Merck Kgaa · XETR:MRK
Merck Kgaa — Q1 2023 Earnings Presentation
36 slides from Merck Kgaa's earnings presentation, May 11, 2023
Slide 1: Global diversification drives performance
Global diversification drives performance Merck Q1 2023 results Belén Garijo, CEO Marcus Kuhnert, CFO May 11, 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 Outlook & Guidance 3 Merck Q1 2023 Results Presentation | May 11, 2023
Slide 4: Executive summary
Executive summary 01
Slide 5: Highlights Q1 2023: Operations and Financials
Highlights Q1 2023: Operations Financials Life Science: ▪ +1% org. growth despite severe COVID-19 headwinds ▪ Core business1 at +7% org. sales growth, mainly driven by LSS and SLS Q1 organic sales: +1% ▪ +3% org. growth in PS core, despite inventory dynamics Q1 organic EBITDA pre: -2% Healthcare: ▪
Slide 6: Healthcare performance drives Group sales growth; EBITDA pre burdened by Electronics and fading COVID-19
Healthcare performance drives Group sales growth; EBITDA pre burdened by Electronics and fading COVID-19 business Q1 YoY Net Sales Q1 YoY EBITDA pre Organic Currency Portfolio Total €1,629 m €1,587 m Life Science 0.6% 0.9% 0.3% 1.7% -1.7% -0.5% -0.4% Healthcare 5.3% 0.8% 0.0% 6.2% Electronics -7.1%
Slide 7: Financial overview
Financial overview 02
Slide 8: Q1 2023: Overview
Q1 2023: Overview Key figures Comments [€m] Q1 2022 Q1 2023 Δ ▪ Sales up +2%, driven largely by performance of Healthcare, supported Net sales 5,198 5,293 1.8% by slight FX tailwinds EBITDA pre 1,629 1,587 -2.6% ▪ Electronics and fading COVID-19 Margin (in % of net sales) 31.3% 30.0% -1.4pp business
Slide 9: Q1 2023: Reported figures
Q1 2023: Reported figures Reported results Comments ▪ EBIT decline of -12% mainly driven [€m] Q1 2022 Q1 2023 Δ by costs of efficiency initiatives at Group level and higher D&A EBIT 1,173 1,035 -11.8% Financial result -34 -23 -33.9% ▪ Improved financial result primarily driven by higher interest inc
Slide 10: Life Science Q1: Robust org. growth of +7% in core business
Life Science Q1: Robust org. growth of +7% in core business, with Process Solutions core at +3% org.; sharp decline in COVID-19 business as expected Life Science P&L Net sales bridge [€m] IFRS Pre €2,445 m 0.6% 0.9% 0.3% €2,487 m Q1 2022 Q1 2023 Q1 2022 Q1 2023 Net sales 2,445 2,487 2,445 2,487 M&S
Slide 11: Healthcare Q1: Profitable growth driven by Bavencio and Mavenclad
Healthcare Q1: Profitable growth driven by sales momentum of Bavencio® and Mavenclad® in line with the mid-term guidance Healthcare P&L Net sales bridge [€m] IFRS Pre €1,795 m 5.3% 0.8% 0.0% €1,905 m Q1 2022 Q1 2023 Q1 2022 Q1 2023 Net sales 1,795 1,905 1,795 1,905 * M&S -376 -381 -375 -380 Q1 2022
Slide 12: Electronics Q1: Semi Solutions grows +2% org.
Electronics Q1: Semi Solutions grows +2% org., ahead of a depressed market; decline in Display Solutions weighs on sales and profits Electronics P&L Net sales bridge €957 m 0.8% 0.3% €901 m [€m] IFRS Pre Q1 2022 Q1 2023 Q1 2022 Q1 2023 -7.1% Net sales 957 901 957 901 M&S * -156 -158 -156 -158 +0.0%
Slide 13: Balance sheet
Balance sheet Assets [€bn] Liabilities [€bn] 48.5 48.6 48.6 48.5 Cash & cash equivalents 1.9 1.6 4.1 4.3 Receivables 4.6 4.9 Inventories 26.2 26.0 Net equity Intangible assets 25.7 25.0 10.6 10.4 Financial debt Property, plant 3.3 3.4 Payables/refund liabilities 8.2 8.2 2.1 2.1 & equipment Provision
Slide 14: Cash flow statement
Cash flow statement Q1 2023 – Cash flow statement Comments [€m] Q1 2022 Q1 2023 Δ Profit after tax 884 800 -84 ▪ Decline in profit after tax driven by decreased EBIT, partially offset by D&A 430 456 26 lower effective tax rate Changes in provisions 107 -8 -115 ▪ Delta in other assets & liabilities d
Slide 15: Outlook & Guidance
Outlook & Guidance 03
Slide 16: Full-year 2023 guidance
Full-year 2023 guidance Net sales: Organic: +1% to +4% YoY (ex-COVID: +4% to +7%) FX: -5% to -2% YoY ~€21.2 – €22.7 bn EBITDA pre: Organic: -5% to 0% YoY FX: -5% to -2% YoY ~€6.1 – €6.7 bn EPS pre: ~€8.80 to €9.90 16 Merck Q1 2023 Results Presentation | May 11, 2023
Slide 17: 2023 business sector guidance
2023 business sector guidance1 Net sales EBITDA pre Life Science ▪ Organic: -2% to +2%; ex-COVID: +3% to +8% ▪ Organic:-8% to -4% YoY ▪ FX: -5% to -1% YoY ▪ FX: -6% to -2% YoY ▪ ~€9.70 bn to €10.45 bn ▪ ~€3.20 bn to €3.50 bn ▪ All BUs to contribute to core growth ▪ Total COVID-19 sales of ~€250 m (v
Slide 18: Appendix
Appendix
Slide 19: Additional financial guidance 2023
Additional financial guidance 2023 Further financial details Corporate & Other EBITDA pre Lower costs driven by hedging Interest result ~ €-90 m to -130 m Effective tax rate ~ 21% to 23% Capex on PPE1 ~ €1.8 to 2.0 bn FY 2022 overall hedge ratio ~50% Hedging EUR/USD hedging @ ~1.07 2023 Ø EUR/USD as
Slide 20: Growth in Europe compensates for softer APAC; North America stable
Growth in Europe compensates for softer APAC; North America stable Regional breakdown of net sales [€m] Regional organic development Europe +7.6% org. ▪ Europe: Growth driven by strong Process 30% Solutions, supported by Fertility and Bavencio® ▪ North America: Growth of Semiconductor North America
Slide 21: Credit details
Credit details Maturity profile as of March 31, 2023 Credit rating information Coupon [€m / $m] 3.250% Last LT LT ST 0.125% 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 7
Slide 22: Clear metrics to drive execution and progress towards 2030 ambition
Clear metrics to drive execution and progress towards 2030 ambition Goal Metric 2022 (2021) Target 1 Percentage of newly published patent families with positive sustainability impact 27% (n.a.) n.a. People treated with our Healthcare products* 174 mio (165 mio) 1 bn people ambition1: HC Percentage o
Slide 23: Process Solutions: Core business up despite adverse inventory dynamics
Process Solutions: Core business up despite adverse inventory dynamics Sales development [€m] - org. growth [%] 1,193 1,154 1,139 ▪ Temporary slowdown in core growth to +3% org. on adverse inventory dynamics 1,053 1,022 ▪ Process Solutions therefore down -4% org. amid strong COVID-19 headwind ▪ Impr
Slide 24: Life Science Services: Strong core growth offset by decline in COVID sales
Life Science Services: Strong core growth offset by decline in COVID sales Sales development [€m] - org. growth [%] 262 247 ▪ Life Science Services sales down -7% org., 241 very strong growth in the core offset by sharp decline in COVID-related sales ▪ COVID-19 business down to single-digit €m 193 1
Slide 25: Science & Lab Solutions: Healthy growth performance due to core business
Science & Lab Solutions: Healthy growth performance due to core business Sales development [€m] - org. growth [%] 1,247 1,276 1,199 1,232 1,220 ▪ Strong core business drives +6% org. sales performance in Q1, supported by pricing ▪ Robust performance across portfolios, regions and customer segments ▪
Slide 26: Healthcare organic growth by franchise/product
Healthcare organic growth by franchise/product Q1 2023 organic sales growth [%] by key product [€m] 167 31% 128 250 4% 242 237 23% 189 154 -25% 201 197 -2% 200 218 0% 218 130 0% 128 142 1% 138 Q1 2023 Q1 2022 26 Merck Q1 2023 Results Presentation | May 11, 2023
Slide 27: Neurology & Immunology: Mavenclad sales up +23% org.
Neurology & Immunology: Q1 Mavenclad® sales up +23% org., nearly offsetting a weaker Rebif® performance of -25% amid channel dynamics ® Sales development N&I, [€m] Mavenclad Y1+Y2 patients1 ® ▪ Mavenclad most prescribed oral HE drug in the U.S. and EU-4 in org. org. org. org. org. dynamic market seg
Slide 28: Oncology: Bavencio mUC 1L ramp-up drives 15% org. franchise growth
Oncology: Bavencio® mUC 1L ramp-up drives 15% org. franchise growth ® Sales development Oncology, [€m] Erbitux net sales, [€m] ▪ Growth across most regions, 300 274 +4% org. org. org. org. org. org. 258 249 250 [€m] 242 26.6% 8.1% 24.5% 11.3% 14.7% 250 ▪ Further updates from pivotal 200 500 trials i
Slide 29: Fertility: Org. growth of +7% in Q1
Fertility: Org. growth of +7% in Q1 Sales development Fertility, [€m] Gonal-f® net sales, [€m] 250 org. org. org. org. org. 221 200 198 205 197 [€m] 4.3% -2.7% 2.6% 11.5% 6.7% 200 400 373 380 150 ▪ Competitor stock-out of 366 341 351 100 urine-based product in 350 50 selected markets 300 0 ▪ Spike i
Slide 30: CM&E: +3% org. growth in Q1
CM&E: +3% org. growth in Q1; Saizen® with double-digit org. growth ® Sales development CM&E, [€m] Glucophage net sales, [€m] ▪ Glucophage® flat as tender org. org. org. org. org. 2.5% 2.7% 6.0% 6.4% 3.0% phasing in ME&A leads to a [€m] 237 248 250 218 228 218 negative contribution 200 800 730 733 15
Slide 31: Merck pipeline
Merck pipeline May 11, 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 antagonist)
Slide 32: 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 33: Semiconductor Solutions delivers organic growth; slowdown due to softening market
Semiconductor Solutions delivers organic growth; slowdown due to softening market Sales development [€m] - org. growth [%] 729 711 ▪ Semiconductor Solutions growth 653 slows due to ongoing Semi market 604 softening 581 20% ▪ High growth in DS&S business more 16% than offsets softer Semiconductor 15%
Slide 34: Adjustments in Q1 2023
Adjustments in Q1 2023 Adjustments in EBIT [€m] Q1 2022 Q1 2023 Adjustments thereof D&A Adjustments thereof D&A Life Science 7 1 17 0 Healthcare 4 1 -4 -1 Electronics 11 0 19 10 Corporate & Other 6 0 74 0 Total 28 3 106 10 34 Merck Q1 2023 Results Presentation | May 11, 2023
Slide 35: Financial Calendar
Financial Calendar Date Event May 11, 2023 Q1 2023 Earnings release August 3, 2023 Q2 2023 Earnings release October 19, 2023 Capital Markets Day November 9, 2023 Q3 2023 Earnings release March 7, 2024 Q4 2023 Earnings release 35 Merck Q1 2023 Results Presentation | May 11, 2023
Slide 36: Investor Relations contacts
CONSTANTIN FEST SVENJA DJAVAHERI PETRA HOLTZ Head of Investor Relations Assistant Investor Relations Assistant Investor Relations +49 6151 72-5271 +49 6151 72-3744 +49 6151 72-3321 constantin.fest@merckgroup.com svenja.djavaheri@merckgroup.com petra.holtz@merckgroup.com ADRIAN GORSKI DANIEL WENDORFF