Merck KGaA Reports Strong 3Q 2020

Merck KGaA, Darmstadt, Germany, grew significantly in the third quarter of 2020. In comparison with the year-earlier quarter, group net sales increased by 9.7% to €4.4 billion. The increase was primarily due to double-digit%age organic growth in the Life Science business sector and acquisition-related in-creases in the Performance Materials business sector.

EBITDA pre, the group’s most important earnings indicator, rose to €1.7 billion, which was 53% higher than in the third quarter of 2019. Among other things, this increase was attributable to the strong operating performance of the businesses as well as income from the release of a provision amounting to €365 million for potential damages from the patent litigation with Biogen Inc.

The group has revised its forecast for the full year 2020 and refined its expectations for net sales as compared with the most recent forecast published in the half-yearly financial report as of June 30 to a narrower range of between €17.1 billion and €17.5 billion. In addition, the company now expects higher EBITDA pre of between €5.05 billion and €5.25 billion.

“The superb results of the third quarter once again underscore the strength of our diversified business model. First and foremost, our medicines Mavenclad and Bavencio, our Process Solutions business with products and services for drug manufacturing, and our Semiconductor Solutions business contributed substantially to our company’s growth. We are achieving success with our three innovation-driven business sectors even in difficult times and are making important contributions to the fight against the pandemic,” said Stefan Oschmann, chairman of the Executive Board and CEO.

Among other things, the company is supporting more than 50 potential COVID-19 vaccines, supplying products and reagents for diagnostics and is investigating an active pharmaceutical ingredient for the treatment of patients with COVID-19 pneumonia.

The increase in group net sales by 9.7% in the third quarter stemmed from organic growth of 7.2%, which was driven by the Life Science and Healthcare business sectors. Group sales rose by 6.9% due to portfolio changes. Acquisitions were responsible for an 8.2% increase in EBITDA pre.

Performance Materials generated a 43.4% rise in net sales to €836 million in the third quarter. The key factor behind this increase was the contribution of 51.6% from the acquisitions of Versum Materials and Intermolecular. This positive effect was weakened by an organic decline in sales of -5.4% and negative foreign exchange effects of -2.8%. In the same period, Display Solutions saw an organic sales decline of -9.9%.

Net sales of the Surface Solutions business unit declined organically by -12.3% in the third quarter. This was primarily the outcome of ongoing weakness in the automotive and decorative cosmetics markets, which remain impacted by the COVID-19 crisis. In the third quarter, EBITDA pre of Performance Mate-rials amounted to €254 million, an increase of 43.3% over the year-earlier quarter.