Merck KGaA Q1 profits fall 53% on exceptionals

25 April 2007 09:11  [Source: ICIS news]

LONDON (ICIS news)--Merck KGaA, the German pharmaceuticals and fine chemicals company, reported a 53.3% drop in year-on-year operating profits in the first quarter on Wednesday due to exceptional items.

 

Merck said it posted exceptional items totalling €196m in the first quarter, leading to a fall in earnings before interest and tax (EBIT) to €125.6m ($171.3m).

 

“This sum primarily represents further purchase price allocations, this time for Serono inventories. These exceptional items for inventories will be completed by the end of 2007 in four equal instalments,” the company said.

 

Revenues for the first quarter were up 37% from the same period last year at €2.17bn, with the newly-acquired Serono contributing about €490m of first-quarter sales and a further €60m in royalty income.

 

“This major acquisition will have a strong influence on this year’s results – both revenue and profit figures – and it is clear to see that Merck remains on a solid footing and now has much more potential,” said Michael Roemer, chairman of the executive board of Merck KGaA.

 

“This acquisition has changed the face of Merck with the pharmaceuticals business sector now accounting for more than 75% of total revenues.”

 

The chemicals business contributed about one quarter of total group revenues but 48% of the group’s operating result in the first quarter, Merck said.

 

Revenues for the division fell by 5.8% in the first quarter to €529m.

 

“Revenues increased slightly on an organic basis but currency effects had a negative impact of 5.8% because a high portion of chemicals sales are generated in US dollars and Asian cur­rencies,” the company added.

 

Merck said that  for the full year, excluding its generics division which it plans to sell, it expected a high single-digit organic growth rate for sales and a comfortable double-digit rate of increase on the operating result including the purchase price allocation.

 

($1 = €0.73)

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Author: Hilde Ovrebekk
+44 20 8652 3214

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