Merck Kgaa · XETR:MRK
Merck Kgaa — Q1 2014 Earnings Presentation
30 slides from Merck Kgaa's earnings presentation, May 15, 2014
Slide 1: Q1 2014 Results Conference Call
Q1 2014 Results Conference Call Sound operations yield organic growth Karl-Ludwig Kley, CEO May 15, 2014
Slide 2: EMD brand notice for United States and Canada
DISCIAIMEN bisncittenor scree KGaA, Darmstadt, Germany. In the United States and Canada the subsidiaries of Merck KGaA, Darmstadt, Germany operate under the umbrella brand EMD. To reflect such fact and to avoid any misconception of the reader of the publication certain logos, terms and business desc
Slide 3: Disclaimer
Disclaimer Remarks All comparative figures relate to the corresponding last year’s period. Important information This presentation does not constitute an offer of securities for sale or a solicitation of an offer to purchase securities in the United States. The shares referred to herein have not bee
Slide 4: Agenda
Agenda Executive overview Business and financial review Q1 2014 Guidance
Slide 5: Highlights Q1 2014
Highlights Q1 2014 Solid organic sales growth of 4% is outweighed by currency headwinds of 5% Sound operational performance – all divisions post organic growth EBITDA pre increases despite royalty income reduction and FX headwinds 9% EPS pre increase to €2.31 Net cash position established Group 2014
Slide 6: All divisions post organic growth while currency headwinds continue
All divisions post organic growth while currency headwinds continue Q1 YoY sales Organic Currency Portfolio Total Biopharmaceuticals and Life Biopharmaceuticals 4% -5% 0% -1% Science remain strongest absolute contributors to organic sales growth Consumer Health 6% -6% 0% -1% Currency headwinds m
Slide 7: Organic growth across all regions
Organic growth across all regions Group Q1 sales by region Regional development of sales [€ m] Organic -2% sales 2,660 growth 2,614 North America Europe Europe 1,013 +1% +2% 20% 1.025 39% North America 516 -2% +3% 507 34% 7% Emerging +6% Markets 924 -4% 888 Emerging Markets Japan & others* Japan & o
Slide 8: Agenda
Agenda Executive overview Business and financial review Q1 2014 Guidance
Slide 9: Q1 2014: Stable financials amid royalty income reduction and currency headwinds
Q1 2014: Stable financials amid royalty income reduction and currency headwinds [€ m] Q1 2014 Q1 2013 ∆ Q1 2014 Sales 2,614 2,660 -2% Sales decline as organic improvement is outweighed EBITDA pre 807 801 1% by negative currency effects Margin (% of sales) 30.9% 30.1% EBITDA pre and EPS pre impro
Slide 10: Solid business performance, lower financial and restructuring expenses contribute to EPS increase
Solid business performance, lower financial and restructuring expenses contribute to EPS increase [€ m] Q1 2014 Q1 2013 ∆ Reported results EBIT 468 399 17% EBIT increases on lower one-time costs and organic growth offsetting lower royalties and FX headwinds Financial result -35 -59 -41% Financia
Slide 11: Biopharmaceuticals: Solid performance supported by key franchises
Biopharmaceuticals: Solid performance supported by key franchises despite royalty income reduction [€ m] Q1 2014 Q1 2013* Comments Sales 1,375 1,389 Organic growth more than offset by adverse currency effects XXX leading to slight reduction in sales Marketing and selling -280 -295 Rebif grows
Slide 12: Consumer Health: Neurobion and Femibion drive quarterly performance
Consumer Health: Neurobion and Femibion drive quarterly performance [€ m] Q1 2014 Q1 2013* Comments Sales 180 182 Stable sales as solid organic growth driven by Emerging Markets XXX is offset by FX headwinds Marketing and selling -68 -69 Latin America grows organically due to performance of ne
Slide 13: Performance Materials: Solid performance amid high comparables
Performance Materials: Solid performance amid high comparables and strong currency headwinds [€ m] Q1 2014 Q1 2013 Comments Sales 402 421 Sales lower as slight organic growth is more than offset by FX XXX Marketing and selling -33 -35 LC* organically flat, facing tough comparables due to last
Slide 14: Life Science: Growth in Process Solutions improves profitability
Life Science: Growth in Process Solutions improves profitability [€ m] Q1 2014 Q1 2013 Comments Sales 657 669 Sales decrease slightly as organic growth is more than offset by XXX FX mainly driven by the Japanese yen and the U.S. dollar Marketing and selling -169 -169 Process Solutions growth d
Slide 15: Balance sheet: Deleveraging continues
Balance sheet: Deleveraging continues [€ m] March 31, 2014 Dec 31, 2013 March 31, 2014 Dec 31, 2013 Current assets 7,739 7,385 Net equity 11,243 11,069 Cash and cash equivalents 2,495 981 Current liabilities 5,113 3,899 Marketable securities and financial assets 1,241 2,411 Current financial liabili
Slide 16: Underlying cash flow strength
Underlying cash flow strength [€ m] Q1 2014 Q1 2013 ∆ Cash flow drivers Profit after tax 327 269 58 Higher profit after tax due to solid business performance and lower D&A 302 354 -53 one-time items Changes in provisions -47 23 -70 D&A lower as last year included restructuring related impairment
Slide 17: Agenda
Agenda Executive overview Business and financial review Q1 2014 Guidance
Slide 18: Full year 2014 guidance
Full year 2014 guidance Group guidance for 2014, including AZ1 Sales: ~ €10.9 – 11.1 bn EBITDA pre: ~ €3.3 – 3.4 bn EPS pre2: ~ €9.00 – 9.50 1 The AZ Electronic Materials acquisition was closed on May 2, 2014 and will be consolidated as of this date 2 Based on number of shares before the share split
Slide 19: Guidance details
Guidance details Biopharmaceuticals Consumer Health Performance Materials Life Science Sales Sales Sales Sales Moderate organic Moderate organic Organically stable Slight organic growth growth growth EBITDA pre EBITDA pre EBITDA pre* EBITDA pre ~ €1.75 – 1.85 bn ~ €170 – 180 m ~ €830 – 880 m ~ €640
Slide 20: Merck KGaA
Merck KGaA Darmstadt - Germany
Slide 21: Appendix
Merck KGaA Darmstadt : Germany
Slide 22: Additional financial guidance
Additional financial guidance Further financial details Group royalty, license and commission income in 2015 ~€130 – 150 m Corporate EBITDA pre ~€ -170 – 200 m Underlying tax rate ~23% to 25% Capex on PPE and software ~€500 m Hedging / USD assumption 2014 & 2015 hedge rate ~30% at EUR/USD ~1.30 to 1
Slide 23: Biopharmaceuticals organic growth by product
Biopharmaceuticals organic growth by product Q1 2014 organic sales growth [%] by key products [€ m] 459 +5% 454 209 +1% 222 152 +11% 145 97 +9% 92 86 -12% 104 54 +7% 54 Q1 2014 Q1 2013 23
Slide 24: Rebif – defending market leadership in Europe; competitive pressure in the U.S.
Rebif – defending market leadership in Europe; competitive pressure in the U.S. Rebif performance - Regional sales evolution [€ m] Sales increase slightly to €459 m as organic growth is partially offset by FX Trend North America Q1 drivers Organic growth in U.S. as pricing Price measures and who
Slide 25: Erbitux – Japan continues to drive organic growth
Erbitux – Japan continues to drive organic growth Erbitux sales by geography Erbitux performance Sales decline to €209 m as organic +1% Q1 YoY [€ m] organic growth growth is outweighed by adverse 250 currency effects Europe organically down due to softer 200 performance in core countries as well
Slide 26: Strong growth in Fertility while Endocrinology and General Medicine grow more moderately
Strong growth in Fertility while Endocrinology and General Medicine grow more moderately Sales evolution Q1 drivers Fertility Q1 drivers Organic growth in Fertility is driven by [€ m] good demand for entire portfolio; 210 mainly due to Gonal-f growth 180 Organic recovering across all major regions
Slide 27: Biopharmaceuticals pipeline
Biopharmaceuticals pipeline Phase I Phase II Phase III / in registration ATX-MS-1467 - Immune tolerizing agent Ceralifimod (ONO-4641) - MSB 0010445 (NHS-IL2) - TH-302 - Hypoxia-activated prodrug Multiple sclerosis Oral S1P receptor modulator Cancer immunotherapy Soft tissue sarcoma Multiple
Slide 28: One-time items in Q1 2014
One-time items in Q1 2014 One-time items on EBIT [€ m] Q1 2014 Q1 2013 One-time items thereof D&A One-time items thereof D&A Biopharmaceuticals 11 1 56 27 Consumer Health 2 0 0 0 Performance Materials 8 0 4 0 Life Science 6 0 10 0 Corporate & Other 11 0 3 0 Total 38 1 74 27 Totals may not add up due
Slide 29: Financial calendar
Financial calendar Date Event August 7, 2014 Q2 2014 Earnings release November 13, 2014 Q3 2014 Earnings release March 3, 2015 Q4 2014 Earnings release April 17, 2015 Annual General Meeting 2015 May 19, 2015 Q1 2015 Earnings release 29
Slide 30: Investor Relations contact details
Investor Relations contact details Constantin Fest Alessandra Heinz Svenja Bundschuh Head of Investor Relations Assistant Investor Relations Assistant Investor Relations +49 6151 72-5271 +49 6151 72-3321 +49 6151 72-3744 [email protected] [email protected] svenja.bundschuh@emd