Strong growth recorded in its dialysis business and in the sale of infusion drugs unit in emerging markets helped the German healthcare group Fresenius to beat market expectations for the fourth quarter of last year and boosted confidence of the company to announce that it expects that its net income for 2020 will increase.
2018 was a very bad year for the company with a number of profit warnings issued by it. In comparison, 2019 was a much better one in which the company made some important investments as its bottom line stabilized. The top management of the group have also said that starting 2020, it would pose an improvement in growth and profitability.
Despite a weak performance of the company in its North American business, Fresenius reported its adjusted operating income for the fourth quarter of last year at 1.29 billion euros which just beat average estimates by analysts according to a company-provided consensus at 1.25 billion euros.
In 2020, the net income of the group will to grow between 1 per cent and 5 per cent in constant currency terms, it said, while also confirming its previous forecast for a jump of between 4 per cent and 7 per cent for its revenues in for the current year.
For a medium term forecast of between 2020 and 2023, the group now expects that there will be an acceleration of the total earnings of the group, which was as it had forecast previously, the company said and added that the anticipated growth will be driven by sales growth and efficiency improvements in addition to the drug unit’s biosimilars business.
But the company also said that it was not yet in a position to evaluate and quantify the possible impact of the outbreak of the coronavirus in China which has so far killed about 2,100 people as more than 74,000 people have been infected by the virus. The coronavirus has restricted movement within as well as to and from China and extension of closure of factories there has upended global supply chains of large companies.
The most exposed business unit of the company to the virus outbreak was its infusion drugs division Kabi, said the company’s Chief Executive Stephan Sturm while talking to the press. He said that the division’s first quarter sale volume is likely to be impacted because of difficulty in accessing hospitals while supply chains have been disrupted.
He however added that for the entire of 2020, this impact would not have any significant effect on the unit’s or the group’s total earnings and growth projections.
In a separate announcement, the news of setting up of a joint venture between Kabi and Swiss rival Vifor Pharma was announced by Fresenius. This tie up will help to provide treatments for iron deficiency in China.
While stabilizing steadily in Germany, its Helios hospital unit reported strong growth in Spain during the fourth quarter, Fresenius said.
Sturm said that the company will be looking for further opportunities to expand Helios this year after making several acquisitions in Colombia to complement its two main European businesses.
(Adapted from Reuters.com)