Draegerwerk AG & Co KGaA
XETRA:DRW8
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Draegerwerk AG & Co KGaA
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Good
day
and
welcome
to
the
Drägerwerk
AG
&
Co.
KGaA 2021
Full
Year
Results
Earning
Call.
Today's
conference
is
being
recorded.
At
this
time,
I
would
like
to
turn
the
conference
over
to
Stefan
Dräger.
Please
go
ahead,
sir.
Well,
ladies and
gentlemen,
good
afternoon
and
a
warm
welcome
to
everyone
joining
us
today.
I
have
with
me
Gert-Hartwig
Lescow,
CFO;
Tom
Fischler,
Investor
Relations;
and
Peter
Müller,
Financial
Communication.
We
would
like
to
guide
you
through
the
presentation
covering
our
final
2021
full
year
results,
which
we
made
available
on
our
website
this
morning.
In
January,
we
had
already
published
preliminary
results,
and
the
guidance
for
the
current
year
was
already
published
in
November
last
year.
Let's
get
started.
I
will
elaborate
on
some
main
developments
in
2021
before
Gert-Hartwig
will
take
over
and
go
into
the
financial
details
of
the
group
and
the
divisions.
Following
the
presentation,
we
will
open
the
floor
to
your
questions.
Out
of
respect
to
everybody's
time,
we
will
end
this
conference
in
one
hour.
It
was
extraordinary
year
in
so
many
ways,
never
before
our
mission
was
as
important
as
in
these
challenging
times
to
protect,
support
and
save
lives.
We
are
doing
as
much
as
we
can
to
serve
this
mission
every
day.
That
is
how
I
started
my
comments
last
year,
exactly
one
year
back
from
now.
From
today's
perspective,
one
year
later,
this
is
still
true
even
as
we
have
all
personally
become
more
or
less
accustomed
to
life
under
pandemic
conditions,
2021
was
not
a
normal
year
for
Dräger
business.
2021
was
still
under
the
special
influence
of
the
pandemic,
which
gave
us
a
boost
in
some
business
areas.
I'm
sure
you
know
the
relevant
areas,
in
particular
Dräger
ventilators
were
high
demand
in
connection
with
the
pandemic
all
over
the
world,
especially
in
2020 but
also
in
2021,
at
least
in
the
first
half
of
the
year.
And
so,
2021
was
another
year
characterized
by
a
very
high
level
of
activity.
But
the
effort
was
worth
it. Dräger's
technology
for
life
was
once
again
able
to
help
many
of
our
customers
fight
the
pandemic.
We
have
worked
hard
for
this
important
mission,
and
it
has
also
paid
off
financially.
At
the
beginning
of
the
year,
we
had
expected
a
significant
drop
in
net
sales.
A
decline
of
between
7%
and
11%
had
been
forecast
after
sales
have
grown
by
26%
in
the
record
previous
year.
But
the
expected
normalization
did
not
set
in
until
much
later.
In
the first
half
of
the
year,
we
received
major
orders
without
much
lead
time
especially
from
some
emerging
markets.
As
a
result,
we
started
scaling
back
production
capacity
especially
in
ventilation
much
later
than
planned.
At
peak
times,
we
have
[indiscernible]
(00:03:51) our
production
capacity
for
ventilators
[indiscernible]
(00:03:54).
The
unexpected
demand
in
H1
then
also
led
us
to
raise
our
full-year
forecast
in
the
summer
of
2021.
Eventually,
demand
began
to
normalize
in
the
second
half
of
the
year.
For
our
customers,
the
bottleneck
of
sector
in
combating
the
pandemic
was
no
longer
medical
equipment,
but
nursing staff.
The
demand
and
supply
environment
could
also
change
for
FFP
masks.
A
demand
situation
had
set
in
due
to
the
strong
global
production
capacity
expansions.
Some
major orders from
the
previous
year
had
also
been
delivered
in
the
meantime.
As
a
result,
the
second
half
of
2021
was
characterized
by
lower
order
entry
momentum
than
in
the
previous
quarter.
But
in light
of
the
strong
first
six
months,
net
sales
performance
for
the
year
as
a
whole
was
significantly
better
than
previously
expected.
Net
sales
around
€3.3
billion,
only
just
2%
below
the
record
year
of
2020.
Overall,
therefore,
sales
declined
only
slightly
compared
to
the
previous
year.
By
ventilators
and
patient
monitoring,
we're
unable
to
repeat
the
previous
year's
strong
performance.
Almost
all
other
areas
showed
good
growth.
A
similar
picture
emerges
for
the
geographical
distribution.
The
decline
particularly
affects
Europe
and
Germany,
almost
all
other
regions
and
countries,
also
countries
in
Europe
have
grown.
So,
many
product
areas
that
were
not
positively
affected
by
the
pandemic
2021,
thus
a
successful
year
as
well.
And
safety,
our
core
business,
was
able
to
celebrate
successes
again
after
a difficult
year
due
to
the
pandemic.
For
example,
a
nice
success
was
winning
the
fire
department
in
Cologne
as
a
new
customer,
which
had
previously
been
served
by
the
competition
for
many
years.
The
gas
detection
business
has
also
developed
well.
And
this
is
despite
the
fact
that
Dräger
has
of
course
also
suffered
from
the
challenges
in
the
global
supply
chain
issues.
Even
though
there
have
been
delays
in
some
area
due
to
supply
bottlenecks,
we
have
been
able
to
keep
the
situation
under
control
quite
well
overall
so
far.
Nevertheless,
procurement
remains
a
challenge
and
poses
risks
for
the
current
year.
Not
only
for
Dräger
but
for
the
entire
company.
In
fact,
the
impact
on
Dräger
has
so
far
been
much
less
than
the
bad
news
from
other
industries,
which
led
us
to
fear.
Currently,
there
are
some
shortages
leading
to
delays.
So
far,
they
have
not
led
to
a
loss
in
net
sales
only
to
a
delay
of
delivery.
In
addition
to
net
sales,
earnings
are
also
above
our
original
expectations
with
EBIT
of
€271
million,
the
EBIT
margin
is
at
8.2%,
which
is
above
the
original
forecast.
In
fact
if
the
margin
is
not
even
higher,
it's
also
due
to
a
number
of
one-offs,
which
impacted
earnings
particularly
in
the
fourth
quarter.
One
of
these
special
effects
is
the
write-down
of
our
production
capacity
in
the
mask
manufacturing
area.
You
probably
all
remember
quite
well
at
the
beginning
of
the
pandemic
when
personal protective
equipment
such
as
FFP
mask
was plus
a
much
hyped
commodity.
Export
bans
and
protectionism
suddenly
prevailed
in
the
mask
market.
[indiscernible]
(00:08:07)
showed
up
in
the
news,
unloading
cargo
aircraft
with
masks
from
China.
Light
breathing
protection,
which
includes
FFP
masks,
have
long
been
part
of
our
portfolio
in
the
safety
division.
However,
this
product
area
was
of
small
size.
Then,
large
orders
required
local
production
at
the
beginning
of
the
pandemic.
We
reacted
quickly
and
decided
to
build
up
local
production
capacity.
We
invested
a
total
of
around
€60
million
in
expanding
capacity.
This
has
paid
off
for
us
economically.
These
investments
have
contributed
to
the
good
result
in
2020 and
even
more
in
2021
and
half
of
that
already
amortized
and
paid
off.
In
parallel,
we
have
also
professionalized
sales
for
light
breathing
protection.
So,
if
you
continue
to
believe
in
the
success
of
this
business
for
Dräger.
However,
as
the
global
market
for
masks
is
currently
oversaturated,
we
had
to
write-down
the
value
of
production
facilities
that
are
currently
not
being
utilized
as
planned.
Regardless
of
the
write-down,
we
are
convinced
that
the
production
effort
will
be
successful.
Some
production
lines
are
currently
hibernated
and
will
be
activated
if
required.
The
situation
is
different
for
the
Dräger
COVID
antigen
rapid
test
although
the
Dräger
test
is
clearly
superior
to
other
inexpensive
self-test
in
terms
of
handling,
remember
that
the Dräger
antigen test
works without
the
user
having
to
handle
any litmus, the
market
is
not
prepared
to
pay
the
necessary
premium
for
our
test.
It
probably
would
in
connection
with
a
remote
video-based
certificate,
however
a
purely
political
decision
to
no
longer
accept
video-based
certificates
have
prevented
the
success
of
our
test
and
led
to
a
write-down
as
well.
These
necessary
value
adjustments
for
the FFP
mask
and
the
antigen
test
also
prevented
our
2021
results
from
being
even
better.
That is
how
entrepreneurship
works.
There
are
opportunities
and
risks
and
not
at
all chances,
events.
And
not
at
all
chances
eventually
materialize.
Overall,
business
development
in
2021
was
very
good,
as
well
as
the
cash
flow
development.
We
used
around
€100
million
of
its
free
liquidity
to
accelerate
the
improvement
of
our
capital
structure.
In
the
first
quarter
of
2021,
we
bought
back
part
of
the
profit
participation
certificate
that
already
had
been
cancelled,
something
that
benefits
the
attractiveness
of
the
Dräger
share.
In
other
respects
too,
the
company
is
in
a
good
financial
position.
The
equity
ratio
has
been
falling
as
a
result
of
the
cancelation
of
the
profit
participation
certificate
has
largely
recovered
much
faster
than
expected.
Here
again,
we
have
seized
the
opportunity.
We
have
used
the
solid
financial
situation
to
extend
and
expand
our
important
credit
facility
with
our
core
brands
at
an
early
stage.
Theoretically,
this
significant
improvement
is
not
yet
reflected
in
the
share
price.
Personally,
I
also
find
this
development
very
disappointing.
I
do
understand
that
the
share
price
development
also
reflects
the
subdued
outlook
for
the
current
year.
And
I
assure
you
that
we
will
all
be
working
hard
to
improve
the
margin
profile
steadily
in
the
coming
years.
And
due
to
the
improvement
in
the
balance
sheet
structure,
all
shareholders
will
benefit
from
this
as
well,
and
I'm
confident
that
this
will
also
be
reflected
in
the
share
price.
Now
I'm on
slide
5.
And
before
I
handover
to
Gert-Hartwig
for
the
financials,
I
would
like
to
share
some
thoughts
on
innovation.
We
continued
the
implementation
of
our
R&D
roadmap.
In
2021,
we
launched
12
new
safety
and
9
new
medical
products.
Most
of
them
are
explained
in
the
Annual
Report.
Let
me
just
share
two
examples
with
you
here.
In
medical
last
year,
we
launched
the
ceiling
supply
unit
Ambia
and
Ponta.
Ambia
and
Ponta
help
make
workflows
in
the
operating
room
in
neonatal
and
intensive
care
units
more
efficient.
They
allow
for
an
individual
workplace
design
to
be
user
friendly
ergonomics
and
more
and more
important
the
design
allows
for
effective
infection
prevention
to
help
protect
patients
and
caregivers.
Launching
products
during
corona
times
is
quite
challenging.
For
the
launch,
we
hosted
a
global
virtual
launch
event
themed
tailor-made,
where
we
showcased
our
extensive
medical
workplace
design,
consulting
services,
and
new
portfolio
to
900-plus
sales
partners
and
customers
all
over
the
globe.
The
product
is
well-received
by
customers
and
has
led
to
good order
entry
in
the
workplace
infrastructure
use.
In
addition
to
product
innovation,
one
issue
to
which
we
continue
to
devote
the
highest
attention
is
the
implementation
of
the
plan
to
address
the
FDA
warning
letter
from
early
last
year.
Our
activities
are
progressing
as
planned,
and
we
continue
to
expect
to
be
able
to
conclude
our
activities
during
this
year.
The
FDA
will
then
decide
when
to
conduct
the
necessary
re-inspection.
Moving
on
to
some
innovations
from
the
safety
division.
And
the
safety
released
some
new
personal
protection
equipment
for
the
firefighter
with
PSS
AirBoss,
our
new
firefighting
SCBA.
Ergonomics
become
continuously
more
important.
As
a
result
of
the
greatly
reduced
weight
and
gearing
profile,
firefighters
can
move
more
freely
and
perform
their
heavy
missions
with
less
physical
strain.
In
addition,
reflective
surfaces
and
buddy
lights
increase
individual
visibility,
and
various
sensors
improves
responders'
awareness
of
their
surroundings. In
the
digital
world,
the
connected
and
automated
respiratory
protection
monitoring
system
ensures
continuous
and
unambiguous
coordination
at
the
scene
and
the
Incident
Command
Center.
This
increased
the
safety
of
the
individual
user
and
that
of
the
[indiscernible]
(00:16:02) response
team.
With
the
AirBoss, we
also
launched
our
new
fire
fighter
helmet,
HPS
SafeGuard.
It
is
a
special
shaped,
offers
maximum
protection
and
supports
the
senses
by
not
restricting
hearing
and
vision.
In
addition,
it
has
an
integrated
voice
communication
system
which
facilitates
coordination
of
the
team
and
at
the
same
time
it
is
extremely
lightweight
and
offers
optimized
hearing
comfort.
And
now,
I
would
like
to
turn
over
to
Gert-Hartwig
Lescow,
for
more
color
on
the
financial
performance.
Gert-Hartwig,
please.
Thank
you,
Stefan,
and
a
good
day
to
everyone.
As
usual,
we
focus
on
the
development
in
the
markets
when
evaluating
our
performance,
i.e.,
unless
stated
otherwise,
I
will
refer
to
figures
net
of
currency
effects
when
I
mentioned
growth
rates.
We're
on
page
7
and
I
would
like
to
start
with
the
view
on
the
Q4.
While
usually
Dräger
seasonality
is
characterized
by
a
weak
first
quarter
and
a
very
strong
fourth
quarter,
this
pattern
was
different,
almost
upside
down
in
2021
after
a
very
strong
start
into
the
year
that
gained
support
from
pandemic-driven
orders
next
to
a
weakening
of
net
sales
and
EBIT
in
the
latter
half
of
the
year.
In
addition,
the
write-offs
and
the mask
facilities
and
the
COVID
test
inventories
resulted
in
a
disappointingly
unusually
weak
fourth
quarter
in
terms
of
earnings.
This
sharp
decline
in
group
net
sales
in
Q4
compared
with
the
prior-year
quarter
is
mainly
a
base
effect.
In
the
prior-year
quarter
in
Q4 2020,
we
have
the
strongest
quarter
in
our
history
in
terms
of
sales
with
well
over
€1.1
billion
due
in
particular
to
strong
corona demand.
Against
this
tough
comparable
quarter,
net
sales
declined
by
roughly
17%.
The
decline
concerns
the
medical
business.
In
fact,
net
sales
in
safety
were back
to
the
previous
year's
quarter.
In
safety,
the
recovery
of
some
core
areas
overcompensated
the
net
sales
decline
of
the
mask
business,
where
the
deliveries
of
the
large
orders
that
have
supported
net
sales
development
in
the
prior
couple
of
quarters
are
coming
to
an
end.
Driven
by
the
lower
volumes,
the
gross
profit
margin
in
Q4
also
was
substantially
lower
than
one
year
ago,
down
by
6
points
to
just
below
41%.
And
this,
of
course,
also
includes
the
write-downs.
Currency
effects
also
burned
the
margin
in
Q4
by
roughly
1
percentage
point.
As
Stefan
Dräger
mentioned,
changing
market
conditions
required
the
write-downs
in
our
facilities
and
inventories
for FFP
masks
and
the
COVID-19
antigen
test.
These
write
downs
mixed
to
some
minor
one-offs
amounted
to
roughly
€35
million.
And
the
Q4
EBIT
amounts
to
only
€14.7
million.
On
a
positive
note,
some
€850
million
order
entry
in
the
quarter
was
on
a
very
good
level,
some
12%
in
the
past –
previous
year's
quarter.
Both
divisions
in
all
three
regions
contributed
to
the
good
order
intake.
This
makes
us
confident
that
we
will
have
a
good
start
into
2022.
Let's
now
take
a
closer look
at
the
full-year quarter.
As
already
mentioned
by
Stefan,
financially,
2021
was
much
better
than
originally
expected.
Compared
with
a
record
year
2020,
the
comparable
figures
are,
of
course,
of
limited
significance.
Order
entry
declined
by
roughly
18%
for
the
full
year,
with
the
biggest
decline
coming
from
Europe
due
to
the
very
strong
prior
year
there.
Due
to
the
timing
delays,
as
a
good
portion
of
orders
received
in
2020
were
delivered
in
2021,
net
sales
declined
much
less
than
the
order
entry
by
only
a
modest
1.8%.
In
line
with
the
lowered
sales
volume,
our
gross
profit
also
declined.
This
development
was
mainly
due
to
a
decline
in
net
sales
and
margins
in
the
second
half
of
the
year,
compared
to
a
very
strong
prior
year.
In
the
first
two
quarters,
sales
and
earnings
were
also
positively
influenced
by
the
call-off
agreement
for
ventilators
for
the
German
Federal
Ministry
of
Health.
The
lower
gross
margin
of
the
full
year
is
attributable,
among
other
things,
to
lower
production
capacity
utilization
and
a
less
stable
country
and
product
mix.
Currency
effects
only
had
a
slightly
negative
impact
on
gross
profit
and
gross
margin.
At
46.3%,
the
margin
was
roughly
one
percentage
point
below
the
prior-year
figure.
Adjusted
for
currency
effects,
our
functional
costs
were
some
5%
higher
than
in
the
previous
year,
functional
cost
increased
due
to
higher
expenses
for
external
services
and
research
and
development
in
particular,
and
an
increase
in
the
number
of
employees.
The
research
and
development
activities
have
a
high
priority
for
Dräger,
and
the
R&D
expenses
increased
by
some
14%,
resulting
in
an
R&D
ratio
of
nearly
10%.
We
will
continue
to
renew
our
product
portfolio
unabated
in
2022, and
we
expect
to
spend
between
€320
million
and
€335
million
in
research
and
development.
Overall,
earnings
in
2021
were
impacted
by
a
slight
decline
in
net
sales
for
the
year
as
a
whole
with
costs
tending
to
rise.
As
a
result,
EBIT
amounted
to
a
very
good
level
of
just
below
€272
million,
corresponding
to
EBIT
margin
of
8.2%.
Currency
impact
on
earnings
for
the
full
year
were
negligible
on
the
group
level.
Next,
let's
get
to
the
P&L
below
the
EBIT
line.
At
€35
million,
interest
was
on
the
same
level
as
in
2020.
There
are
two
unrelated
reasons
for
this.
In
2020,
the
high
interest
expense
includes
costs
for
the
cancellation
of
the
participation
certificates
which
was
significantly
lower
in
2021.
In
2021,
however,
the
interest
expense
includes
an
adjustment
for
the
repayment
obligation
to
the
minority
shareholder
of
Draeger
Arabia.
This
is
a
one-off
effect
and
will
not
be
repeated
in
the
current
year.
Hence,
the
interest
in
2022
is
expected
to
be
considerably
lower
and
in
the
range
of
€17
million to
€23
million.
Mainly
due
to
valuation
allowance
on
deferred
tax
assets,
the
tax
rate
increased
to
34.5%
–
34.8%.The
tax
rate
as
well
should
normalize
again
between
31%
and
34%
in
the
current
year.
Consequently,
net
profit
is
down
to
€154.3
million.
The
primary
metric
with which
we
see
our
business
is
the DVA,
the
Dräger
Value
Added.
While
lower
than
in
the
records
2020,
the DVA
amounted
to
round €172
million
in
the
last
year,
mainly
due
to
the
lower
earnings
levels.
Now,
let's
look
at
some
key
financial
ratios
for
the
last
year
on
page
8.
Cash
inflow
was
again
at
a
very
good
level
in
2021,
even
though
operating
cash
flow
was
lower
than
in
the
record
year
2020, it
was
still
substantially
stronger
than
in
pre-corona
years.
With
a
lower
cash
outflow
for
investments
in
2021,
Dräger
was
able
to
improve
free
cash
flow
by
nearly
€80
million
and
pass
the
already
high
level
of
the
prior
year.
Overall,
we've
generated
a positive
free
cash
flow
of
€275
million.
The
main
driver
for
the
strong
operating
cash
flow
was
of
course
the
continued
high
profitability.
The
year-on-year
decline
in
profitability
was
offset
by
a
significant
improvement
in
working
capital.
This
was
due
in
particular
to
the
cash
flow
from
receivables
and
inventories.
These
two
also
offset
a
lower
increase
in
trade
accounts
payable
and
other
liabilities.
In
the
previous
year,
the
latter
included
an
advance
payment
of
around
€80
million for
call
options
and
connections
with
our
respiratory
equipment
business.
These
call
options
have
since
expired.
The
decrease
in
operating
cash
inflow
is
mainly
attributable
to
the
decline
in
other
provisions,
which
include
higher
variable
compensation
for
2021
paid
out
in
2020 – for
2020
paid
out
in
2021
as
well
as
stronger
reductions
in
tax
receivables.
As
I
said,
cash
outflow
for
investments
was
lower
in
2020 than
in
–
2021 than
in
2020,
improving
free
cash
flow
about
€153
million.
The
main
reason
for
this
is
a
decrease
in
cash
investments
in
money
market
funds.
In
2021,
we
had
net
investments
in
such
money
market
funds,
of
€139
million,
while
in
2021
we
had
a
small
redemption
of
about
€9
million.
Excluding
these
changes
in
money
market
funds,
actual
investments
were
at
the
level
of
the
previous
year.
In
the
current
financial
year,
the
planned
volume
of
capital
expenditure
will
remain
roughly
at
the
current
level
between
€120
million to
€140
million.
This
includes
investments
for
the
modernization
of
some
of
our
facilities
in
Lübeck.
Our
cash
position
at
the
end
of
2021
amounted
to
€445
million.
In
addition,
about
€130
million are
currently
invested
in
said
money
market
funds.
While
this
liquidity
position
is
currently
very
high,
please
have
in
mind
the
cash
outflow
in
January
2023
to
redeem
the
remaining
participation
certificates
in
the
amount
of
roughly
€208
million.
Due
to
the
strong
cash
generation,
our
net
financial
debt
has
substantially
improved.
Leverage
of
the
group
remains
conservative
with
a
net
financial
debt
to
EBITDA
ratio
of
minus
0.06.
The
equity
ratio
also
improved
markedly
by
almost
8.5
percentage
points
to
a
total
of
€39.7
million.
It
was
not
only
the
high
profitability
that
contributed
to
this
improvement
by
around
4.7
percentage
points.
Our
equity
ratio
also
benefited
from
lower
pension
obligations
due
to
an
increase
in
the
relevant
interest
rates
and
from
the
reduction
in
total
assets
following
the
redemption
of
the
Series
A
and
Series K
and Series
D
part
of
the
participation certificates
in
the
first quarter
of
2021.
While
the
net profit
declined
by
roughly
38%, the
decline
in EPS
was
less
pronounced.
This
is
a
positive effect
of
the
partial
redemption
of
the
participation
certificates
and
the
buyback in
Q1
last
year. Under
the
assumption of
full
distribution, the
EPS for
the
common
shares
is €7.13
and
€7.19
for
the
preferred
shares after
EPS in
the
record year
2020 was
at
€10.19
and
€10.25, respectively.
The
final
redemption
of
the remaining
participation
certificates
will have
an
additional positive
effect
on EPS
once
they're
paid
back
and
no longer
participate
in
the
earnings
for
the year
2023.
Let me
now come
to
the business
development
in
the
medical division
on page
9. In
medical,
the
order
intake
decreased
by more
than
22%.
The
decline reflects
the
pandemic-driven
record
order
intake of
the previous
year.
For example,
the order
intake
for
the
respiratory equipment
was
down
significantly
and
the
order
intake
in the
patient
monitoring
and
the
data
management
area
and
in
the
hospital
consumables
business
was
also
well
below
the
very
high
prior-year
level.
On
the
other
hand,
some
areas
that
did
not
perform
well
in
the
prior
year
performed
better
again.
These
include,
for
example,
our
[indiscernible]
(00:29:02) regulation
business
and
also
our
workplace
infrastructure
business,
and
our
service
business
also
recorded
a
stronger
demand.
In
regional
terms,
we
recorded
the
largest
declines
of
order
intake
and
sales
in
Europe,
where
we
had
just
recorded
the
largest
increases
in
the
year
before.
In
line
with
the
sharp
decline
in
net
sales
of
nearly
10%,
the
gross
profit
of
the
medical
division
also
decreased
by
11%,
due
to
the
high
share
of
respiratory
care,
particularly
in
the
first
nine
months,
the
gross
margin
decreased
only
slightly
by
0.3
percentage
points.
Functional
expenses
increased
as
planned
and
were
3%
higher
than
in
the
previous
year.
The
key
driver
were
higher
expenses
in
research
and
development.
In
consequence,
medical
EBIT
amounted
€191.6
million
corresponding
to
EBIT
margin
of
9.3%.
The
DVA
declined
with
the
lower
earnings
to
€132
million.
Moving
on
to
the
safety
division
on
page
10. In
safety,
order
entry
in
2021
was
down
8.8%
year-on-year.
The
decline
was
due
to
lower
demand for
live
breathing
protection
predominantly
FFP
masks,
compared
to
the
pandemic
related
strong
prior
year.
As
already
mentioned,
we
are
facing
a
massive
oversupply
of
masks
in
the
global
market.
In
this
environment,
it
is
extremely
challenging
to
win
new
orders
and
to
fully
utilize
the
existing production
capacities.
On
a
positive
note,
there
was
stronger
demand
for
many
of
our
other
core
product
areas,
particularly
our
service
business
and
the
gas
detection
business.
We
also
recorded
higher
order
volumes
for
respiratory
and
personnel
protection
products
following
the
decline
in
the
previous
year.
In
regional
terms,
the
decline
in
order
entry
was
mainly
from
Europe,
where
we,
again,
had
won
the
bulk of
the
large
mask
orders
in
2020.
After
declines
in
the
previous
year,
our
net
sales
in
safety
rose
by
14.5%
in
2021.
Deliveries
increased
significantly
in
all
regions.
As
a
result
of
the
strong
increase
in
net
sales,
gross
profit
improved
by
10%,
mainly
due
to
the
volume
effects,
particularly
from
the
FFP
mask
business
and
the
positive
product
and
country
mix.
Gross
margin,
nevertheless,
decreased
by
1.8
percentage
points.
This
was
mainly
due
to
the
write-downs
in
our
production
equipment
and
the
inventories
for
FFP
masks
and
the
Dräger
COVID-19
antigen
rapid
test.
Just
to
clarify,
despite
these
write-downs,
the
FFP
mask
business
built
up
in
the
wake
of
the
pandemic
was
successful
and
made
a
significant
positive
contribution
to
earnings
in
2021.
Mainly
due
to
the
increased
expenses
in
the
local
sales
organization
and
in
research
and
development,
functional
expenses
were
up
by
about
9%.
Safety
EBIT
increased
by
roughly
€30
million
to
€80
million.
The
EBIT
margin
was
slightly
higher
at
6.3%,
and DVA
increased
to
just
below €40
million.
In
light
of
the
very
good
business
development
during
the
pandemic,
the
opportunity
was
taken
in
Q1
and
Q2
2020
to
simplify
our
capital
structure
and
to
cancel
all
participation
certificates.
In
total,
the
payment
of
the
– further
redemption
of
all
participation
certificates
amounts
to
approximately
€470
million.
More
than
half
of
this
has
already
been
paid
in
Q1
last
year,
namely
€157
million
for
the
Series
A and
Series K
in
January
2021,
and
a
further €100
million
for
part
of
Series
B,
which
we
bought
back
in
Q1
last
year
below
their
refund
amount.
The
transaction
was
successfully
closed
and
with
immediate
positive
benefits
on
the
equity
ratio
and
EPS.
The
final
amount
of
€208
million
for
the
remaining
participation
certificate
Series
B
is
due
in
January
next
year
and
will
be
paid
in
full
by
existing
liquidity.
These
certificates
will
still
receive
a
final
dividend
payment
in
2023
for
the
business
year
2022. After
the
elimination
of
the
participation
certificates
next
year,
the
future
profit
goes
entirely
to
our
shareholders.
This
will
be
directly
apparent
in
higher
earnings
per
share.
Considering
the
dilution
effects
of
the
capital
increase,
the
EPS
will
rise.
[indiscernible]
(00:33:41)
by about
27%.
That's
it
for
the
financial
overview.
Thank
you.
Back
to
you,
Stefan.
Thank
you,
Gert-Hartwig.
Coming
to
our
dividend
proposal
and
outlook.
The
cancelation
of
the
participation
certificates
of
2020
resulted
in
a
strong
increase
of
net
debt
and
a
sharp
fall
of
the
equity
ratio.
Against
this
background,
we
had
decided
for
a
higher
profit
retention
until
the
equity
ratio
had
risen
again
to
a
level
of
over
40%.
The
good
business
development
of
the
last
two
years
has
considerably
improved
the
situation.
We
are
not
quite
at
the
previous
levels
again.
However,
we
expect
to
surpass
the
40%
equity
ratio
in
the
current
year,
and
we'll
then
propose
a
higher
dividend.
I
know
the
dividend
proposal
will
remain
on
the
current
level
of
€0.13
for
a
common
share
and
€0.19
for
a
preferred
share.
Now,
before
we
go
into
the
Q&A,
let
me
share
with
you the
outlook
for
the
calendar
year
2020. The
outlook
is
unchanged
to
the
guidance
we
communicated
in
November
last
year.
As
we
are
all
aware,
with
the
war
in
Ukraine,
the
world now
faces
its
worst
global
security
threat
since
decades.
While
a
human
tragedy
beyond
words,
it
is
our
responsibility
to
evaluate
the
economic
implications
for
Dräger.
Ukraine
and
Russia,
our
combined
sales
are
less
than
2%
of
the
group.
Today,
it
is
unclear
how
strong
their
net
sales
and
earnings
will
decline
from
this
region
in
the
current
year.
The
conflict
has
not
been
factored
into
the
guidance
and
naturally
poses
headwinds
for the
guidance.
The
corona
pandemic
has
provided
substantial
economic
opportunities
for
Dräger
in
the
last
two
years.
However,
this
tailwind
has
faded,
and
order
development
has
normalized
again.
This
results
in
the
expected
lower
net
sales
development
than
during
the
pandemic.
And
compared
to
the
high
level
of
2021,
we
expect
a
currency
adjusted,
a
decline
in
net
sales
of
between
5%
and
9%.
Despite the
decline,
the
net
sales
level
is
well
above
the
pre-pandemic
levels,
the
net
sales
decline
would
be
more
pronounced
in
medical
than
in
safety.
In
the
last two
years,
the
pandemic-driven
orders
also
had
a
positive
effect
on
realized
prices
and
product
mix,
and
hence,
on
the
gross
profit
margin.
The
current
normalization
of
the
top
line
and
product
mix
has
therefore
a
negative
effect
on
the
gross
margin.
We
expect
the
gross
margin
to
be
between
44%
and
46%
this
year.
We
do
see
improvement
potential
of
the
gross
margin
in
the
future
when
the
new
products
gain
more
volume.
Profitability
is
also
being
impacted
by
a
significantly
higher
prices
for
energy,
raw
materials
and
electronic
components
and
continued
high
freight
and
logistic
cost.
In
the
interest
of
strong and
medium-term
growth,
Dräger
is
also
making
targeted
investments
in
selective
focus
markets
to
expand structures
and
specific
sales
capabilities.
At
the
same
time,
Dräger
is
continuing
its
innovation
initiatives
in
the
medical
division
and
is
therefore
investing
in
R&D
projects
for
the
medium-term
benefit.
Taking
all
this
into
account,
we
expect
the
2022
full
year
EBIT
margin
to
be
in
the
range
between
1%
and
4%.
Following
the
decline
in
net
sales
and
profitability
in
2022,
we
expect
a
steady
increase
in
net
sales
and
an
improvement
in
earnings
in
the
following
years.
Starting
2023, Dräger
will
return
to
revenue
growth
and
also
increase
its
profitability
again.
The
implementation
of
the
gradual
renewal
of
our
product
portfolio
and
the
expansion
of
our
offering
will
support
both
revenue
and
gross
margin.
We
also
expect
additional
leverage,
and
our
functional
cost
will
only
increase
at
a
rate
below
the
growth
rate
of
sales
from
then
on.
We
consider
the
midterm
effects
from
the
pandemic
to
be,
economically
speaking,
net
positive
for
Dräger.
We
expect
to
see
higher
investment
into
ICU
infrastructure.
In
the
coming
years,
the
new
ICU
capacity
is
built
up
or
modernized
in
many
years,
on
areas
of
the world.
Dräger
is best
positioned
to
benefit
from
such
a
structural
improvement
of
hospital
investments.
We
also
see
an
increased
demand
for
safety
and
security
in
the
future
to
the
benefit
of
our
safety
business
at
Dräger.
With
this, I
would
like
to
end
the
presentation.
You
can
find
some
additional guided figures
like
investments,
R&D
budget,
etcetera,
in
the
appendix
of
the
presentation.
All
guided
figures
are
based
on
the
assumption
of
stable
exchange
rates
at
the
beginning
of
the
year.
And
now,
the
floor
is
open
to
your
questions.
Please
ask
them
now.
Hello,
operator?
Sorry
for
the
interruption.
[Operator Instructions]
We'll
now
take
our
first question
from Eggert Kuls
from
Warburg
Research.
Please
go
ahead.
Yes.
Hello.
I
have
a
question
regarding
your,
again,
heavy
R&D
budget
for
2022.
I
can
remember
some
five
years
ago
or
so, you
have
started
to
increase
your
R&D
budget
heavily
and,
at
the
time,
I
understood
that
this
will
last
maybe
for
two
or
three
years.
But
meanwhile,
the
budget
has
become
bigger
and
bigger
year-by-year.
So
meanwhile,
we
are
at
roughly
10%
of
your
sales
volume.
And
when
I
go
back
10
years
back,
it
was
7%
to
8%.
So,
the
question
is
can
we
expect
any
time
in
the
future
to
come
back
to
old
levels
with
regard
to
the
R&D
budget?
Or
is
that
something
we
should
expect
forever?
You
are
correct,
[indiscernible]
(00:41:59)
your
observation
and
that
was
to
some
extent
that
the
deviation
from
our
own
expectation
and
to
a
significant
extent
that's
due
to
the
FDA
warning
letter
that
we
received
at
the
beginning
of
2020
that
pointed
out
some
weak
points
that
we
had
historically
with
us
in
the
US
operation.
And
we
are
still
in
the
course
of
remediation
of
this
as
I
pointed
out.
And
so,
our
expectation
is
that
this
extra
effort
should
come
to
an
end
during
the
course
of
this
year.
So
in
– so
from
2023
on,
we
expect
that
the
R&D
expenses
will
only
grow
under
proportionately
and
we
will
return
to
a
more
normal,
let's
say,
ratio.
And
so,
this
growing
out
of
proportion
very
clearly
will
not
go
on
forever.
Okay.
That's
good
to
hear
because,
in
the
past,
I
got
always the
impression
that
after
a
heavy
R&D
cycle,
your
margin
improved
significantly
afterwards,
your
public
contribution
of
a
new
product.
But,
anyway,
regarding
the
dividend,
so
I
was
initially
expecting
a
higher
dividend
only
from
2023
onwards
when
our
participation
rights
have
been
canceled.
So,
did
I
understood
it
right
that
you
have
spoken
about
the
higher
dividend
already
in
2022?
Indirectly
because
we
said
at
all
times
that
we
will
consider
a
higher
dividend
when
it
costs
us
–
the
equity
costs
us
a
40%
mark.
And
I
said
earlier
that
we
expect
this
to
happen
now
already
during
the course
of
this
year
because
of
the
very
good
business
development
in
2020
and
2021.
So, the
good news
is
that
it
will
happen
faster,
that
we
can
go
to
a
different
level.
So,
I
think
you
spoke
when
you
brought
the
common
shares
to
the
market
in
2010
or
2009
about
the
payout
ratio
of
some
30%.
So,
is
that
something
we
can
expect
already
even
for
2022,
to
make
a
rough
calculation
for
the
possible
dividend?
Yeah.
Also,
your
memory
is
correct.
And
I
remember
that
your
colleagues
were
instrumental in
making
this
happen
that
we
did
IPO
and
common
shares
at
that
time
in
2010.
However,
then
things
have
changed
since
then.
And
so,
many
unexpected
things
happened
like
the
opportunity
for
the
cancellation
of
the
participation
certificates
and
where
we
get
to
in
the
future,
we
will
see
mainly
cost
to
40%
mark.
Okay. Thank
you very
much.
That's
for
the
time
being.
We
will
now take
our
next
question
from
Oliver
Reinberg
from
Kepler.
Please
go
ahead.
Oh,
yeah. Thanks.
Good afternoon,
thanks
for
taking
my
question.
Three
if
I
may.
Firstly,
on
the
geopolitical
situation,
thanks
for
the
color
that
you
provided.
Can
you
just
talk
about
what
are
the
potential
impacts
that
you
see
in
your
business,
not
in
terms
of
quantifying
it,
but
where
could
you
face
headwinds?
I
mean,
it's
obvious
that
the
demand
from
Russia
may
decline.
But
is
there any
kind
of
incremental
concerns
in
terms
of
supply
chain
or
inflation
pressure
or
any
kind
of
other
indirect
implications
from
this
kind
of
developments?
I
mean,
it's
early
and
tough
to
call,
but
if
you
just
can
share
your
thinking
on
that.
And
I
noted
that
in
the
annual
report,
you
talked
about
that
there's
strong
expected
demand
for
ventilators
in
Russia.
And
I
think
you
also
pointed
out
a
strong
chemicals
industry
in
Russia.
So,
I'm
just
cross-checking
into
guide
that
you
provided,
what
is
based
on
an
early
assumption
of
a
strong,
significant
growth,
which
was
to
have
increased
the
exposure
to
Russia, Ukraine,
and
Belarus
towards
the
north
of
2%?
That's
the
first
question
for
me.
Secondly,
on
FDA.
Can
you
just
clarify?
Have
you
had
any
kind
of
specific
discussion
with
the
regulator
at
this
point
in
time?
Also,
what
kind
of
progress
have
you
made
in
terms
of
the
kind
of
software
launches
for
monitoring?
And
then
the
update
when
you
would
be
willing
to
file
for
approval
of
the
Atlan
anesthesia
device
in
the
US?
And
third,
last
one
if
I
may,
just
in
the
order
intake. The
12%
growth
looks
actually
quite
encouraging
even
if
we
adjust
for
minor
support
from
base
effects.
But
is
this
broad
based?
Can
this
continue?
And
also,
you
indicated
that
you
see
a
chance
for
ICU
capacity
being
ramped
up.
Are
there
any
kind
of
specific
projects
you're already
seeing
or
is
it
just
an
expectation
for
future
years?
Thanks
so
much.
Well,
thank
you
for
your
question,
Mr.
Reinberg.
I'll
start
with
the
first
one
and
are
happy
to
share
some
thoughts
on
the
effects
of
the
Ukraine.
They
were
the
first
[indiscernible]
(00:48:17)
beyond
the
business
implications.
It's
an
emotional
and
humanitarian
catastrophe
that
the
invasion
of
Russia
into
Ukraine
exactly
one
week
ago.
In
Thursday
morning, we
woke
up
in
a
different
world,
very
different
from
what
we
experienced
for
the
last
[ph]
77 (00:48:39) years.
And
so,
we
have
no
owned
organization,
subsidiaries
in
Ukraine.
However,
we
do
have
from
Russia
110
colleagues
of
us
and
quite
a
number
of
them
I
know
personally,
and
they
all
have
different
opinions.
They
all
differ
and
are
not
the
same
from
what
the
government's
opinion
is,
one
from
the
other.
And
to
me,
it
is
of
utmost
importance
to
treat –
that
we
treat
each
other
with
respect
and
tolerance
and
expect
–
and
accept
different
opinions
here
to
avoid
a
further
falling
apart
of
the
society,
as
we
already
experienced
during
the
COVID
times,
which
may
be
the
ultimate
target
of
the
aggressor.
And
the
business
impact,
we
have
evaluated
and
as
I
– we
said,
the
elements
that
you
mentioned,
the
growth
potential
for
ventilator
in
Russia
and
for
the
chemical
industry,
that
was
figured
in
the
figures
that
we
gave.
And
whilst
we
expect
that
we
have
opportunities
in
other
areas
of
the
world as
well,
it
would
not
bring
us
some
north
of
the
2%
portion
of
this
– of
sales
that
we
have
in
Russia.
And
please
keep
in
mind
that
as
we
are
making
technology
for
life,
that
we
firmly
believe
[indiscernible]
(00:50:46)
all
human
beings
in
the world
in
all
countries,
no
matter
what
government
they
have,
we
will
continue
to
serve
Russia
as
a
country,
observing
all
rules
and
regulations
for
business
all
over
the
world
and
all
sections.
And
typically,
we
get
exemptions
for
medical
equipment.
So,
this
2%
will
not
drop
to
zero.
And
the
–
that
area
– so,
the
sales
impact
is,
I
would
say,
not
too
significant.
And
with
that,
try
to
evaluate
the
supply
chain
that
you
mentioned.
We
are
not
overly
dependent
on
energy
and
not
too
energy
intensive,
our
business
operations.
And
so
far,
we
could
not
find
any
other
significant
raw
material
or
component.
The
biggest,
I'd
say,
share
of
our
supplies
that
we
actually
– where
the
value
creation
is
in
Russia
is
software
development.
And
here,
we
work
with
a
global
partner
in
our
contract
over
to
US.
So
–
however
the
employees,
they
are
local
– Russians
are
located
in
Russia
that
work
for
Dräger
on
the
job.
So,
that
will
not
have
an
immediate
impact
on
the
products
at
least
our
– the
plant
and
the
contract
is
with
the
US.
So,
that
is
not
too
bad
either.
However,
the
indirect
effects
that
it
can
result
from
disruption
of
the
supply
chain
in
some
other
areas
will
not
oversee
today,
can
be
much,
I
would
say,
more
significant
than
2%.
The
whole
world
economy
could
have
an
impact
that
is
far
beyond
2%
and
that's
not figured
into
our
guidance,
of
course
not.
As
I
mentioned
that's
the
exception,
these
effects
that
we
cannot
quantify
and
do
not
know
yet
are
not
included.
So,
that
is
the
–
I
think,
and
it
take
care
of
the
number
one
question.
Effects
of
the
geopolitical
crisis
and
the
war
in
Ukraine.
The
second,
on
FDA.
So,
the
major
effort
is
on
the
remediation
of
the
findings
that
we
are –
laid
out
in
the
warning
letter.
That's
all
been
addressed
and
worked
on
continuously.
With
a
close
communications
with
the
FDA
and
we
expect
the
– that
we
are
ready
for
reinspection
after
remediation
of
all
the
issues
during
the
course
of
this
year.
When
the
actual
reinspection
does
take
place
and
we'll
get
the
clearance,
that
is
not
completely
in
our
hands.
And
we
won't
compromise
the
authority
of
the
FDA
when
they
actually
– so
if
they
have
time
to
do
that.
There,
we
do
have
some
progress
on
the
market.
So,
for
the
US,
the
very
important
step
was
that
we
have
received
the
official
clearance,
that
we
can
resume
the
marketing
of
the
Infinity
Acute
Care
System
VG
4.2
version.
Then
–
that
we
had
subdued
marketing.
It's –
so
a
period
of
over
two
years,
so
that
can
now
resume.
That's
a –
there's
– and
that
information
is
not
two
or
three
weeks old
work only. So,
that's
–
it's
in
progress.
But
we
are
still
working
on
the
[indiscernible]
(00:55:10)
that
you
remember
very
correctly
that
is
not
affected
by
the
warning
letter
but
that's
a
separate
issue.
And
that
is
the
cybersecurity
guideline
that
requires
authentication
mechanisms
for
each
and
every
device
to
be
secure
in
the
sales
and
not
depend
on
the
hospital
network
to
be
secured
by
firewall.
And
that
is
very
deeply
in
the
design
and
that
is
still
in
the
works. And so our
plan
is
–
will
not
significantly
contribute
to
the
US
success
in
this
year.
And
the
last
question
was
for
the
composition
of
the
net
order
entry.
And
if
as
you
have
observed
and
we've
pointed
out,
net
order
entry
was
quite
strong
in
the
fourth
quarter
2021.
It
was
about
16%
higher
on
the
safety
and
was
about
13%
higher
on
the
medical
compared
to
the
fourth
quarter
of
the
prior
year.
And
that
includes
better
order
entry
really
across
the
portfolio
for
many
areas
that
were
weaker
during
corona,
and
which
have
now
recovered.
So,
we
see
that
also
is
an
indication
of
continued
robust
development
and
includes
our
GDS
business
on
the
safety
side,
our
safety
respiratory
care
protective
systems
business
and
also
our
services,
which
were
all
up
double
digits
on
the
safety
side.
And
on
the
medical
side
as
well,
other
products
from
our
therapies,
so
including
anesthesia
and
thermoregulation,
but
also our
workplace
infrastructure
business
were
up
more
than
10%
and
often
more
than
20%
compared
to
the
fourth
quarter
of
the
previous
year.
And
again
on
medical
as
well,
our
service
business
progressed
quite
nicely
with
double
digit
growth
as
well.
So,
overall,
to
your
question,
a
robust
growth
across
the
portfolio
with
a
few
exceptions
that
shouldn't
avoid.
Patient
monitoring
was
weaker.
Since
that
had
strongly
benefited
from
corona,
it
doesn't
do
to
the
same
degree.
And
our
HTA
business,
which
actually
has
seen
very
strong
growth,
was
just
barely
on
the
same
level
as
in
the
fourth
quarter,
just
indicating
that
this
is
not
an
[indiscernible]
(00:58:03) but
really
robust
growth
across
the
portfolio.
Super.
Very
helpful. And
sorry
if
I
just
can
ask
on
this
ICU
project?
I
mean,
is there
any
kind
of
tender
projects
you're
seeing?
No
particularly
large
projects
that
would
stand
out.
Our
demand
is
for
many
products
that
go
into
the
ICU.
So,
yes,
there
is
demand
from
the
ICU
but
not
–
no
large
individual
projects
that
would
be
worth
mentioning
at
this
point.
Super.
And
last
question
will
be
on
ventilators,
the
current
demand
and
the
order
intake,
is
that
significantly
below
pre-pandemic
level
or
is
it
still
at around
normal
levels?
That's
around
normal
level.
So,
the
other
that
we
considered
during
the
pandemic,
remember
when
we
received the
10,000 ventilators
ordered.
I
must
say
[indiscernible]
(00:59:06)
some
saturation
effects
after, so
that
did
not
happen.
So,
in
some,
say,
regional
markets,
a
slight
exaggeration,
I
would
say.
But
in
other
geographical
areas,
an
increased
awareness
of
how
important
a
good
ICU
equipment
is.
So,
that
levels
us
and
it
is
at
or
slightly
above
the
level
that
we
would
have
had
with
no
pandemic.
Super. Thanks
so
much.
Sorry
for
the
– taking
so
much
time,
but
that
was
very
insightful.
You're
welcome.
[Operator Instructions]
We'll
now
take
our
next
question
from
[indiscernible]
(00:59:53).
Please
go
ahead.
Yeah.
Good
afternoon.
Thanks
for
taking
my
question.
I
only
have
one
question.
Does
Dräger
have
any
exposure
to
the
defense
industry,
and
is
there
any
upside
potentials
foreseeable
in
respect
of
safety
equipment
for
national
defense
budgets? Thank
you.
It
is
very
limited.
We
do
have
products,
obviously,
especially
our
technical
products
that
go
into
other
military
goods,
but
if
you
look
at
it
from
a
commercial
point
of
view,
it's
less
than
1%
of
our
group
sales
and
–
which
really
supports
a
thesis
in
both
directions.
Our
downside
is
limited
and
similarly
is
our
upside
from
the
discussion,
and
I'm
sure
Stefan
Dräger
can
add
some
more
color
to
that.
Yes.
Not
so
much
more
to
add.
So,
overall
sales
is
less
than
1%.
It's
for
defense.
And
we
do
not
see
an
immediate
upside.
I
had
a
call
this
morning.
So
somebody
asked
for
helmets.
We
said,
well,
we
don't
have
ballistic
helmets.
We
have
– we
do
develop
and
manufacture
helmets
for
firefighters.
And
the
answer
was,
no.
We
don't
need
this.
Okay.
Right.
Thank
you
very
much.
As
there
are
no
further
questions
in
the
queue
at
this
time,
I'd
like
to
turn
the
call
back
to
your
speakers
for
any
additional
or
closing
remarks.
Well,
thank
you
very
much. Then
we
can
close
this
call
on
time.
Thank
you
very
much
for
being
with
us
today
and
for
the
lively
discussion
and
look
forward
to
hearing
from
you
all
one
day
meeting
you
again
in
person.
So
for
now,
have
a
pleasant
rest of
the
day
and
goodbye.
Thank
you.
That
will
conclude
today's
conference
call. Thank
you
for
your
participation.
Ladies
and
gentlemen,
you
may
now
disconnect.