Merck KGaA, Darmstadt, Germany, a leading science and technology company, registered the effects of the COVID-19 pandemic in all business sectors in the second quarter.
Healthcare and Performance Materials were affected most strongly. In comparison with the year-earlier quarter, Group sales increased by 3.7% to €4.1 billion. EBITDA pre, the Group’s most important earnings indicator, fell by 5.7% to €1.1 billion in the second quarter.
Irrespective of this, the company specified its sales forecast for fiscal 2020 and now expects Group sales of between €16.9 billion and €17.7 billion. Also, the company has raised the lower end of the range for expected EBITDA pre and now forecasts a value between €4.45 billion and €4.85 billion.
“Despite considerable pandemic-related obstacles in some businesses, overall we did well in the second quarter. In recent months, we again proved the strengths of our diversified business model with three strong, innovation-driven business sectors,” said Stefan Oschmann, chairman of the Executive Board and CEO. “Especially in view of the pandemic, it is apparent that our strategic focus on science and technology is the right one.”
The 3.7% year-on-year increase in Group sales in the second quarter primarily reflects acquisition-related growth in the Performance Materials business sector and organic growth in Life Science. Group-wide, net sales decreased organically by 2.5%, mainly due to the impacts of the Covid-19 pandemic. EBITDA pre declined by 5.7% to €1.1 billion in the second quarter.
By contrast, acquisitions were responsible for an increase of 8.8%. The operating result EBIT declined by 20.6% to €491 million. Net financial debt amounted to €12.6 billion on June 30, 2020. Rapidly reducing debt remains a high priority for the company.
In the first six months of 2020, net sales of the Group increased by 10% to €8.5 billion. All business sectors contributed to this. Organically, Group sales rose by 2.4%, foreign exchange effects softened the increase by -0.2%, and portfolio effects from acquisitions supported sales by 7.7%. EBITDA pre grew by 9.1% to €2.3 billion, earnings per share pre rose by 4.9% to €2.80.
Performance Materials generated a 38.1% increase in sales to €814 million in the second quarter. The key factor behind this growth was the net sales contribution of 50.1% from the acquisitions of Versum Materials and Intermolecular. Organically, sales declined by 13.7%.
Apart from the continued price pressure in the Liquid Crystals business and the strong comparative basis of the previous year, weaker end-user demand triggered by the pandemic led to an organic sales decline of 20.8% in Display Solutions. Both the business performance of the legacy Versum business and the integration are on track. EBITDA pre amounted to €238 million, improving by 25.2% over the year-earlier quarter.
