Merck Kgaa · XETR:MRK
Merck Kgaa — Q3 2024 Earnings Presentation
42 slides from Merck Kgaa's earnings presentation, Nov 14, 2024
Slide 1: Q3: All sectors onto profitable growth
Q3: All sectors onto profitable growth Merck Q3 2024 results Belén Garijo, CEO Helene von Roeder, CFO November 14, 2024
Slide 2: Disclaimer
Disclaimer Cautionary Note Regarding Forward-Looking Statements and financial indicators This communication may include “forward-looking statements.” Statements that include words such as “anticipate,” “expect,” “should,” “would,” “intend,” “plan,” “project,” “seek,” “believe,” “will,” and other wor
Slide 3: Agenda
Agenda 01 Executive summary 02 Financial overview 03 Outlook & Guidance 3 Merck Q3 2024 Results Presentation | November 14, 2024
Slide 4: Executive summary
Executive summary 01
Slide 5: Highlights: Merck accelerates organic growth with outstanding profitability
Highlights: Merck accelerates organic growth with outstanding profitability Operations Group Financials Life Science: ▪ Delivering quarterly growth for the first time since Q1’23, with sales up +2% org. ▪ PS returns to organic growth with orders and sales sequentially Q3 organic sales: +3.8% recover
Slide 6: All sectors driving strong profitable growth
All sectors driving strong profitable growth Q3 YoY Net Sales Q3 YoY EBITDA pre Organic Currency Portfolio Total 16.9% €1,618 m Life Science 2.1% -1.2% 0.0% 0.9% €1,446 m -5.0% 0.0% Healthcare 6.2% -3.0% 0.0% 3.2% Electronics 2.4% -1.5% -0.2% 0.8% Merck Group 3.8% -2.0% 0.0% 1.8% Q3 2023 Organic Cur
Slide 7: Geographical diversification drives organic sales growth
Geographical diversification drives organic sales growth Regional breakdown of net sales [€m] Regional organic development Europe +6.4% org. ▪ North America: slight HC growth; 28% overcompensated by slightly lower LS and EL sales ▪ Europe: strong growth in both HC and North America LS; HC growth acr
Slide 8: Financial overview
Financial overview 02
Slide 9: Q3 2024: Overview
Q3 2024: Overview Key figures Comments [€m] Q3 2023 Q3 2024 Δ ▪ Sales up +2% with solid organic growth overcompensating slight FX headwinds Net sales 5,173 5,266 1.8% ▪ Sales growth across all business sectors EBITDA pre 1,446 1,618 11.9% Margin (in % of net sales) 27.9% 30.7% 2.8pp ▪ EBITDA pre gro
Slide 10: Q3 2024: Reported figures
Q3 2024: Reported figures Reported results Comments ▪ EBIT up, driven by higher topline across [€m] Q3 2023 Q3 2024 Δ all three business sectors and improved EBIT 983 1,097 11.6% operational leverage ▪ Unfavorable financial result mainly due Financial result -46 -54 17.7% to lower result from financ
Slide 11: Life Science Q3: Profitable growth driven by PS and SLS
Life Science Q3: Profitable growth driven by PS and SLS Life Science P&L Net sales bridge [€m] IFRS Pre €2,191 m 2.1% 0.0% €2,210 m -1.2% Q3 2023 Q3 2024 Q3 2023 Q3 2024 Net sales 2,191 2,210 2,191 2,210 M&S -556 -543 -555 -544 +0.0% Q3 2023 Organic Currency Portfolio Q3 2024 Admin -103 -104 -94 -98
Slide 12: Healthcare Q3: Strong top- and bottom-line growth
Healthcare Q3: Strong top- and bottom-line growth Healthcare P&L Net sales bridge [€m] IFRS Pre €2,066 m 6.2% 0.0% €2,133 m Q3 2023 Q3 2024 Q3 2023 Q3 2024 -3.0% Net sales 2,066 2,133 2,066 2,133 M&S -405 -416 -400 -416 Q3 2023 Organic Currency Portfolio Q3 2024 Admin -79 -73 -74 -69 R&D -391 -330 -
Slide 13: Electronics Q3: Semiconductor Materials drives profitable growth
Electronics Q3: Semiconductor Materials drives profitable growth Electronics P&L Net sales bridge [€m] IFRS Pre €916 m 2.4% €923 m -1.5% -0.2% Q3 2023 Q3 2024 Q3 2023 Q3 2024 Net sales 916 923 916 923 M&S -144 -140 -142 -141 +0.0% Q3 2023 Organic Currency Portfolio Q3 2024 Admin -40 -43 -32 -32 R&D
Slide 14: Balance sheet
Balance sheet Assets [€bn] Liabilities [€bn] 48.5 50.1 50.1 48.5 Cash & cash equivalents 2.0 3.2 Receivables 4.0 4.0 Inventories 4.6 4.4 28.4 26.8 Net equity Intangible assets 24.4 23.9 11.4 9.9 Financial debt Property, plant 9.4 3.4 Payables/refund liabilities 9.1 2.8 & equipment 2.1 2.3 Provisions
Slide 15: Q3 2024: Cash flow statement
Q3 2024: Cash flow statement Cash flow statement Comments [€m] Q3 2023 Q3 2024 Δ ▪ Profit after tax up due to higher Profit after tax 740 812 72 operative profits amid lower R&D costs D&A 435 449 14 ▪ D&A about stable with minor impairments in relation to Healthcare R&D Changes in provisions 30 19 -
Slide 16: Outlook & Guidance
Outlook & Guidance 03
Slide 17: Merck Group Full-year 2024 guidance
Merck Group Full-year 2024 guidance Net sales: Organic: +2% to +5% YoY FX: -3% to 0% YoY ~€20.7 – €22.1 bn, trending in the lower half of the range EBITDA pre: Organic: +4% to +10% YoY FX: -5% to -1% YoY ~€5.8 – €6.4 bn, trending around the mid-point EPS pre: ~€8.20 - €9.30, trending around the mid-
Slide 18: 2024 business sector guidance
2024 business sector guidance1 Net sales EBITDA pre Life Science ▪ Organic: -2% to +2% YoY ▪ Organic:-6% to +1% YoY ▪ FX: -3% to +1% YoY ▪ FX: -4% to 0% YoY ▪ ~€8.80 bn to €9.50 bn, trending slightly above ▪ ~€2.55 bn to €2.80 bn, trending slightly above the lower end of the range the lower end of t
Slide 19: Appendix
Appendix
Slide 20: Additional financial guidance 2024
Additional financial guidance 2024 Further financial details Corporate & Other EBITDA pre -€450 m to -€520 m3 Interest result2 ~ €-65 m to -95 m4 Effective tax rate ~ 21% to 23% Capex on PPE1 ~ €1.6 to 1.8 bn FY 2024 overall hedge ratio ~ 50% Hedging EUR/USD hedging @ ~ 1.10 2024 Ø EUR/USD assumptio
Slide 21: Credit details
Credit details Maturity profile as of September 30, 2024 Credit rating information Coupon [€m / $m] 3.250% Last LT LT ST 0.125% Rating Outlook Rating Rating Change 1.625% 1.875% 3.875% 2.875% A3 21.10.21 Stable P-2 1,600 1.625% 3.375% 800 0.875% 842 0.500% A 29.05.13 Stable A-1 0.375% 500 2.375% 750
Slide 22: Return to growth accelerates, driven by Healthcare and Electronics
Return to growth accelerates, driven by Healthcare and Electronics 9M YoY Net Sales 9M YoY EBITDA pre Organic Currency Portfolio Total €4,586 m 3.3% €4,581 m Life Science -5.0% -0.9% 0.0% -6.0% -3.4% 0.0% Healthcare 7.1% -2.2% 0.0% 4.9% Electronics 5.4% -1.8% -0.2% 3.4% Merck Group 1.4% -1.6% 0.0% -
Slide 23: 9M 2024: Overview
9M 2024: Overview Key figures Comments [€m] 9M 2023 9M 2024 Δ ▪ Sales around stable with slight organic sales growth and FX headwinds Net sales 15,768 15,738 -0.2% ▪ Strong growth in Healthcare EBITDA pre EBITDA pre 4,586 4,581 -0.1% partially mitigates decline in Life Science Margin (in % of net sa
Slide 24: 9M 2024: Reported figures
9M 2024: Reported figures Reported results Comments ▪ EBIT declines, driven mainly by €140 m [€m] 9M 2023 9M 2024 Δ impairment of Xevinapant in Q2’24 and EBIT 2,988 2,821 -5.6% lower Life Science EBIT Financial result -144 -93 -35.2% ▪ Favorable financial result mainly due to lower LTIP provisions a
Slide 25: Life Science 9M: Gradual progression in Q3 improves YTD performance
Life Science 9M: Gradual progression in Q3 improves YTD performance Life Science P&L Net sales bridge [€m] IFRS Pre €7,031 m 0.0% €6,611 m 9M 2023 9M 2024 9M 2023 9M 2024 -5.0% -0.9% Net sales 7,031 6,611 7,031 6,611 M&S -1,689 -1,661 -1,690 -1,652 9M 2023 Organic Currency Portfolio +0.0%9M 2024 Adm
Slide 26: Process Solutions: Returning to growth with highest sales for five quarters
Process Solutions: Returning to growth with highest sales for five quarters Sales development [€m] - org. growth [%] YoY 893 896 ▪ Org. sales rise with improving volumes on 873 871 higher activity levels; sales up 3% sequentially with a second quarter of sequential growth ▪ Order intake, continuing
Slide 27: Science & Lab Solutions: Solid YoY growth
Science & Lab Solutions: Solid YoY growth Sales development [€m] - org. growth [%] YoY 1,170 1,192 1,111 1,137 1,143 ▪ Solid sales growth year-over-year; excluding SAP migration impact from Q3’23, still slight sales growth ▪ Biomonitoring and Lab Water Solutions up org. mid- to high-single digits ▪
Slide 28: Life Science Services: down against high comparable
Life Science Services: down against high comparable Sales development [€m] - org. growth [%] YoY 220 ▪ Sales down against high comparable 206 194 ▪ Contract testing up high-single-digit percentage org. 171 ▪ CDMO down, with high comparable in prior 157 period relating to a non-repeat of COVID-19 rel
Slide 29: Healthcare 9M: Strong first nine months supported across franchises
Healthcare 9M: Strong first nine months supported across franchises Healthcare P&L Net sales bridge [€m] IFRS Pre €6,021 m 7.1% 0.0% €6,318 m -2.2% 9M 2023 9M 2024 9M 2023 9M 2024 Net sales 6,021 6,318 6,021 6,318 M&S -1,208 -1,251 -1,198 -1,250 9M 2023 Organic Currency Portfolio +0.0%9M 2024 Admin
Slide 30: Healthcare organic growth by franchise/product
Healthcare organic growth by franchise/product Q3 2024 organic sales growth [%] 9M 2024 organic sales growth [%] by key product [€m] by key product [€m] 180 551 -1% 6% 185 530 301 864 14% 14% 271 781 265 20% 792 11% 225 724 154 -10% 480 -9% 175 534 209 3% 640 5% 213 629 247 8% 706 12% 235 650 161 11
Slide 31: Oncology: Erbitux with strong contribution to +9% org. franchise growth
Oncology: Erbitux® with strong contribution to +9% org. franchise growth ® Sales development Oncology, [€m] YoY Bavencio net sales, [€m] ▪ About stable despite negative org. org. org. org. org. 200 185 183 186 186 180 pricing impact from Japan and [€m] 18.1% 18.4% 19.3% 9.2% 9.1% launch of alternati
Slide 32: N&I: Mavenclad sales up +20% YoY amid softer comps
N&I: Mavenclad® sales up +20% YoY amid softer comps ® Sales development N&I, [€m] YoY Mavenclad Y1+Y2 patients1 ▪ Strong growth driven by continued U.S. prescription org. org. org. org. org. depth & breadth expansion2 [€m] -11.5% -1.3% 8.8% -7.4% 6.7% ▪ Most prescribed HE oral in the 450 419 434 419
Slide 33: Fertility: +1% org. growth as competitors' stock-out effects to moderate
Fertility: +1% org. growth as competitors’ stock-out effects to moderate Sales development Fertility, [€m] YoY Gonal-f® net sales, [€m] 250 227 org. org. org. org. org. 213 219 204 209 [€m] 14.0% 13.9% 7.7% -0.5% 1.1% 200 450 150 403 400 386 385 383 377 100 50 350 300 0 Q3 2023 Q4 2023 Q1 2024 Q2 20
Slide 34: CM&E: Strong demand across all segments drive +8% org. franchise growth
CM&E: Strong demand across all segments drive +8% org. franchise growth ® Sales development CM&E, [€m] YoY Glucophage net sales, [€m] org. org. org. org. org. ▪ Glucophage ® sales up +8% [€m] 6.8% 4.8% 4.2% 13.7% 7.8% 247 org. YoY, up +4% QoQ 250 235 233 221 238 YoY 200 ▪ Approved in more than 70 80
Slide 35: Merck pipeline
Merck pipeline November 14, 2024 Healthcare pipeline Phase 1 Phase 2 Phase 3 Registration pimicotinib (CSF-1R inhibitor) Study met the primary endpoint, Tenosynovial giant cell tumor (TGCT)1 open-label part ongoing avelumab (anti-PD-L1 mAb)+Sacituzumab Govitecan / NKTR-255 / M6223 (anti-TIGIT mAb) L
Slide 36: Healthcare catalysts
Healthcare catalysts Q1 2024 Q2 2024 Q3 2024 Q4 2024 Cladribine capsules (Immune Reconstitution Therapy) Study initiation - Phase III generalised Myasthenia Gravis Enpatoran Enpatoran (Oral TLR7/8 inhibitor ) (Oral TLR7/8 inhibitor ) Read-out - Phase II CLE program Read-out - Phase II SLE program Xe
Slide 37: Electronics 9M: Strong Semiconductor Solutions growth
Electronics 9M: Strong Semiconductor Solutions growth Electronics P&L Net sales bridge [€m] IFRS Pre €2,716 m 5.4% €2,809 m -1.8% -0.2% 9M 2023 9M 2024 9M 2023 9M 2024 Net sales 2,716 2,809 2,716 2,809 M&S -450 -420 -447 -420 9M 2023 Organic Currency Portfolio +0.0%9M 2024 Admin -108 -116 -95 -99 EB
Slide 38: Semiconductor Solutions recovery pace tempers in the near-term
Semiconductor Solutions recovery pace tempers in the near-term Sales development [€m] - org. growth [%] YoY 660 665 633 642 ▪ Overall, continued strong org. sales 612 growth in Semiconductor Solutions ▪ Semi Materials with substantial YoY growth, with sustained QoQ growth 11% ▪ Demand for adv. nodes
Slide 39: Cash flow statement
Cash flow statement 9M 2024 – cash flow statement Cash flow drivers [€m] 9M 2023 9M 2024 Δ ▪ Profit after tax driven by lower EBIT Profit after tax 2,246 2,117 -129 ▪ D&A includes one-time impairments in D&A 1,373 1,583 210 relation to Healthcare R&D Changes in provisions 76 41 -35 ▪ Delta in other
Slide 40: Adjustments in Q3 2024
Adjustments in Q3 2024 Adjustments in EBIT [€m] Q3 2023 Q3 2024 Adjustments thereof D&A Adjustments thereof D&A Life Science 14 0 26 0 Healthcare -38 0 6 0 Electronics 26 4 19 2 Corporate & Other 29 0 22 0 Total 31 4 73 2 Totals may not add up due to rounding 40 Merck Q3 2024 Results Presentation |
Slide 41: Adjustments in 9M 2024
Adjustments in 9M 2024 Adjustments in EBIT [€m] 9M 2023 9M 2024 Adjustments thereof D&A Adjustments thereof D&A Life Science 76 32 124 56 Healthcare -30 -1 134 155 Electronics 67 19 54 13 Corporate & Other 162 0 89 1 Total 276 50 401 225 Totals may not add up due to rounding 41 Merck Q3 2024 Results
Slide 42: Meet the Merck team
CONSTANTIN FEST NADJA GROSSCHMIDT SUSAN KUEHN eet the eRck team Head of Investor Relations Assistant Investor Relations Assistant Investor Relations +49 6151 72-5271 +49 6151 72-3321 +49 6151 72-3321 constantin.fest@merckgroup.com nadja.grosschmidt@merckgroup.com susan.kuehn@merckgroup.com DATE EVEN