Merck confirms outlook for 2017 despite a challenging third quarter
“We generated healthy organic growth in Healthcare and Life Science. In Performance Materials, our diversified portfolio comprising four strong pillars is helping us cope with the challenges in Liquid Crystals,” said Stefan Oschmann, CEO and Chairman of the Executive Board of Merck.
Sales increase by 0.1%
Group sales increased in the third quarter by 0.1% to EUR 3.7 billion, thus maintaining the year-earlier level (Q3 2016: EUR 3.7 billion). Sales grew organically by 4.2% thanks to the Healthcare and Life Science business sectors. However, this was offset by negative foreign exchange effects amounting to -3.7%, which stemmed mainly from the weaker U.S. dollar against the euro. Geographically, all regions contributed to the organic sales growth.
EBITDA decreases by -8.3%
EBITDA pre exceptionals fell by -8.3% to EUR 1.1 billion (Q3 2016: EUR 1.2 billion). At 28.9%, the EBITDA margin pre exceptionals was lower than in the year-earlier quarter (Q3 2016: 31.5%). Group EBIT grew by 33.3% to EUR 901 million, particularly as a result of the gain on the divestment of the Biosimilars business (Q3 2016: EUR 676 million). Net income soared by 41.1% to EUR 645 million (Q3 2016: EUR 457 million). Earnings per share pre exceptionals decreased in the third quarter of 2017 by -11.2% to EUR 1.51 (Q3 2016: EUR 1.70).
Growth in the first nine months of 2017
In the period from January to September 2017, net sales rose by 2.5% to EUR 11.5 billion (January-September 2016: EUR 11.2 billion). This increase was due to organic sales growth of 3.2%. From January to September 2017, EBITDA pre exceptionals of EUR 3.4 billion was at the year-earlier level (January-September 2016: EUR 3.4 billion).
Benefits for Performance Materials
In the third quarter, Performance Materials saw a slight organic sales decrease of -1.5%. Exchange rate effects caused sales to decline by an additional -3.8%. Overall, sales of the Performance Materials business sector declined by -5.3% to EUR 611 million (Q3 2016: EUR 645 million). The Pigments & Functional Materials business unit generated healthy organic growth in the third quarter. EBITDA pre exceptionals of Performance Materials fell in the third quarter by -11.7% to EUR 249 million (Q3 2016: EUR 282 million). With an EBITDA pre exceptionals margin of 40.7%, the profitability of Performance Materials was the highest among the three business sectors (Q3 2016: 43.7%).
Outlook for 2017 confirmed
For the full year, Merck continues to forecast slight to moderate organic sales growth compared with the previous year. Net sales are likely to be at the lower end of the previously targeted range of EUR 15.3 billion to EUR 15.7 billion owing to the amended exchange rate expectations. Merck maintains the corridor for EBITDA pre exceptionals at EUR 4.4 billion to EUR 4.6 billion. However, the company assumes that EBITDA pre exceptionals for 2017 will also be at the lower end of this range.