Merck Kgaa · XETR:MRK
Merck Kgaa — Merck KGaA, Darmstadt, Germany — Q2 2024 Earnings Presentation
42 slides from Merck Kgaa's earnings presentation, Aug 1, 2024
Slide 1: Returning to Growth with Improved Guidance
Returning to Growth with Improved Guidance Merck KGaA, Darmstadt, Germany Q2 2024 results Belén Garijo, CEO Helene von Roeder, CFO August 1, 2024
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 Outlook & Guidance 3 Merck KGaA, Darmstadt, Germany Q2 2024 Results Presentation | August 1, 2024
Slide 4: Executive summary
Executive summary 01
Slide 5: Highlights: Group returns to sales growth
Highlights: Group returns to sales growth Operations Group Financials Life Science: ▪ Sales down -4% org. compared to prior year, when destocking was not yet fully reflected, with residual COVID-19 headwinds Q2 organic sales: +1.7% ▪ Second quarter of positive QoQ order intake in PS, further confirm
Slide 6: Strong operative performance in Healthcare and Electronics
Strong operative performance in Healthcare and Electronics Q2 YoY Net Sales Q2 YoY EBITDA pre Organic Currency Portfolio Total €1,553 m €1,509 m Life Science -3.7% -0.4% 0.0% -4.1% -0.8% -2.1% 0.0% Healthcare 5.3% -1.1% 0.0% 4.3% Electronics 7.6% -0.9% -0.2% 6.5% Group 1.7% -0.7% 0.0% 0.9% Q2 2023 O
Slide 7: Financial overview
Financial overview 02
Slide 8: Q2 2024: Overview
Q2 2024: Overview Key figures Comments [€m] Q2 2023 Q2 2024 Δ ▪ Sales up +1% with organic growth overcompensating slight FX headwinds Net sales 5,302 5,352 0.9% ▪ Sales growth driven by HC and EL, with EBITDA pre 1,553 1,509 -2.9% decline in LS Margin (in % of net sales) 29.3% 28.2% -1.1pp ▪ HC EBIT
Slide 9: Q2 2024: Reported figures
Q2 2024: Reported figures Reported results Comments ▪ EBIT declines, driven mainly by €140 m [€m] Q2 2023 Q2 2024 Δ impairment of Xevinapant, as well as EBIT 969 792 -18.3% operating performance in Life Science ▪ Favorable financial result mainly due to Financial result -76 -7 -90.6% lower taxes and
Slide 10: Life Science Q2: Sequential sales and EBITDA growth in all businesses
Life Science Q2: Sequential sales and EBITDA growth in all businesses Life Science P&L Net sales bridge [€m] IFRS Pre €2,354 m 0.0% €2,258 m Q2 2023 Q2 2024 Q2 2023 Q2 2024 -3.7% -0.4% Net sales 2,354 2,258 2,354 2,258 M&S -566 -567 -566 -563 +0.0% Q2 2023 Organic Currency Portfolio Q2 2024 Admin -1
Slide 11: Healthcare Q2: Record sales fueled by Oncology and CM&E
Healthcare Q2: Record sales fueled by Oncology and CM&E Healthcare P&L Net sales bridge [€m] IFRS Pre €2,049 m 5.3% 0.0% €2,137 m -1.1% Q2 2023 Q2 2024 Q2 2023 Q2 2024 Net sales 2,049 2,137 2,049 2,137 M&S -422 -437 -418 -439 Q2 2023 Organic Currency Portfolio Q2 2024 Admin -79 -78 -76 -76 R&D -401
Slide 12: Electronics Q2: AI & adv. node semi market inflects, driving strong growth
Electronics Q2: AI & adv. node semi market inflects, driving strong growth Electronics P&L Net sales bridge [€m] IFRS Pre €899 m 7.6% €957 m -0.9% -0.2% Q2 2023 Q2 2024 Q2 2023 Q2 2024 Net sales 899 957 899 957 M&S -148 -142 -147 -142 +0.0% Q2 2023 Organic Currency Portfolio Q2 2024 Admin -35 -36 -3
Slide 13: Balance sheet
Balance sheet Assets [€bn] Liabilities [€bn] 48.5 49.9 49.9 48.5 Cash & cash equivalents 2.0 2.7 Receivables 4.0 4.3 Inventories 4.6 4.7 28.6 26.8 Net equity Intangible assets 24.4 24.5 10.7 9.9 Financial debt Property, plant 3.4 Payables/refund liabilities 9.1 9.4 3.0 & equipment 2.1 2.3 Provisions
Slide 14: Q2 2024: Cash flow statement
Q2 2024: Cash flow statement Cash flow statement Comments [€m] Q2 2023 Q2 2024 Δ ▪ Profit after tax lower due to less EBIT Profit after tax 706 605 -101 ▪ D&A includes one-off impairments in D&A 482 680 198 relation to Healthcare R&D ▪ Changes in provisions include lower Changes in provisions 53 -18
Slide 15: Outlook & Guidance
Outlook & Guidance 03
Slide 16: Group Full-year 2024 guidance
Group Full-year 2024 guidance Net sales: Organic: +2% to +5% YoY FX: -3% to 0% YoY ~€20.7 – €22.1 bn EBITDA pre: Organic: +4% to +10% YoY FX: -5% to -1% YoY ~€5.8 – €6.4 bn EPS pre: ~€8.20– €9.30 16 Merck KGaA, Darmstadt, Germany Q2 2024 Results Presentation | August 1, 2024
Slide 17: 2024 business sector guidance
2024 business sector guidance1 Net sales EBITDA pre Life Science ▪ Organic: -2% to +2% YoY ▪ Organic:-6% to +1% YoY ▪ FX: -3% to +1% YoY ▪ FX: -4% to 0% YoY ▪ ~€8.80 bn to €9.50 bn ▪ ~€2.55 bn to €2.80 bn ▪ Gradual sequential recovery during 2024 ▪ Returning to organic growth in H2 ▪ COVID-19 sales
Slide 18: Appendix
Appendix
Slide 19: Additional financial guidance 2024
Additional financial guidance 2024 Further financial details Corporate & Other EBITDA pre -€450 m to -€520 m Interest result2 ~ €-65 m to -95 m Effective tax rate ~ 21% to 23% Capex on PPE1 ~ €1.6 to 1.8 bn FY 2024 overall hedge ratio ~ 50% Hedging EUR/USD hedging @ ~ 1.10 2024 Ø EUR/USD assumption
Slide 20: Asia-Pacific, Europe and LATAM drive organic sales growth
Asia-Pacific, Europe and LATAM drive organic sales growth Regional breakdown of net sales [€m] Regional organic development Europe +2.5% org. ▪ North America: decline largely driven by 29% Life Science (particularly PS), partially compensated by growth in Electronics ▪ Europe: driven by growth in He
Slide 21: Credit details
Credit details Maturity profile as of June 30, 2024 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% 0.875% 842 0.500% 2.875% A 29.05.13 Stable A-1 0.375% 500 2.375% 750 750 800 500 500
Slide 22: Group returns to growth in H1, driven by Healthcare and Electronics
Group returns to growth in H1, driven by Healthcare and Electronics H1 YoY Net Sales H1 YoY EBITDA pre Organic Currency Portfolio Total €3,140 m €2,963 m Life Science -8.3% -0.8% 0.0% -9.1% -3.0% -2.6% 0.0% Healthcare 7.6% -1.8% 0.0% 5.8% Electronics 7.0% -2.0% -0.2% 4.8% Group 0.2% -1.4% 0.0% -1.2%
Slide 23: H1 2024: Overview
H1 2024: Overview Key figures Comments [€m] H1 2023 H1 2024 Δ ▪ Sales down -1% with flat organic sales and FX headwinds Net sales 10,595 10,472 -1.2% ▪ Strong growth in Healthcare EBITDA pre EBITDA pre 3,140 2,963 -5.7% partially mitigates decline in Life Science Margin (in % of net sales) 29.6% 28.
Slide 24: H1 2024: Reported figures
H1 2024: Reported figures Reported results Comments ▪ EBIT declines, driven mainly by €140 m [€m] H1 2023 H1 2024 Δ impairment of Xevinapant and lower EBIT 2,004 1,724 -14.0% Life Science EBIT Financial result -98 -39 -60.0% ▪ Favorable financial result mainly due to lower LTIP provisions and taxes
Slide 25: Life Science H1: Sales down v.s. strong comps and COVID-19 non-repeats
Life Science H1: Sales down v.s. strong comps and COVID-19 non-repeats Life Science P&L Net sales bridge [€m] IFRS Pre €4,840 m 0.0% €4,402 m H1 2023 H1 2024 H1 2023 H1 2024 -8.3% -0.8% Net sales 4,840 4,402 4,840 4,402 M&S -1,134 -1,117 -1,135 -1,108 H1 2023 Organic Currency Portfolio +0.0%H1 2024
Slide 26: Process Solutions: Sales down at declining magnitude versus high comparable
Process Solutions: Sales down at declining magnitude versus high comparable Sales development [€m] - org. growth [%] YoY 994 ▪ Org. sales down amid improving activity, against still high case; sales up 7% sequentially ▪ Solid order intake, continuing positive trend seen in Q1, up YoY and QoQ in Q2’2
Slide 27: Science & Lab Solutions: Sales return to YoY growth
Science & Lab Solutions: Sales return to YoY growth Sales development [€m] - org. growth [%] YoY 1,182 1,170 1,192 1,111 1,137 ▪ Sales up YoY, first quarter since Q1-23, continuing gradual sequential development trend ▪ Biomonitoring and Lab Water Solutions up org. mid- and low-single digits, respec
Slide 28: Life Science Services: Positive development YoY and sequentially
Life Science Services: Positive development YoY and sequentially Sales development [€m] - org. growth [%] YoY 220 ▪ Sales up in both contract testing and CDMO 206 businesses 194 178 ▪ Contract testing up mid-teens org. ▪ CDMO up slightly 157 ▪ NA and Europe up org. in the high-single digits, Asia up
Slide 29: Healthcare H1: Strong first half supported across franchises
Healthcare H1: Strong first half supported across franchises Healthcare P&L Net sales bridge [€m] IFRS Pre €3,955 m 7.6% 0.0% €4,184 m -1.8% H1 2023 H1 2024 H1 2023 H1 2024 Net sales 3,955 4,184 3,955 4,184 M&S -803 -836 -798 -834 H1 2023 Organic Currency Portfolio +0.0%H1 2024 Admin -155 -154 -147
Slide 30: Healthcare organic growth by franchise/product
Healthcare organic growth by franchise/product Q2 2024 organic sales growth [%] H1 2024 organic sales growth [%] by key product [€m] by key product [€m] 186 372 6% 10% 178 345 276 563 8% 14% 260 510 266 1% 527 6% 262 499 168 -19% 326 -9% 205 359 227 5% 431 6% 219 416 238 23% 459 14% 197 415 155 19%
Slide 31: Oncology: Erbitux with strong contribution to +9% org. franchise growth
Oncology: Erbitux® with strong contribution to +9% org. franchise growth ® Sales development Oncology, [€m] YoY Bavencio net sales, [€m] ▪ Growth of +6% org. supported org. org. org. org. org. 200 178 185 183 186 186 across nearly all regions [€m] 17.8% 18.1% 18.4% 19.3% 9.2% 150 ▪ North America -16
Slide 32: N&I: Continued Mavenclad patient growth, PY dynamics amplify Rebif decline
N&I: Continued Mavenclad® patient growth, PY dynamics amplify Rebif® decline ® Sales development N&I, [€m] YoY Mavenclad Y1+Y2 patients1 ▪ Record sales quarter, driven by continued U.S. prescription org. org. org. org. org. depth & breadth expansion2 [€m] 12.2% -11.5% -1.3% 8.8% -7.4% ▪ Most prescri
Slide 33: Fertility: -1% org. growth as competitors' stock-out effects to moderate
Fertility: -1% org. growth as competitors’ stock-out effects to moderate Sales development Fertility, [€m] YoY Gonal-f® net sales, [€m] 250 227 org. org. org. org. org. 219 213 219 [€m] 24.7% 14.0% 13.9% 7.7% -0.5% 204 200 450 150 409 403 400 386 385 383 100 50 350 ▪ Competitor stock-out of urine- 3
Slide 34: CM&E: All segments contributing to +14% org. franchise growth
CM&E: All segments contributing to +14% org. franchise growth ® Sales development CM&E, [€m] YoY Glucophage net sales, [€m] org. org. org. org. org. [€m] 0.9% 6.8% 4.8% 4.2% 13.7% 250 235 233 221 238 ▪ Glucophage ® growth rate of 197 +23% org. impacted by prior 200 800 724 720 746 150 year slow-down
Slide 35: Group pipeline August 01, 2024
Group pipeline August 01, 2024 Healthcare pipeline Phase 1 Phase 2 Phase 3 Registration pimicotinib (CSF-1R antagonist) Agreement with Abbisko Tenosynovial giant cell tumor (TGCT)1 (announced Dec-2023)3 avelumab (anti-PD-L1 mAb)+Sacituzumab Govitecan / NKTR-255 / M6223 (anti-TIGIT mAb) LA or metasta
Slide 36: Healthcare catalysts
Healthcare catalysts Q1 2024 Q2 2024 Q3 2024 Q4 2024 Cladribine capsules (Immune Reconstitution Therapy) Study initiation - Phase III generalised Myasthenia Gravis Enpatoran Enpatoran (Oral TLR7/8 inhibitor ) (Oral TLR7/8 inhibitor ) Read-out - Phase II CLE program Read-out - Phase II SLE program Xe
Slide 37: Electronics H1: Strong growth driven by Semiconductor Solutions
Electronics H1: Strong growth driven by Semiconductor Solutions Electronics P&L Net sales bridge [€m] IFRS Pre €1,800 m 7.0% €1,886 m -2.0% -0.2% H1 2023 H1 2024 H1 2023 H1 2024 Net sales 1,800 1,886 1,800 1,886 M&S -306 -280 -305 -279 H1 2023 Organic Currency Portfolio +0.0%H1 2024 Admin -68 -73 -6
Slide 38: Semiconductor Solutions returning to growth in 2024
Semiconductor Solutions returning to growth in 2024 Sales development [€m] - org. growth [%] YoY 660 665 633 ▪ Overall, returning to growth driven by 602 612 strong Semi Materials performance ▪ Bifurcation of Semi growth as AI and adv. nodes inflect in H1, with wider 11% market to recover gradually
Slide 39: Cash flow statement
Cash flow statement H1 2024 – cash flow statement Cash flow drivers [€m] H1 2023 H1 2024 Δ ▪ Profit after tax driven by lower EBIT Profit after tax 1,506 1,305 -201 ▪ D&A includes one-time impairments in D&A 938 1,134 196 relation to Healthcare R&D Changes in provisions 45 22 -24 ▪ Delta in other as
Slide 40: Adjustments in Q2 2024
Adjustments in Q2 2024 Adjustments in EBIT [€m] Q2 2023 Q2 2024 Adjustments thereof D&A Adjustments thereof D&A Life Science 45 32 72 56 Healthcare 12 0 126 155 Electronics 22 5 24 11 Corporate & Other 60 0 38 0 Total 138 37 259 222 40 Merck KGaA, Darmstadt, Germany Q2 2024 Results Presentation | Au
Slide 41: Adjustments in H1 2024
Adjustments in H1 2024 Adjustments in EBIT [€m] H1 2023 H1 2024 Adjustments thereof D&A Adjustments thereof D&A Life Science 62 32 98 56 Healthcare 8 -1 127 155 Electronics 41 15 36 11 Corporate & Other 133 0 67 0 Total 245 47 328 223 41 Merck KGaA, Darmstadt, Germany Q2 2024 Results Presentation |
Slide 42: Meet the Merck Team
CONSTANTIN FEST NADJA GROSSCHMIDT SUSAN KUEHN EET THE ERCK TEAM 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] DATE EVENT Augu
Merck KGaA, Darmstadt, Germany — Q2 2024 Earnings Presentation on 6ix