Merck KGaA Expecting to Achieve Sustainable Profitable Growth in 3 Business Sectors

Merck KGaA, Darmstadt, Germany expects to achieve sustainable profitable growth in all three business sectors in the coming years.

At its Capital Markets Day, the company informed analysts and investors about the progress it has made in implementing its strategy.

“In recent years, we have rigorously positioned our businesses in innovation-driven technologies. Science is at the heart of everything we do and the foundation for our future growth,” said Stefan Oschmann, chairman of the Executive Board and CEO of Merck KGaA.

Merck KGaA is now in the growth and expansion phase of its strategy and is well on track.

In 2016, Oschmann presented the company strategy shortly after taking office as chairman of the Executive Board. Two years later, the Group defined its “Unite for Growth” strategy through to the year 2022.

“We want to become the vibrant science and technology company. This objective is ambitious. With our three innovation-driven business sectors, we are shaping the rapidly advancing technological changes to our world,” said Oschmann.“For 2019, we continue to assume that the Group will increase all its key figures: sales, EBITDA pre and EPS pre. We also have our sights firmly set on profitable growth for 2020 and beyond.”

Following the expected closing of the Versum Materials acquisition, the company will focus on generating cash to quickly lower its post-acquisition debt, as it usually does. Also, sustainable culture of cost awareness within the company continues to have high priority.

Performance Materials has made significant progress with the implementation of its “Bright Future” transformation program announced in summer 2018.

Performance Materials aims to benefit from sustainable growth trends, particularly the trend towards increasingly higher data volumes worldwide.

As of 2020, Merck KGaA assumes that average annual sales growth in Performance Materials will range between 2% to 3%. The long-term EBITDA pre margin target is around 30%. Merck KGaA continues to assume that the market for semiconductor materials, measured in terms of silicon wafer area shipments (MSI, million square inches), will return to growth as of 2020. The planned acquisitions of Versum Materials for around $6.5 billion and Intermolecular for around $62 million are expected to close in the second half of 2019, subject to regulatory clearances and the satisfaction of other customary closing conditions.

The OLED materials business is also showing a tremendous growth dynamic. According to industry estimates, the volume of the overall market for OLED materials will exceed that for liquid crystal materials as of 2022.

In August, Merck KGaA and Universal Display Corporation (UDC) announced an R&D cooperation in the OLED field to accelerate the development of new products and further advance OLED technology. In 2016, a collaboration agreement was entered into with Idemitsu Kosan, likewise a well-established developer of OLED materials. To further strengthen its presence in the OLED materials market in Asia, Merck KGaA opened an OLED technology center in Shanghai in 2018 in addition to its existing centers in Southeast Asia.