* 3rd-Quarter Sales Rise 14% to New High of EUR 1,952 Million
* Operating Results Soar 52% to EUR 293 Million
* Profit After Tax/Before Exceptionals Jumps 60% to EUR 131 Million
* Merck Expects Best Year in Its 333-Year History
LONDON, Oct. 25 /PRNewswire/ -- The Merck Group reported a third
record-breaking quarter with sales rising 14% to EUR 1,952 million and an
operating result climbing 52% to EUR 293 million. The business development in
the third quarter was predominantly driven by an excellent performance from
Pharmaceuticals, especially Ethicals and Generics, and also by Laboratory
Distribution.
Merck Group sales for the third quarter rose 14% to EUR 1,952 million,
entirely due to organic growth. The operating result for the quarter jumped
52% to EUR 293 million, while net profit after minorities and excluding
exceptionals soared to EUR 118 million from EUR 77 million. The group tax
rate before exceptionals increased to 43% in the quarter from 42% in the same
period last year. Quarterly earnings per share jumped to EUR 2.05 from EUR
0.35.
The company's sales growth was driven by strong performances from the
Pharmaceuticals (+23%) and Laboratory Distribution (+14%) sectors.
Geographically, sales in North America climbed 29% to EUR 866 million. The
North American continent accounted for 44% of Merck's total third-quarter
sales and will remain a major focus for the company. Sales in Europe rose 9%
to EUR 666 million while sales in Latin America and AAA (Asia, Africa and
Australia) each declined 2%.
"Once again, I am proud to announce the best quarterly sales and operating
result in the company's 333-year history," said Prof. Bernhard Scheuble,
Chairman and Chief Executive Officer of Merck. "Now that we have three
record-breaking quarters in a row behind us, I can safely say that we expect
full-year double-digit growth on both the bottom and top lines."
The Merck Group sold its 43% stake in the U.S. generics drug manufacturer
Pharmaceutical Resources Inc. (PRI) during the third quarter for EUR 411
million. This resulted in an exceptional after tax profit of EUR 234 million.
PRI was deconsolidated as of September 1. During the third quarter of last
year, Merck posted exceptional charges of EUR 12.8 million.
The third-quarter ROS (return on sales) for the Group rose to 15.0% from
11.3% in the year-ago period. ROCE (return on capital employed) increased to
16.9% from 11.9%.
Business sectors
Pharmaceuticals sales increased 23% to EUR 892 million in the third
quarter while the operating result jumping 92% to EUR 232 million, giving the
business sector an ROS ratio of 26.0% compared to 16.6% in the year-ago
period. Pharmaceuticals contributed 46% to sales and 79% to the operating
result of the Merck Group during the third quarter. Sales of Ethicals
increased significantly, by 22% to EUR 553 million, aided by a 42% rise in
sales to EUR 831 million for the anti-diabetes family of drugs - Glucophage,
Glucovance and Glucophage XR. About 40% of new prescriptions written in the
U.S. for the oral diabetes market by the end of the third quarter were for
Glucophage products.
Generics sales jumped 34% to EUR 265 million helped by the outstanding
August launch in the U.S. of Fluoxetine, the generic version of the
best-selling antidepressant Prozac. While the disposal of the PRI stake
resulted in the deconsolidation of PRI sales at the end of August, Merck's
Genpharm in Canada and Alphapharm in Australia have development and supply
agreements that allow them to continue sharing in the profits of many PRI
products such as Fluoxetine. Consumer Healthcare sales rose 6% to EUR 74
million helped by demand in western Europe for its innovative multivitamins
such as BION3 - with vitamins, minerals and probiotics - and Femibion for use
before and during pregnancy.
Speciality Chemicals sales were unchanged from the year-ago quarter at EUR
278 million, mainly due to the worldwide slump in the high technology
industries. The operating result fell 64% because of the flat sales and
depreciation of inventories. ROS declined to 8.0% from 22.1%. This business
sector contributed 14% to total sales and 8% to overall operating results of
the Merck Group. Electronic Chemicals sales were unchanged at EUR 54 million
with demand from the semiconductor slowing as expected. Liquid Crystals sales
dropped 12% EUR 67 million as the popularity of flat-panel LCD monitors failed
to compensate for the decline in sales to the PC-notebook and mobile phone
markets.
The Laboratory Products sales rose 2% to EUR 142 million in the third
quarter, accounting for 4% of Group revenue. The operating result increased
56% to EUR 11 million, recovering from higher marketing and sales costs last
year to open up the Japanese and U.S. markets. Sales of Laboratory Reagents
rose 3% to EUR 81 million. Scientific Laboratory Products remained at EUR 61
million.
The Laboratory Distribution business, VWR International Inc., reported
third-quarter sales rose 14% to EUR 701 million. The operating result jumped
to EUR 27 million from EUR 3.4 million the year before when results were
impacted by restructuring expenses. As the operating result has grown steadily
for a year, plans for VWR's IPO remain on track.
Outlook
After record-breaking results in each quarter, the Merck Group expects
that 2001 will be the best year in the company's 333-year history. The
company predicts double-digit growth rates on both the top and bottom lines.
The Pharmaceuticals business sector will produce the bulk of this growth rate.
Generic competition in the U.S. for the top-selling oral diabetes treatment,
Glucophage, had not started by the end of the 3rd quarter but could commence
at anytime. Still, we expect that the Glucophage family of products should be
able to retain a significant portion of its sales for sometime to come.
Merck's Speciality Chemicals sector managed to remain unaffected by the
worldwide slowdown in the high technology industries during the first half of
2001 but could not avoid it in the third quarter. Liquid Crystals and
Electronic Chemicals, especially, will continue to be negatively impacted into
the 4th quarter. VWR International's sales and earnings continue to improve
and its planned IPO remains on track.
Notes:
* A live webcast of the presentations at the Merck press conference in
London will be available in English on the company website
http://www.merck.de at 10 am London time (11 am CEST). An archived
webcast will be available after the press conference.
* The complete quarterly report in English and German also is available
on the Media/Investor Relations section of the company website:
http://www.merck.de
Search Symbols:
Reuters: MRCG
Bloomberg: MRK GY
Frankfurt Stock Exchange WPK: 659 900
Headquartered in Darmstadt/Germany, the Merck Group generated sales of
EUR 6,7 billion in 2000 in the fields of Pharmaceuticals, Speciality
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 34,300 people worldwide. 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: Q3/2001 vs Q3/2000
Merck Group (EUR million) Q3/2001 Q3/2000 (+/- %)
Sales 1,951.8 1,712.2 14.0
Research & Development - 127.9 - 128.0 0
Patent and license revenues 41.3 44.6 - 7.4
Operating result 292.8 193.1 51.6
Exceptional items 354.0 - 12.8 --
EBIT 646.8 180.3 258.8
Financial result - 62.4 - 52.6 18.6
Profit before tax 584.4 127.7 357.7
Income tax - 219.4 - 63.4 246.1
Profit after tax 365.0 64.3 467.9
Minority interest - 12.9 - 4.3 202.3
Net profit after minority interest 352.1 60.0 486.8
Earnings per share (EUR) 2.05 0.35 487
Free Cash-Flow 438.5 - 101.7 --
Investments (property, plant, equipment) 99.8 144.8 - 31.1
Sales by businesses (EUR million) Q3/2001 Q3/2000 (+/-%)
Pharmaceuticals 891.8 726.4 22.8
- Ethicals 553.3 455.1 21.6
- Generics 264.5 197.4 34.0
- Consumer Healthcare 74.0 70.0 5.6
Speciality Chemicals 278.2 279.5 -0.5
- Cosmetics, Health, Nutrition 84.3 78.9 6.9
- Pigments/Technical Industries 72.4 70.5 2.7
- Liquid Crystals 67.2 76.2 - 11.8
- Electronic Chemicals 54.0 53.9 0.2
Laboratory Products (LP) 141.5 139.1 1.7
- Laboratory Reagents 80.5 78.3 2.8
- Scientific Laboratory Products 61.0 60.8 0.2
Laboratory Distribution (LD) 700.5 616.2 13.7
- Eurolab 201.2 178.3 12.8
- VWR 499.3 438.0 14.0
Interdivisional sales (LP/LD) - 60.2 - 49.1 22.5
Sales by Regions (EUR million) Q3/2001 (+/- %) Sales Share (%)
Europe 666.0 8.7 34
North America 866.0 28.7 44
Latin America 112.4 - 1.5 6
Asia/Australia/Africa 307.5 - 1.7 16
Business Development Figures: Q1-3/2001 vs Q1-3/2000
Merck Group (EUR million) Q1-3/2001 Q1-3/2000 (+/-%)
Sales 5,679.3 4,972.1 14.2
Research & Development - 424.8 - 409.4 3.8
Patent and license revenues 132.3 102.6 29.0
Operating result 753.4 559.4 34.7
Exceptional items 354.0 0.6 --
EBIT 1,107.4 560.0 97.8
Financial result - 165.3 - 168.9 - 2.1
Profit before tax 942.1 391.1 140.9
Income tax - 383.0 - 214.5 78.5
Profit after tax 559.2 176.5 216.7
Minority interest - 22.4 - 10.9 105.9
Net profit after minority interest 536.7 165.6 224.0
Earnings per share (EUR) 3.12 0.96 224.0
Free Cash-Flow 581.9 178.3 226.0
Investments (property, plant, equipment) 334.7 315.2 6.0
Sales by businesses (EUR million) Q1-3/2001 Q1-3/2000 (+/-%)
Pharmaceuticals 2,521.7 2,150.3 17.3
- Ethicals 1,594.4 1,363.5 16.9
- Generics 695.8 557.3 24.9
- Consumer Healthcare 231.5 217.6 6.4
Speciality Chemicals 856.3 807.8 6.0
- Cosmetics, Health, Nutrition 263.9 248.7 6.1
- Pigments/Technical Industries 231.5 220.0 5.2
- Liquid Crystals 200.8 199.2 0.8
- Electronic Chemicals 159.4 139.7 14.1
Laboratory Products (LP) 421.7 400.6 5.3
- Laboratory Reagents 238.2 225.7 5.5
- Scientific Laboratory Products 183.5 174.9 5.0
Laboratory Distribution (LD) 2,063.0 1,752.0 17.8
- Eurolab 620.9 530.4 17.1
- VWR 1,442.1 1,221.6 18.0
Interdivisional sales (LP/LD) - 183.4 - 138.6 32.3
Sales by Regions (EUR million) Q1-3/2001 (+/- %) Sales Share (%)
Europe 2,025.6 8.5 36
North America 2,419.8 25.3 42
Latin America 343.6 8.1 6
Asia/Australia/Africa 890.3 4.1 16
SOURCE Merck KGaA
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Related links:
http://www.merck.de
CONTACT:
Phyllis Carter of Merck KGaA,
+49-61-51-72-7144
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