Merck KGaA · XETR:MRK
Merck KGaA — Merck KGaA, Darmstadt, Germany — Q3 2021 Earnings Presentation
47 slides from Merck KGaA's earnings presentation, Nov 11, 2021
Slide 1: BIG3 Drive Another Quarter of Double-Digit Growth
BIG3 Drive Another Quarter of Double-Digit Growth Q3 2021 results Belén Garijo, CEO Marcus Kuhnert, CFO November 11, 2021
Slide 2: Disclaimer
Disclaimer Publication of Merck KGaA, Darmstadt, Germany. In the United States and Canada the group of companies affiliated with Merck KGaA, Darmstadt, Germany operates under individual business names (EMD Serono, Millipore Sigma, EMD Performance Materials). To reflect such fact and to avoid any mis
Slide 3: Agenda
Agenda Executive summary Financial overview Guidance 3 Merck KGaA, Darmstadt, Germany Q3 2021 Results Presentation | November 11, 2021
Slide 4: Executive summary
Executive summary 01
Slide 5: Highlights: All sectors contribute to ~€500m organic net sales increase
Highlights: All sectors contribute to ~ €500 m organic net sales increase Operations Financials Life Science: another record quarter in terms of absolute Q3 organic sales: +10.9% sales and 17% organic growth against higher comps; largest growth contributor to group (~ €330 m org.) with all Q3 organi
Slide 6: 11% organic sales growth driven by all three business sectors
11% organic sales growth driven by all three business sectors; EBITDA pre growing 13% organically (excluding Biogen) Q3 YoY Net Sales Q3 YoY EBITDA pre Organic Currency Portfolio Total €1,701 m Life Science 17.1% 0.6% 0.0% 17.7% 2.2% €1,552 m -10.9% -0.1% Healthcare 4.1% 1.0% -0.1% 5.1% Electronics
Slide 7: Continued strong Life Science demand primary driver of growth across all regions
Continued strong Life Science demand primary driver of growth across all regions Regional breakdown of net sales [€m] Regional organic development Europe +15.6% ▪ APAC: Life Science and Electronics org. largest contributors to growth 29% particularly in Process Solutions, and Semiconductor Solutions
Slide 8: Financial overview
Financial overview 02
Slide 9: Q3 2021: Overview
Q3 2021: Overview Key figures (Excl. Biogen provision reversal) Comments [€m] Q3 2020 Q3 2021 Δ Q3 2020 Δ ▪ Growth across all sectors, particularly Net sales 4,447 4,973 11.8% Life Science, further supported by +1% FX tailwind results in +12% sales growth EBITDA pre 1,701 1,552 -8.7% 1,336 16.2% 38.
Slide 10: Q3 2021: Reported figures – comps impacted by Biogen provision
Q3 2021: Reported figures – comps impacted by Biogen provision Reported results Comments [€m] Q3 2020 Q3 2021 Δ EBIT 1,167 1,047 -10.2% ▪ Underlying EBIT growing 31% while reported EBIT growth impacted by Financial result -102 -54 -46.7% Q3 2020 €365 m provision reversal Profit before tax 1,065 993
Slide 11: Life Science Q3: Strong core business and COVID-19 demand drive record sales
Life Science Q3: Strong core business and COVID-19 demand drive another quarter of record sales Life Science P&L Net sales bridge [€m] IFRS Pre 17.1% 0.6% 0.0% €2,248 m €1,910 m Q3 2020 Q3 2021 Q3 2020 Q3 2021 Net sales 1,910 2,248 1,910 2,248 M&S * -478 -529 -477 -527 +0.0% Admin -88 -93 -80 -84 Q3
Slide 12: Healthcare Q3: Strong Bavencio performance and continued Mavenclad ramp-up
® Healthcare Q3: Strong Bavencio performance and continued ® Mavenclad ramp-up drive 4% organic growth Healthcare P&L Net sales bridge [€m] IFRS Pre €1,702 m 4.1% 1.0% €1,788 m -0.1% Q3 2020 Q3 2021 Q3 2020 Q3 2021 Net sales 1,702 1,788 1,702 1,788 * M&S -382 -386 -379 -386 Admin -75 -79 -75 -77 Q3
Slide 13: Electronics Q3: 21% growth in Semi continue to drive double-digit organic sales growth
Electronics Q3: 21% growth in Semi continue to drive double-digit organic sales growth Electronics P&L Net sales bridge 10.3% 1.7% 0.0% €937 m [€m] IFRS Pre €836 m Q3 2020 Q3 2021 Q3 2020 Q3 2021 Net sales 836 937 836 937 M&S * -133 -147 -132 -145 +0.0% Admin -38 -39 -36 -28 Q3 2020 Organic Currency
Slide 14: Balance sheet
Balance sheet Assets [€bn] Liabilities [€bn] 43.8 43.8 41.8 1.5 41.8 Cash & cash equivalents 1.4 3.8 Receivables 3.2 3.3 3.8 Inventories 20.7 17.0 Net equity Intangible assets 23.6 24.3 11.0 12.1 Financial debt 2.9 2.4 Payables/refund liabilities Property, plant 3.6 4.0 Provisions for employee benef
Slide 15: Cash flow statement
Cash flow statement Q3 2021 – Cash flow statement Cash flow drivers [€m] Q3 2020 Q3 2021 Δ ▪ Operating cash flow up €296 m driven Profit after tax 806 764 -43 primarily by higher underlying profit D&A after tax, particularly in Life Science 451 443 -8 ▪ Negative delta in profit after tax impacted Ch
Slide 16: Guidance
Guidance 03
Slide 17: Holistic view: a look at inflation, input prices and potential shortages
Holistic view: a look at inflation, input prices and potential shortages Sector Input prices & shortages Output pricing Life Science ▪ Higher than usual wage inflation in some Sep 2021 YTD countries, such as the U.S. ▪ Pricing currently at higher end of historical corridor Gross Margin: ▪ Freight co
Slide 18: Outlook: On the path towards climate neutrality 2040
Outlook: On the path towards climate neutrality 2040 Climate Nov. 2021 Dec. 2021 Q2 2022 2030 2040 Neutrality Submit validation Work on SBT Develop towards Certification by SBTi documents for roadmap towards climate neutrality expected1 SBTi certification climate targets (2040) ▪ Aiming for climate
Slide 19: Full-year 2021 guidance
Full-year 2021 guidance Net sales: Organic: +13% to +15% YoY FX: -1% to -2% YoY ~€19.30 bn to €19.85 bn EBITDA pre: Organic: +26% to +29% YoY (excl Biogen1) FX: -1% to -2% YoY ~€6.00 bn to €6.30 bn EPS pre: ~ €8.50 to €9.00 1 Q3 20 reversal of the provision for the patent dispute over Rebif in the a
Slide 20: 2021 business sector guidance
1 2021 business sector guidance Net sales EBITDA pre Life Science ▪ Organic: +20% to +22% ▪ Organic:+36% to +39% YoY ▪ Process Solutions as main ▪ FX: -1% to -2% YoY growth driver, including ▪ ~€3,200 – 3,350 m ~€1 bn COVID-19 sales EBITDA pre Net sales Healthcare ▪ Organic: +8% to +9% ▪ Organic:+17
Slide 21: Looking beyond 2021: #25by25
Looking beyond 2021 #25by25: delivering €5 bn+ organic additional sales by 2025 >€1 bn organic sales growth per annum ~80% of each year from 2021 to 2025 >€1 bn growth from ~€25 bn2 BIG3 and > 6% organic CAGR >€1 bn Process illustration Solutions >€1 bn Healthcare 1 New Products >€1 bn Semiconductor
Slide 22: Appendix
Appendix
Slide 23: Additional financial guidance 2021
Additional financial guidance 2021 Further financial details Corporate & Other EBITDA pre ~ €-440 to -470 m Interest result ~ €-190 to -220 m Effective tax rate ~22% to 24% Capex on PPE ~€1.4 bn FY 2021 hedge ratio ~70% Hedging/USD assumption at EUR/USD ~1.17 2021 Ø EUR/USD assumption ~1.17 to 1.19
Slide 24: Credit details
Credit details Maturity profile as of Sep 30, 2021 Credit rating information Coupon [€m / $m] 3.250% 0.125% LT ST Since Outlook Rating Rating 2.950% 1.375% Baa1 1 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 1.000 750 750 800
Slide 25: Strong 9M performance across all three business sectors
Strong 9M performance across all three business sectors; Life Science growing 24% organically in the first 9 months of 2021 9M YoY Net Sales 9M YoY EBITDA pre Organic Currency Portfolio Total 20.3% €4,639 m Life Science 23.9% -3.5% 0.0% 20.4% €3,956 m -2.9% -0.1% Healthcare 9.9% -3.0% -0.5% 6.4% Ele
Slide 26: 9M 2021: Overview
9M 2021: Overview Key figures (Excl. Biogen provision reversal) Comments [€m] 9M 2020 9M 2021 Δ 9M 2020 Δ ▪ Strong YTD performance across all three Net sales 12,936 14,474 11.9% Sectors. Particularly Life Science drives 12% growth in the first 9 months EBITDA pre 3,956 4,639 17.3% 3,591 29.2% Margin
Slide 27: 9M 2021: Reported figures – impacted by Q3 2020 Biogen provision
9M 2021: Reported figures – impacted by Q3 2020 Biogen provision Reported results Comments [€m] 9M 2020 9M 2021 Δ ▪ EBIT growing 32%, despite Biogen, 2,374 3,140 32.3% driven primarily by operating leverage EBIT in Life Science, Bavencio® and soft Financial result -302 -208 -31.2% comps in Fertility
Slide 28: Life Science 9M: Strong YTD performance with €1.3bn org. net sales growth
Life Science 9M: Strong YTD performance with €1.3 bn org. net sales growth, primarily driven by Process Solutions Life Science P&L Net sales bridge [€m] IFRS Pre adjustments 23.9% 0.0% €6,604 m €5,485 m 9M 2020 9M 2021 9M 2020 9M 2021 -3.5% Net sales 5,485 6,604 5,485 6,604 M&S * -1,464 -1,535 -1,46
Slide 29: BIG 3 - Process Solutions: record Q3 2021 in absolute terms
BIG 3 - Process Solutions: record Q3 2021 in absolute terms, declining growth rate against tough comps Sales development [€m] - org. growth [%] 1,186 1,145 ▪ Continued strong growth in the core 1,054 business paired with still increasing COVID- 975 19 contributions (mainly vaccine related) 892 926 3
Slide 30: Research Solutions: Normalizing org. growth against tougher comps
Research Solutions: Normalizing org. growth against tougher comps Sales development [€m] - org. growth [%] 644 631 602 30.9% 608 ▪ Organic growth now moderating to 7% as 566 546 Q3 2020 comparables include strong post Q2 24.0% lockdown catch-up and recovery as well as 501 additional COVID-19 demand
Slide 31: Applied Solutions: record absolute sales, normalizing growth rate
Applied Solutions: record absolute sales, normalizing growth rate Sales development [€m] - org. growth [%] 453 449 454 421 432 413 418 ▪ Growth remains on elevated level due to ongoing post-lockdown recovery ▪ Core business remains main driver with 12.8% broad-based performance across business lines
Slide 32: Healthcare 9M: Strong net sales growth
Healthcare 9M: Strong net sales growth; underlying EBITDA pre growing 28% organically Healthcare P&L Net sales bridge [€m] IFRS Pre €4,901 m 9.9% €5,214 m 9M 2020 9M 2021 9M 2020 9M 2021 -3.0% -0.5% Net sales 4,901 5,214 4,901 5,214 M&S * -1,215 -1,147 -1,203 -1,140 +0.0% 9M 2020 Organic Currency Po
Slide 33: Healthcare organic growth by franchise/product
Healthcare organic growth by franchise/product Q3 2021 organic sales growth [%] 9M 2021 organic sales growth [%] by key product [€m] by key product [€m] 234 708 -16% -14% 279 864 209 639 -10% -5% 226 686 233 +6% 726 +17% 217 636 191 -1% 577 +26% 192 471 133 +3% 386 -3% 127 407 123 +5% 342 +1% 115 34
Slide 34: Neurology & Immunology: Mavenclad hits record quarter
Neurology & Immunology: Mavenclad® hits record quarter with sales up 33% (org.) YoY and equal growth contribution by U.S. and ex U.S. ▪ Recovery of US dynamic Sales development N&I, [€m] Dynamic market volume [R3W] 1 market dampened by COVID 19 delta wave org. org. org. org. org. [€m] 8.9% 4.5% -4.3
Slide 35: Oncology: UC 1L ramp-up fuels 147% organic growth in Bavencio
Oncology: UC 1L ramp-up fuels 147% organic growth in Bavencio® ® Sales development Oncology, [€m] Erbitux net sales, [€m] ▪ Solid 6% org. growth with all major regions contributing 300 273 [€m] org. org. org. org. org. 250 255 233 ▪ Sequential phasing shows Eli 7.2% 19.7% 20.1% 48.8% 26.4% 217 219 2
Slide 36: Bavencio UC 1L launch: Growing adoption of 1L maintenance therapy
Bavencio® UC 1L launch: Growing adoption of 1L maintenance therapy treatment and establishing stable market shares across key geographies U.S. - Approved in June 2020: YTD YTD YTD YTD YTD Newly diagnosed PT-based Maintenance 1L Maintenance Platinum metastatic 85% 70-75% chemo1 1L ~70% therapy 45-50%
Slide 37: Fertility: strong org. growth of +7% against already recovered Q3 LY
Fertility: strong org. growth of +7% against already recovered Q3 LY Sales development Fertility, [€m] Gonal-f® net sales, [€m] 192 200 191 186 ▪ Gonal-f® underlying 200 org. org. org. org. org. 7.2% 158 [€m] -1.3% 0.8% 22.0% 87.6% 150 growth in all markets 400 except U.S. 100 350 343 339 314 320 50
Slide 38: CM&E: Growth in other regions and strong Endocrinology offset VBP impact
CM&E: Growth in other regions and strong Endocrinology largely ® offset VBP impact on Glucophage in China ® Sales development CM&E, [€m] Glucophage net sales, [€m] org. org. org. org. org. ▪ Glucophage organic decline of [€m] 2.4% -1.2% -4.2% 0.6% -3.4% 250 226 218 217 213 209 -10% partly compensate
Slide 39: Healthcare pipeline
Healthcare pipeline November 11, 2021 Phase I Phase II Phase III M1231 M6223 berzosertib bintrafusp alfa xevinapant Bispecific MUC1xEGFR anti-TIGIT mAb ATR inhibitor TGFbeta trap/anti-PD-L1 IAP inhibitor ADC Solid tumors3 Small-Cell Lung Cancer4 Cervical cancer 2L Locally advanced squamous cell carc
Slide 40: Healthcare catalysts
Healthcare catalysts Oncology Immuno-Oncology Immunology Q4 2021 Q1 2022 Q2 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 41: Electronics 9M: top-line growth well above mid-term guidance
Electronics 9M: top-line growth well above mid-term guidance driven by strong Semi Solutions and soft comps in Surface Solutions Electronics P&L Net sales bridge [€m] IFRS Pre adjustments €2,550 m 6.7% 0.0% €2,655 m 9M 2020 9M 2021 9M 2020 9M 2021 -2.6% Net sales 2,550 2,655 2,550 2,655 M&S * -402 -
Slide 42: BIG 3 - Semiconductor Solutions: Strong Semi Materials drive growth
BIG 3 - Semiconductor Solutions: Strong Semi Materials drive growth Sales development [€m] - org. growth [%] 573 ▪ Another record quarter for Semiconductor 468 501 Solutions, both in terms of absolute sales 483 474 469 476 20.9% 20.0% and organic growth 12.1% 11.6% ▪ Semiconductor Materials biggest
Slide 43: Cash flow statement
Cash flow statement 9M 2021 – cash flow statement Cash flow drivers [€m] 9M 2020 9M 2021 Δ Profit after tax 1,554 2,258 705 ▪ Operating cash flow growing €1.4 bn or +63% vs. 9M 2020 D&A 1,442 1,287 -156 ▪ Profit after tax primary driver, with Changes in provisions -294 246 540 +€705 m (muted by 2020
Slide 44: Adjustments in Q3 2021
Adjustments in Q3 2021 Adjustments in EBIT [€m] Q3 2020 Q3 2021 Adjustments thereof D&A Adjustments thereof D&A Healthcare 4 0 9 0 Life Science 18 0 18 0 Electronics 28 1 38 18 Corporate & Other 31 0 11 1 Total 82 1 76 19 44 Merck KGaA, Darmstadt, Germany Q3 2021 Results Presentation | November 11,
Slide 45: Adjustments in 9M 2021
Adjustments in 9M 2021 Adjustments in EBIT [€m] 9M 2020 9M 2021 Adjustments thereof D&A Adjustments thereof D&A Healthcare -8 2 30 3 Life Science 15 0 26 0 Electronics 194 112 65 25 Corporate & Other 56 0 114 1 Total 256 114 235 30 45 Merck KGaA, Darmstadt, Germany Q3 2021 Results Presentation | Nov
Slide 46: Financial Calendar
Financial Calendar Date Event March 3, 2022 Q4 2021 Earnings release April 22, 2022 Annual General Meeting May 12, 2022 Q1 2022 Earnings release August 4, 2022 Q2 2022 Earnings release November 10, 2022 Q3 2022 Earnings release 46 Merck KGaA, Darmstadt, Germany Q3 2021 Results Presentation | Novembe
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 [email protected] [email protected] [email protected] ILJA DOERING GUNNAR ROMER AMELIE
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