Merck KGaA confirmed its forecast for the development of organic EBITDA pre for the full year 2018.
“2018 was a challenging year for our company. We made future-oriented decisions that will lead to profitable growth as of 2019,” said Stefan Oschmann, chairman of the Executive Board and CEO of Merck KGaA. “In the third quarter, we generated strong organic sales growth across all three business sectors. In particular, Healthcare and Life Science performed well, delivering strong organic growth of nearly 10%.”
Group sales rose in the third quarter by 6.6% to €3.7 billion. Organically, sales grew very strongly by 8.8%. The negative foreign exchange impact of –2.1% was primarily attributable to Latin American currencies such as the Argentinean peso and the Brazilian real.
EBITDA pre, the key financial indicator used to steer operating business, grew organically by 3.7%, due mainly to Healthcare and Life Science. However, significant negative foreign exchange effects of 9.5% caused EBITDA pre to decrease by 5.9% to €963 million (Q3 2017: €1,023 million). Group EBIT decreased by 43.1% to €491 million (Q3 2017: €862 million). Net income of the Group fell in the third quarter by 47.2% to €340 million (Q3 2017: €644 million). Earnings per share pre declined by 7.7% to €1.32 (Q3 2017: €1.43).
In comparison with the end of the second quarter, net financial debt decreased by more than €500 million. At €10.2 billion, this figure was slightly higher than at the end of 2017 (Dec. 31, 2017: €10.1 billion).
In the first nine months of 2018, Group sales of €10.9 billion were at the year-earlier level (January-September 2017: €10.9 billion). The marked organic increase of 5.7% was largely eliminated by negative exchange rate effects of 5.0%. EBITDA pre fell by 13.2% to €2.9 billion in the first nine months of 2018 (January-September 2017: €3.3 billion). The impact of negative foreign exchange effects on EBITDA pre was 10.1%. Earnings per share pre decreased by 16.7% to €3.89 (January-September 2017: €4.67).
As in the second quarter, the Performance Materials business sector once again delivered organic sales growth. The organic increase of 3.4% exceeded negative foreign exchange effects of 0.9%. Consequently, net sales of Performance Materials rose by 2.4% to €626 million in the third quarter of 2018 (Q3 2017: €611 million).
The sales increase in Display Solutions was driven mainly by the very good organic growth of the OLED materials business, energy-saving UB-FFS technology, as well as established liquid crystal technologies. The latter are currently benefiting from projects by panel makers in China to build up production capacities. Sales of the Display Solutions business unit, which are being reported for the first time, amounted to €357 million in the third quarter.
The Semiconductor Solutions business unit, which comprises the business with materials used in integrated circuit production, again delivered very strong organic growth in the third quarter, with sales amounting to €152 million. At €115 million, net sales of the Surface Solutions business unit declined overall in the third quarter of 2018, also impacted by negative exchange rate effects.
EBITDA pre of Performance Materials declined significantly by 18.3% to €203 million (Q3 2017: €249 million).
Following strong organic sales growth in the third quarter, particularly in the Healthcare and Life Science business sectors, Merck KGaA now expects for the full year 2018 a solid organic net sales increase of 4% to 6% (previously 3% to 5%) over 2017.
Overall, taking into account the treatment of the Consumer Health business as a discontinued operation, Merck KGaA forecasts Group net sales in a range of between €14.4 billion and €14.8 billion in 2018 (previously: €14.1 billion to €14.6 billion; 2017: €14.5 billion).