Q Earnings Release

Transcription

1 Q Earnings Release Dr. Karl-Ludwig Kley General Partner and Chairman of the Executive Board Dr. Michael Becker General Partner and Member of the Executive Board, Chief Financial Officer April 28, 2011

2 Disclaimer Remarks All comparative figures relate to the corresponding last year s period. Return on Sales (ROS) calculation is based on total revenues. Important Information This presentation does not constitute an offer of securities for sale or a solicitation of an offer to purchase securities in the United States. The shares referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the Securities Act ), and may not be offered or sold in the United States absent registration under the Securities Act or an available exemption from such registration. Note regarding forward-looking statements The information in this document may contain forward-looking statements. Forward-looking statements may be identified by words such as expects, anticipates, intends, plans, believes, seeks, estimates, will or words of similar meaning and include, but are not limited to, statements about the expected future business of Merck KGaA resulting from the proposed transaction. These statements are based on the current expectations of management of Merck KGaA and E. Merck KG, and are inherently subject to uncertainties and changes in circumstances. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are factors relating to satisfaction of the conditions to the proposed transaction, and changes in global, political, economic, business, competitive, market and regulatory forces. Merck KGaA and E. Merck KG do not undertake any obligation to update the content of this presentation and forward-looking statements to reflect actual results, or any change in events, conditions, assumptions or other factors. 2

3 Agenda A Executive Summary and Operational Developments Karl-Ludwig Kley B Financials Michael Becker 3

4 Merck Group Q Key Messages We generated a solid quarter of performance and are off to a strong start in 2011 Organic revenue growth of approximately 3% for Merck Group Core return on sales for Group increases year-over-year to 24.6% from 20.6% Liquid Crystals generated strong growth and margins Merck Millipore continued to benefit from higher production of biologic drugs Merck Serono delivered in-line performance due to strength of emerging markets Year-over-year comparability of results negatively affected by stocking effect in the US from ERP implementation in 2010 Japan tragedy had little effect on Q1 performance Divested Crop BioScience and announced bolt-on acquisitions Q1 free cash flow increases by EUR 466m from divested businesses Announced two transactions to bolster Merck Millipore s business 4

5 Merck Group Q Sales by Regions 1,008 Europe + 14% North America + 29% Latin America + 22% Asia/Africa Australasia + 31% in EUR million Pharmaceuticals Chemicals 5

6 Performance Materials Q Performance Driven by Solid Underlying Market Trends Revenues of EUR 409m driven by healthy underlying demand for LCD displays and continued strength in automotive coatings Reported growth of 15% 22% growth when adjusted for cosmetics actives business and Crop Bioscience divestment Liquid Crystals performance driven by strong volumes and positive mix Reported revenue growth of 26%, 18% organic revenue growth 54.5% Return on Revenues Pigments & Cosmetics grows 9%, now running at capacity limits Higher volumes and favorable product mix from automotive and plastics industries drive revenues Onahama plant damaged, but scheduled to re-open in June 6

7 Merck Millipore Q Delivers Solid Quarter on Strength of Biotech Reports revenues of EUR 611m on strength of legacy Millipore business Higher sales of biotech customers in Asia and Emerging markets help drive growth Increasing quality standards in China benefiting our position as premium supplier Delivers higher core return on revenues margin of 21.5% Organizational integration completed Division focused on generating sales synergies by capitalizing on scale and global presence 7

8 Merck Serono Q Neurodegenerative Diseases Underlying Growth and Profitability Remain Solid Rebif Reported sales -4%, but US inventory stocking effect of EUR 41m in Q reduced growth by 10% Rebif Sales (EURm) Cladribine Tablets Complete Response Letter from FDA announced on March 2, 2011 Ongoing study program continues (ORACLE MS, CLARITY EXTENSION, ONWARD) Q Q Q Q Q Q sales pulled forward into Q1 End-of-review meeting will occur by the end of May 8

9 Merck Serono Q Oncology Erbitux Growing in Established Markets Erbitux Increased penetration in existing indications drives sales growth of 9% and offsets price cuts in major countries Erbitux Sales (EURm) Japan sales softer, affected by KRAS transition and move from 3 rd line to 1 st line following label change in March 2010 Indication extension submitted in March to EMA for approval in combination with standard 1 st line platinum-based chemotherapy in patients with advanced or metastatic non-small cell lung cancer with high epidermal growth factor receptor (EGFR) expression - addition of Erbitux to standard chemotherapy increases response rate from 28% to 44% - further data to be presented at upcoming congresses Q Q Q Q Q

10 Merck Serono Q Other Therapeutic Areas Key Products Growing, External Collaborations Strengthened Key Products Fertility: Gonal-f sales affected by 2010 ERP implementation in US Cardiometabolic Care products deliver good performance: Concor and Glucophage: strong growth in emerging markets offsetting generic competition in mature markets Endocrinology: Saizen liquid formulation approved in > 10 EU countries Collaborations Cooperation started with Domain Therapeutics to develop drugs for Parkinson s Disease Initiation of a BioIncubator Fund in Israel Sales by Key Products EURm Gonal-f Concor* Glucophage* 54.9 Saizen % +6.0% +1.3% Q Q * Sales of branded products only -4.2% 10

11 Agenda A Executive Summary and Operational Developments Karl-Ludwig Kley B Financials Michael Becker 11

12 Merck Group Q Operating Result EURm Q Q Δ in % Total revenues 2, , Sales 2, , Royalty, license and commission income Gross margin 1, , SG&A Research & development Amortization of intangibles Operating result Core operating result* Core ROS (return on revenues) 24.6% 20.6% Reported revenue growth of 22%, reflects 16% growth from acquisitions; 3% positive impact from changes in foreign exchange rates and 3% organic revenue growth Higher gross margin reflects year-over-year improvement of Chemicals and Merck Serono Amortization of intangibles includes EUR 50m impairment of Cladribine Exceptional income of EUR 157m due to the sale of Crop Bioscience Higher core ROS reflects impact of Millipore acquisition *Core operating result = Operating result less costs related to the purchases of Serono and Millipore (amortization of intangible assets and integration costs) 12

13 Performance Materials Q Key Financials EURm Q Q Δ in % Total revenues thereof Liquid Crystals Marketing & selling Research & development Operating result thereof Liquid Crystals ROS (return on revenues) ROS Liquid Crystals Reported revenue growth of 15%, reflects -5% impact from divestments; 6% positive impact from changes in foreign exchange rates and 14% organic revenue growth Revenues affected by the sale of Crop BioScience and inclusion of Cosmetic Actives Japan tragedy: Almost no effect on sales Expense of EUR 4.2m to cover all potential costs related to plant repairs Underlying free cash flow (before acquisitions and divestments) ROS benefiting from stronger volumes, product mix and increased production efficiency 13

14 Merck Millipore Q First Time Reporting in New Business Unit Structure Bioscience Lab Solutions Process Solutions Products used by specialized life science laboratories Lab products and equipment for applications in life science and industrial markets Products used in the production of pharmaceutical and biopharmaceutical drugs 18% 40% 42% 14 Contribution to divisional sales for Merck Millipore

15 Merck Millipore Q Key Financials EURm Q Q Δ in % Total revenues Bioscience Lab Solutions Process Solutions Marketing & selling Research & development Core Operating result* Reported revenue growth of 166% reflects a 4% positive impact from changes in foreign exchange rates and 2% organic revenue growth (Legacy Merck) No pro forma growth calculation provided for division Operating costs higher primarily as a result of acquisition-effect 21.5% core ROS margin reflects higher profitability of legacy Millipore portfolio Core ROS (return on revenues) Underlying free cash flow (before acquisitions and divestments) 21.5% 15.3% Division continues to deliver attractive underlying free cash flow 15 * Core operating result = Operating result less costs related to the purchase of Millipore (amortization of intangible assets and integration costs)

16 Merck Serono Q Key Financials EURm Q Q Δ in % Total revenues 1, , Sales 1, , Royalty, license and commission income Marketing & selling (excl. commission and royalty expenses) Royalty/commis./lic. exp Research & development Core operating result* Core ROS (return on revenues) 24.3% 22.4% Underlying free cash flow (before acquisitions and divestments) Organic revenue 1%; FX +2% and -1% from divestment Q1 sales adversely affected by: EUR 50m of additional revenue in Q due to ERP implementation and related stocking in United States Théramex divestment Rebif franchise delivers performance in-line with expectations Charges related to nonrecurring items down on a yearover-year basis * Core operating result = Operating result less costs related to the purchase of Serono (amortization of intangible assets) 16

17 Consumer Health Care Q Key Financials EURm Q Q Δ in % Total revenues Marketing & selling Organic revenue increase of 5.8% and FX tailwind of 2.6% Strong revenue growth driven by the good performance of the strategic brands Solid operating leverage led to improvement in operating result Research & development Operating result ROS (return on revenues) Underlying free cash flow (before acquisitions and divestments) 6.6% 1.4%

18 Merck Group Key Balance Sheet Data EURm Mar. 31, 2011 Dec. 31, 2010 Δ in % Total assets 22,218 22, Equity 10,579 10, Cash & other liquid funds 1, Intangible assets 12,082 12, Financial debt 5,282 5, Equity ratio increased to 47.6% from 46.3% Higher cash flow leads to EUR 743m decline of net financial debt Cash balance increased by EUR541m Debt reduced by EUR 202m Net financial debt excluding pensions (financial assets covering pensions as well as pension liabilities) Pension provisions -1,591-1, thereof covered by financial assets Net financial debt -3,742-4,

19 Merck Group Q Free Cash Flow EURm Q Q Δ in EURm Profit after tax Depreciation/amortization Changes in working capital Capital expenditures Others FCF increased by EUR 450m due to: Strong PAT and Payments received for sale of Théramex of EUR 265m and Crop Bioscience of EUR 201m Interest payment of EUR 117m on the bonds launched in 2010 for financing the Millipore acquisition Free cash flow Underlying free cash flow (before acquisition and divestments)

20 Merck Group 2011 Guidance Update Merck Divisions Total Revenues Merck Serono +1%-6% unchanged: guidance w/o cladribine Consumer Health Care +7%-12% unchanged Performance Materials +2%-7% unchanged Merck Millipore +51%-56% unchanged Merck Group Merck Group Total Revenues +10%-15% unchanged: guidance w/o cladribine Merck Group Operating Result +35%-45% unchanged Merck Group Core ROS* 22%-23% unchanged * Excludes costs related to the purchase of Serono (amortization of intangible assets) and related to the purchase of Millipore (amortization of intangible assets) 20