Merck Kgaa · XETR:MRK
Merck Kgaa — Merck KGaA, Darmstadt, Germany — Q1 2019 Earnings Presentation
38 slides from Merck Kgaa's earnings presentation, May 14, 2019
Slide 1: Solid Growth at the Start of the Year
SOLID GROWTH AT THE START OF THE YEAR Merck KGaA, Darmstadt, Germany Q1 2019 results Belén Garijo, CEO Healthcare Marcus Kuhnert, CFO May 14, 2019
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: Disclaimer: Forward-Looking Statements
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 4: Disclaimer: Additional Important Information
Disclaimer Additional Important Information and Where to Find It This communication does not constitute an offer to buy or solicitation of an offer to sell any securities. This communication relates to a proposal which Merck KGaA, Darmstadt, Germany has made for a business combination transaction wi
Slide 5: Agenda
Agenda Executive summary Financial overview Guidance 5
Slide 6: Executive Summary
EXECUTIVE SUMMARY
Slide 7: Highlights
Highlights ® Healthcare – Mavenclad U.S. approval in March 2019, continued strong uptake in ex- US territories and M7824 alliance with GSK announced in February 2019 Operations Life Science – Very strong organic growth fueled by all businesses across all regions Performance Materials – Ongoing stron
Slide 8: All business sectors drive organic growth supported by FX tailwinds
All business sectors drive organic growth supported by FX tailwinds Q1 2019 YoY net sales • Healthcare growth driven by General Medicine, Organic Currency Portfolio Total Fertility, Mavenclad® and Bavencio®, offsetting strong Rebif® decline Healthcare 2.9% 0.4% 0.0% 3.2% • Life Science with above-ma
Slide 9: Organic growth driven by Asia-Pacific, Europe and Latin America
Organic growth driven by Asia-Pacific, Europe and Latin America Regional breakdown of net sales [€ m] Regional organic development Europe +5.2% • Strong growth in APAC fueled by double- org. ® digit growth of Life Science, Glucophage , ® Erbitux and OLED; LC still benefitting from 32% temporary capa
Slide 10: Financial Overview
FINANCIAL OVERVIEW
Slide 11: Q1 2019: Overview
Q1 2019: Overview Key figures Comments [€m] Q1 2018* Q1 2019 Δ • Net sales reflect organic sales growth across 3,486 3,746 7.5% all business sectors fueled by FX tailwinds Net sales • EBITDA pre & margin decrease due to EBITDA pre 967 929 -4.0% hedging losses and LC price decline; last Margin (in %
Slide 12: Reported figures
Reported figures Reported results Comments [€m] Q1 2018* Q1 2019 Δ • Lower EBIT reflects hedging losses and EBIT 502 379 -24.6% LC price decline; last year EBIT included Peg-Pal milestone Financial result -61 -113 83.9% • Lower financial result driven by Profit before tax 441 266 -39.6% revaluation
Slide 13: Healthcare: Solid core business and strong Mavenclad weighed down by Peg-Pal milestone
Healthcare: Solid core business and strong Mavenclad weighed down by last year’s Peg-Pal milestone payment Healthcare P&L Comments [€m] Q1 2018* Q1 2019 • Organic growth driven by double-digit growth of General Medicine and ongoing strong demand in Fertility Net sales 1,435 1,481 ® • Mavenclad with
Slide 14: Mavenclad and Bavencio on track and support €2 bn pipeline target
Mavenclad® and Bavencio® are on track and support the €2 bn pipeline target Global launches gaining traction ... … and supporting €2 bn pipeline sales ambition 1 > €2 bn MAVENCLAD ® Approved in 55 countries since 2017 (incl. USA, Canada, EU, Australia and Switzerland) Mavenclad®: US (Approved on Mar
Slide 15: Broad Multiple Sclerosis portfolio positions Merck KGaA as key player
Broad Multiple Sclerosis (MS) portfolio positions Merck KGaA, Darmstadt, Germany as a key player both now and in the future Clinical Development Launch Core portfolio Evobrutinib (BTK-inhibitor) First BTKi demonstrating Proof- US Approval: Received US approval on March Stable market share: of-concep
Slide 16: Highly resilient core business sustains growth despite competitive landscape
Highly resilient core business sustains impressive growth rates despite competitive landscape Sales contribution of core business Emerging markets & & organic growth rates1 innovative business models Market leader posting strong growth in Europe and APAC Sustainable growth ensured through innova
Slide 17: Upcoming catalysts
Upcoming catalysts A year of continued pipeline development1 Oncology Completed Immuno-Oncology Immunology ASCO Neurology R&D Update Call (June 14) Q2 2019 Q3 2019 Q4 2019 Q1 2020 Evobrutinib Tepotinib Bavencio® (BTK-inhibitor) (c-Met–inhibitor) (Avelumab/Anti-PD-L1) Ph IIb 48 week data (MS) Expecte
Slide 18: Life Science: Strong organic sales growth across all businesses drives margin expansion
Life Science: Strong organic sales growth across all businesses drives margin expansion Life Science P&L Comments [€m] Q1 2018 Q1 2019 • Ongoing strong demand in Process Solutions with double-digit growth driven by all businesses and all major regions Net sales 1,487 1,661 -409 -470 • Applied Soluti
Slide 19: Performance Materials: Organic growth driven by OLED demand
Performance Materials: Organic growth mainly driven by ongoing strong demand for OLED and support from LC capacity ramp-up and low comps Performance Materials P&L Comments [€m] Q1 2018 Q1 2019 • Performance Materials with moderate organic growth reflecting Net sales 564 604 strong demand for OLED, L
Slide 20: Balance sheet – Changes due to IFRS 16 adoption
Balance sheet – Changes due to IFRS 16 adoption Assets [€ bn] Liabilities [€ bn] 38.7 38.7 36.9 2,3 36.9 Cash & cash equivalents 2,2 3,6 3,2 Receivables 2,9 2,8 17,7 Net equity 17,2 Inventories 21,0 Intangible assets 21,0 9,5 Financial debt 8,9 1 2,2 2,2 Payables 2,5 2,3 Property, plant & equipment
Slide 21: Cash flow statement
Cash flow statement Q1 2019 – cash flow statement Cash flow drivers [€m] Q1 2018 Q1 2019 Δ • Profit after tax in line with lower EBIT Profit after tax 342 190 -152 • D&A increase mainly due to IFRS 16 reclassification D&A 428 474 46 • Changes in provisions driven by build up for transformation progr
Slide 22: Guidance
GUIDANCE
Slide 23: Key earnings drivers to remember for 2019
Group Key earnings drivers to remember for 2019 1 1 EBITDA -supporting factors EBITDA -reducing factors • Strong sales contribution from Mavenclad® ramp-up and Bavencio®; • Slight absolute increase in R&D costs budgeted for Healthcare but first contribution from Mavenclad® US by Q2 2019 decrease as
Slide 24: Group: Full-year 2019 guidance
Group Full-year 2019 guidance1 Net sales: Organic +3% to +5% YoY FX ~ 0% to +2% YoY ~ € 15.3 – 15.9 bn EBITDA pre: 2 Organic +10% to +13% YoY FX 0% to +2% YoY 3 ~ € 4,150 – 4,350 m EPS pre: ~ € 5.30 – 5.65 1 2 Merck KGaA, Darmstadt, Germany stand-alone, i.e. without acquisition of Versum Materials a
Slide 25: Group: 2019 business sector guidance
Group 2019 business sector guidance1 Healthcare Performance Life Science Materials Net sales Net sales Net sales ▪ Moderate organic growth +4% to +6% ▪ Organic growth +6% to +7% above ▪ Moderate organic decline -3% to -6% ▪ Base business at least stable organically expected market growth ▪ Liquid Cr
Slide 26: Slide 26
Slide 27: Appendix
APPENDIX
Slide 28: Additional financial guidance 2019
Additional financial guidance 2019 Further financial details Corporate & Other EBITDA pre* ~ -€420 – -480 m Interest result ~ -€220 – -240 m Effective tax rate ~ 24% to 26% Capex on PPE ~ €1.1 bn – 1.2 bn FY 2019 hedge ratio ~60% Hedging/USD assumption at EUR/USD ~1.20 2019 Ø EUR/USD assumption ~ 1.
Slide 29: Well-balanced maturity profile reflects Sigma-Aldrich financing transactions
Well-balanced maturity profile reflects Sigma-Aldrich financing transactions Maturity profile as of Dec. 31, 2018 2.4% Coupon 4.5% [€ m/US $] 2.95% 3.25% 750 1.375% 4.25% 2.625% 0.75% 1 000 70 1 600 1 350 3.375% 1 000 800 550 500 2019 2020 2021 2022 2023 2024 2025 1 EUR bonds USD bonds Private place
Slide 30: Healthcare organic growth by franchise/product
Healthcare organic growth by franchise/product Q1 2019 organic sales growth [%] by key franchise/products [€ m] Organic 299 -16% 348 199 +2% 200 180 +21% 149 168 0% 166 117 +18% 99 91 +13% 81 43 >100% 13 22 +77% 12 Q1 2019 Q1 2018 30
Slide 31: Neurodegenerative Diseases: Strong growth of Mavenclad mitigates Rebif decline
® Neurodegenerative Diseases: Strong growth of Mavenclad mitigates ® Rebif decline ® Rebif net sales, [€m] ® Rebif sales of €299 m in Q1 Sales development NDI, [€m] 450 383 363 2019 reflects organic decline of 400 348 344 350 299 -16.4% mitigated by 300 450 org. org. org. org. org. 250 FX effect o
Slide 32: Oncology: Organic growth driven by Bavencio ramp up and Erbitux in China
® Oncology: Organic growth driven by Bavencio ramp up and strong demand ® for Erbitux in China ® Absolute sales almost stable with Erbitux net sales, [€m] €199 m (org. 1.6%; FX -1.9%) Sales development Oncology, [€m] 250 200 203 212 202 199 Decline in Europe reflects ongoing 200 competition, pri
Slide 33: Fertility: High single digit organic growth
Fertility: High single digit organic growth reflects ongoing strong demand across the portfolio ® Gonal-f net sales, [€m] Sales development Fertility, [€m] 250 200 184 182 175 Fertility posts high single digit 166 168 350 org. org. org. org. org. 150 growth driven by growth across 8.2% 8.0% 17.9%
Slide 34: Double digit organic growth of General Medicine fueled by China and LATAM
Double digit organic growth of General Medicine fueled by China and LATAM Sales evolution Q1 2019 organic drivers Endocrinology [€ m] Organic 150 • Endocrinology declines organically due to 96 -3.0% org. 100 86 93 87 83 lower demand and higher sales deductions in the U.S. mitigated by 50 higher dema
Slide 35: Healthcare pipeline
May 5, 2019 Healthcare pipeline Phase I Phase II Phase III M2698 avelumab tepotinib bintrafusp alfa avelumab - anti-PD-L1 mAb p70S6K & Akt inhibitor anti-PD-L1 mAb MET kinase inhibitor TGFbeta trap/anti-PD-L1 Non-small cell lung cancer 1L Solid tumors Solid tumors Non-small cell lung cancer Non-smal
Slide 36: Adjustments in Q1 2019
Adjustments in Q1 2019 Adjustments in EBIT [€m] Q1 2018 Q1 2019 Adjustments thereof D&A Adjustments thereof D&A Healthcare 3 0 3 0 Life Science 13 0 9 0 Performance Materials 3 0 35 0 Corporate & Other 24 0 28 0 Total 43 0 76 0 Totals may not add up due to rounding 36
Slide 37: Financial calendar
Financial calendar Date Event August 8, 2019 Q2 2019 Earnings release November 14, 2019 Q3 2019 Earnings release March 5, 2020 FY 2019 Earnings release 37
Slide 38: Investor Relations contacts
CONSTANTIN FEST SVENJA BUNDSCHUH ALESSANDRA HEINZ 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] ANNETT WEBER AMELIE SCHRA
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