Merck KGaA Profit Rises as AZ Acquisition Offsets EuroNaomi Kresge
Merck KGaA’s second-quarter profit rose 2.3 percent as the acquisition of AZ Electronic Materials SA helped offset the effect of a stronger euro.
Earnings before interest, taxes, depreciation and amortization excluding one-time items climbed to 845.7 million euros ($1.1 billion) from 826.4 million euros a year earlier, the Darmstadt, Germany-based company said today in a statement. That beat the 837 million-euro average estimate of 11 analysts surveyed by Bloomberg.
Merck, the drug and chemical manufacturer that makes the Erbitux cancer medicine, said in May, and again today, that AZ Electronic would drive profit growth this year. AZ Electronic supplies chemicals to the electronics industry. Merck will focus now on deals to build its Merck Serono pharmaceuticals and life-sciences division, Chief Financial Officer Marcus Kuhnert said in an interview the company posted on YouTube.
“We want to strengthen our group portfolio,” Kuhnert said.
Today’s results exposed weakness at Serono. Sales of its biggest drug Rebif, a multiple sclerosis medicine losing ground to newer challengers, fell 2.8 percent excluding currency effects. Royalty, licensing and commission income from Serono plummeted 31 percent. The unit’s sales fell 1.4 percent to 1.4 billion euros. Excluding currency swings, revenue would have risen 3 percent.
The company as a whole turned in “a decent set of figures above expectations,” Peter Spengler, a Frankfurt-based analyst for DZ Bank AG, wrote in a note to investors.
Revenue for the company rose 0.8 percent to 2.86 billion euros, with growth held back by the euro’s increase against the dollar, yen and Latin American currencies. Analysts predicted 2.82 billion euros, according to the average estimate.
Merck rose 3.2 percent to 64.37 euros at 4:35 p.m. in Frankfurt trading. The stock has gained less than 1 percent this year including reinvested dividends, compared with a 12 percent return for the Bloomberg Europe Pharmaceutical Index.
Ebitda excluding one-time items this year will be 3.3 billion euros to 3.4 billion euros, Merck said, repeating the forecast it issued in May. Sales will be about 10.9 billion euros to 11.1 billion euros, the company confirmed.