Slide 1: Demonstrating Resilience under market pressure
Demonstrating Resilience under market pressure Merck Q2 2023 results Belén Garijo, CEO Helene von Roeder, CFO August 3, 2023
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 Executive summary Financial overview ESG update Outlook & Guidance 3 Merck Q2 2023 Results Presentation | August 3, 2023
Slide 4: Executive summary
Executive summary 01
Slide 5: Highlights Q2 2023: Operations, Financials
Highlights Q2 2023: Operations Financials Life Science: ▪ Sales decline of -9% org. amid pronounced destocking and COVID-19 headwinds Q2 organic sales: -1% ▪ Core business1 sales -4% org., mainly driven by PS and LSS Q2 organic EBITDA pre: -7% Healthcare: ▪ The growth driver of the group ▪ Recent la
Slide 6: Group resilient as Healthcare largely offsets decline in Life Science and Electronics
Group resilient as Healthcare performance largely offsets decline in Life Science and Electronics Q2 YoY Net Sales Q2 YoY EBITDA pre Organic Currency Portfolio Total €1,782 m Life Science -8.7% -2.4% 0.0% -11.1% €1,553 m -7.0% -5.7% -0.2% Healthcare 11.9% -5.4% 0.0% 6.5% Electronics -6.3% -3.8% 0.3%
Slide 7: Double-digit growth in LATAM and ME&A partially offsets major markets downturn
Double-digit growth in LATAM and ME&A partially offsets major markets downturn Regional breakdown of net sales [€m] Regional organic development Europe -1.5% org. ▪ North America: Strong Mavenclad® and 29% Bavencio®, as well as Semis, mitigate sharp Life Science decline ▪ Europe: Sales growth weighe
Slide 8: Financial overview
Financial overview 02
Slide 9: Q2 2023: Overview
Q2 2023: Overview Key figures Comments [€m] Q2 2022 Q2 2023 Δ ▪ Sales down -5%, impacted by FX headwinds Net sales 5,568 5,302 -4.8% ▪ Lower volumes in Life Science and EBITDA pre 1,782 1,553 -12.8% Electronics, partially offset by growth in Margin (in % of net sales) 32.0% 29.3% -2.7pp Healthcare E
Slide 10: Q2 2023: Reported figures
Q2 2023: Reported figures Reported results Comments [€m] Q2 2022 Q2 2023 Δ ▪ EBIT decline mainly driven by impact from PS destocking in Life Science EBIT 1,177 969 -17.6% and Electronics slowdown Financial result -55 -76 37.4% ▪ Financial result with additional Profit before tax 1,122 894 -20.3% int
Slide 11: Life Science Q2: Core decline of -4% org. mainly due to destocking
Life Science Q2: Decline in the core business of -4% org. mainly due to destocking in Process Solutions; COVID-19 business fading out as expected Life Science P&L Net sales bridge €2,648 m [€m] IFRS Pre €2,354 m Q2 2022 Q2 2023 Q2 2022 Q2 2023 -8.7% -2.4% 0.0% Net sales 2,648 2,354 2,648 2,354 M&S *
Slide 12: Healthcare Q2: +12% growth driven by Bavencio and Mavenclad
Healthcare Q2: +12% growth driven by sales momentum of Bavencio® and Mavenclad® , amplified by Fertility Healthcare P&L Net sales bridge 11.9% 0.0% €2,049 m [€m] IFRS Pre €1,924 m Q2 2022 Q2 2023 Q2 2022 Q2 2023 -5.4% Net sales 1,924 2,049 1,924 2,049 * M&S -417 -422 -415 -418 Q2 2022 Organic Curren
Slide 13: Electronics Q2: Semi Solutions resilience; Display Solutions challenging
Electronics Q2: Semi Solutions with resilience in declining semi market; Display Solutions environment remains challenging Electronics P&L Net sales bridge €996 m 0.3% €899 m [€m] IFRS Pre Q2 2022 Q2 2023 Q2 2022 Q2 2023 -6.3% -3.8% Net sales 996 899 996 899 M&S * -163 -148 -162 -147 +0.0% Q2 2022 O
Slide 14: Balance sheet
Balance sheet Assets [€bn] Liabilities [€bn] 48.5 48.8 48.8 48.5 Cash & cash equivalents 1.9 1.8 4.1 4.2 Receivables 4.6 5.0 Inventories 26.8 26.0 Net equity Intangible assets 25.7 24.9 11.2 10.4 Financial debt Property, plant 3.4 Payables/refund liabilities 8.2 8.4 3.4 & equipment 2.1 2.1 Provision
Slide 15: Cash flow statement
Cash flow statement Q2 2023 – Cash flow statement Comments [€m] Q2 2022 Q2 2023 Δ ▪ Profit after tax driven by lower EBIT, partially offset by lower tax Profit after tax 870 706 -164 ▪ Prior year D&A elevated by Berzosertib D&A 532 482 -50 trial discontinuation impairments ▪ Prior year provisions im
Slide 16: ESG update
ESG update 03
Slide 17: Driving positive social impact – first progress report on DE&I
Driving positive social impact – first progress report on DE&I Our road towards gender equity Gender balanced workforce and leadership ➢ We aim at gender parity in leadership until 2030, % women in… improving from 36% in 2021 to 38% in 2022 …the Executive Board: 40% ➢ Attract, promote and develop wo
Slide 18: Outlook & Guidance
Outlook & Guidance 04
Slide 19: Full-year 2023 guidance
Full-year 2023 guidance Net sales: Organic: -2% to +2% YoY (ex-COVID: +1% to +5%) FX: -6% to -3% YoY ~€20.5 – €21.9 bn EBITDA pre: Organic: -9% to -3% YoY FX: -6% to -3% YoY ~€5.8 – €6.4 bn EPS pre: ~€8.25 – €9.35 19 Merck Q2 2023 Results Presentation | August 3, 2023
Slide 20: 2023 business sector guidance
2023 business sector guidance1 Net sales EBITDA pre Life Science ▪ Organic: -8% to -2%; ex-COVID: -3% to +4% ▪ Organic:-21% to -12% YoY ▪ FX: -5% to -2% YoY ▪ FX: -6% to -2% YoY ▪ ~€9.10 bn to €9.95 bn ▪ ~€2.75 bn to €3.20 bn ▪ Destocking in PS more pronounced than expected ▪ Total COVID-19 sales of
Slide 21: Appendix
Appendix
Slide 22: Additional financial guidance 2023
Additional financial guidance 2023 Further financial details Corporate & Other EBITDA pre Lower costs driven by hedging Interest result ~ €-120 m to -160 m Effective tax rate ~ 21% to 23% 1 Capex on PPE ~ €1.8 to 2.0 bn FY 2023 overall hedge ratio ~ 50% Hedging EUR/USD hedging @ ~ 1.07 2023 Ø EUR/US
Slide 23: Credit details
Credit details Maturity profile as of June 30, 2023 Credit rating information Coupon [€m / $m] 3.250% Last LT 0.125% LT ST Rating Outlook Rating Rating Change 1.625% 1.875% A3 21.10.21 Stable P-2 1,600 1.625% 3.375% 1 000 0.875% 0.500% 2.875% A 29.05.13 Stable A-1 0.005% 500 0.375% 2.375% 750 750 75
Slide 24: Group delivers resilient performance; Healthcare compensates for weaker Life Science and Electronics
Group delivers resilient performance; Healthcare compensates for weaker Life Science and Electronics H1 YoY Net Sales H1 YoY EBITDA pre Organic Currency Portfolio Total €3,411 m €3,140 m Life Science -4.2% -0.9% 0.1% -5.0% -4.5% -3.2% -0.3% Healthcare 8.8% -2.4% 0.0% 6.3% Electronics -6.7% -1.6% 0.3
Slide 25: H1 2023: Overview
H1 2023: Overview Key figures Comments [€m] H1 2022 H1 2023 Δ ▪ Sales down -2% with flat organic sales Net sales 10,766 10,595 -1.6% and FX tailwinds EBITDA pre 3,411 3,140 -7.9% ▪ Lower Life Science and Electronics EBITDA Margin (in % of net sales) 31.7% 29.6% -2.1pp pre, partially mitigated by Hea
Slide 26: H1 2023: Reported figures
H1 2023: Reported figures Reported results Comments ▪ EBIT decline mainly from efficiency [€m] H1 2022 H1 2023 Δ drive costs across the Group and EBIT 2,350 2,004 -14.7% lower Life Science and Electronics volume Financial result -89 -98 10.0% ▪ Financial result with additional Profit before tax 2,26
Slide 27: Life Science H1: Core growth of +2% amid destocking in Process Solutions
Life Science H1: Core growth of +2% amid increasing headwinds from destocking in Process Solutions; declining COVID-19 demand as expected Life Science P&L Net sales bridge [€m] IFRS Pre €5,093 m 0.1% €4,840 m H1 2022 H1 2023 H1 2022 H1 2023 -4.2% -0.9% Net sales 5,093 4,840 5,093 4,840 Portfolio +0.
Slide 28: Process Solutions: -12% org. decline on destocking; COVID-19 headwinds
Process Solutions: -12% org. decline on destocking; COVID-19 headwinds Sales development [€m] - org. growth [%] YoY 1,193 1,154 1,139 ▪ Core development of -7% org. on destocking now full materializing in Q2 1,022 994 ▪ Destocking more pronounced than expected, now also visible beyond our larger cus
Slide 29: Life Science Services: Negative batch phasing and high comps
Life Science Services: Negative batch phasing and high comps Sales development [€m] - org. growth [%] YoY 262 247 ▪ Life Science Services sales down -30% 241 org., negative development in the core amplified by sharp decline in COVID-19 sales ▪ COVID-19 business down to single-digit €m 188 amount ami
Slide 30: Science & Lab Solutions: Slight decline organically on COVID-19 headwind
Science & Lab Solutions: Slight decline organically on COVID-19 headwind Sales development [€m] - org. growth [%] YoY 1,247 1,276 1,232 1,220 ▪ Flat performance of the core business in Q2, 1,182 supported by pricing ▪ Softer demand mainly at larger pharma companies, mainly in North America ▪ COVID-1
Slide 31: Healthcare H1: New launches and Fertility drive organic growth
Healthcare H1: New launches and Fertility drive organic growth Healthcare P&L Net sales bridge [€m] IFRS Pre €3,719 m 8.8% 0.0% €3,955 m -2.4% H1 2022 H1 2023 H1 2022 H1 2023 Net sales 3,719 3,955 3,719 3,955 Portfolio +0.0%H1 2023 * M&S -792 -803 -791 -798 H1 2022 Organic Currency Admin -152 -155 -
Slide 32: Healthcare organic growth by franchise/product
Healthcare organic growth by franchise/product Q2 2023 organic sales growth [%] H1 2023 organic sales growth [%] by key product [€m] by key product [€m] 178 345 27% 29% 146 274 260 510 10% 7% 258 500 262 28% 499 26% 212 401 205 -3% 359 -14% 217 419 219 19% 416 8% 198 398 197 -9% 415 -5% 228 445 131
Slide 33: Neurology & Immunology: Q2 Mavenclad sales up +28% org.
Neurology & Immunology: Q2 Mavenclad® sales up +28% org., Rebif® with softer decline (-3% org.) benefitting from positive U.S. channel dynamics ® Sales development N&I, [€m] YoY Mavenclad Y1+Y2 patients1 ® ▪ Mavenclad most prescribed oral HE drug in the U.S. and EU-4 in org. org. org. org. org. dyna
Slide 34: Oncology: Bavencio mUC 1L ramp-up drives 18% org. franchise growth
Oncology: Bavencio® mUC 1L ramp-up drives 18% org. franchise growth ® Sales development Oncology, [€m] YoY Bavencio net sales, [€m] ▪ Continued strong growth momentum of +27% org.; QoQ growth projected for 200 178 [€m] org. 8.1% org. 24.5% org. 11.3% org. 14.7% org. 17.8% 146 166 172 167 remaining q
Slide 35: Fertility: Growth of +25% org. supported by competitors' stock out
Fertility: Growth of +25% org. supported by competitors’ stock out Sales development Fertility, [€m] YoY Gonal-f® net sales, [€m] 250 org. org. org. org. org. 221 219 198 205 197 [€m] -2.7% 2.6% 11.5% 6.7% 24.7% 200 450 150 ▪ Competitor stock-out of 409 400 380 100 urine-based product in 373 366 351
Slide 36: CM&E: +1% org. growth in Q2; Saizen with double-digit org. growth
CM&E: +1% org. growth in Q2; Saizen® with double-digit org. growth ® Sales development CM&E, [€m] YoY Glucophage net sales, [€m] ▪ Q2 China sales declining due org. org. org. org. org. to recent slowdown in market [€m] 2.7% 6.0% 6.4% 3.0% 0.9% 237 248 growth, linked to high Covid- 250 228 218 200 19
Slide 37: Merck pipeline August 03, 2023
Merck pipeline August 03, 2023 Healthcare pipeline Phase 1 Phase 2 Phase 3 Registration Marketed9 evobrutinib (BTK inhibitor) Relapsing multiple sclerosis enpatoran (TLR7/8 antagonist) Cutaneous lupus erythematosus enpatoran (TLR7/8 antagonist) Systemic lupus erythematosus enpatoran (TLR7/8 antagoni
Slide 38: Healthcare catalysts
Sustainability Report to be published Healthcare catalysts April 13, 2023 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Enpatoran Enpatoran (Oral TLR7/8 inhibitor ) (Oral TLR7/8 inhibitor ) Phase II DM/PM Phase II CLE/SLE program – study initiation – futility analysis Tepotinib Evobrutinib (c-Met–inhibitor) (BTK
Slide 39: Electronics H1: Semi Solutions outperforms declining semi market
Electronics H1: Semi Solutions outperforms declining semi market; Display Solutions environment remains challenging Electronics P&L Net sales bridge [€m] IFRS Pre €1,954 m 0.3% €1,800 m H1 2022 H1 2023 H1 2022 H1 2023 -6.7% -1.6% Net sales 1,954 1,800 1,954 1,800 Portfolio +0.0%H1 2023 * M&S -319 -3
Slide 40: Semiconductor Solutions outperforms weaker semi market
Semiconductor Solutions outperforms weaker semi market Sales development [€m] - org. growth [%] YoY 729 711 ▪ Semiconductor Solutions slows due to 653 ongoing semi market softening with 604 602 mid-teens decline in MSI in Q2 20% ▪ High growth in DS&S business driven by capex investment in new fabs 1
Slide 41: Cash flow statement
Cash flow statement H1 2023 – cash flow statement Cash flow drivers [€m] H1 2022 H1 2023 Δ ▪ Profit after tax driven by lower EBIT, Profit after tax 1,754 1,506 -248 partially offset by lower tax D&A 962 938 -24 ▪ Prior-year provisions impacted by actuarial gain from higher interest rates; Changes i
Slide 42: Adjustments in Q2 2023
Adjustments in Q2 2023 Adjustments in EBIT [€m] Q2 2022 Q2 2023 Adjustments thereof D&A Adjustments thereof D&A Life Science 30 0 45 32 Healthcare 91 90 12 0 Electronics 11 0 22 5 Corporate & Other 30 0 60 0 Total 163 90 138 37 42 Merck Q2 2023 Results Presentation | August 3, 2023
Slide 43: Adjustments in H1 2023
Adjustments in H1 2023 Adjustments in EBIT [€m] H1 2022 H1 2023 Adjustments thereof D&A Adjustments thereof D&A Life Science 37 1 62 32 Healthcare 95 91 8 -1 Electronics 22 0 41 15 Corporate & Other 37 0 133 0 Total 191 93 245 47 43 Merck Q2 2023 Results Presentation | August 3, 2023
Slide 44: Financial Calendar
Financial Calendar Date Event October 19, 2023 Capital Markets Day November 9, 2023 Q3 2023 Earnings release March 7, 2024 Q4 2023 Earnings release April 26, 2024 Annual General Meeeting May 15, 2024 Q1 2024 Earnings release August 1, 2024 Q2 2024 Earnings release 44 Merck Q2 2023 Results Presentati
Slide 45: Investor Relations contacts
CONSTANTIN FEST PETRA HOLTZ Head of Investor Relations Assistant Investor Relations +49 6151 72-5271 +49 6151 72-3321 constantin.fest@merckgroup.com petra.holtz@merckgroup.com ADRIAN GORSKI DANIEL WENDORFF FLORIAN SCHRAEDER EVA STERZEL Institutional Investors / Institutional Investors / Institutiona