Merck Germany Reports 5% Decline In Q2 Sales, Expects More Decline In 2023

Merck KGa Germany MKGAF MKKGY reported Q2 sales of €5.3 billion, down 4.8% Y/Y.

The company said that while net Life Science and Electronics sales declined in softer markets, Healthcare delivered an organic sales growth of 11.9%.

The strong growth of the Healthcare business sector largely offset the decline in Life Science and Electronics, resulting in the organic development of Group sales of −1.1%. 

Despite the strong earnings growth of Healthcare, Group EBITDA pre declined by −12.8% (organically −7.0%) to € 1.55 billion, primarily due to decreased sales volumes and the proportionately lower share of higher-margin products. 

Profit fell 19% to €706 million. Operating profit fell 18% to €969 million, with margin compressing from 21.1% to 18.3%.

In a statement, the company cited "persistently high inventory levels of our Life Science customers, the further delayed recovery of the market for semiconductor materials, an increased cost level due to inflation, and an even stronger negative foreign exchange impact."

Merck Germany has updated its 2023 forecast, and it now expects an organic sales growth of −2% to +2% (previously +1% to +4%) along with an organic decline in EBITDA pre by −9% to −3% (previously: −5% to 0%). 

Excluding the Covid-19 business, Group sales are expected to grow organically by +1% to +5% (previously: +4% to +7%). 

Both net sales and EBITDA pre will likely be impacted by negative foreign exchange effects of −6% to −3% (previously: −5% to −2%). 

"For us, 2023 remains a transition year," said Belén Garijo, Chair of the Executive Board and CEO of Merck. "In the second quarter, our Healthcare business once again proved to be a growth driver... We remain confident of our mid-term growth ambition and in delivering € 25 billion in sales by 2025."