Merck Kgaa · XETR:MRK
Merck Kgaa — Q2 2021 Earnings Presentation
47 slides from Merck Kgaa's earnings presentation, Aug 5, 2021
Slide 1: Strong Quarter With Double-Digit Growth Driven by BIG3
Strong Quarter With Double-Digit Growth Driven by BIG3 Q2 2021 results Belén Garijo, CEO Marcus Kuhnert, CFO August 5, 2021
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 Guidance 3 Merck Q2 2021 Results Presentation | August 5, 2021
Slide 4: Executive summary
Executive summary 01
Slide 5: Highlights: Strong group performance with contribution of all businesses
Highlights: Strong group performance with contribution of all businesses Operations Financials Healthcare: 88% organic growth in Fertility; Oncology up nearly 50% with Bavencio® nearly tripling in size, Q2 organic sales: +23.0% Mavenclad® more than doubling & resuming sequential growth; dynamic mark
Slide 6: BIG3 primary driver of ~€950m organic growth in Q2
BIG3 primary driver of ~ €950 m organic growth in Q2, further supported by recovery in areas impacted by COVID-19 in Q2 2020 ~500 Growth drivers by Business Process Solutions: ~350 ▪ +34% organic growth delivering additional ~€300 m ▪ Bioprocessing primary driver amid strong underlying business and
Slide 7: Strong Life Science demand and Healthcare recovery drive 23% sales and 52% EBITDA pre growth
Strong Life Science demand and robust Healthcare recovery drive 23% sales and 52% EBITDA pre organic growth Q2 YoY Net Sales Q2 YoY EBITDA pre Organic Currency Portfolio Total 52.0% €1,576 m Healthcare 23.6% -4.3% 0.0% 19.2% -5.2% -0.1% €1 074 m Life Science 28.2% -5.0% 0.0% 23.2% Electronics 10.3%
Slide 8: Regional breakdown: strong growth in North America and Europe
Life Science demand and Healthcare recovery drive particularly strong growth in North America and Europe Regional breakdown of net sales [€m] Regional organic development Europe +26.4% ▪ APAC: Strong growth across all sectors org. 29% particularly in Process Solutions, Fertility and Semiconductor So
Slide 9: Financial overview
Financial overview 02
Slide 10: Q2 2021: Overview
Q2 2021: Overview Key figures Comments [€m] Q2 2020 Q2 2021 Δ Net sales 4,119 4,870 18.2% ▪ EBITDA pre & margin increase, driven by operating leverage in Life Science and EBITDA pre 1,074 1,576 46.7% Healthcare vs. LY COVID-19 burden Margin (in % of net sales) 26.1% 32.4% 6.3pp ▪ EPS pre increase dr
Slide 11: Q2 2021: Reported figures
Q2 2021: Reported figures Reported results Comments ▪ EBIT more than doubles, driven by [€m] Q2 2020 Q2 2021 Δ strong performance across all sectors EBIT 491 1,049 113.6% vs. Q2 2020 COVID-19 burden Financial result -102 -95 -7.3% ▪ Improved financial result largely driven by lower interest expense
Slide 12: Healthcare Q2: Strong Fertility recovery and Bavencio performance
® Healthcare Q2: Strong Fertility recovery & Bavencio performance; ® Mavenclad returns to sequential growth as dynamic market picks up Healthcare P&L Net sales bridge [€m] IFRS Pre 23.6% €1 788 m €1 499 m Q2 2020 Q2 2021 Q2 2020 Q2 2021 -4.3% 0.0% Net sales 1,499 1,788 1,499 1,788 * M&S -409 -391 -4
Slide 13: Life Science Q2: Strong core business and COVID-19 demand fuel record growth
Life Science Q2: Strong core business and COVID-19 demand fuel record growth, mainly driven by Process and Research Solutions Life Science P&L Net sales bridge [€m] IFRS Pre 28.2% 0.0% €2 225 m €1 806 m Q2 2020 Q2 2021 Q2 2020 Q2 2021 -5.0% Net sales 1,806 2,225 1,806 2,225 M&S * -488 -505 -488 -505
Slide 14: Electronics Q2: Strong performance in Semi, recovery in Surface
Electronics Q2: Strong performance in Semi, recovery in Surface, and stabilizing Display Solutions drive double-digit organic sales growth Electronics P&L Net sales bridge [€m] IFRS Pre €814 m 10.3% 0.0% €857 m Q2 2020 Q2 2021 Q2 2020 Q2 2021 -5.0% Net sales 814 857 814 857 M&S * -134 -137 -131 -136
Slide 15: Balance sheet
Balance sheet Assets [€bn] Liabilities [€bn] 41.8 43.1 43.1 41.8 Cash & cash equivalents 1.4 1.8 3.2 3.7 Receivables 3.3 3.6 Inventories 19.4 17.0 Net equity Intangible assets 23.6 24.0 12.0 12.1 Financial debt 2.4 Payables/refund liabilities 2.9 Property, plant 4.0 Provisions for employee benefits
Slide 16: Cash flow statement
Cash flow statement Q2 2021 – Cash flow statement Cash flow drivers [€m] Q2 2020 Q2 2021 Δ ▪ Operating cash flow up €386 m driven Profit after tax 289 747 458 primarily by higher profit after tax in all three sectors, particularly Life Science D&A 559 419 -140 ▪ Delta in D&A driven by COVID-19 Chang
Slide 17: Guidance
Guidance 03
Slide 18: Full-year 2021 guidance
Full-year 2021 guidance Net sales: Organic: +12% to +14% YoY FX: -2% to -4% YoY ~€18.8 – 19.7 bn EBITDA pre: Organic: +21% to +25% YoY (excl. Biogen1) FX: -2% to -4% YoY ~€5.6 – 6.0 bn EPS pre: ~ €7.80 – 8.50 1 Q3 20 reversal of the provisions for the patent litigation proceedings for Rebif in the a
Slide 19: 2021 business sector guidance
2021 business sector guidance1 Net sales EBITDA pre Healthcare ▪ Organic: +7% to +10% ▪ Organic:+15% to +18% YoY ▪ Mainly driven by ® (excl Biogen2) Mavenclad , Bavencio® and recovery ▪ FX: -5% to -7% YoY of Fertility ▪ ~€2,050 – 2,150 m ▪ Base business organically around stable Net sales EBITDA pre
Slide 20: Merck Group: Looking beyond 2021
Merck Group Looking beyond 2021 Life Science Healthcare Electronics Upgrading the Updating Further upgraded COVID-19 PS floor 2022 pipeline sales to guidance also positive for 2022 to € 700m €1.6 bn to €1.8 bn signal for 2022 and beyond ▪ Higher 2021 overall COVID- ▪ Mavenclad® peak sales of ▪ Conti
Slide 21: Appendix
Appendix
Slide 22: Additional financial guidance 2021
Additional financial guidance 2021 Further financial details Corporate & Other EBITDA pre ~ €-450 to -500 m Interest result ~ €-220 to -245 m Effective tax rate ~22% to 24% Capex on PPE ~€1.4 to 1.5 bn FY 2021 hedge ratio ~70% Hedging/USD assumption at EUR/USD ~1.17 2021 Ø EUR/USD assumption ~1.19 t
Slide 23: Credit details
Credit details Maturity profile as of June 30, 2021 Credit rating information Coupon [€m / USDm] 3.250% 0.125% LT ST Since Outlook Rating Rating 2.950% 1.375% Baa1 12.12.14 Stable P-2 1 600 1.625% 3.375% 1.625% 2.875% 1 000 0.875% 0.500% A 29.05.13 Stable A-1 0.005% 500 0.375% 1.000 1.000 750 750 80
Slide 24: Strong performance across all sectors drives 17% organic net sales growth in H1
Strong performance across all sectors drives 17% organic net sales growth and 44% organic EBITDA pre growth against COVID-19-impacted H1 2020 H1 YoY Net Sales H1 YoY EBITDA pre Organic Currency Portfolio Total 43.8% €3 087 m Healthcare 12.9% -5.2% -0.6% 7.1% €2 256 m -6.8% -0.1% Life Science 27.5% -
Slide 25: H1 2021: Overview
H1 2021: Overview Key figures Comments [€m] H1 2020 H1 2021 Δ ▪ Strong performance across all sectors Net sales 8,489 9,501 11.9% drives +12% growth despite -6% FX EBITDA pre 2,256 3,087 36.9% ▪ EBITDA pre & margin increase, driven by Margin (in % of net sales) 26.57% 32.49% 5.919% operating leverag
Slide 26: H1 2021: Reported figures
H1 2021: Reported figures Reported results Comments [€m] H1 2020 H1 2021 Δ ▪ EBIT increase driven by strong growth and operating leverage in all business EBIT 1,207 2,092 73.3% sectors, particularly Life Science Financial result -201 -154 -23.3% ▪ Improved financial result largely Profit before tax
Slide 27: Healthcare H1: Strong organic growth driven by Fertility, Mavenclad and Bavencio
Healthcare H1: Strong organic growth driven by recovery in Fertility, Mavenclad® & Bavencio® uptake, and upside from Erbitux® supply to Eli Lilly Healthcare P&L Net sales bridge [€m] IFRS Pre €3 200 m 12.9% €3 427 m H1 2020 H1 2021 H1 2020 H1 2021 -5.2% -0.6% Net sales 3,200 3,427 3,200 3,427 M&S *
Slide 28: Healthcare organic growth by franchise/product
Healthcare organic growth by franchise/product Q2 2021 organic sales growth [%] H1 2021 organic sales growth [%] by key product [€m] by key product [€m] 247 475 -9% -13% 290 584 213 430 -4% -3% 226 460 273 36% 492 23% 207 419 200 85% 386 45% 112 279 127 1% 253 -5% 130 281 112 0% 219 -1% 114 228 157
Slide 29: Neurology & Immunology: Mavenclad sales +102% (org.) YoY
Neurology & Immunology: Mavenclad® sales +102% (org.) YoY amid initial recovery of dynamic market and low comps Sales development NDI, [€m] Dynamic market volume [R3W] 1 ▪ 102% organic growth against soft comps org. org. org. org. org. ▪ Q2 impacted by low base of [€m] -5.1% 8.9% 4.5% -4.3% 15.3% ye
Slide 30: Mavenclad US: Q2 Y1 patients growing QoQ
Mavenclad® US: Q2 Y1 patients growing QoQ with expanded prescriber base New patient volume growing 23% QoQ, now comprising over 60% of total patient volume Mavenclad® US Y1/Y2 patients ▪ New patients growing QoQ both in terms of volume and % of total patients ▪ New prescribers growing QoQ by 23% ▪ T
Slide 31: Oncology: Bavencio org. growth of 206%
Oncology: Bavencio® org. growth of 206% fueled by UC 1L launch; Erbitux org. growth of 36% primarily driven by Eli Lilly supply agreement ® Sales development Oncology, [€m] Erbitux net sales, [€m] ▪ Sales boosted by benefit 300 273 from Eli Lilly supply agreement org. org. org. org. org. 255 [€m] 6.
Slide 32: Bavencio UC 1L launch
Bavencio® UC 1L launch: Increasing the adoption of 1L maintenance therapy in both U.S. and ex-U.S. U.S. – 1 year into launch, continued progress across the entire treatment flow: Newly diagnosed Platinum PT-based chemo1 Maintenance 1L Maintenance metastatic 85% eligble ~75% 1L treatment ~70% therapy
Slide 33: Fertility: +88% organic growth against soft COVID-19 related comps
Fertility: +88% organic growth against soft COVID-19 related comps ® Sales development Fertility, [€m] Gonal-f net sales, [€m] 192 200 200 186 org. org. org. org. org. 158 ▪ Strong growth of +88% [€m] 87.6% -38.9% -1.3% 0.8% 22.0% 150 over heavily impacted Q2 112 400 2020 across all regions 100 343
Slide 34: CM&E: Growing 1% org.
CM&E: Growing 1% org. as Glucophage VBP in China largely compensated for by growth in other regions and strong Endocrinology ® Sales development CM&E, [€m] Glucophage net sales, [€m] ▪ Organic decline of -4% further org. org. org. org. org. muted by -2% FX headwinds [€m] 3.9% 2.4% -1.2% -4.2% 0.6% 6
Slide 35: Healthcare pipeline
Healthcare pipeline August 5, 2021 Phase I Phase II Phase III M1231 bintrafusp alfa berzosertib bintrafusp alfa xevinapant Bispecific MUC1xEGFR TGFbeta trap/anti-PD-L1 ATR inhibitor TGFbeta trap/anti-PD-L1 IAP inhibitor ADC Cervical cancer 1L Small-Cell Lung Cancer4 Biliary tract cancer 1L Locally a
Slide 36: Healthcare catalysts
Healthcare catalysts Oncology Immuno-Oncology Immunology Q3 2021 Q4 2021 Q1 2022 Tepotinib (c-Met–inhibitor) EMA: Filing accepted in Q4 2020, review ongoing Bavencio® Bintrafusp alfa (Avelumab/Anti-PD-L1) (TGFbeta trap/anti-PD-L1) 1L NSCLC (JAVELIN 100): 2L Cervical (INTR@PID 017): Expected data rea
Slide 37: Life Science H1: Strong core performance across all businesses
Life Science H1: Strong core performance across all businesses and substantial COVID-19 demand in Process and Research fuel record growth Life Science P&L Net sales bridge [€m] IFRS Pre 27.5% 0.0% €4,356 m €3,575 m H1 2020 H1 2021 H1 2020 H1 2021 -5.6% Net sales 3,575 4,356 3,575 4,356 M&S * -986 -1
Slide 38: Electronics H1: Delivering growth above mid-term guidance
Electronics H1: Delivering growth above mid-term guidance despite unfavorable phasing in DS&S project business Electronics P&L Net sales bridge [€m] IFRS Pre €1,714 m 5.0% 0.0% €1,719 m H1 2020 H1 2021 H1 2020 H1 2021 -4.7% Net sales 1,714 1,719 1,714 1,719 M&S * -270 -272 -266 -271 H1 2020 Organic
Slide 39: Cash flow statement
Cash flow statement H1 2021 – cash flow statement Cash flow drivers ▪ Operating cashflow more than doubles [€m] H1 2020 H1 2021 Δ as strong profit after tax is further Profit after tax 747 1,495 748 boosted by favorable working capital D&A 991 843 -148 ▪ Lower depreciation & amortization vs. H1 2020
Slide 40: BIG 3 - Process Solutions: Continued strong double-digit growth
BIG 3 - Process Solutions: Continued strong double-digit growth, moderating as expected against rising comps Sales development [€m] - org. growth [%] 1,145 1,054 ▪ Continued double-digit growth in the core business paired with rising COVID-19 975 926 contributions (mainly vaccine related) 892 38.3%
Slide 41: Research Solutions: Record organic growth
Research Solutions: Record organic growth amid ongoing business recovery and soft comps Sales development [€m] - org. growth [%] 644 631 602 ▪ Strong double-digit growth, accelerating 566 546 further on soft comps (Q2-20 with biggest 30.9% impact from lockdowns) 501 24.0% ▪ Ongoing core business rec
Slide 42: Applied Solutions: Growth accelerating as recovery gains traction
Applied Solutions: Growth accelerating as recovery is gaining traction Sales development [€m] - org. growth [%] 453 449 421 432 413 418 ▪ Growth accelerating to double-digits as recovery continues amid still easy comps (H1-20 with flat growth due to lockdowns) ▪ Core business as main driver with bro
Slide 43: BIG 3 - Semiconductor Solutions: Strong semi materials drive growth
BIG 3 - Semiconductor Solutions: Strong semi materials drive growth Sales development [€m] - org. growth [%] 501 483 474 476 469 468 ▪ Q2 2021: record quarter for Semiconductor Solutions, driven by strong performance across 20.0% the board, particularly in semi materials 12.1% 11.6% ▪ DS&S project p
Slide 44: Adjustments in Q2 2021
Adjustments in Q2 2021 Adjustments in EBIT [€m] Q2 2020 Q2 2021 Adjustments thereof D&A Adjustments thereof D&A Healthcare 15 0 11 3 Life Science -15 0 -6 0 Electronics 131 112 10 5 Corporate & Other 8 0 97 0 Total 138 112 112 8 44 Merck Q2 2021 Results Presentation | August 5, 2021
Slide 45: Adjustments in H1 2021
Adjustments in H1 2021 Adjustments in EBIT [€m] H1 2020 H1 2021 Adjustments thereof D&A Adjustments thereof D&A Healthcare -12 2 21 3 Life Science -4 0 8 0 Electronics 165 112 27 7 Corporate & Other 25 0 103 1 Total 174 114 159 11 45 Merck Q2 2021 Results Presentation | August 5, 2021
Slide 46: Financial Calendar
Financial Calendar Date Event August 5, 2021 Q2 2021 Earnings release September 9, 2021 Virtual Capital Markets Day November 11, 2021 Q3 2021 Earnings release April 22, 2022 Annual General Meeting August 4, 2022 Q2 2022 Earnings release 46 Merck Q2 2021 Results Presentation | August 5, 2021
Slide 47: Investor Relations contacts
CONSTANTIN FEST SVENJA BUNDSCHUH SARA HOFMANN 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.bundschuh@merckgroup.com sara.hofmann@merckgroup.com ILJA DOERING GUNNAR ROMER A