Merck KGaA Reports 3Q 2019 Results

Merck KGaA, Darmstadt, Germany, generated strong organic sales growth and benefited from positive foreign exchange effects in the third quarter of 2019. EBITDA pre increased even more strongly than net sales in the three-month period from July to September. Following the closing of the Versum Materials acquisition in October, Merck KGaA, Darmstadt, Germany, is raising its full-year forecast for sales and EBITDA pre in 2019.

“In the third quarter, we continued to resolutely implement our strategy. We substantially increased sales and earnings thanks to the strong performance of Healthcare and Life Science as well as all regions. With the successful acquisition of Versum at the beginning of October, Performance Materials achieved a key milestone of its Bright Future transformation program,” said Stefan Oschmann, chairman of the Executive Board and CEO of Merck KGaA, Darmstadt, Germany.

“Now we are focusing on generating cash and consequently rapidly lowering our debt,” added Marcus Kuhnert, member of the Executive Board and Chief Financial Officer.

Group net sales rose by 8.1% to €4,054 million (Q3 2018: €3,749 million). Group organic sales growth, which was fueled by the Healthcare and Life Science business sectors, amounted to 5.7% or €213 million. The currency-driven sales increase of 2.7% or €102 million was mainly due to the US dollar, the Japanese yen and the Chinese renminbi.

EBITDA pre, the Group’s most important earnings indicator, increased by 15.4% to €1,111 million; the EBITDA pre margin improved to 27.4% (Q3 2018: 25.7%) The development of EBITDA pre reflects organic growth of 9.8%, positive exchange rate effects of 5.8%, and a negative portfolio effect of –0.1%.

The increase in EBITDA pre, which was more pronounced than that of sales, was attributable to strong sales growth, a greater focus on costs, income from the alliance with GlaxoSmithKline as well as the continued margin improvement in Healthcare and Life Science. The operating result (EBIT) thus also increased by 23.8% to €608 million (Q3 2018: €491 million). Net income increased slightly by 0.8% to €343 million (Q3 2018: €340 million). Earnings per share pre improved by 2.3% to €1.35 (Q3 2018: €1.32).

Net financial debt amounted to €7.32 billion on Sept. 30, 2019, which was approximately €500 million less than at the end of the second quarter of 2019 (€7.83 billion).

In the first nine months of 2019, net sales increased by 7.5% to €11,771 million (January-September 2018: €10,949 million). During the same period, EBITDA pre increased by 11.5% and amounted to €3,179 million (January-September 2018: € 2,850 million).

Merck KGaA completed the acquisition of Intermolecular on Sept. 20 and Versum Materials on Oct. 7. The acquisitions will strengthen Performance Materials and considerably expand the company’s position as a leading supplier of electronic materials for the semiconductor and display industries. In 2019, Versum will be consolidated for the 86 calendar days until year-end, contributing to sales and EBITDA pre.

Merck KGaA continues to expect for the full year 2019 a moderate organic net sales increase of 3% to 5% over the previous year. For fiscal 2019, Merck KGaA expects a portfolio effect from the Versum acquisition of approximately €270 million on Group sales. Overall, net sales of the Group in 2019 are forecast to be between €15.7 billion and €16.3 billion (previously: €15.3 billion to €15.9 billion; 2018: €14.836 billion).