03.06.15
Merck has successfully completed a year of strategically important moves and achieved its objectives.
“We strengthened all three of Merck’s business sectors: Healthcare, Life Science and Performance Materials. With the acquisition of AZ, the offer to acquire Sigma-Aldrich and the alliance with Pfizer in immuno-oncology, we have laid the foundations for future growth,” said Karl-Ludwig Kley, chairman of the Executive Board of Merck. “These developments are the result of our long-term transformation and growth strategy. Merck is transforming into a highly specialized, global technology company with the goal to improve the lives of patients and customers.”
Total revenues of the Merck Group rose by 3.7% to €11.5 billion in 2014 (2013: €11.1 billion). Sales grew by 5.5% to €11.3 billion (2013: €10.7 billion). This was primarily the result of organic growth of 4.0% as well as acquisition-related increases of 3.3%, which were attributable to the acquisition of AZ. At the same time, foreign exchange effects lowered sales by -1.8%.
Merck markedly increased its operating result (EBIT) by 9.4% to €1.8 billion (2013: €1.6 billion). The key financial indicator used to steer operating business, EBITDA pre one-time items, climbed 4.1% to €3.4 billion (2013: €3.3 billion), also thanks to good operating performance and the acquisition of AZ.
Even though the purchase price payment for AZ amounting to around €1.9 billion was financed, net financial debt rose by only €252 million to €559 million (2013: €307 million). As of June 30, 2014, this figure had temporarily risen to €2.2 billion. This renewed evidence of the Merck Group’s high internal financing power shows that Merck is well prepared for the acquisition of Sigma-Aldrich. As of Dec. 31, 2014, Merck had 39,639 employees worldwide (2013: 38,154).
In the fourth quarter of 2014, Merck achieved strong sales growth of 12.9% to €3.0 billion compared with the year-earlier period (Q4/2013: €2.6 billion). Apart from organic growth of 4.4%, portfolio effects from the AZ acquisition and favorable foreign exchange effects were responsible for the considerable increase. Consequently, despite declining royalty, license and commission income, EBITDA pre one-time items grew 10.5% to €878 million (Q4/2013: €795 million). Earnings per share pre one-time items rose 7.5% to €1.14 (Q4/2013: €1.06).
Sales of Performance Materials, Merck’s specialty chemicals business, increased in 2014 by 25.4% to €2.1 billion (2013: €1.6 billion). Both solid organic growth of 4.1% as well as acquisition-related sales increases of 22.8% or €375 million contributed to this sharp rise. Adverse foreign exchange effects lowered sales by 1.5%.
Organic growth was delivered by all the existing business units, with Liquid Crystals making the largest absolute contribution to the increase in sales. In the Liquid Crystals business, in which Merck is the global market and innovation leader, the company benefited from the strong demand for high-quality and large-size televisions, for example ultra HD devices. This growth was also bolstered by sales volume developments of the new, energy-saving UB-FFS (Ultra-Brightness Fringe Field Switching) technology, which is used in the new generation of displays for smartphones and tablet PCs. The Pigments & Cosmetics business unit achieved slight organic sales growth in 2014. Xirallic pigments, which are primarily used in high-quality automotive coatings, as well as technical-functional materials were the main drivers. Due to higher demand for OLED displays, the Advanced Technologies business unit made a good contribution to the organic growth of Performance Materials.
EBITDA pre one-time items of Performance Materials rose in 2014 particularly as a result of the acquisition of AZ by 14.8% to €895 million (2013: €780 million).
“Merck is not only benefiting from the megatrend of digitization, but is also actively helping to shape it, for example by developing energy-saving and thus battery-saving display materials,” explained Merck CEO Kley. “Apart from the good performance of the Liquid Crystals business with both established and innovative products, we are therefore particularly pleased by the sales growth resulting from the acquisition of AZ. Meanwhile AZ has been fully integrated and optimally complements our business portfolio.”
For 2015, Merck expects a slight increase in organic sales over the previous year amid moderately positive foreign exchange effects. Moreover, due to the inclusion of AZ for a full fiscal year, a slightly positive portfolio effect is expected. Owing to the expected operating development and positive foreign exchange effects, Merck forecasts a slight increase in EBITDA pre one-time items in 2015. EBITDA pre one-time items in 2015 should, however, at least reach the previous year’s level.
“We strengthened all three of Merck’s business sectors: Healthcare, Life Science and Performance Materials. With the acquisition of AZ, the offer to acquire Sigma-Aldrich and the alliance with Pfizer in immuno-oncology, we have laid the foundations for future growth,” said Karl-Ludwig Kley, chairman of the Executive Board of Merck. “These developments are the result of our long-term transformation and growth strategy. Merck is transforming into a highly specialized, global technology company with the goal to improve the lives of patients and customers.”
Total revenues of the Merck Group rose by 3.7% to €11.5 billion in 2014 (2013: €11.1 billion). Sales grew by 5.5% to €11.3 billion (2013: €10.7 billion). This was primarily the result of organic growth of 4.0% as well as acquisition-related increases of 3.3%, which were attributable to the acquisition of AZ. At the same time, foreign exchange effects lowered sales by -1.8%.
Merck markedly increased its operating result (EBIT) by 9.4% to €1.8 billion (2013: €1.6 billion). The key financial indicator used to steer operating business, EBITDA pre one-time items, climbed 4.1% to €3.4 billion (2013: €3.3 billion), also thanks to good operating performance and the acquisition of AZ.
Even though the purchase price payment for AZ amounting to around €1.9 billion was financed, net financial debt rose by only €252 million to €559 million (2013: €307 million). As of June 30, 2014, this figure had temporarily risen to €2.2 billion. This renewed evidence of the Merck Group’s high internal financing power shows that Merck is well prepared for the acquisition of Sigma-Aldrich. As of Dec. 31, 2014, Merck had 39,639 employees worldwide (2013: 38,154).
In the fourth quarter of 2014, Merck achieved strong sales growth of 12.9% to €3.0 billion compared with the year-earlier period (Q4/2013: €2.6 billion). Apart from organic growth of 4.4%, portfolio effects from the AZ acquisition and favorable foreign exchange effects were responsible for the considerable increase. Consequently, despite declining royalty, license and commission income, EBITDA pre one-time items grew 10.5% to €878 million (Q4/2013: €795 million). Earnings per share pre one-time items rose 7.5% to €1.14 (Q4/2013: €1.06).
Sales of Performance Materials, Merck’s specialty chemicals business, increased in 2014 by 25.4% to €2.1 billion (2013: €1.6 billion). Both solid organic growth of 4.1% as well as acquisition-related sales increases of 22.8% or €375 million contributed to this sharp rise. Adverse foreign exchange effects lowered sales by 1.5%.
Organic growth was delivered by all the existing business units, with Liquid Crystals making the largest absolute contribution to the increase in sales. In the Liquid Crystals business, in which Merck is the global market and innovation leader, the company benefited from the strong demand for high-quality and large-size televisions, for example ultra HD devices. This growth was also bolstered by sales volume developments of the new, energy-saving UB-FFS (Ultra-Brightness Fringe Field Switching) technology, which is used in the new generation of displays for smartphones and tablet PCs. The Pigments & Cosmetics business unit achieved slight organic sales growth in 2014. Xirallic pigments, which are primarily used in high-quality automotive coatings, as well as technical-functional materials were the main drivers. Due to higher demand for OLED displays, the Advanced Technologies business unit made a good contribution to the organic growth of Performance Materials.
EBITDA pre one-time items of Performance Materials rose in 2014 particularly as a result of the acquisition of AZ by 14.8% to €895 million (2013: €780 million).
“Merck is not only benefiting from the megatrend of digitization, but is also actively helping to shape it, for example by developing energy-saving and thus battery-saving display materials,” explained Merck CEO Kley. “Apart from the good performance of the Liquid Crystals business with both established and innovative products, we are therefore particularly pleased by the sales growth resulting from the acquisition of AZ. Meanwhile AZ has been fully integrated and optimally complements our business portfolio.”
For 2015, Merck expects a slight increase in organic sales over the previous year amid moderately positive foreign exchange effects. Moreover, due to the inclusion of AZ for a full fiscal year, a slightly positive portfolio effect is expected. Owing to the expected operating development and positive foreign exchange effects, Merck forecasts a slight increase in EBITDA pre one-time items in 2015. EBITDA pre one-time items in 2015 should, however, at least reach the previous year’s level.