AGM 2021

May 20, 2021

Slides

Good morning, and gentlemen. My name is Ditur Chienk. As Chairman of the Supervisory Board, I'm here with opening the ordinary Annual General Meeting for 2021 of Fresenius Medical Care AG and Co KGAA, a partnership limited by shares. And in accordance with the Articles of Association, I'm going to be running the meeting. I would like to welcome you, our shareholders, our proxies, the representatives of the media as well as all other spectators who will be able to follow this Annual General Meeting in sound and in images. Very cordially on behalf of the Supervisory Board of Fresenius Medical Care AG and Co KGAA as well as on behalf of the Managing Board of the General Partner Fresenius Medical Care Management AG. I would have much preferred to have been able to welcome you personally to Frankfurt Am Main to our Annual General Meeting. However, due to the special circumstances once again this is not possible this year. Due to the health risks associated with the coronavirus, we all have to continue to restrict physical contacts as far as possible and to maintain distance from one another. Unfortunately, this makes the conduct of a Annual General Meeting where everyone is able to physically be present impossible. As you were able to see from the invitation to the Annual General Meeting, the Management Board of our general partner has with the consent of the Supervisory Board has consented to hold this year's ordinary Annual General Meeting as a virtual Annual General Meeting without the physical presence of the shareholders and their proxies. And thus, we are once again making use of the statutory possibility open to us, which the lawmakers in this country created for us in reaction to the COVID-nineteen pandemic. With the conduct as a virtual Annual General Meeting, we are ensuring that you our shareholders will be able to receive the upcoming important resolutions, and be able to adopt them while taking into account the protection that is needed against the infection. And thus you will ultimately receive your dividend as soon as possible. We are aware that holding a virtual Annual General Meeting necessarily is associated with certain restrictions of the rights of our shareholders. In particular, and the management of the company cannot enter into a general debate as usual. Nevertheless, so that you were still able to exercise your shareholder rights appropriately, The company has done what has been possible from a legal standpoint and what has been possible from a technical standpoint to open up a number of opportunities for you for example to exercise your voting rights and to address your questions to the management board. Compared to last year, we have expanded your rights once again during the course of this meeting and I will deal with this later on. In order to restrict physical contacts to the extent possible, we have also reduced once again the number of participants here in our business premises in Baton Rouge to a few people. Next to me you see, Katharina, Doctor. Katharina Mazarossas from the Management Board of the General Partner as well as Doctor. Dorothea Wenzel, who is a member of the Supervisory Board of the company. The Chairman of the Management Board of our General Partner, Mr. Riespauil is joining us electronically from The United States. Unfortunately, due to the current travel restrictions that exist, he is unable to attend personally. The other members of the Management Board and the Supervisory Board are also joining us electronically at this Annual General Meeting due to the restrictions imposed by the pandemic and can get in touch with me at any time if needed. I would like to welcome all of the members of the management board and the Supervisory Board. I'd also like to welcome our notary Doctor. Karsten von Schenk, who once again is also personally present at this meeting this year and who has been given the mandate to record the minutes of this Annual General Meeting. Also present, but not visible for you at this time, our proxy representatives of the company, our statutory auditors, as well as a few employees who ensure the contact of this virtual Annual General Meeting. Ladies and gentlemen, I'd like to begin with a few organizational remarks. First of all, I'd like to ascertain that the invitation to today's Annual General Meeting was announced in the German Federal Gazette in due form and on time on the April 7. The notary Doctor. Fonschenk was given a printout of this publication of the convening of this meeting in the German Federal Gazette and he will be attaching that to the minutes of this Annual General Meeting. And also since the April 7, all of the prescribed documents and information have been made accessible on the website of our company and may be retrieved there for the duration of this virtual Annual General Meeting. They have also been laid out for inspection in the business premises of our company since this meeting was called. We will also be, maintaining a list of participants for this virtual Annual General Meeting. The proxies will also be reported in this list together with the numbers of shares that they are representing. Shareholders and their proxies who wish to exercise their voting rights via letter or mail will not be reported in the list of participants of the Annual General Meeting. So at the moment, we have the following people: 2 and €92,876,570 divided into 292,876,570 shares. And we have 238,537,300 some shares represented at this meeting. This corresponds to 81.45% of the capital of the company. And then we have postal shares for approximately 177,000 shares. So that means together we have 238,694,597 shares with just as many votes and that again means 81.5% of our equity capital. This list will be laid out in this room and will be updated regularly throughout the meeting. In the time limit that was set for countermotions, the company did receive one countermotion and this motion was submitted by the umbrella organization of critical shareholders and concerns the approval of the actions of the Supervisory Board under Item four of today's agenda. The company has properly made this countermotion available and accessible on its website and also published a comment on the part of the company's management. And I will come back to this later on prior to the voting. If you wish to support this counter motion, then when we reach item number four of the agenda, you will have to vote with no or issue the corresponding instructions to the proxies. If on the other hand, you wish to support the, proposal of the company, please vote with yes or issue the corresponding instructions when we get to item number four. Nominations have not been received by the company within the period of time provided here for. All of the shareholders who have properly registered were able to submit questions in advance of our virtual Annual General Meeting through our shareholders portal in the Internet. These questions will be answered following the speech to be held by Mr. Powell and the report of the Supervisory Board. We will answer all of the questions that we received in due time as comprehensively and as in just as detailed as we would have done and as you've used to us in previous Annual General Meetings. Moreover, shareholders who are properly registered to exercise their votes were able to do this prior to the Annual General Meeting either by way of a mail vote or by means of issuing instructions and, empowering the proxies of the company Ms. Tanja Hoodle and Doctor. Ulrich Martin Wolf. During the Annual General Meeting, shareholders are also able to exercise their voting rights via mail or by granting power of attorney and instructions to the proxies of the company via our shareholders portal in the Internet. This will be possible until directly before we begin the actual voting. And I will explicitly point this out to you at that point in time as to when you will have the last possibility to cast your votes or to grant instructions. In your own interest, I ask you to vote as soon as possible. With regard to the further details of issuing proxies and issuing instructions as well as the exercise of your voting rights, I ask you to please pay attention to the further information contained in the proxy form and the form of instructions, which you was sent to you after you registered for the Annual General Meeting. There you will find comments regarding the shareholders portal. The legal framework and conditions of a virtual Annual General Meeting do not provide for having shareholders, being able to speak to the management or with the other shareholders. In order to make sure that your voice dear shareholders is heard even in an Annual General Meeting, we have allowed you however to submit your comments ahead of time, in the form of video messages. All of the video messages that were submitted on due course, can be seen by all of the registered shareholders and proxies in the shareholders portal. We have, removed for the most part the restrictions that were due to a virtual Annual General Meeting. And I'd also like to point out to you that once again this year we are providing simultaneous translation of the whole Annual General Meeting from German into English. And in the event of any English contributions, you will be able to switch from English to German. You can change the language in the shareholders portal. So those were my organizational remarks. Ladies and gentlemen, we are now going to deal with the agenda. The agenda has been made accessible via our website of the company since this meeting was called. The agenda is also present here today. Together with the calling of this meeting to today's Annual General Meeting, you'll receive the information through your depositary banks. So I herewith assume that all of you are familiar with the agenda. We're going to begin with item number one in our agenda. The annual financial statements and the consolidated financial statements of Fresenius Metal Care AG and Co KGA as at thirty one December twenty twenty, the corresponding management reports, the explanatory report of the general partner regarding the information required in accordance with Sections 289A and Sections 315A of the German Commercial Code, the Supervisory Board and the proposal concerning the allocation of the distributable profit as well as all of the other documents listed in the invitation to the Annual General Meeting have been laid out for inspection on the premises of the company since the meeting was called. Moreover, they were made accessible via the company's website and they're also available here today. Upon your request, the aforementioned documents were sent to you. So therefore, I may assume that all of these documents are familiar to everyone and one copy each has also been received by the notary Doctor. Von Schenck. First, I'd like to ask Mr. Powell to explain the presentations regarding agenda item one and to comment on the outlook for the ongoing fiscal year. As we've already stated, Mr. Powell will be joining us electronically from The United States. The following speech by Mr. Powell was recorded prior to the Annual General Meeting in order to prevent any possible technical disruptions. To the twenty twenty one Annual General Meeting of Fresenius Medical Care. We are celebrating a major anniversary this year. On September 30, Fresenius Medical Care will turn 25. Over the last quarter century, we have lived a remarkable success story. We now care for six times as many patients, produce 12 times as many dialyzers and generate 14 times the net income we did when we started in 1996. Our numbers show how we at Fresenius Medical Care have actively shaped the history of dialysis. Looking back fifty years, end stage renal disease was a death sentence for many people. Today, we are the world's leading provider of products and services for patients with renal disease and provide a routine treatment that saves hundreds of thousands of lives each year. We can only achieve this by putting our patients first. We are continuously working to improve our products and services, bring new innovations to market and expand our value based care approach even further. All of our efforts are focused on ensuring a future worth living for our patients. I will share with you how we make this happen and why I believe that a new leap in renal care is imminent. Before we get to the future, let's talk about 2020. 2020 was a demanding year. As you can imagine, I'm referring to the COVID pandemic. Believe me, in the course of our twenty five year history, we have never experienced anything like it. But faced with this virus, our teams did a tremendous job going the extra mile to protect our vulnerable patients and maintain their life sustaining treatments. Allow me to give you a quick recap. During the first phase of the pandemic, we quickly established strict additional hygiene measures to keep our operations running and our clinics open to patients. In 2020, we delivered dialysis to around 346,000 patients in over 4,000 clinics. All in all, we provided approximately 54,000,000 dialysis treatments. For patients who caught the virus, we created isolation capacities. We grew the share of treatments performed at home to more than fourteen percent in The U. S. And increased our telehealth options to minimize exposure. When calls began coming in from critical care units around the world requesting our acute dialysis solutions to help with their COVID cases, we quickly ramped up production. This pandemic is not over yet. Our thoughts are with all those who are grieving the loss of a loved one. We saw significant excess mortality in the dialysis population after infection rates surged again at the end of twenty twenty. Every single life lost is a human tragedy, but there is hope. We have seen significant progress in the rollout and adoption of vaccines throughout the first months of the year. Our patients are being vaccinated as we speak. We have made our own dialysis centers in several countries available for the direct vaccination of patients. At the March, the U. S. Government agreed to directly allocate COVID-nineteen vaccine to dialysis centers nationwide. Approximately sixty five percent of patients and forty seven percent of dialysis center staff have been at least partially vaccinated in The U. S. Market. On a global basis, about fifty one percent of Fresenius Medical Care's patients have received at least one vaccination. We are grateful that we can support health care systems by directly vaccinating our dialysis patients in our clinics. We have a wealth of experience in this area, as we routinely vaccinate our patients against influenza or hepatitis B. Each injection brings us closer to getting the pandemic under control. How did our business perform in the past year? Despite the challenging circumstances in 2020, we achieved our goals for the year. We want you, our shareholders, to participate in this success. This is why we are proposing a 12% rise in our dividend to 1.34 per share. This is now our twenty fourth consecutive dividend increase. In 2020, we generated revenue of €17,900,000,000 up 5% from 2019. Our net income rose by 12% before special items and at constant currency. This was thanks to significantly improved efficiency, reduced travel and meeting spend, and the very strong performance of our Products business. While our efforts in the fight against the coronavirus were supported by the U. S. Government in 2020, we do not expect significant financial state aid to come our way in 2021. We know that COVID-nineteen will continue to impact our business in the months ahead. The still high COVID-nineteen infection rates in several markets continue to impact our organic growth. Increasing excess mortality in the first half of this year leads to a lower utilization of our infrastructure and increased cost for personal protective equipment and personnel. This will have a negative impact on our earnings. Against this backdrop, 2021 will be a challenging year for us. As already published, we expect our revenue to grow in the low to mid single digit percentage range and net income to decline at a rate in the high teens to mid-20s, both before special items and at constant currency. With more progress in vaccinations, we continue to assume the start of a normalization of the mortality pattern in the second half of the year. At our Capital Markets Day in October 2020, we announced our intention to strengthen our future profitability through investments in our company. In February, we launched our FME25 program to achieve this goal and at the same time compensate for the negative earnings effect of the COVID-nineteen pandemic. In a rapidly changing environment, I believe that it is crucial for us as a company to become more agile, more capable of adapting faster. As CEO of Fresenius Medical Care, this is my responsibility towards our patients and employees. We intend to achieve this by transforming and adapting our operating model. I look forward to helping to shape this change and create an even better future for Fresenius Medical Care and its patients. We plan to invest up to €500,000,000 in this program in the coming years. By 2025, for each euro we invest, we expect to sustainably reduce our annual cost base by at least the same amount. This program supports our Strategy 2025, which takes us to our next topic. I am excited about our future. We see two opposing trends in health care. On the one hand, the pandemic has vastly accelerated the pace and scale of our industry's transformation. Lockdowns have shifted telehealth and digitalization into hyperdrive. We have spent years preparing for this development of Connected Health, which will pave the way for the next big leap forward in Renal Care. On the other hand, we are facing challenges in public health based on demographics. The global population is growing and so is the number of elderly and chronically ill people. By 02/1930, approximately one billion men and women will be 65 years of age or older. More than zero five billion will live with diabetes. And over two billion will suffer from hypertension. Our projections show that by 02/1930, more than six million patients will need regular dialysis, a 460% increase over the year February. This aging generation deserves high quality health care and will require it on an unprecedented scale. In many countries, health care expenditure has grown faster than GDP in recent decades, pushing systems to the limits of their financial capacity. This new wave of older patients with multiple chronic diseases threatens to overwhelm them. We need to do what seems impossible: improve care and reduce cost at the same time. This is what our Strategy 2025 is all about. At its core, it focuses on what we call the Renal Care Continuum. In other words, supporting our patients along their entire treatment path. To this end, we are developing new renal care models that use artificial intelligence to analyze the health data we collect from our patients. Mining that data will unlock the potential of precision medicine and allow us to make targeted decisions for each individual patient. These new care models also include personalized dialysis and holistic home treatment. In addition, we will continue investing in start ups and early stage companies to stay at the forefront of other renal care innovations that have the potential to disrupt our industry. We must treat our patients holistically along their complete treatment path in two ways: first, by getting involved earlier on to ensure that they stay healthy longer and slow their progression into end stage renal disease and secondly, by supporting our patients in getting a kidney transplant if necessary. How can we make sure that the superior care we intend to offer in the future remains affordable. The solution is value based care. This approach allows us to manage our patients' total cost of care, giving us a natural incentive to look for ways to reduce cost. Value based care models also measure and reward clinical performance, so better patient outcomes translate into financial improvements. This creates a virtuous cycle of continually increasing quality combined with decreasing cost. Two other very important elements also play a role in our Strategy 2025: Critical Care Solutions and complementary assets. We are planning to extend our portfolio of critical care solutions, which are a growing part of our service and products business and have been in great demand during this pandemic. The number of patients requiring continuous renal replacement therapy is set to rise to around one point six million by 02/1930. We will use our expertise in this area to treat acute heart and lung failure. Finally, we will consolidate our network of complementary assets through additional partnerships, investments and acquisitions to support the other two elements of our strategy. This will allow us to build an even more solid foundation for future growth to 2025 and beyond. We are very confident about the future of Fresenius Medical Care, even in a challenging year like the past one. We fully confirm our targets through 2025. As already published, we expect over the next five years an annual average increase in the mid single digit percentage range for revenue and in the upper single digit percentage range for net income, both before special items and at constant currency. We want to provide the best possible care for a growing number of patients. That is what we mean when we talk about sustainability. It is not just limited to our ecological footprint. We want to be successful in the long term and create lasting value in ecological, social and economic terms. Our global sustainability program is under my direct responsibility. Despite the challenges we faced in 2020, I am pleased to report that we made real progress towards achieving our goals. We approved global standards in areas like patient care and supplier management. We define new global sustainability performance indicators to measure and improve our impact. In addition to financial performance targets, at the last Annual General Meeting, you voted to include sustainability performance targets in management's compensation. They reflect our aspiration to be measured by our commitment to continuously improve. In conclusion, today we deliver our products to more than half of the world's dialysis patients and operate the leading and largest dialysis network worldwide. I want you to know that after twenty five years of success, we do not take our achievements for granted. We will not rest in our efforts to provide ever better services for our patients, payers and health care systems, while at the same time creating long term added value for you as shareholders in a sustainable way. A new leap in Renal Care is imminent. And with our innovative and dedicated team of more than 125,000 employees, for Xenius Medical Care is at the forefront of this progress. I thank Mr. Paulo for his very comprehensive and positive statements. Thank you very much, Rice. Ladies and gentlemen, I'm surely also acting on your behalf if I now very cordially thank the management board of Medical Care Management AG and all of the employees who are working around the world for Fresenius Medical Care for their very dedicated work. This explicitly also includes our thanks for the special performance, in this very difficult special situation of the world pandemic. I would now like to say goodbye to those people who are now watching our Annual General Meeting through our shareholders portal. As we announced this in our invitation, as of this point in time, only those people will be able to continue to follow the Annual General Meeting who have registered in the shareholders portal. I would like to thank the other spectators for their interest in our company and I wish you all the best. Goodbye.