Merck KGaA · XETR:MRK
Merck KGaA — Merck KGaA, Darmstadt, Germany — Q3 2023 Earnings Presentation
45 slides from Merck KGaA's earnings presentation, Nov 9, 2023
Slide 1: Staying the course through challenging macro environment
Staying the course through challenging macro environment Merck KGaA, Darmstadt, Germany Q3 2023 results Belén Garijo, CEO Helene von Roeder, CFO November 9, 2023
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 ESG update Outlook & guidance 3 Merck KGaA, Darmstadt, Germany Q3 2023 Results Presentation | November 9, 2023
Slide 4: Executive summary
Executive summary 01
Slide 5: Highlights Q3 2023: Operations and Financials
Highlights Q3 2023: Operations Financials Life Science: ▪ Sales down -13% org. as Covid-19 fades, pronounced destocking, China macroeconomy and SAP roll-out Q3 organic sales: -4% ▪ Core business1 sales -8% org., mainly driven by PS and SLS Q3 organic EBITDA pre: -13% Healthcare: ▪ Continues to drive
Slide 6: Group resilient as Healthcare organic performance partially offsets decline in Life Science and Electronics
Group resilient as Healthcare organic performance partially offsets decline in Life Science and Electronics Q3 YoY Net Sales Q3 YoY EBITDA pre Organic Currency Portfolio Total €1,810 m Life Science -13.2% -5.1% 0.0% -18.3% €1,446 m Healthcare 7.4% -8.5% 0.0% -1.1% -13.2% -6.6% -0.3% Electronics -4.0
Slide 7: Geographical diversification supports resilient portfolio
Geographical diversification supports resilient portfolio Regional breakdown of net sales [€m] Regional organic development Europe -6.8% org. ▪ North America: Strong Mavenclad® and 27% Semis, mitigate sharp Life Science decline ▪ Europe: Sales decline in Life Science, North America partially offset
Slide 8: Financial overview
Financial overview 02
Slide 9: Q3 2023: Overview
Q3 2023: Overview Key figures Comments [€m] Q3 2022 Q3 2023 Δ ▪ Sales down -11%, impacted by FX headwinds Net sales 5,806 5,173 -10.9% ▪ Lower volumes in Life Science and EBITDA pre 1,810 1,446 -20.2% Electronics, partially offset by org. growth Margin (in % of net sales) 31.2% 27.9% -3.3pp in Healt
Slide 10: Q3 2023: Reported figures
Q3 2023: Reported figures Reported results Comments [€m] Q3 2022 Q3 2023 Δ ▪ EBIT decline mainly driven by lower sales volumes in Life Science and EBIT 1,234 983 -20.3% Electronics Financial result -47 -46 -2.3% ▪ Financial result flat as impact of Profit before tax 1,187 937 -21.1% hedging costs fr
Slide 11: Life Science Q3: Core business down -8% org.
Life Science Q3: Core business down -8% org. with Process Solutions destocking; COVID-19 sales fading out as expected Life Science P&L Net sales bridge [€m] IFRS Pre €2,681 m 0.0% €2,191 m Q3 2022 Q3 2023 Q3 2022 Q3 2023 -13.2% -5.1% Net sales 2,681 2,191 2,681 2,191 M&S * -634 -556 -629 -555 +0.0%
Slide 12: Healthcare Q3: Organic growth of +7% supported by all franchises
Healthcare Q3: Organic growth of +7% supported by all franchises Healthcare P&L Net sales bridge [€m] IFRS Pre €2,089 m 7.4% 0.0% €2,066 m Q3 2022 Q3 2023 Q3 2022 Q3 2023 -8.5% Net sales 2,089 2,066 2,089 2,066 * M&S -413 -406 -412 -400 Q3 2022 Organic Currency Portfolio Q3 2023 Admin -84 -79 -79 -7
Slide 13: Electronics Q3: Semi Solutions demonstrates resilience as guided
Electronics Q3: Semi Solutions demonstrates resilience as guided; Display Solutions compensates with volume driven growth Electronics P&L Net sales bridge €1,036 m [€m] IFRS Pre 0.3% €916 m Q3 2022 Q3 2023 Q3 2022 Q3 2023 -4.0% -7.9% Net sales 1,036 916 1,036 916 M&S * -173 -144 -172 -142 +0.0% Q3 2
Slide 14: Balance sheet
Balance sheet Assets [€bn] Liabilities [€bn] 48.5 49.9 49.9 48.5 Cash & cash equivalents 1.9 2.4 4.1 4.2 Receivables Inventories 4.6 5.0 28.3 26.0 Net equity Intangible assets 25.7 25.2 11.0 10.4 Financial debt Property, plant 3.4 Payables/refund liabilities 8.2 8.7 3.2 & equipment 1.9 2.1 Provision
Slide 15: Cash flow statement
Cash flow statement Q3 2023 – Cash flow statement Comments [€m] Q3 2022 Q3 2023 Δ ▪ -20% decline in profit after tax driven by lower sales in Life Science and Profit after tax 926 740 -186 Electronics D&A 470 435 -35 ▪ Profit after tax supported by lower tax and improved financial result Changes in
Slide 16: ESG update
ESG update 03
Slide 17: Energy management: Investing in green energy
Energy management: Investing in green energy % Electricity purchased from GWh2 purchased electricity mix 100% 80% ambition renewable sources incl. business 2022 vs. 2026e 90% growth 80% ~70%3 2022 2026e incl. new VPPAs 70% Texas 2022 60% Spain 47% Conventional 2025e 50% new electricity Conventional
Slide 18: Outlook & Guidance
Outlook & Guidance 04
Slide 19: Group Full-year 2023 guidance
Group 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, trending slightly below the mid-point EBITDA pre: Organic: -9% to -3% YoY FX: -6% to -3% YoY ~€5.8 – €6.4 bn, trending in the lower half of the range EPS pre: ~€8.25 – €9.35,
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, trending in the lower half ▪ ~€2.75 bn to €3.20 bn, trending in the of the range lower half of th
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% Capex on PPE1 ~ €1.8 to 2.0 bn FY 2023 overall hedge ratio ~ 50% Hedging EUR/USD hedging @ ~ 1.07 2023 Ø EUR/USD
Slide 23: Credit details
Credit details Maturity profile as of September 30, 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 7
Slide 24: Group delivers resilient performance; Organic growth in Healthcare compensates weaker Life Science
Group delivers resilient performance; Organic growth in Healthcare largely compensates for weaker Life Science and Electronics 9M YoY Net Sales 9M YoY EBITDA pre Organic Currency Portfolio Total €5,221 m Life Science -7.3% -2.3% 0.1% -9.6% €4,586 m -7.5% -4.4% -0.3% Healthcare 8.3% -4.6% 0.0% 3.7% E
Slide 25: 9M 2023: Overview
9M 2023: Overview Key figures Comments [€m] 9M 2022 9M 2023 Δ ▪ Sales down -5% with organic sales Net sales 16,572 15,768 -4.8% slightly down and FX tailwinds EBITDA pre 5,221 4,586 -12.2% ▪ Lower Life Science and Electronics EBITDA Margin (in % of net sales) 31.5% 29.1% -2.4pp pre, partially mitiga
Slide 26: 9M 2023: Reported figures
9M 2023: Reported figures Reported results Comments ▪ EBIT decline mainly from lower sales [€m] 9M 2022 9M 2023 Δ in Life Science and Electronics EBIT 3,585 2,988 -16.7% ▪ Financial result with additional Financial result -136 -144 5.8% interest costs from pensions, related party financial liabiliti
Slide 27: Life Science 9M: Core business down -2% org.
Life Science 9M: Core business down -2% org. as LSS growth partially offsets headwinds in PS and SLS; declining COVID-19 demand as expected Life Science P&L Net sales bridge [€m] IFRS Pre €7,774 m 0.1% €7,031 m 9M 2022 9M 2023 9M 2022 9M 2023 -7.3% -2.3% Net sales 7,774 7,031 7,774 7,031 M&S * -1,79
Slide 28: Process Solutions: Core down -15% org. on destocking
Process Solutions: Core down -15% org. on destocking; COVID-19 headwinds Sales development [€m] - org. growth [%] YoY 1,193 1,139 ▪ Core development of -15% org. on seeing the expected trough on destocking in Q3 1,022 994 ▪ COVID-19 headwinds of -8% as expected; overall down -23% 873 ▪ Order intake
Slide 29: Life Science Services: Core sales up +12% org.
Life Science Services: Core sales up +12% org.; COVID-19 headwinds Sales development [€m] - org. growth [%] YoY 241 247 ▪ Core business growth of +12% org. with both contract testing and CDMO contributing 206 ▪ Org. sales down -10% with sharp decline in 188 COVID-19 sales 178 ▪ COVID-related sales i
Slide 30: Science & Lab Solutions: Sales down -5% org.
Science & Lab Solutions: Sales down -5% org.; slight COVID-19 headwinds Sales development [€m] - org. growth [%] YoY 1,247 1,276 1,220 ▪ Core business down -4% org., mainly due to 1,182 cautious spending environment, more visible in 1,111 China, and complex SAP migration ▪ COVID-19 business down, bu
Slide 31: Healthcare 9M: Wave 1 launches and Fertility drive organic growth
Healthcare 9M: Wave 1 launches and Fertility drive organic growth Healthcare P&L Net sales bridge [€m] IFRS Pre €5,808 m 8.3% 0.0% €6,021 m 9M 2022 9M 2023 9M 2022 9M 2023 -4.6% Net sales 5,808 6,021 5,808 6,021 M&S * -1,205 -1,208 -1,202 -1,198 9M 2022 Organic Currency Portfolio +0.0%9M 2023 Admin
Slide 32: Healthcare organic growth by franchise/product
Healthcare organic growth by franchise/product Q3 2023 organic sales growth [%] 9M 2023 organic sales growth [%] by key product [€m] by key product [€m] 185 530 22% 26% 166 440 271 781 13% 9% 274 774 225 3% 724 17% 234 636 175 -25% 534 -18% 249 668 213 5% 629 7% 221 620 235 8% 650 0% 237 682 149 10%
Slide 33: Neurology & Immunology: Q3 Mavenclad sales up +3% org.
Neurology & Immunology: Q3 Mavenclad® sales up +3% org., continued uptake in the US ® 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. dynamic market segment2 [€m] 2.3% -3.7% -2.0% 12.2% -11.5% ▪ Con
Slide 34: Oncology: +18% org. growth driven by Bavencio and Erbitux
Oncology: +18% org. growth driven by Bavencio mUC 1L ramp-up and continued strong volume growth of Erbitux ® Sales development Oncology, [€m] YoY Bavencio net sales, [€m] ▪ Continued strong growth momentum of +22% org. 185 org. org. org. org. org. 200 166 172 167 178 ▪ Q3 first quarter of sole globa
Slide 35: Fertility: Growth of +14% org. boosted by competitors' stock out
Fertility: Growth of +14% org. boosted by competitors’ stock out Sales development Fertility, [€m] YoY Gonal-f® net sales, [€m] 250 org. org. org. org. org. 221 219 213 205 197 [€m] 2.6% 11.5% 6.7% 24.7% 14.0% 200 450 150 ▪ Competitor stock-out of 409 400 380 386 100 urine-based product in 373 366 5
Slide 36: CM&E: All segments contributing to 7% org. franchise growth
CM&E: All segments contributing to 7% org. franchise growth ® Sales development CM&E, [€m] YoY Glucophage net sales, [€m] ▪ Q3 with first signs of market org. org. org. org. org. recovery in China after H1 [€m] 6.0% 6.4% 3.0% 0.9% 6.8% 237 248 slowdown linked to high Covid- 250 218 235 200 197 drive
Slide 37: Group pipeline
Group pipeline November 9, 2023 Healthcare pipeline Phase 1 Phase 2 Phase 3 Registration Marketed9 evobrutinib (BTK inhibitor) Relapsing multiple sclerosis enpatoran (TLR7/8 antagonist) Cutaneous lupus erythematosus1 Futility analysis completed enpatoran (TLR7/8 antagonist) Systemic lupus erythemato
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 9M: Semi Solutions resilient in semi down cycle
Electronics 9M: Semi Solutions resilient in semi down cycle; Display Solutions environment remains challenging Electronics P&L Net sales bridge [€m] IFRS Pre €2,990 m 0.3% €2,716 m 9M 2022 9M 2023 9M 2022 9M 2023 -5.7% -3.8% Net sales 2,990 2,716 2,990 2,716 M&S * -491 -450 -490 -447 9M 2022 Organic
Slide 40: Semiconductor Solutions demonstrates resilience in down cycle
Semiconductor Solutions demonstrates resilience in down cycle Sales development [€m] - org. growth [%] YoY 729 711 ▪ Semiconductor Solutions slows due to ongoing semi market softening with 604 602 612 high-teens decline in MSI in Q3 15% ▪ High growth in DS&S business driven 12% by ongoing capex inve
Slide 41: Cash flow statement
Cash flow statement 9M 2023 – cash flow statement Cash flow drivers [€m] 9M 2022 9M 2023 Δ ▪ Profit after tax driven by lower sales Profit after tax 2,680 2,246 -434 volumes and negative mix D&A 1,432 1,373 -59 ▪ Lower effective tax rate and interest costs provide support Changes in provisions1 125
Slide 42: Adjustments in Q3 2023
Adjustments in Q3 2023 Adjustments in EBIT [€m] Q3 2022 Q3 2023 Adjustments thereof D&A Adjustments thereof D&A Life Science 41 0 14 0 Healthcare 29 0 -38 0 Electronics 18 10 26 4 Corporate & Other 30 0 29 0 Total 118 11 31 4 42 Merck KGaA, Darmstadt, Germany Q3 2023 Results Presentation | November
Slide 43: Adjustments in 9M 2023
Adjustments in 9M 2023 Adjustments in EBIT [€m] 9M 2022 9M 2023 Adjustments thereof D&A Adjustments thereof D&A Life Science 78 1 76 32 Healthcare 124 91 -30 -1 Electronics 40 11 67 19 Corporate & Other 67 0 162 0 Total 309 103 276 50 43 Merck KGaA, Darmstadt, Germany Q3 2023 Results Presentation |
Slide 44: Financial Calendar
Financial Calendar Date Event 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 November 14, 2024 Q3 2024 Earnings release 44 Merck KGaA, Darmstadt, Germany Q3 2023 Results Presentation | Novemb
Slide 45: Investor Relations contacts
CONSTANTIN FEST NADJA GROSSCHMIDT SUSAN KUEHN Head of Investor Relations Assistant Investor Relations Assistant Investor Relations +49 6151 72-5271 +49 6151 72-3321 +49 6151 72-3321 [email protected] [email protected] [email protected] ADRIAN GORSKI DANIEL WENDORFF FLO
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