Fresenius Medical ($FMS), the world's largest dialysis company, posted a 39% profit drop last quarter, pulling in $225 million as its costs swelled.
The company reported lower operating margins in the U.S. and abroad, blaming spiking personnel costs in America and the effects of a struggling Venezuelan Bolivar.
On the revenue side, however, Fresenius is still moving forward. Overall sales increased by 7% to $3.5 million last quarter, driven by an 8% increase in dialysis service revenue and a 2% rise in dialysis product revenue. But the tepid growth in product sales is largely due to Fresenius' U.S. trouble, as stateside device revenue dropped 2% to $183 million.
Despite all that, Fresenius is counting on a big revenue year, projecting sales of $14.6 billion, a 6% jump over 2012. The company expects annual profits between $1.1 billion and $1.2 billion, up to 15% growth, and Fresenius figures it'll spend about $300 million on acquisitions to expand its presence in the dialysis world.
"In a challenging, uncertain environment we delivered solid first-quarter results led by the continuous growth in our dialysis services business in North America," CEO Rice Powell said in a statement. "Also of note is that we are confident meeting our guidance range for the full year, although we are not completely satisfied with our growth internationally in the first quarter of 2013."
Fresenius will need to follow through on its growth plans if it wants to stay on top of its market. Baxter ($BAX), the second-largest dialysis outfit, has agreed to buy No. 3, Gambro AB, for about $4 billion in a deal expected to close this year. The acquisition will likely vault Baxter over Fresenius in market leadership unless the German company can expand its share.
- read the company's full results