* Dividend to rise faster
* Adjusted 2012 net income above expectations
* FMC's 2013 profit outlook more cautious than market view
* Fresenius and FMC shares rise as broader market falls
By Ludwig Burger
FRANKFURT, Feb 26 German healthcare group
Fresenius has beefed up its dividend payout policy on
the expectation that two of its key businesses will weather
difficult markets on both sides of the Atlantic.
The company said on Tuesday that it will pay a higher than
expected 2012 dividend and promised higher dividend growth rates
Its Kabi division, which makes generic infusion drugs and
gastric tube feeding supplies, is expected to benefit from the
introduction of products established in the United States to
emerging markets and Europe.
The group also forecasts growth for its separately listed
subsidiary Fresenius Medical Care (FMC), the world's
largest dialysis provider, on the increase in longevity, obesity
and diabetes - contributing factors to kidney failure - across
much of the world.
For this year, Fresenius said that FMC's net income will
rise only slightly because of austerity measures in the United
States, its biggest market.
However, analysts have said that FMC's focus on
life-threatening illness and its buying power with suppliers
means that it may take U.S. healthcare spending cuts in its
Shares in Fresenius and FMC were up 2.2 percent and 1.6
percent respectively at 1317 GMT, two of only three gainers in
Germany's blue-chip DAX index, which dropped 1.7
Fresenius said it will pay a dividend of 1.1 euros ($1.45)
per share for 2012, above the 1.07 euros average forecast in a
Reuters poll and up from 0.95 euros last year. It added that
future dividend growth would be in line with increases in
adjusted earnings per share (EPS).
Previously, the annual dividend grew only at about half the
rate of increases in adjusted EPS. This led to a gradual
deterioration of the payout ratio. At 21 percent in 2012, this
neared the bottom of its target range of 20-25 percent of
Adjusted net income in 2012 rose 22 percent to 938 million
euros, ahead of the average estimate of 930 million euros in a
FMC took a more cautious view than some analysts over the
expected hit from cutbacks in the U.S. healthcare sector.
The dialysis specialist, which competes with DaVita
HealthCare Partners and Baxter International,
predicted net income of between $1.1 billion and $1.2 billion
this year. The consensus forecast in a Reuters poll of 11 banks
and brokerages was $1.21 billion.
U.S. Congress, battling to rein in its budget deficit, is
debating various cutbacks at state-run health schemes, such as
Medicare, that account for about 30 percent of the German
The White House on Monday escalated a campaign to warn of
dire consequences if automatic government spending cuts go ahead
on March 1.
FMC said that it may lift the lower end of its earnings
target range if such cuts can be averted and Equinet Bank
analyst Konrad Lieder pointed out that the company has a history
of lifting its outlook as the year progresses.