Merck KGaA, Darmstadt, Germany, Continues to Grow Profitably in 1Q 2017

Merck KGaA, Darmstadt, Germany, significantly increased both net sales and EBITDA pre exceptionals in the first quarter of 2017. In addition, the company today confirmed and specified its outlook for the full year.
 
“For our company, 2017 is another year of many challenges as well as tremendous opportunities. I am confident that we will seize these opportunities by further driving our clear growth strategy for our three business sectors forward,” said Stefan Oschmann, Executive Board chairman and CEO of Merck KGaA. “We again achieved profitable growth in the first quarter.”
 
Net sales rose by 5.3% to €3.9 billion in the first quarter of 2017 (Q1 2016: €3.7 billion). The Group grew in all three business sectors.  Accounting for 32% of Group sales, AsiaPacific was the largest region.
 
EBITDA pre exceptionals, the key earnings indicator of the Group, rose by 14.5% to €1.2 billion (Q1 2016: € 1.1 billion) thanks to the good operational performance of Healthcare and Life Science. Group EBIT fell by 11.1% to €755 million (Q1 2016: €849 million). This decline is due to an exceptional item in the year-earlier quarter when Merck KGaA, Darmstadt, Germany, sold its rights to Kuvan and realized a divestment gain of €324 million.
 
Net income declined slightly in the first quarter of 2017 to €521 million (Q1 2016: €591 million) owing to the decrease in EBIT. Earnings per share decreased from €1.36 to €1.20.
 
Merck KGaA reduced the net financial debt resulting from the Sigma-Aldrich acquisition by a further €400 million to €11.1 billion at the end of the first quarter, which compares with €11.5 billion on Dec. 31, 2016. As with major acquisitions in the past, the company is aiming to rapidly and extensively reduce its debt. The Group had 51,480 employees worldwide on March 31, 2017.
 
In the first quarter, net sales of the Performance Materials business sector grew by 3.6% to €645 million (Q1 2016: €622 million). A slight organic sales decline of 0.9% was more than offset by positive foreign exchange effects of 4.5%. The organic decline, which stemmed from the Display Materials business, was compensated for by the positive organic development of the other three Performance Materials business units.
 
In the Display Materials business unit, the double-digit growth of the business with the innovative liquid crystal technology UB-FFS marked a new sales record in the first quarter. However, this could not fully offset the typical price declines and the normalization of market shares.
 
The Pigments & Functional Materials business unit delivered solid organic growth. The Integrated Circuit Materials business unit, which includes the business with materials used to manufacture integrated circuits as well as the SAFC Hitech business of Sigma-Aldrich, generated good organic sales growth. The strong sales increase in the Advanced Technologies business unit was primarily due to continued growth in the OLED materials business.
 
EBITDA pre exceptionals of Performance Materials fell in the first quarter by 3.7% to €263 million (Q1 2016: € 273 million). Merck KGaA, Darmstadt, Germany, is working to apply its liquid crystals expertise also in areas beyond displays, for instance liquid crystal windows.