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To our shareholders

Photo Dr. Ulf M. Schneider

2012 marked our 100th anniversary. As a leading global health care group we are dedicated to the advancement of medicine and human health – values we have upheld ever since our founding as a small pharmacy lab in 1912.

Our corporate culture has been vital to this success. Fresenius strives to seize the opportunities created by constant change. We make bold decisions that move the company forward while staying true to our values and principles. We are committed to innovation, entrepreneurship, and decentralized management structures. We have successfully expanded our business worldwide by maintaining a global view and remaining responsive to the demands of our local markets. We also stand for continuity, demonstrated in long-term value creation, solid financial management, compliance with all applicable laws and regulations, adherence to the highest ethical standards, and stable management. To sum it up, this culture has made us a reliable partner for the health care industry around the globe.

The Group’s dynamic growth of recent years proves the value of these principles: In the last decade alone, Fresenius has nearly tripled sales and increased net income more than eight-fold. Today, each of our four business segments is among the leaders in its respective markets.

Our history of growth continued in 2012, with sales and earnings setting new records. Group sales rose by 13 percent in constant currency to €19.3 billion. Net income before special items reached €938 million, an increase of 17 percent in constant currency. We also achieved a record EBIT margin of 15.9 percent.

All business segments grew at double-digit rates in both sales and EBIT, posting significant organic sales growth and taking advantage of opportunities created by market consolidation. With the acquisition of Fenwal Holdings, Fresenius Kabi now enjoys a leading position worldwide in transfusion technology. The acquisition of the Damp Group significantly strengthened Fresenius Helios’ hospital network in Northern Germany.

Our goal of combining RHÖN-KLINIKUM AG with Fresenius Helios unfortunately did not materialize. Pooling these two companies’ strengths would have enabled us to develop new, forward-looking approaches to health care in Germany. Following our unsuccessful takeover bid, we evaluated alternative transaction structures to achieve our initial goals with a manageable level of risk. None proved viable. In the interest of clarity for all parties, and in keeping with our tradition of sound and disciplined acquisition decisions, we have not submitted a second takeover offer to RHÖN-KLINIKUM AG shareholders.

At the end of 2012, we announced the decision to discontinue our Fresenius Biotech business with its two antibodies ATG-Fresenius S and Removab. We are currently exploring a sale of Fresenius Biotech while simultaneously assessing the equally viable option of retaining the immunosuppressive drug ATG-Fresenius S within the Group. This product has been well established in the hospital market for decades and is consistently profitable. Fresenius will divest the Removab business, resulting in a positive effect on Group earnings starting this year. Going forward, we will focus on our four established business segments, which offer significant growth opportunities.

Looking back on 2012, I would like to express my sincere appreciation and gratitude to our employees for their dedication and outstanding work. Thanks to their extraordinary efforts and commitment, Fresenius had another year of great progress and achievement.

With a century’s worth of experience and knowledge, Fresenius is well positioned to meet the challenges of the future and to capitalize on the growth prospects created by increasing demand for high-quality health care around the world. We foresee a number of significant opportunities:

  • We expect further dynamic growth in emerging markets. With the number of dialysis patients in these countries growing at double-digit rates, Fresenius Medical Care will continue to expand its dialysis product and service business. Emerging markets will also offer above-average growth for Fresenius Kabi. Developing health care systems in these countries drive increasing demand for nutrition and infusion products.
  • The rising trend towards generic drugs worldwide will benefit Fresenius. Generics are indispensable to affordable and high-quality health care since they are significantly cheaper than branded drugs.
  • Hospital privatizations continue to represent a growth opportunity for Fresenius, allowing us to strengthen our leading position in the German hospital market.
  • We meet increasing global demand for high-performance health care facilities with project design and process solutions that raise medical standards and improve efficiency.

For all our growth opportunities, we must strive to keep our products and services affordable. With aging populations in many countries, the affordability of health care poses an increasing challenge. To meet this objective, we will continue to reduce costs, optimize processes, and harness economies of scale.

Looking ahead, we have set ambitious financial goals for 2013. On a constant currency basis, Group sales are expected to grow by 7 to 10 percent, and net income before special items by 7 to 12 percent. We will integrate our recent acquisitions swiftly and thoroughly into the Group, continue to generate high organic growth, and strive for operational excellence.

Helping seriously ill people and promoting medical progress is at the heart of everything we do. We will continue to pursue this goal in the future. Our values, experience, and knowledge have served our company well for the past 100 years. Fresenius is entering its second century with confidence and commitment.

We remain grateful for your continued trust and support.

Dr. Ulf M. Schneider
Chairman of the Management Board

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