenges in maintaining growth momentum in the biosimilars market, with competition and market dynamics affecting uptake.

Q & A Highlights

Q: Could you discuss the momentum in Helios Germany, given the softer margins and underlying margin calculations? A: Michael Sen, CEO of Fresenius Kabi, explained that Helios Germany's performance is supported by energy relief funds, which are expected to fade. The company has outlined measures to maintain margins, including a EUR130 million cost-saving plan. Sara Hennicken, CFO, added that energy relief funding will start to fade by Q3, and Helios Germany will need to run faster to maintain margins.

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