UpdateMerck’s Performance Materials division Q3 sales fall 5.2%

26 October 2011 11:50  [Source: ICIS news]

(leads on Performance Materials' revenue, adds further financial detail throughout)

Merck KGaA headquarters in Darmstadt, Germany. (Image provided by in Merck KGaA)LONDON (ICIS)--Merck Group’s revenue from its Performance Materials division in the third quarter of 2011 fell by 5.2% year on year to €342m ($475m), on the back of unfavourable exchange rates and the divestment of the division’s Crop BioScience business, the German-based producer said on Wednesday.

Currency exchange rates lowered revenue growth by 1.7% and the divestment of Merck’s Crop BioScience business in February subtracted another 2.2 percentage points from the growth of its Performance Materials division, which resulted in an organic revenue decline of 1.3% year on year in the third quarter, it added.

The company said that third-quarter sales for the division’s liquid crystals business unit increased organically by only 2.4% in the quarter as customers reduced stocks in response to a weaker economic environment, while sales by its pigments and cosmetics business unit declined by 12% organically year on year during the quarter because of lower volumes and softer demand across all business fields.

Merck Group’s total net profit rose by 7.5% year on year to €226.6m in the third quarter, while the firm’s overall revenues rose by 3.8% to €2.53bn, in line with solid contributions from its pharmaceuticals divisions and the Merck Millipore life science division. Merck said that exchange rate movements reduced total third-quarter revenue growth by 2.2%.

“The Merck Group produced solid third-quarter revenue growth in a difficult environment, driven mainly by good performances from the Merck Serono and Merck Millipore divisions,” said Karl-Ludwig Kley, chairman of the executive board of Merck Group.

“Net profit rose… on higher revenues as one-time costs from last year were not repeated, leaving us well positioned as we head into the end of the year,” Kley added.

The group’s third-quarter earnings before interest and tax (EBIT) fell by 8.3% year on year to €333.3m. Merck said the primary reason for the decline in profitability was a weakening of its Performance Materials division and the increase in research and development (R&D) costs.

The Merck Serono pharmaceutical division’s total revenues during the third quarter increased by 5.4% to €1.5bn compared with the same period last year, while the group’s Consumer Health Care division reported a 6.3% year-on-year rise in total revenue to €133m in the third quarter. Merck Millipore’s total revenue increased by 5.2% year on year to €588m in the third quarter of 2011.

For the nine-month period ended 30 September, Merck Group’s net profit fell by 17.7% year on year to €481.8m, while its revenues rose by 13.4% to €7.65bn.

Looking ahead, the company is expecting full-year group revenues of about €10bn-10.2bn, with its EBIT expected to be around €1bn, the company added.

“We are making progress in driving our change agenda forward and we will provide important updates on this endeavour in the first half of 2012,” Kley said.

Additional reporting by Nurluqman Suratman

($1 = €0.72)

For more on Merck Group visit ICIS company intelligence

By: Franco Capaldo
+44 (0)20 8652 3214

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