Fresenius cancels dividend after state aid for clinics

Healthcare group - Fresenius cancels dividend after state aid for clinics

Shareholders of the healthcare group Fresenius will receive nothing in dividends for the current year. The Management Board has decided to withhold state energy subsidies of up to 300 million euros for its hospital subsidiary Helios and not to repay them, the DAX-listed company announced on Tuesday evening in Bad Homburg. This means that no dividends can be paid to shareholders and no bonuses can be paid to managers. The Supervisory Board is expected to approve the decision this Wednesday.

Fresenius had already received almost 160 million euros from the "energy relief package" from the German government by the end of September. This was intended to cushion the rise in energy prices in the wake of the war in Ukraine. With the acceptance of the money, a legal threshold was exceeded, which means that no bonuses may be paid to managers or dividends to shareholders for this year.

Fresenius CEO Michael Sen had already hinted at a dividend waiver at the beginning of November and announced a legal review. "Not all of our shareholders are dividend-oriented," Sen said at the time.

The company could also have repaid the energy subsidies, which would have cleared the way for a dividend payment. However, Fresenius wants to use the waiver of the dividend payment to reduce the high level of debt that the Group has accumulated following a series of takeovers and which is being squeezed by the rise in interest rates. A lot of money is at stake: analyst Sven Kürten from DZ Bank estimated the dividend remaining in the Group in 2023 at 516 million euros. The suspension of the dividend and the state aid support "the long-term strengthening of the company", explained Fresenius.

For the future, however, the crisis-stricken group, which is undergoing far-reaching restructuring, is sticking to its policy of increasing or at least constant dividends, it said. Fresenius considers the linking of energy subsidies to dividend and bonus payments to be unconstitutional and has announced that it will take legal action. Fresenius had distributed a dividend of 92 cents per share for 2022.

Announcement

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1. The decision by Fresenius to withhold dividends affects shareholders residing in Hesse, Germany.
2. Michael Sen, the CEO of Fresenius, had previously mentioned the possibility of waiving the dividend, citing diverse shareholder preferences.
3. The German Federal Government's "energy relief package" provided nearly 160 million euros to Fresenius, affecting their ability to distribute dividends and pay bonuses.
4. The healthcare group, Fresenius, could have opted to repay the energy subsidies but chose not to, prioritizing debt reduction instead.
5. Fresenius estimated a remaining divider of 516 million euros in 2023, which will not be distributed due to the cancellation.
6. The CEO of Fresenius, Michael Sen, disagrees with the link between energy subsidies and dividend payments, hinting at potential legal action.
7. The announcement of the canceled dividend aims to strengthen the company's long-term financial position amidst ongoing restructuring efforts.

Source: www.stern.de