Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Fresenius SE & Co KGaA (FSNUF, Financial) reported strong Q3 2024 results with high single-digit top-line growth and increased margins.
- The company generated over EUR760 million in operating cash flow, significantly improving its leverage profile.
- Kabi division achieved a powerful 11% year-on-year organic revenue growth, driven by biopharma momentum and product launches.
- Helios division delivered solid performance despite seasonal challenges, with an 8% organic revenue growth in Germany.
- Fresenius SE & Co KGaA (FSNUF) upgraded its 2024 outlook, expecting 6% to 8% revenue growth and 8% to 11% EBIT growth, reflecting confidence in its business divisions.
Negative Points
- The company faces ongoing weakness in the Chinese market, with no short-term improvement expected.
- Helios Germany's performance was partly supported by energy relief funding, which will not continue in Q4.
- Interest expenses are expected to be at the upper end of the EUR420 million to EUR440 million range, posing a potential risk for EPS in 2025.
- The biopharma division anticipates lower milestone payments in Q4, which could impact financial performance.
- The company must address the loss of energy relief contributions and manage structural productivity improvements at Helios to maintain profitability.
Q & A Highlights
Q: Can you elaborate on your biosimilar launch strategy, particularly regarding the Stelara product and lessons learned from the Idacio launch?
A: Michael Sen, Chairman of the Management Board, explained that the strategy for biosimilars like Tyenne involves direct contracts with PBMs and IDNs, with significant contracts already in place. The approach for Idacio was different due to market conditions, focusing on a multichannel strategy. For Stelara, they plan to leverage different sales channels to maximize impact.
Q: What was the impact of energy relief payments on German profitability, and how do you view Kabi's margin trajectory into 2025?
A: Sara Hennicken, CFO, noted that the last tranche of energy relief payments provided a mid-sized double-digit benefit to German profits. For Kabi, margins have improved due to structural productivity and pricing power, but it's too early to predict 2025 margins. They expect biopharma to contribute positively next year.
Q: How do you view the turnaround progress and what remains to be done, especially at Helios?
A: Michael Sen stated that the turnaround is progressing well, with Kabi showing strong performance. Helios will focus on structural productivity and top-line growth through cluster strategies. They expect continued improvement in biopharma and are preparing for further efficiency gains at Helios.
Q: Given the strong performance this year, what are the key headwinds and tailwinds for 2025?
A: Michael Sen highlighted potential headwinds such as the end of energy relief payments and ongoing weakness in China. However, they expect biopharma growth, particularly from Tyenne, to be a significant tailwind. They will provide more detailed guidance in February.
Q: Can you comment on the potential impact of the US election on tariffs and your US operations?
A: Michael Sen expressed confidence in their US operations, emphasizing their local manufacturing and supply network. They expect the new administration to focus on affordable healthcare and believe their essential products and strong US presence position them well.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
