Merck accelerates growth, driven by all business sectors
Merck confirms and specifies guidance for fiscal 2024
Merck, a leading science and technology company, accelerated its growth in the third quarter of 2024. All three business sectors achieved organic increases in sales and earnings. Accordingly, the company remains on course to return to profitable growth in fiscal 2024, as previously announced.
“As expected, we continued our growth course in the third quarter. We confirm our guidance of profitable growth in fiscal 2024,” said Belén Garijo, Chair of the Executive Board and CEO of Merck. “The markets in which we operate continue to experience robust growth trends and our multi-industry portfolio is optimally positioned to benefit from these positive developments.”
Due to the positive business performance in all three business sectors, Merck grew its net sales to € 5,266 million in the third quarter of 2024, achieving organic growth of 3.8%. Taking negative foreign exchange effects of 2.0% into account, Group sales grew by a total of 1.8% compared with the year-earlier quarter.
EBITDA pre rose organically by 16.9%. This was driven by sales growth, strict cost discipline and the temporarily lower spend on research and development in Healthcare. Including negative foreign exchange effects of 5.0%, earnings saw double-digit growth of 11.9% to € 1,618 million overall. The EBITDA pre margin increased to 30.7% compared to 27.9% in the year-earlier quarter. Earnings per share pre amounted to € 2.30.
Life Science: Return to organic sales and earnings growth
In Life Science, sales increased organically by 2.1% and reached € 2,210 million in the third quarter of 2024. As such, the business sector returned to organic sales growth for the first time since the first quarter of 2023.
The Process Solutions business unit, which markets solutions for the entire pharmaceutical production value chain, also returned to growth with an organic sales increase of 3.7% while inventory destocking by customers is gradually coming to an end. Compared to the second quarter of 2024, the business unit saw a further gradual recovery of sales and order intake. Science & Lab Solutions, which is the largest business unit within Life Science in terms of sales and provides products and services to support research activities in pharmaceutical, biotechnology and academic research institutions, also delivered organic sales growth of 4.3%. In contrast, net sales of Life Science Services declined organically by 16.6%, which corresponds to around € 34 million. The higher sales figure for the year-earlier quarter included a one-time customer payment from the Covid-19-related business. Life Science Services offers customers a fully integrated portfolio of services for contract testing, development and manufacturing.
EBITDA pre of Life Science also grew organically by 7.1% to € 646 million; this was mainly due to the sales increases in its two large business units and efficiency measures in the operating business. The EBITDA pre margin increased to 29.3%.
Healthcare: Solid organic sales growth and very good profitability
Healthcare generated net sales of € 2,133 million in the third quarter of 2024. The organic increase of 6.2% was attributable to newer products alongside those that are long established in the market. The major drivers of the organic sales growth included Mavenclad for the treatment of multiple sclerosis (+19.8%) and the oncology drug Erbitux (+13.8%). The Cardiovascular, Metabolism and Endocrinology franchise also generated strong organic sales growth.
EBITDA pre of Healthcare went up organically by 27.0% to € 836 million. In addition to the positive sales performance and cost discipline, this was also due to temporarily lower research and development (R&D) expenses than in the year-earlier quarter. The EBITDA pre margin reached an outstanding 39.2%. Merck expects R&D spend in Healthcare to gradually increase in 2025.
Electronics: Another quarter of profitable growth
Electronics delivered organic sales growth of 2.4% in the third quarter of 2024. Its total net sales were € 923 million. The sales growth was generated by the largest business unit Semiconductor Solutions, which achieved an organic sales increase of 7.0%, driven by strong demand for semiconductor materials for AI applications and advanced nodes. The recovery of the rest of the market for semiconductor materials continues to be delayed. As expected, the project business within Semiconductor Solutions, Delivery Systems & Services, recorded a sales decline while customer projects were being delayed.
The two other business units of Electronics, Display Solutions and Surface Solutions, recorded organic declines in sales. In July 2024, Merck signed an agreement to divest its global Surface Solutions business.
EBITDA pre of Electronics grew to € 235 million, representing organic growth of 15.0%. This increase against the low comparative base of the year-earlier quarter was mainly driven by the sales growth in Semiconductor Solutions, combined with stringent cost management. The EBITDA pre margin of Electronics was 25.5%.
Guidance for fiscal 2024
As announced at the Capital Markets Day in October 2024, Merck confirms the guidance for fiscal 2024 and specifies the indicated target corridors prior to the last quarter of the year. The company expects:
- Sales: organic growth between 2% and 5%, foreign exchange effects between ‑3% and 0%, in total between € 20.7 billion and € 22.1 billion – trending in the lower half of the absolute range
- EBITDA pre: organic growth between 4% and 10%, foreign exchange effects between ‑5% and ‑1%, in total between € 5.8 billion and € 6.4 billion – trending around the mid-point of the absolute range
- EPS pre: € 8.20 to € 9.30 – trending around the mid-point.
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