Merck KGaA Sees FY23 Results At Lower Half Of Outlook Range, Organic Sales Growth In FY24; Stock Up

German science and technology major Merck KgaA Thursday reconfirmed its earnings and sales forecast for fiscal 2023, but at the lower half of the range after reporting weak profit and sales in its third quarter amid a difficult market environment. Further, the company projects a return to organic sales growth in fiscal 2024. The shares were gaining around 5 percent in the morning trading in Germany.

Belen Garijo, Chair of the Executive Board and CEO of Merck, said, “We remain disciplined and on track to achieve not only our fiscal 2023 but also our medium-term targets. In 2024, we expect to return to organic sales growth.”

According to the company, Healthcare business‘ strong organic development in the quarter were offset by market weakness in Life Science and Electronics segments.

For fiscal 2023, the company continues to expect earnings per share pre between 8.25 euros and 9.35 euros, trending in the lower half of the range.

EBITDA pre is still expected to decline 9 percent to 3 percent organically, totaling 5.8 billion euros to 6.4 billion euros, trending in the lower half of the absolute range.

The company continues to expect organic Group net sales to be down 2 percent to up 2 percent, totaling 20.5 billion euros to 21.9 billion euros, trending slightly below the mid-point of the absolute range.

Excluding the Covid-19 business, Group sales are still expected to grow organically by 1 percent to 5 percent.

In its third quarter, profit after tax declined 20 percent to 740 million euros from last year’s 926 million euros.

Earnings per share were 1.70 euros, down 19.8 percent from 2.12 euros a year ago. Earnings per share pre were 2.07 euros, compared to 2.68 euros a year ago.

EBITDA pre declined 20.2 percent to 1.45 billion euros from prior year’s 1.81 billion euros. This was primarily due to lower sales volumes as well as the proportionately lower share of sales of high-margin products in the Life Science and Electronics business sectors.

The EBITDA pre margin was 27.9 percent, down from 31.2 percent last year.

Group net sales fell 11 percent to 5.17 billion euros from 5.81 billion euros in the prior year. Net sales decreased organically by 4.1 percent.

Healthcare business sector’s net sales increased 7.4 percent organically, supported by all franchises.

Meanwhile, Life Science business sector recorded an organic decline of 13.2 percent in net sales as lower Covid-19-related demand and inventory destocking by key customers adversely affected the business.

In the third quarter, sales of the Electronics business sector declined organically by 4 percent.

In Germany, Merck KGaA shares were trading at 154.95 euros, up 4.66 percent.

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