-- 2nd-Quarter Sales Rise 16% to Record EUR 1,949 Million
-- Operating Results Jump 34% to New Quarterly High of EUR 249 Million
-- Sales for Glucophage Franchise Increase 64%
-- Full-Year Double-Digit Bottom-Line Growth Reconfirmed
DARMSTADT, Germany, July 26 /PRNewswire/ -- The Merck Group produced its
best-ever results in the 2nd quarter, increasing sales by 16% to a record
EUR 1,949 million and raising operating results by a very gratifying 34% to a
record EUR 249 million. These increases were mainly due to organic growth and
good performances from the Pharmaceuticals and Laboratory Distribution
divisions. Sales of Merck's oral antidiabetic products in the Glucophage
franchise soared 64% in the quarter.
Merck Group sales for the second quarter of 2001 rose 16 percent to
EUR 1,949 million, mainly as the result of real growth (13 percent) rather
than currency effects (2.6 percent) or consolidation (0.4 percent). The
operating result for the quarter rose significantly, by 34 percent to
EUR 249 million, while net income after minorities and excluding exceptionals
rose an excellent 87 percent to EUR 96 million from EUR 51 million. The group
tax rate decreased to 47 percent in the quarter from 54 percent before
exceptionals in the same period last year. Quarterly earnings per share jumped
to EUR 0.56 from -EUR 0.02.
All four business segments saw increases in sales. Despite the slowdown in
the world economy, the four major regions of the globe also showed sales
growth: 31 percent for North America; 19 percent in Latin America; 2 percent
for AAA (Asia, Africa and Australia); and 7 percent in Europe.
"We are reporting the best sales and operating results in the company's
long history," said Prof Dr Bernhard Scheuble, Chairman and Chief Executive
Officer of Merck. "With such a good performance in the second quarter,
following a record-breaking first quarter, I can reconfirm the guidance for
full-year double-digit growth on the bottom line."
There were no exceptional items during the second quarter of this year.
The Merck Group posted a total of -EUR 57 million of exceptional items in the
second quarter of last year, with the largest single item being
-EUR 33 million for the write-down of fixed assets for the ascorbic acid
business.
The second-quarter ROS (return on sales) for the Group rose to
12.8 percent from 11.1 percent in the year-ago period. ROCE (return on
capital employed) increased to 14.4 percent from 11.6 percent.
Business sectors
Pharmaceuticals sales rose a very satisfactory 19 percent to
EUR 871 million, with operating results jumping 40 percent to EUR 162 million,
giving the division an ROS ratio of 18.6 percent compared to 15.8 percent in
the year-ago period. Pharmaceuticals contributed 45 percent to sales and 65
percent to the operating result of the Merck Group during the second quarter.
Sales of Ethicals increased significantly, by 22 percent to EUR 564 million,
boosted by a 64 percent jump in sales to EUR 926 million for the anti-diabetes
family of drugs -- Glucophage, Glucovance and Glucophage RX. More than 41
percent of new prescriptions written in the U.S. for the diabetes market by
the end of the second quarter were for Glucophage products.
Generic drug sales also posted strong gains, 19 percent to
EUR 227 million. Alphapharm in Australia, Merck Generiques in France,
Pharmaceutical Resources Inc. (Par) in the U.S. and Genpharm in Canada, all
produced outstanding second-quarter results. Consumer Healthcare sales
increased 11 percent to EUR 79 million. BION3, its new patented multivitamin
plus probiotic cultures, is the fastest growing product in the U.K.
multivitamin market while Femibion is the market leader in Germany for
multivitamins before and during pregnancy.
Specialty Chemicals sales rose 5.2 percent to EUR 290 million while
operating results were up 24 percent to EUR 55 million, for an ROS of
18.9 percent compared to 16.1 percent in the year-ago period. The division
contributed 15 percent to total sales and 22 percent to overall operating
results of the Merck Group. Electronic Chemicals sales rose 18 percent to
EUR 54 million as demand from the semiconductor industry remained on a high
level in Asia and Europe, though a moderate slowdown is expected in the third
quarter. Liquid Crystals revenue was little changed at EUR 67 million as the
growing popularity of LCD computer monitors helped to offset the effects of
the ailing mobile phone industry.
The Laboratory Products divisional sales rose 6.9 percent to
EUR 141 million in the second quarter, accounting for 4 percent of Group
revenue. The operating result declined 12 percent to EUR 9 million due to a
temporary lack of high margin product sales and adverse effects from inventory
valuations. Sales of Laboratory Reagents rose 7.8 percent to EUR 79 million.
Scientific Laboratory Products increased sales 5.8 percent to EUR 61 million.
The Laboratory Distribution business, VWR International Inc., reported a
strong sales growth of 21 percent to EUR 710 million and a 50 percent increase
in operating results to EUR 22.5 million. With continued excellent growth and
improved profitability, VWR International remains on course for its planned
IPO.
Outlook
Our Pharmaceutical business continues to grow and the life-cycle
management of our top-selling oral antidiabetic, Glucophage, is progressing
well. U.S. generic competition had not started by the end of the second
quarter, giving our licensee more time to inform doctors and patients about
the advantages of our newer diabetes treatments, Glucovance and Glucophage XR.
Likewise, our generics business is developing well. The acquisition of Mohan
Research Medicine Institute -- which is still subject to due diligence -- will
provide a platform for growth in Japan, the world's second-largest drug
market. The worldwide slowdown in the high technology industries is having a
first, but modest, impact on our Specialty Chemicals business though margins
remain at a high level. VWR International, with excellent growth and
profitability this quarter, remains on course for its planned IPO. We also
expect to be able to announce further restructuring of the Group and details
about a new corporate identity by the end of the third quarter.
Notes:
Q2 Interim Report:
The complete quarterly report is available as a .pdf file for download in
English and German on the company Website: http://www.merck.de
Q2 Conference Call
You are invited to join an English-language conference call with members
of the Merck KGaA executive board today at 3 p.m. Frankfurt time (2 p.m.
London and 9 a.m. New York). To access the conference call, please dial:
+44 (0) 20 8240 8240
+44 (0) 20 8240 8242
and use the passwords: "Merck - Christian Raabe." A recording of the call
will be available for the next two working days on Instant Replay. For this
service, please dial:
+44 (0) 20 8288 4459
Access Code 685 612
Stock Symbols:
Reuters: MRCG
Bloomberg: MRK GY
Frankfurt Stock Exchange WPK: 659 900
Internet: http://www.merck.de
Headquartered in Darmstadt/Germany, the Merck Group generated sales of
EUR 6.7 billion in 2000 in the fields of Pharmaceuticals, Specialty Chemicals,
Lab Products and Lab Distribution. Founded in 1668, the Merck Group is
represented today by more than 200 companies in 52 countries and employs
34,000 people world-wide. The company groups its operating activities under
Merck KGaA, in which E. Merck, as a general partner, holds the Merck family's
74 percent equity interest in Merck KGaA. The Merck Group strongly believes
that promotion of its employees' self-initiative and self-responsibility,
application-oriented research and development and close customer relationships
in the markets are the keys to long-term corporate success.
Business Development Figures: Q2/2001 vs Q2/2000
Merck Group (EUR million) Q2/2001 Q2/2000 (+/- %)
Sales 1,949.2 1,676.5 16.3
Research & Development - 155.3 - 148.1 4.9
Patent and license revenues 46.1 32.5 41.7
Operating result 248.6 185.3 34.2
Exceptional items 0.0 - 56.6 --
EBIT 248.6 128.7 93.2
Financial result - 57.5 - 66.1 - 12.9
Profit before tax 191.1 62.6 205.4
Income tax - 90.5 - 62.4 45.1
Profit after tax 100.6 0.2 --
Minority interest - 4.9 - 3.9 25.8
Net profit after minority interest 95.7 - 3.7 --
Earnings per share (EUR) 0.56 - 0.02 --
Free Cash-Flow 75.3 - 113.9 --
Investments (property, plant,
equipment) 113.4 90.7 25.0
Sales by businesses (EUR million) Q2/2001 Q2/2000 (+/-%)
Pharmaceuticals 870.5 730.5 19.2
- Ethicals 563.7 463.6 21.6
- Generics 227.4 190.6 19.3
- Consumer Healthcare 79.4 71.6 11.0
Specialty Chemicals 289.7 275.4 5.2
- Cosmetics, Health, Nutrition 90.6 86.3 5.1
- Pigments/Technical Industries 77.5 75.4 2.7
- Liquid Crystals 67.4 68.0 - 0.9
- Electronic Chemicals 54.1 45.7 18.3
Laboratory Products (LP) 140.7 131.6 6.9
- Laboratory Reagents 79.3 73.6 7.8
- Scientific Laboratory Products 61.4 58.0 5.8
Laboratory Distribution (LD) 710.3 585.9 21.2
- Eurolab 205.2 179.1 14.5
- VWR 505.1 406.7 24.2
Interdivisional sales (LP/LD) - 62.0 - 46.8 32.4
Sales by Regions (EUR million) Q2/2001 (+/- %)Sales Share (%)
Europe 672.3 6.8 35
North America 854.5 31.4 44
Latin America 123.1 19.2 6
Asia/Australia/Africa 299.3 2.1 15
Business Development Figures: H1/2001 vs H1/2000
Merck Group (EUR million) H1/2001 H1/2000 (+/-%)
Sales 3,727.5 3,259.9 14.3
Research & Development - 296.9 - 281.5 5.5
Patent and license revenues 91.0 58.0 57.0
Operating result 460.6 366.3 25.8
Exceptional items 0.0 13.4 --
EBIT 460.6 379.7 21.3
Financial result - 102.8 - 116.2 - 11.5
Profit before tax 357.8 263.4 35.8
Income tax - 163.6 - 151.2 8.2
Profit after tax 194.2 112.3 73.0
Minority interest - 9.5 - 6.6 43.9
Net profit after minority
interest 184.6 105.6 74.8
Earnings per share (EUR) 1.07 0.61 74.8
Free Cash-Flow 143.5 280.0 - 48.8
Investments (property,
plant, equipment) 234.9 170.4 37.9
Sales by businesses (EUR million) H1/2001 H1/2000 (+/-%)
Pharmaceuticals 1,630.0 1,423.9 14.5
- Ethicals 1,041.1 908.4 14.6
- Generics 431.3 359.9 19.8
- Consumer Healthcare 157.6 147.6 6.8
Specialty Chemicals 578.1 528.3 9.4
- Cosmetics, Health, Nutrition 179.6 169.8 5.7
- Pigments/Technical Industries 159.1 149.5 6.4
- Liquid Crystals 133.6 123.0 8.6
- Electronic Chemicals 105.4 85.8 22.8
Laboratory Products (LP) 280.3 261.4 7.2
- Laboratory Reagents 157.7 147.4 7.0
- Scientific Laboratory Products 122.6 114.0 7.5
Laboratory Distribution (LD) 1,362.5 1,135.8 20.0
- Eurolab 419.8 352.1 19.2
- VWR 942.8 783.7 20.3
Interdivisional sales (LP/LD) - 123.3 - 89.5 37.7
Sales by Regions (EUR million) H1/2001 (+/- %) Sales Share (%)
Europe 1,359.6 8.4 36
North America 1,553.8 23.4 42
Latin America 231.3 13.5 6
Asia/Australia/Africa 582.8 7.4 16
SOURCE Merck KGaA
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Related links:
http://www.merck.de
CONTACT:
Phyllis Carter of Merck KGaA,
+49-6151-72-7144, or fax, +49-6151-72-7707, or
phyllis.carter@merck.de
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