Fresenius Medical Care AG (FMS) 2010 Q2 法說會逐字稿

Good day, and welcome to the Fresenius Medical Care Earnings Release Conference Call for the Second Quarter and First Half Earnings for the Year 2010. At this time, I'd like to turn the conference over to Mr. Maier. Please go ahead, sir.

Thank you, Brian. Good afternoon, good morning, everybody. I would like to welcome you to our second quarter and first half year results conference call. I'm joined today by Ben Lipps, our Chairman and CEO. Ben will address our strategic priorities and give us a general business update, and our Chief Financial Officer, Mike Brosnan, who will then discuss our second quarter and first half results in greater detail and address our growth outlook for the full-year. We will use slides for the presentation today, which have been posted on our website, and a link was sent to you separately by email.

I would like to remind you that our comments today will be governed by our Safe Harbor statement. So the course of our presentation today we make certain forward-looking statements and actual results could vary materially. We will use non-GAAP financial measures to help you to understand our underlying business performance, although the GAAP reconciliations are also provided in our investor news. So, with that, actually I would like to turn the call over to Ben. Ben, it's yours.

Thank you, Oliver. Ladies and gentlemen, let me extend a warm welcome to you, our board members and all of our employees and associates around the world who have joined us today on the internet. Oliver's pretty much covered the agenda, so let me start right in by turning to page four, or chart four. We're very pleased to report an excellent quarter. We're fully on track to meet our full-year guidance.

Now, before I start I'd like to thank all of the management board members and the employees who put much extra effort into our activities this quarter because we really had a very challenging quarter in a number of areas. But we accomplished all of our objectives, as you'll see, both strategically and in terms of short term objectively -- objectives. So, again, thank you very much for all that effort.

And at the same time now we turned in revenues of around US$2.95 billion for the quarter, a growth of 7% in both actual and constant currency. Mike will talk about the revenue -- the EBIT margin development. It was excellent. So, therefore, on the net income line we turned in a 12% growth or US$248 million for the quarter.

Turning now to page five, let's look a little bit at the revenue breakout by regions. We saw solid revenue growth in all the regions, especially in North America and Latin America, where the actual growth rate -- constant currency in Latin America -- in North America was 8%. Very, very good job.

North America turned in around US$2 billion, a little over US$2 billion in revenue. International had about US$920 million in revenue, at a constant currency growth of 5%. And again, Latin America grew at 8% constant currency, Asia-Pacific 5%, and Europe at 4% constant currency.

Turning now to page six, chart six, let's look at the half year. It's really pretty much -- pretty similar to what we saw for the first -- for the second quarter. North America turned in just short of US$4 billion in revenue, actual growth of 9%. International turned in US$1.8 billion in revenue, constant currency growth of 6%. Again, we saw Latin America turn in a growth rate of 9%, Europe 5% constant currency, and Asia-Pacific 7%.

Our organic growth was a little bit lower in international. Again, for a number -- for a couple three reasons. And we expect as we go through the back half of the year we expect to see a rebound in that area. And I'll talk a little more about that when we get into some of the other discussions of the service area and the products area. But by and large a very strong first half of the year. We turned in US$5.8 billion, a revenue growth of 9%, 8% in constant currency.

Turning now to page seven, let's look at the dialysis services on a global basis. We had very strong revenue growth globally. Our focus has been on growing the service business. We now treat over 200,000 patients on a worldwide basis. North America turned in an 8% growth in the second quarter, basically very, very strong, continued the momentum from first quarter. And I will talk a little bit more about the revenue per treatment. That was also quite reassuring.

If you look at international, we turned in a 9% constant currency growth in the dialysis services business, very strong. So, again, if you take a look at the entire -- the entire picture, then, for dialysis services, we had an 8% constant currency growth for the second quarter, basically treating about 202,000 patients.

Now, in this area we saw a 12% growth in Europe in constant currency in the dialysis services area. Again, pretty much following the focus that we've had during the past quarter and the past year. And so if you look at it from an overall basis, then, we had a very strong revenue growth in the dialysis services in the second quarter.

Turning now to chart eight, we'll look at it for the full half year. And again, for the full half year North America continued an excellent pace at a 10% growth. The dialysis care group and the group in North America are doing an outstanding job of growing their revenue. And you'll also see when Mike talks about it, we're also growing the EBIT margin. So very, very strong growth in the US over the first half. And they turned in about US$3.6 billion of revenue.

We had also equally strong growth in the international area, with a 9% constant currency growth. And so, again, we basically are staying in the range of the high single digit, low double digit growth, which gave us, then, a 10% constant currency growth in the dialysis services for the first half year 2010.

Now let me turn to chart nine. Clearly, I think you all recognize that we have a clear and absolute commitment to quality, both in the products and the services. And so let me take a couple of minutes and talk about what we're doing in the quality area. And again, this is sort of my standard chart. And we have some areas that we think we're essentially doing a very good job. We have some other areas that we'd like to do better as we can get some of the regulatory constraints off the table.

Now, first off, when it comes to the treatments we deliver, over 95% of the time we deliver the prescription therapy that the doctor orders. And that's both in North America and in Europe, Middle East and Africa, or EMEA. Therefore, you can see on the top line we're between 95% and 96%.

Looking now at the anemia management part of it, in North America we've been able to tighten our distribution and we now have about 68% of our patients between 10 and 12 gm/dl hemoglobin. We have not made the progress yet in the nutritional area that we'd like to, although we do expect and we see some early signs of that on a month-to-month basis by -- with our new program, where we're actually allowed to provide supplements to patients that are below 3.5. So I think you'll see that increase over the next year here in the nutritional area.

And of course in the binder area we're just now rolling out our PKM program and we hope to be able to improve that number. It is -- it is creeping up from the 52% to 55%. So, all in all, though, as you look at North America, we continue to improve our hospital days. We're now down below 10 days per year, which is really getting probably at the low end of what we can hope to do.

And so now let's turn to EMEA. And as you can see when it comes to albumin, our nutritional status, doing an outstanding job. And we're really pleased with that. And we're also doing a better job in terms of bone mineral metabolism. And I believe that probably relates to more and more acceptance of hemodiafiltration, which we're the leader of here in the industry. Again, the hospitalization days are in the 8.5 to 9.5 range, bouncing around. That's probably the best we're going to do around the world.

Now, the other good news, which is not on the chart but I'll tell you, is we keep track of our mortality. And of course everybody measures it differently. So we look at it just in our own way. And we now, the way we calculate it, we continue to see an improvement. Both Europe and North America are less than 15% mortality, which is excellent. And so we're very pleased that we're now getting down into the 14% to 15% mortality, even with about 50% diabetic patients in North America and 30% diabetics in Europe.

So, again, I think when it comes to quality, and the same way with products, that is our focus. And I believe that our customers and our employees and our patients really appreciate the effort we put on in that area. And we will continue to try to improve as we go forward.

Turning now to page ten, let's talk a little bit about some of the key metrics in the service business. Our organic revenue growth globally was 7%. Again, this mirrors the 7% we saw in North America, which is again quite outstanding. And we also saw same market growth 4.3%. And so both regions are growing between 4% and 4.5% same market growth. And we're quite pleased with that.

We do think that in certain areas there's a mix effect here in the international because as we buy into more established programs, countries that have more established programs, their rates will be lower. And so it really depends a little bit and as we go forward next year we'll probably break out really slightly different metric here. So you can see the organic growth on clinics that have been in our system for over a year. But at this point in time, that's the average and it's actually quite good.

Looking at revenue per treatment, what we've seen on revenue per treatment constant currency as Europe continues to accomplish the 2% growth in terms of constant currency revenue per treatment, which is really quite outstanding, considering the environment that we're operating in around the world economically. At the same time, we're about 17 out of 35 of our countries over the last 12 months has basically provided a revenue increase. And so we're still very optimistic that we will accomplish our goal in international over 2% constant currency increase.

And in North America we said between 2% and 4%. And I'll show you here the middle -- in a minute we're right in the middle of that range. So essentially, I think everything is pretty much as we had targeted for the year. Now, that's not without a lot of effort. But at the same time, it's nice to see that that effort pays off.

We've opened through the first six months of the year 45 de novos, 28 in the US and 17 international. The good news also is we only have 33 waiting for certification in North America, so that problem has pretty much, I think, dissipated and we're pretty much in real time, where we always have somewhere in the range of 30 to 35 clinics waiting for certification.

Turning now to page 11, or chart 11, let's look at the revenue per treatment in the US. If you look at versus our revenue per treatment Q2 of '09 to Q2 of '10, we had a 4% increase. And that was about 85% what we call reimbursement, or rate increases, and about 15% utilization. Now, the utilization was primarily IV iron, as we're trying to optimize -- some of our physicians are interested in optimizing anemia management with essentially looking at iron protocols.

But essentially it's been primarily rate increases. Q1 2010 to Q2 2010 were pretty flat, against -- up US$1, or a little less than US$1. And again, as we mentioned, this year, because of essentially our utilization is stable, has been for a couple of years, in terms of EPO and most of the drugs, we will see, then, essentially a 2% to 4% increase over the average of 2009. And then we're pretty much on that track if you look at it being in the US$355 to US$356 range. So that's our target to be within 2% to 4%. And if we stay in flat in this US$355 range, we'll be pretty much at 3% for the year, achieving our target.

Turning now to page 12, let's talk about the products side of the business, or segment of the business. If you look at chart 12, you'll see that our overall revenue growth was 5% in constant currency, and that includes sales to ourselves. And that's an important number because as we continue to expand, especially in the international area in terms of acquiring dialysis clinics, you'll find more and more of the sales become internal and they don't show up in your external sales, your external sales numbers.

However, our external sales were about -- were 3% growth in terms of constant currency. We're really pleased that North America bounced back to above market at 5%. We are seeing a little bit this quarter international was in the 2% range. And really, this comes from a couple of activities that we think will work their way through this year, and that as we look at the back half of the year, we expect to be in our normal growth range on products in the international.

We have a couple situations that essentially are ongoing, as we mentioned, because of the economic issues in international. There's been a tendency of some of our customers to continue to use our machines for a longer period of time, so therefore the machine sales have been soft. But that essentially works its way out after a while and we know that when they buy they'll buy our products.

We also had a pharmaceutical registration, or basically a restriction in Turkey, where we -- there has been a change in terms of how we can essentially sell our pharmaceuticals to -- so that our patients can essentially use them. And they find pharmacies that the patients have to go to and some of them we didn't have contracts with. So there is a regulation change, then, in Turkey on the pharmaceutical side, which has impacted our pharma business, again, on a temporary basis. We'll work our way through this as we go through the year.

And so those are the two areas that probably took away anywhere from 200 to 300 basis points in the international sales. And those are things that essentially where the guys are on top of them. And we expect that, as we said, the back half of the year we'll see an increase in the revenue for the service -- for the products area.

Turning to page 13, this is basically a look at the year. Not a whole lot to mention here on page 13. Again, we had a 4% external revenue growth constant currency. And again, as I mentioned, for the first quarter the US was focusing with the Liberty Cycler and with the IV iron internally. They've basically done a very good job of converting our clinics or the new patients coming in looking to use both our own Venofer and also there's been great acceptance of the Liberty Cycler for new patients coming on.

So that essentially basically averaged down the products growth in North America for the first half. And you see it's basically bouncing back the second quarter and the same thing I think we saw here on second quarter in international. So as we look forward, then, I think I've mentioned that we expect the products business to basically get back into the mid to high single digit.

Moving now to chart 14 and talking about the bundle, and again, I'm certainly not an expert on the bundle so I will only say a few words. But we felt that there was some progress. And I guess what FMC would like to do is we certainly would like to applaud the agency's hard work and diligence in creating a very thorough comprehensive final rule. And I think by and large they listened to the community. There was good dialog with the community.

A number of things were basically listened to and changed, such as the base treatment, delaying the Part D drugs and the lab tests. And again, I think the co-morbid case mix was good, to shrink that down in terms of basically administrative. But there is one area that, quite frankly, we still don't believe that we're particularly pleased about it.

And that, of course, is the transition adjustment. And it's not that we haven't had good dialog. We just don't quite understand exactly how this is going to be -- or how it was calculated and how it's essentially -- why it's applied in the way it is. But we do have a good dialog with CMS and they've agreed to look at this again in 2012, if not before. But it's really the one area that I think is not what Congress intended. The 2% haircut is in there, but I don't think any of us were looking at an additional haircut due to transition adjuster, at least if we went in the bundle 100%.

So, at that point in time, really, I think, a very good dialog. Everybody knows they're out. We're all now basically working on how we move forward. And I think to give you some idea, again, we'll talk about this on our Capital Markets Day third quarter. Reece Powell, CEO of North America, will give you basically a much better tutorial on what he's going to do and his team's going to do.

But I want to say that there's sort of three areas that we're focusing on and have been all year. One of them is the -- basically the quality performance. We have been focusing, like I said, on tightening up our EPO distribution. And we think we're better than national average in terms of sub 10. And we're really pleased with that.

We've also had a program that's been underway now for almost two years on the Right Start and Right Return, where we essentially have improved the mortality significantly in the first 120 days. We think that's going to be beneficial to both the patients and to the reimbursement.

And finally, the hypo responders, we've been looking at that pretty intently. And we find that, really, nutrition, infections and optimum IV iron therapy have some benefits in essentially mitigating some of the hypo responders. Now, again, we define hypo responders as sub 10. I know there's other definitions, but that's sort of what -- where we are at this point.

Now, turning to chart 15, let's talk about some of the international expansion. I won't spend too much time on that, but I want to mention that at the same time we've seen some real nice opportunities to expand our service business and our products business. We closed at the beginning of Q3 the acquisition of Asia Renal Care. It adds about 100 clinics to our operation and about 6,000 patients. And the annual revenue is in the US$80 million range. So we're very pleased.

But more than that, it gives us a stronger position in about seven different countries in Asia-Pacific where we would like to build up our presence to where we're a true partner with the -- with the government payers so that we can essentially support their programs and do the best we can for their -- for basically the patients and also their reimbursement.

We've also essentially expanded our products business in Korea by taking over the Nikkiso hemodialysis business in Korea. At the same time, we formed a partnership with Nikkiso in Japan because they have a very strong machine base in Japan. We have a very good disposable base. And as Japan is now going to open up with respect to service, we really need to have a strong partner in Japan. And it makes more sense for us to work with Nikkiso than anyone else. So we're pleased and I think that was announced right at the end of the year.

And finally, we've expanded our business in Russia. We see this as a -- certain regions of Russia are quite attractive with respect to their commitment to dialysis. And so we've essentially expanded our business in certain regions in Russia.

Moving now to my last chart, which is 16, again, I think we've talked about the quality and I've hit a little bit on the service quality. But again, it's something that we live by every day and I think everybody knows that. We continue to see good quality in terms of products and service.

We have increased our R&D budget this year, essentially in the products area. And we've got a number of new products that are -- will be introduced in the back half of the year. Again, a new machine in North America and also new machines in international. And I won't bore you with all the products, but at this time we do expect to see those products into the market at the back half of the year.

Mike will talk about the -- basically operating performance. So let me finish by saying we're really pleased with the second quarter and the first quarter. We do reiterate our guidance for the year. It's certainly not going to be easy. But at the same time we're very comfortable where we are mid year. So I think at this point, Oliver, I'll -- let me turn it over to Mike to go into the details.

Alright, thank you, Ben. And let me extend my welcome to Ben's for all the participants in the call today. I'm going to page 18, or chart 18 in the materials that were distributed. Ben reviewed the details of our top line performance with you and I won't repeat that again here, other than to simply say you can see, at US$2.9 billion, very strong performance on the top line with 7% constant currency growth and 6% organic growth.

That top line was transformed by our employees around the world to an even stronger operating performance for the quarter, with our earnings before interest and taxes growing 11% to US$465 million.

Our margin improved for the quarter from 15.1% last year to 15.8% currently, which represents about a 70 basis point improvement. I will add a little bit more color to the operating margins in a few minutes on a separate chart.

Continuing to move through the P&L, you can see that our net interest expense continues to run favorably year-over-year. And this is largely due to the low levels of Libor and Euribor rates that we continue to enjoy. Our interest expense is essentially flat for the first quarter of 2010.

Moving to the tax expense line for the quarter, you can see that the reported effective tax rate shows some variability. And this is due to two specific valuation decisions we've taken in each of the quarters. And I'll take a minute to explain that so that you get a better sense of what our underlying effective tax rate is on our operations.

First, you may recall last year we had a tax claim in litigation. And we've reported in the second quarter that we -- after a careful review of the facts in the second quarter of 2009, we made the determination that we could improve the overall valuation of that tax case. If you separate that favorable impact in our second quarter of 2009, you would see that the underlying effective tax rate was about 35% last year.

In 2010 we were able to look at some additional tax assets and put some structures in place in the second quarter that will allow us to realize those benefits over the next several years. Consequently, we were able to recognize the full value of those benefits in the second quarter.

Separating that valuation determination from our underlying operations would also indicate that the guidance that we provided you for 2010 of an effective tax rate between 34.5% and 35.5% is still the appropriate range with regard to tax on our operations for the year. Our performance in the quarter led to a net income of US$248 million, a 12% double digit increase over the comparable period for the prior year.

Moving to chart 19, to just spend a few minutes on our first half results, again, you can see very strong top line performance at US$5.8 billion. That represents 8% growth on a constant currency basis and 7% growth organically. Again, this was transformed by our employees to 9% growth in earnings before interest and taxes, or just under US$900 million, US$888 million to be precise.

Our EBIT margins for the first half of 2010 are 15.2%. And on the surface that shows about a 10% -- excuse me, a 10 basis point reduction over the prior year. I would just like to remind you that in the first quarter we recognized the effects of the devaluation of the Venezuelan bolivar. And the onetime effects of this event reduces our reported margin for the first half by about 20 basis points.

We also indicated in our guidance for the year that our reported EBIT margins would be around 15.6%, or roughly flat with 2009. Finishing the first half, we continue to believe that this will be the case for fiscal 2010, EBIT margin around 15.6%.

Our tax expense and the underlying effective rate is consistent with the discussion that I just went through for the second quarter. And all of this produced an overall result for the first half of the year of net income of US$459 million, or about a 10% improvement on a year-over-year basis.

Moving to page 20 and our operating margin development, you can see for the second quarter, again, the 15.8% margin and the 70 basis point improvement in our global business. In addition, both of our operating segments delivered margin improvements, with North America growing 40 basis points and international improving 150 basis points.

In North America, the expansion is the result of the 4% improvement in revenue per treatment that Ben's already commented on, along with the increases in our operating expenses that are consistent with the guidance that we provided you at the beginning of the year of operating expense increases of roughly 2% to 3% for fiscal 2010. On the international side of our business, our top line improvements were coupled with additional leverage in our operating expenses and some favorable foreign exchange to produce 150 basis point improvement.

Moving to page 21 and the start of our discussion of cash flows, we always like to start with our receivables management around the world. And again, we had an excellent quarter for cash collections, with a one-day improvement in our global business to 71 days, as you can see on the chart.

North America continues to demonstrate the results of hard work and good process controls by reducing DSO an additional day for a record 51 days for that region of the world. And international has crept up a little bit in a very difficult environment to 113 days. We continue to collect the amounts due in these markets. It's just a little bit slower than our recent history would indicate.

Moving to page 22, showing the cash flow performance for the second quarter, again, we had very strong cash flows. And you can see that our cash flow from operations came in at about 10% of revenues. This is consistent with our guidance and represents more of our ongoing historical trend. We have had some periods of time in the past where because of the dramatic reduction of our DSOs we were showing 11% and, in fact, 12%. But the 10% you're seeing here is consistent with what we indicated our performance would be for 2010.

Our capital expenditures are a little on the lighter side, coming in at about 4% of revenue. And traditionally we've run about 5%. And our mix is about 60%/40% in terms of maintenance and expansion capital. As a result of this, our free cash flow is coming in at about 6% of revenue, with a 23% increase year-over-year.

Acquisition spending at US$68 million is a little lighter than the first quarter's US$82 million, but we continue to be opportunistic in this area. And the spending for the quarter and the half, as Ben indicated, is a little bit ,pre heavily weighted towards the international side of the business this fiscal year.

Moving to page 23, with first half results in terms of cash flows, operating cash flows are at 11%. CapEx is consistent with Q2, a little bit lighter than the norm, just under 4%. Free cash flow shows US$127 million improvement and a very strong 7% of revenues. Our acquisitions on a year-to-date basis at US$150 million are consistent in terms of mix with the second quarter.

Turning to page 24 and just spending a few minutes on our debt and our -- the overall health of our balance sheet, our debt did increase slightly in the quarter to US$5.8 billion. This is not unusual for us, as seasonally we typically pay our dividends to shareholders in the second quarter. And that usually results in a slight up-tick to our overall debt.

Our leverage ratio is flat with yearend at 2.46 times. And that's consistent with our guidance for the year of less than 2.5 times. We did have our annual reviews with rating agencies. And as you may know, Standard & Poor's and Fitch upgraded us from double B stable to double B with a positive outlook. And Moody's maintained our Ba1 rating with a stable outlook.

Lastly, we indicated in our prior calls with you that we planned to extend the credit agreement. We will do that extension of our term loan A and our revolver in the third quarter. We anticipate a closing in late September. We also indicated previously that we would address our remaining 2011 maturities in late 2010 or very early in the first quarter of 2011. We continue to believe that that's the right timing for the Company, and we anticipate no problem in achieving these capital market objectives.

Turning to my last slide on page 25 with regard to our outlook for 2010, I've provided you with some comments during the presentation with regard to the details. But we would like to reaffirm our guidance for the year, with revenues greater than US$12 billion, net income in the range of US$950 million to US$980 million, leverage ratio of less than 2.5 times, capital expenditures in the range of US$550 million to US$650 million. Frankly, with the results I just reported, it would probably be on the lower end of that range.

And we are increasing our guidance with regard to acquisitions. We had previously told you that we would spend up to US$400 million. We now believe that it's appropriate to increase that to an amount of up to US$500 million, or increase the envelope by approximately US$100 million.

I stated before that our EBIT margin guidance is flat with 2009. I would expect our guidance on interest rates -- our guidance on interest rates would be less than 5.5%, inclusive of the transactions we anticipate in the back half of the year. With that, thank you for your attention and I'll turn the call back to Oliver to open it up for questions.

Great. Thank you, Mike, thank you, Ben, for the presentations. I think we can now open up the lines for questions, Brian.

Thank you, sir. (Operator Instructions). We will take our first question from Mr. Kevin Ellich of RBC Capital Markets. Please go ahead.

Good morning. Thanks for taking the call. Nice quarter. Ben, I was wondering if you could provide us a quick update on your thoughts on bundling. And have you guys started to change your pharma utilization trends yet?

Kevin, no. We've certainly been looking at some alternatives, not knowing exactly where the quality incentives or disincentives would land. And so we have started some programs and now we will probably accelerate them during the back half of the year in terms of trying to essentially look at optimization here.

Okay. That makes sense. Sorry to hop around here, but just wondering on the acquisition front, you guys updated the guidance spend to up to US$500 million. I thought I saw something this morning about Gambro's peritoneal dialysis business. By any chance did you guys buy that?

No comment at this point. Send us the note.

Got you.

Okay?

Okay. And then going back to bundling, I think I saw some quotes from you from Reuters, Ben, talking about how you think it's going to be a positive. What was better than expected in the final reg versus -- we know the 3.1% was a little disappointing. Where do you think you can really optimize treatment modalities and drive cost savings?

Kevin, I think it's just a little early to essentially give you some clarity on that. But I think if we step back and they asked me on Reuters. From the dialysis industry standpoint, the real positive for us is we get an automatic update starting in '12. And that's been something that we've been basically remiss in not having.

Secondly, if you look at some of the quality incentives now and some of the latitudes that we'll have to actually provide better care in a situation where we can innovate and do some of these things, we think it's going to be good for both the patients and for ourselves.

So long term, this looks like -- I still believe it's going to be positive for all three of us, the payers and the patients and ourselves. Clearly, the transition deduct is a -- is sort of a negative at this point. But I'm assuming, based on the good working relationship between the industry and CMS, that by 2012 we'll get that behind us. So when I talk long term, I'm really looking at '12 and beyond. But --

Okay.

-- no more clarity than that at this point. We just -- it's only been out a week and we're busy. I haven't even gotten through all 900 pages. So still working --

I understand.

I'm at 400, so I still have 500 to go. So we'll --

Okay.

We'll give more in the next couple of months. We should be able to look at this pretty carefully.

Okay. That's helpful. And then thinking about the acquisition activity you guys have done this year, looking at Asia and Russia, should we assume that's where you want to continue to focus your attention or other geographies that you want to expand into?

Well, we're a little bit -- I don't mean to -- we're a little bit opportunistic and that is that outside the US, we basically operate in about 30 -- 35 or 36 countries. And within those countries we try to operate in a payer region. And so in each of those regions, whatever is -- becomes available that is attractively priced and good programs, good physicians, we will expand and purchase it because we'd like to build up our presence in each of those areas to enough that we're clearly a partner with the payer.

So we basically just have our radar screen and our map and whatever comes up in those areas, we'll pick up. With the economic crisis being what it is around the world, we would expect more activity the back half of the year. And I think you'll probably see that. But it's not major acquisitions. These are basically kind of like five to seven clinics at a time.

Got you. I appreciate that. Thank you.

Thank you. We will now move to our next question from Andreas Dirnagl of Stephens Inc. Please go ahead, sir.

Yes, good morning. Ben, just to sort of follow-up on what Kevin was asking, you commented that pharma utilization is up, especially year-over-year. But I guess within that increase in pharma utilization you are seeing a decrease in EPO utilization due to a tighter control of iron. Is that correct?

No. Basically I went back and looked at that. Were basically seeing a tighter control, which means that we've got more in the 10 to 12 and our EPO utilization has really been pretty flat from 2007 through 2010. So this is -- just what are the influences on the -- below 10? I'm calling those non-responders or hypo responders. So we're just -- we're just trying to optimize our distribution and have as many below -- as few below 10 and a few above 12. So that's really all we're doing at this point.

Okay. And sort of maybe a little bit of a preview to the sort of the analyst and investor day that's coming up, but in terms of what you were talking about with Kevin, I guess that would be kind of the goal here, wouldn't it, though, I mean as we move into the bundle is to find ways to reduce utilization of EPO, probably through tighter controls of other areas in order to not have an impact on quality.

Yes, that's certainly what I think everybody has been discussing. And we clearly -- the quality standards are out now, so we clearly know what we're dealing with. So the question is how do you tighten the -- how do you tighten the distribution. And basically there's a number of things you can do to do that. But that, again, we'll give you more flavor in a couple of months, but that's down the path that we're on right now.

Okay, great. And then finally on the transition adjustment, that 3% or 3.1%, both you and DaVita have been pretty vocal over the past two days that that's still something that you have sort of a fundamental disagreement perhaps with CMS on.

Is it correct in thinking that one of the ways that you guys see this as being incorrect is that their estimate of the percentage of clinics that are going to opt into the bundle is too low because that is the generator of that 3%. If that number were higher, then the transition adjustment would obviously have to be lower. So am I thinking about that in a correct way?

Very much so. And I think the issue for myself and I think for anyone is that we all have to declare when we go in what we're going to do by November 1st, I believe it is. And so it feels like a real penalty to a group that declares to go in 100%, to then have the transition adjuster apply to them. So I'm just having a hard time understanding the logic of why we would have a transition adjuster if we basically agreed to go in 100%. And that should all be known in time for somebody to calculate it for '11. But I'm sure there's more behind it than just my simple analysis, okay.

Okay. And I really didn't mean to sort of state this as what could potentially be seen as kind of to trap you into a question, but if that's the case, then basically isn't what you and DaVita are saying, that you expect to see a higher percentage of the clinics opt in? And given that you two control two-thirds of the US market, we have to make the assumption that a large majority of both of your clinics are very likely to opt in, then, as of January 1st.

Yes, that would be the math. And I think people have calculated it looking at anywhere from 37% to 75%. So that's exactly right. And again, my position, and I haven't really -- we haven't discussed this too much with anyone, but it's -- because I felt that at the end of the day they'll still come to a fair assessment. Which means once you know what's going to happen, if there's an honest transition adjuster, then it should be applied. But it should not be applied in a fashion where you get penalized twice.

Sure. And then I guess finally on this topic would be would you have an expectation that if CMS were to sort of review this in 2012, is there an expectation that you guys -- the industry could get some money back from that, or is it just an expectation that they would reduce the 3% to some lower level or eliminate it altogether?

You're way ahead of me on that. I just was encouraged by the fact that they said they would review it because our relationship with them is such that it's a very good working relationship. So we appreciated their comments that they would review it. Now, what they do after the review, honestly, I'd be only speculating. But I am pleased that they said they would review it.

Okay, great. Thank you very much, Ben.

Thank you. Our next question will come from Mr. Tom Jones of Berenberg. Please go ahead, sir.

Good afternoon. I've got a couple of questions, one for Ben and one for Mike and one for I'm not sure who. Ben, I was just intrigued by your comment you made on Japan. You made it very briefly, talking about potentially opening up from a service standpoint. As a company with lots of capital and fewer places than you might like to put it, I wondered if you could give us some more color on what your plans from the service side are for Japan.

Second question probably for Mike on payer swaps, the -- you've got quite a sizeable amount of payer swaps still outstanding, from what I understand. I just wonder what happens to those if and when you come around to refinance your term loans, whether you need to do something with those as well or whether they'll continue to be a little bit of a drag on your interest charge.

And the third question, CMS produced a fairly detailed impact file after they produced a proposed bundle rule. Do you know either if they have or they intend to publish a similar XL file with the impact by facility for the final rule? I can't get a straight answer out of CMS at the moment.

Okay. I probably can't give you -- I'll take the last one, Tom. I certainly have heard that that is their intention. But, honestly, that's really just talking with our guys. So the feeling is that that probably will be done, but we don't have any assurance that it will at this point or when. Does that -- so that's kind of -- I think we're getting the same answer you have. It's a little early to get the right answer there.

Do you think -- well, it would seem perverse to put it out after the 1st of November. Do you think that that should be sort of the line in the sand by when -- some point before that they should at least get it done so the providers can work through CMS's math on a clinic by clinic basis?

I believe they will do that. Again, it's a very extensive rule. They've been working pretty hard at it. And we've all had a lot of dialog. So I think it's probably their goal. But I have no inside information that would say that's the case. But they've been pretty -- they've been pretty upfront with us, I think, through this whole process.

Now, to Japan, basically Nikkiso has a very strong machine position in Japan. And we've got -- we've got a pretty good dialyzer position with production. So we just decided that rather than spend a lot of money and try to bring our machines to Japan that it may be in the best interests of our Company to find someone to work with there.

And we believe that the service area is going to open up. And, therefore, we would like to have a partner in Japan that we're working with in the products area who has distribution systems, extensive distribution systems so we can essentially effectively move into the service business over the next five years. So that's really the decision we made is to focus on the service business in Japan rather than try to insert our machines into Japan. Okay?

So it's kind of a medium and long term thing, the service business opening in Japan, and it's not -- there's nothing changed on that front in terms of when you expect --

No, no, nothing. We just did -- it makes more sense for us to essentially find a partner now, be working with them, and essentially get prepared for the service side in Japan.

Great.

Okay.

Tom, just coming back to your question for me, the payer swaps, you're talking about the interest rate swaps?

Yes.

Yes, that's what I thought. The -- those swaps essentially come due in 2011. And at the time that we put those in place we did not hedge the entire variable rate portfolio. So we will be able to extend the term loan A and the revolver without having any effect or an overhang in terms of those swaps because we do have the term loan B that will continue to be outstanding through 2012 and early 2013. And the swaps that we do have on the books will apply to those once we refinance.

Okay, perfect.

Thank you, Tom.

Thanks.

Thanks, Tom.

Thank you. Our next question comes from Lisa Clive of Sanford Bernstein. Please go ahead.

Good afternoon. A question on private payers. Yesterday evening DaVita mentioned they had recently signed two long term contracts with large payers, both of which were on a bundled basis. What sort of progress have you made on this front and are you happy with the proportion of your private payers that are bundled? And how do you expect that to change over the next 12 months or so? I guess I'll start with that question.

Yes, I think we mentioned last year, as DaVita has also mentioned, that there's been a movement towards the payers requesting the bundles in the commercial side. And we think it's good for them. It's certainly good for us because they're longer term contracts with certain escalators.

And so I think this is continuing and probably gaining momentum, but I can't tell you exactly what percent it is and I can't tell you that will apply to every commercial payer over the next -- the next couple of years. But it's definitely increasing and will probably continue to increase throughout most of '10 and into '11.

Okay. And then another question. Given the increase in your expected acquisitions, you obviously have some opportunities outside of the US. But do you think we could potentially see a small wave of consolidation over the next maybe 6 to 12 months given the sort of challenges and uncertainties that bundled pricing may bring up for the smaller clinics?

Well, I think I've commented on this in the past. We really think that the US has a very stable ownership situation and that is where you have two companies, DaVita and ourselves, I believe are quite respectful in this field and we're certainly always driving for quality. And we have the size to where we can afford to spend some money to do things for quality. And then we like to provide those to other smaller payers -- or smaller providers.

So I think at this point in time, FMC is probably not going to be too active in purchasing other clinics because we think it's healthy for the industry to have independent clinics. But we'll do everything we can to make sure that they're financially sound by selling them whatever services they need as we analyze the bundle, as I'm sure DaVita will, too. So at this point in time, I think that's FMC's program as far as acquisitions. And most of our acquisition money is focused outside the US.

Great. And then one last question. Given the focus on bundled pricing, topics such as disease management have really sort of slipped into the background, for obvious reasons. With the accountable care framework and -- that was passed in health reform, what would Medicare really have to do to enable you to meaningfully expand your disease management offering? And do you have any ideas of a sort of longer term timeline?

Well, I think maybe as far as the analysts are concerned, it might have slipped into the background. But honestly, within both DaVita and ourselves, this has been very much an active project because I think both companies have been quite -- as well as CMS, have been quite pleased with the results of our demonstration projects. So we've been -- we've been actively working with the industry to try to get a accountable care pilot under this new innovation pilot program, but that hasn't happened yet.

But I think there is a lot of activity going on. We're all very pleased with the results and we think the patients were, too. So, yes, it's still -- we're still trying to move it to the next step, which would be a large pilot. But it would have to be supported by the industry. It ought to be an industry type project.

Great. Thanks a lot.

Thank you, Lisa.

Thank you. We will now move to Morgan Stanley and Mr. Michael Jungling for your next question. Please go ahead, sir.

Great, thank you. Thank you for taking these questions. I have three. Firstly, on the bundle, Ben, as you progress to the bundle from 1 January 2011, did I understand correctly that the drug paradigms you will adjust for the second half, meaning that we may see a slight reduction in the revenue per treatment in the US, but for the benefit of 2011.

Question number two is on your international dialysis care business. Can you comment as to why we're seeing that the constant currency revenue per treatment continues to decline? If you look at 2008 revenue per treatment constant currency was up 8%, 2009 up 4%, in the second quarter we're down now to 0.5%. What is causing that trend?

And then the last question is for Venofer. Can you grow that product line in the US in 2011 in light of a positive impact from the bundle, but also a competitive threats and pressures from [Fareham]? Thank you.

Okay. I'm trying to -- let me go to the international one first, Venofer and then we'll talk, I think, about the revenue per treatment. Basically, remember we moved into the bundle in Portugal where we have a significant market share of the provider business and that's escalated the revenue per treatment into the 8%, I think 6% to 8% range, which was -- which was really a 12 to 18 month type of situation. So that's not the rate that you would look at on an ongoing basis.

Our target is 2% in terms of constant currency growth. And basically we're a little light the first half. We're about 1%. But Europe is running at about 2%. And again, it -- what works for us is if we don't quite get to 2%, that means that the inflation is not as high, so our costs are not as high as inflationary costs.

So it's really sort of a balance situation where we still have the profitability, as you can see, from second quarter. So it really depends on the inflationary drivers in the international. Except for when we can roll in a country bundle by bundle -- rolling in a bundle. So I think you're going to be looking at somewhere around 2% as the ongoing number.

In terms of Venofer, again, we've got a number of programs going. It's a very safe drug. We think there's certainly ways in which you can optimize its use. And yes, get performance increases in terms of your anemia output -- or your anemia outcomes. And so we have a number of programs that we will be talking about during the back half of the year.

And essentially one of them has already been approved by FDA. And this is a Venofer pump that has a particular algorithm because we believe that you should be giving smaller doses or a consistent dose, maintenance dose, and essentially move the TSATs and various things around.

So we've got a lot of programs now that are coming into play the back half of the year with Venofer, because we think it's safe to do this, it's got such a great safety record. And I think on the flip side of that, the fact that we will be offering different doses and different algorithms and so on and so forth. That is something that we believe is better than having a large dose once a month, okay? So that's why we got into this two or three years ago.

The third question, you talked about the revenue per treatment the back half. I don't know right now from where I sit that we -- anything we do during the back half of the year would necessarily reduce the revenue per treatment. We said it would be pretty flat for the year. Most of the things that we're doing now, we're getting our algorithms together. We're looking at going to the medical advisory boards.

But I don't think anything there is going to -- essentially a small bout of utilization that we're talking about is going to influence the revenue per treatment. It's driven pretty much by the contracting. So at this point, don't know that I -- that we plan to see that drop significantly in the back half, but I'll have to look at that a little more carefully in terms of how fast we accelerate some of these programs.

Great. Thanks, Ben.

Thanks Mike.

We now have our next question from Ilan Chaitowitz of Redburn Partners. Please go ahead, sir.

Hi. This is Ilan Chaitowitz from Redburn Partners. Thanks for taking the questions. Just on the private payer side, can you please give us any insight into any changes you've been having in your patient mix of private payers over the last six months and any changes you might anticipate over the next six months, particularly in the light of DaVita's comments last night?

And on a similar vein, can you talk to how your ability to drive through price increases with your private payers is proceeding, if that's some -- if you're finding that tougher or if the situation is unchanged? And the final question relates to a comment that you made in your Q2 report about being vertically integrated. And I was just wondering if the new product launches that you're talking about later in this year, if that is on the machine side or the dialyzer side or both and if those are being specifically geared towards helping extract efficiencies on the services side 2011 and onwards.

Yes, let me take the last one first. Absolutely we're looking forward to basically introducing some capability in the machines. And our new T machine in the US is -- essentially has complete computer interface for algorithm downloads and things like this because essentially we have to find ways to provide the same output -- or the same outcomes with less cost. And so one of the areas is have the machine basically do more. So you'll see that at ASN as we go through.

Now, as far as private pay, I think I'd get my arm broken if I said anything other than that. It's always difficult in the private pay field and our Group, as well as the DaVita group, I think is probably working every day. But when you get to a bundled contract, you have a much tighter relationship with the payer and that is you have a multiyear contract and you have some sort of escalator.

So everybody's sort of a little bit closer in terms -- or at least there's less worry I'll be back at the table next year. So I think from that standpoint, more bundling we have, the better the industry is in terms of private pay. Now, as far as the commercial mix discussion, quite frankly we have continued to see -- depends on -- you can look at it as true commercial or you can look at it as commercial plus VA plus Medicare Advantage. We've seen that continue to creep up over the last couple three years.

And we believe that we are probably -- as an industry have gotten through where we expect to see unemployment come down. So probably we're at a point where this is going to be less of a problem a year from now than it is today. But we've been able to manage it. Now, with a lot of effort, just like everybody else, make sure they don't lose their insurance if they have it. So at that point, this is kind of where we are.

Thank you very much.

Thank you, Ilan.

Thank you. Our next question comes from Stephan Gasteyger of Jefferies. Please go ahead, sir.

Hello, and thank you for taking my question. I have a quick one, please, on bad debt trends. You mentioned the improvement in that in the international field, and I was wondering if you could give us some more color on geographies. I was wondering if -- how this looks like in Europe and southern Europe in particular, considering the ongoing tough economic situation, if you see an improvement there as well or if you would rather see deterioration. Thank you very much.

Yes, Stephan, I'll take that. I think that we are seeing -- the improvement that we mentioned is largely coming from Europe. We appreciate that there's a lot of stress in Europe right now with the sovereigns. But frankly, because we're in the healthcare field and in particular providing a service in the healthcare field, we see that the bills are being paid and we're not experiencing some of the cuts that other parts of the healthcare food chain are seeing today.

So, overall, we are seeing bad debt improvements in -- improvements in bad debt ratios in Europe. I think the situation in the US is stable. And I think it's stable in the Asian market at this point in time.

Thank you very much.

Thank you. We have the next question from Mr. Martin Wales of UBS. Please go ahead, sir.

Thank you. Firstly, could you talk a little bit about what you saw in terms of revenues from your drug sales in the first half of the year and what trends you're seeing there? And secondly, perhaps -- I note that in the bundling documents are suggesting that smaller players should look to form some form of group [personally] organizations. Is there any business opportunity for you there to take advantage of what you're already doing?

Let me try to take the first one and then the second one I got to tell you we haven't done that much thinking about how we approach the question of buying groups.

Now, the pharma sales are primarily in the US driven by essentially Venofer. We continue to see that grow. The utilization has increased per patient. And we're about 75% market share on Venofer in the US. And externally, as I mentioned earlier, we had a setback in Turkey because the pharmacy regulations changed where we couldn't really provide the pharmaceutical products to our patients, and we have a very large patient base in Turkey. And so we're in the process of adjusting to that. So internationally they're down a little bit and in the US they continue to grow, both internally and externally.

As far as the buying groups, we haven't -- I don't think I've really reviewed that close enough with Reece and the group in the US. But that's certainly something that we'll probably look at. A number of options that we're looking at here over the next two to four months.

Okay. Thank you very much.

Thank you. Our next question comes from Invesco, [Ms. Ann Wireheim]. Please go ahead.

Hi. Most of my questions have been answered. First I guess just one clarification on what you were saying with a commercial patient mix. You said that you were seeing it increase over the past three years. Is that correct?

I think it was over the last couple of years we've seen slight increases.

Okay. And then --.

And --.

Oh, go ahead.

I don't know that we've shared -- we've shared data back and forth. I don't really know where the other groups are. So it depends on kind of what base you're coming from, okay, and --.

Okay. Do --?

-- this point in time. But we've not seen a decline at all.

Okay. And when you talk about commercial, you said that you do include VA in there?

Well, we sort of -- it's kind of like a definition mortality. I always consider commercial anything that was non-Medicare/Medicaid. And clearly, we do consider the VA as a commercial payer. We negotiate with them. So right now there are sort of two groups of commercial. One of them is what you would call true commercial or pure commercial. Then the other one would be Medicare Advantage, VA and essentially the true commercial. So we look at both of those.

Okay. And then just on the VA front, I know DaVita had mentioned that they had reached kind of a compromise with them as far as rate decreases going forward. Have you reached a similar agreement or are you still in negotiations with them?

Well, again, I'm not privy to the discussion. I didn't get a chance late last night to listen to it. But I think that basically the VA and their drive towards reducing the Medicare rates is probably not feasible when you look at we taking on that particular pricing as an industry, okay. So I think everybody has stepped back from it. And yes, we're negotiating with them and I sort -- I guess if that's the case that DaVita said that, that's the case. So, yes, we're all working with them, but other than that, I don't know. I can't tell you any more than that.

Okay. And then one last housekeeping item. What was your revolver availability at the end of the period?

Okay --

We'll look it up for you.

Great.

I'll come back and answer that question in a minute.

Thanks.

Thank you. We now have a follow-up question from Lisa Clive of Sanford Bernstein. Please go ahead.

Hi. One last question. In reading the bundled pricing final rule, there seemed to be a lot of concern that some patients may end up bearing higher out-of-pocket expenses under bundled pricing. Do you see this as an issue and will you be taking any particular steps to further manage bad debt expenses in the US?

We've briefly touched on that and I think it just depends on how the -- basically how the Medicare/Medicaid providers, how we get reimbursed through that system. So at this point in time, it's certainly something everyone is aware of, but I don't have any more insight than that.

Okay, thanks.

We now have our next question from Mr. Justin Lake of UBS. Please go ahead, sir.

Thanks. Just one question here and I wanted to follow-up. I know a lot of questions have been asked about payer mix, but just wanted to drill down. You talked about true commercial, which I think is what we're all trying to get an apples-to-apples number on. Are you saying specifically that that true commercial payer mix, the [ex] VA and Medicare Advantage, has been flat over the last, let's say, four to six quarters as the economy's declined?

Actually, it has been flat to slightly up, so without saying any more than that. I also have been informed here that we do have an agreement with the VA. So we have that one covered also. Then again, slightly up.

Okay. And when you -- when you think about that versus what your largest peer in the United States, DaVita, is saying about their payer mix, is there anything that you can tell us that might help us reconcile between those two?

(Music Playing)

Hello?

Hello?

Great. We just got cut off. I --.

Was it something I said?

No. I think it depends a little bit of where you're coming from, and that is that, quite frankly, maybe DaVita was a little higher than we were. So, at the end of the day, my guess is we're all in about the same range. And I just wouldn't read a whole lot into it, at least I don't. So I think all of us have worked very hard to try to, during this -- during this downturn in the economy, to make sure that our patients that have the right to commercial coverage, we help them keep it. And so basically that's kind of the way I look at it. Does that --?

Okay. And DaVita's put that number specifically at 11%. Can you give us your comparable number there on true commercial as a percentage of total?

I'd prefer not to. And if someone put out that number, that's -- I'm sorry, I don't know that today. So let me just say that we're in the same range, but I don't think we ought to put out a number.

Thank you very much.

Thank you, Justin.

(Operator Instructions). We move to a question now from Mr. Martin Whitbread of Credit Suisse. Please go ahead.

Thanks for taking my question. Just one actually on your comments on the increasing adoption of the Liberty Cycler in PD and Ben, I don't know if you can share your view on where PD may be heading in the coming years. Do you look to materially grow your share of PD patients? Thank you.

Yes, thank you. I think the one thing that -- about the Liberty Cycler is we're very pleased with the recent proceedings that happened with respect to the patent dispute with Baxter. But we see -- we see PD as a viable alternative to hemo for certain patients. And we want to make sure that that's always available to them.

And so we are not sure, when you look at all of the bundle payment issues, whether it will drive more or less PD. But we feel that we want to have that available. And we do have the Right Start program and the TOPs program where we inform the patients of their options. So it very well be that PD will grow a couple percent under this new situation, but at this point it's not a matter of pushing PD as much as it just having the capability, if they would elect to go to PD, that we have it.

Okay, that's great. Actually, one more question, if I can. Your acquisition of XCorporeal that happened I think at the end of last year, how is that being integrated into your own wearable kidney activities and prototypes? And do you expect to continue developments of both products?

Yes, we have -- glad you asked. Actually, there were two products that we were interested in, and one of them was a portable machine using sorbent. So I think they're packed machine. And we're developing that pretty rapidly.

And the hemo side of the wearable, that's pretty much staying with Dr. Gura and the Group. We believe that there's some real advantages to a PD wearable, but we'll show that as we bring the sorbents out and basically show what you can do with regenerating fluid right on the cycler as it sits today. So you'll see that over the next 18 months.

That's great. Thanks very much.

Thanks, Martin. And I think, Mike, we have the answer for Ann from Invesco actually concerning the availability on the revolver.

Yes. Ann, I may expand the answer a little bit, if you're getting it general levels of liquidity available to the Company. But under the revolver we had about US$364 million available. We also have a receivable securitization program in the US with a drawable balance of US$340 million. And we have cash on hand, some of which is restricted, but upwards of US$700 million, all of which would be able -- would be available to address any financial needs we might have in the back half of this year.

And our final question today will come from Rosanna Burcheri of FrontPoint Partners. Please go ahead.

Yes, hi. Could you hear me, yes?

We can.

A few questions. First of all, sorry, I lost myself in -- during the presentation. In terms of the international sales, you said that they were weak for three reason. I got the machine sales that looks soft and that looks like there is extension in the sales cycle. I got to the pharmaceutical problem that you had in Turkey in terms of registration. I didn't got to the third reason.

There was no third reason. So you didn't miss it. I was talking about the product sales and there were only two reasons, the machines and the pharmaceutical. The actual service side of the business grew very strongly.

Okay.

But there was no third reason.

The second things is on the revenue per treatment in the US. DaVita's been explaining that they had this drop of US$9 and US$5 out of this US$9 because physician have changed their prescription. And I suppose is because of the EPO. You're sort of saying that the EPO usage has been stable. Could you just explain -- help me understand why there is this difference between you guys?

I don't know that I have an answer on that one. Again, as we look at it, it depends on sort of both of us operate by what our medical group essentially decides to do. And so if the medical group has some ideas on -- for DaVita that are slightly different than what our physicians would feel, you may find a difference in -- essentially in utilization.

But I honestly don't know of any difference and it really depends on where you're coming from rather than where you are today. So I can't comment on any change in their reimbursement. I can only comment about sort of where we're coming from. But I think we're pretty on the same page today.

Okay. And the third question and last that I have is in terms of the cost and in terms of CapEx and G&A that we should expect for the implementation of the bundling, is everything inside your guidance of plus 2% for the year or we have to expect something more backend loaded?

Yes. Just to confirm, because I think we indicated before that our guidance of our overall spending level of 2% to 3% for fiscal '11 is inclusive of what we believe we would need to spend on the bundle implementation.

Okay. Thank you.

That will conclude today's question and answer session. I would now like to turn the call back to our host, Mr. Oliver Maier, for any additional or closing remarks. Thank you.

Great. Thank you so much, everybody, for the presentation here and for the questions. And wish you every -- all the best to you actually as the capital market [stabilizes]. Thank you so much. Take care. Bye-bye.

Thank you very much.

Ladies and gentlemen, that will conclude today's conference call. Thank you for your participation. You may now disconnect.