Merck KGaA · XETR:MRK
Merck KGaA — Merck KGaA, Darmstadt, Germany — FY2021 Earnings Presentation
55 slides from Merck KGaA's earnings presentation, Mar 3, 2022
Slide 1: 2021, A year of record growth and margin expansion
2021, A year of record growth and margin expansion Merck KGaA, Darmstadt, Germany FY 2021 results Belén Garijo, CEO Marcus Kuhnert, CFO March 3, 2022
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 Strategic review Financial overview ESG update Outlook & Guidance 3 Merck KGaA, Darmstadt, Germany Q4 21 Results Presentation | March 3, 2022
Slide 4: Executive summary
Executive summary 01
Slide 5: Highlights 2021
Highlights 2021 Operations Financials Life Science: ▪ Record growth (+21% org.) driven by strong core business (~12pp.) and COVID-19 demand (~9pp) ▪ Largest sales contribution to group (org. +€1.6 bn) FY organic sales: growth of +13.8% ▪ Process Solutions main driver; all business units grow well FY
Slide 6: Guidance delivered
Guidance delivered 2021 Guidance 2021 Results Net Sales €19.3 – 19.85 bn €19.7 bn EBITDA pre €6.00 – 6.30 bn €6.10 bn EPS pre €8.50 – 9.00 €8.72 6 Merck KGaA, Darmstadt, Germany Q4 21 Results Presentation | March 3, 2022
Slide 7: Strong Life Science continues to be primary growth driver across all regions
Strong Life Science continues to be primary growth driver across all regions Regional breakdown of net sales [€m] Regional organic development Europe +14.5% org. ▪ APAC: Process & Semiconductor Solutions, drive +11% growth 29% ▪ Europe: Process Solutions and Research Solutions remain primary North A
Slide 8: Strong company performance drives all time high payment to shareholders
Strong company performance drives all time high payment to shareholders Dividend1 development 2015 - 2021 2021 dividend ▪ Dividend of €1.85 (+32% YoY) per share proposed1 for 2021 1.85 ▪ Payout ratio of 21.2% of EPS pre in 2021; aiming for 20% to 25% 2 1.40 ▪ Dividend yield of 0.8% 1.25 1.25 1.30 1.
Slide 9: Strategic Review
Strategic Review 02
Slide 10: Life Science: +12% org. growth from core business
Life Science: +12% org. growth from core business driven by strong industry position, further supported by +9% org. growth from COVID-19 Business performance Sector focus ▪ Successfully delivering record sales (+21% ▪ Continuous focus on key growth trends as org.) and EBITDA pre (+38% org.) with lea
Slide 11: Healthcare: +8.5% org. growth driven by recent launches
Healthcare: +8.5% org. growth driven by recent launches, complemented by strong Fertility recovery Business performance Sector focus ▪ Well positioned in a dynamic environment, ▪ Strongest organic growth in past 5 years focused leadership in R&D ▪ Oncology up +28% org. mainly driven by ▪ Pipeline wi
Slide 12: Electronics: Shifting to accelerated growth ambitions
Electronics: Shifting to accelerated growth ambitions Business performance Sector focus ▪ Successful “Bright Future” transformation; ▪ Strong organic sales growth of +8% delivers €85 m Versum cost synergies 2022 target on “Bright Future” turn-around commitment already delivered in 2021 ▪ Semiconduct
Slide 13: Financial overview
Financial overview 03
Slide 14: FY 2021: Overview
FY 2021: Overview Key figures (Excl. Biogen provision reversal) Comments [€m] FY 2020 FY 2021 Δ FY 2020 Δ ▪ Sales up +12%, driven by strong growth Net sales 17,534 19,687 12.3% across all sectors, particularly Life Science 5,201 6,103 17.3% 4,836 26.2% ▪ 340 bps uplift in underlying EBITDA pre EBITD
Slide 15: FY 2021: +14% org. growth mainly driven by Life Science
FY 2021: +14% org. growth mainly driven by double-digit growth of Life Science, supported by strong Healthcare and Electronics performance FY YoY Net Sales FY YoY EBITDA pre Organic Currency Portfolio Total 18.1% €6,103 m Life Science 21.3% -1.6% 0.0% 19.6% €5,201 m -0.6% -0.1% Healthcare 8.5% -1.4%
Slide 16: FY 2021: Reported figures
FY 2021: Reported figures – comps impacted by Biogen provision reversal Reported results Comments ▪ EBIT growth of +40% mainly driven [€m] FY 2020 FY 2021 Δ by leveraged business growth, understated by €365 m for Biogen EBIT 2,985 4,179 40.0% provision reversal in 2020 Financial result -354 -255 -28
Slide 17: Life Science Q4: Sequential growth drives another record quarter
Life Science Q4: Sequential growth drives another record quarter; 14% org. growth normalizing but still well above mid-term guidance Life Science P&L Net sales bridge [€m] IFRS Pre 14.2% 3.3% 0.0% 2,386 2,030 Q4 2020 Q4 2021 Q4 2020 Q4 2021 Net sales 2,030 2,386 2,030 2,386 M&S * -531 -584 -529 -582
Slide 18: Healthcare Q4: Continued strong Bavencio ramp up and Fertility growth
Healthcare Q4: Continued strong Bavencio® ramp up and strong growth in Fertility drive +4.7% organic growth in the sector Healthcare P&L Net sales bridge [€m] IFRS Pre €1,738 m 4.7% 3.2% 0.0% €1,875 m Q4 2020 Q4 2021 Q4 2020 Q4 2021 Net sales 1,738 1,875 1,738 1,875 * M&S -449 -452 -414 -453 Admin -
Slide 19: Electronics Q4: Semi growth drives double-digit organic sales growth
Electronics Q4: +24% growth in Semi continues to drive double-digit organic sales growth for the sector Electronics P&L Net sales bridge 10.4% 4.2% 0.0% €952 m [€m] IFRS Pre €831 m Q4 2020 Q4 2021 Q4 2020 Q4 2021 Net sales 831 952 831 952 M&S * -136 -154 -132 -152 +0.0% Admin -41 -35 -34 -33 Q4 2020
Slide 20: Balance sheet
Balance sheet Assets [€bn] Liabilities [€bn] 45.4 45.4 41.8 1.9 41.8 Cash & cash equivalents 1.4 3.6 Receivables 3.2 3.9 Inventories 3.3 21.4 17.0 Net equity 24.6 Intangible assets 23.6 10.8 12.1 Financial debt 3.2 2.4 Payables/refund liabilities Property, plant 3.6 4.0 Provisions for employee benef
Slide 21: Cash flow statement
Cash flow statement Q4 2021 – Cash flow statement Cash flow drivers ▪ +83% growth in profit after tax driven [€m] Q4 2020 Q4 2021 Δ by strong business performance, lower Profit after tax 440 807 366 tax rate and improved financial result ▪ Changes in provisions primarily driven D&A 496 475 -21 by lo
Slide 22: ESG update
ESG update 04
Slide 23: Delivered on all 2021 goals; positioned for 2030 ESG ambition
Delivered on all 2021 goals; optimally positioned to accomplish 2030 ESG ambition Tasks Development In place Results Analysis of requirements: Strategy, Ongoing due to developing field of ESG business, regulation, stakeholders stakeholder expectations and new regulations Build effective data platfor
Slide 24: Improved transparency on sustainability following major standards
Improved transparency on sustainability following major standards Combined Set of LTIP EU Today Annual Sustainability Sustainability Taxonomy Reporting Metrics Factor Science-based Sustainability TCFD SASB Reporting Apr 12 target Report incl. GRI Reporting for all 3 sectors commitment1 LTIP: Long-Te
Slide 25: Outlook & Guidance
Outlook & Guidance 05
Slide 26: Group Full-year 2022 guidance
Group Full-year 2022 guidance Net sales: Strong organic growth Positive FX of 1% to 4% YoY EBITDA pre: Strong organic growth Positive FX of 2% to 5% YoY 26 Merck KGaA, Darmstadt, Germany Q4 21 Results Presentation | March 3, 2022
Slide 27: 2022 business sector guidance
Group 2022 business sector guidance1 Net sales EBITDA pre Life Science ▪ Strong organic growth ▪ Strong organic growth ▪ Strong core business, Process Solutions ▪ Slight to moderate positive FX COVID-19 sales of up to ~€900 m ▪ Process Solutions as main growth driver Net sales EBITDA pre Healthcare
Slide 28: Appendix
Appendix
Slide 29: Additional financial guidance 2022
Additional financial guidance 2022 Further financial details Corporate & Other EBITDA pre Slightly higher costs driven by hedging Interest result ~ €-150 to -190 m Effective tax rate ~22% to 24% Capex on PPE1 ~€1.6 to 1.7 bn FY 2022 hedge ratio ~50% Hedging/USD assumption at EUR/USD ~1.16 2022 Ø EUR
Slide 30: Credit details
Credit details Maturity profile as of Dec 31, 2021 Credit rating information Coupon [€m / $m] 3.250% 0.125% LT ST Since Outlook Rating Rating 2.950% 1.375% A3 21.10.21 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 1,000 750 750 800 550
Slide 31: Clear Metrics to drive execution towards 2030 ambition
Clear Metrics to drive execution and progress towards 2030 ambition Goal Metric 2021 (2020) Target 1 Percentage of newly published patent families with positive sustainability impact from 2022 n.a. People treated with our Healthcare products* 2021 (April) 1 bn people ambition1: HC Percentage of wome
Slide 32: Q4 2021: Double-digit growth of Sales and EBITDA pre
Q4 2021: Double-digit growth of Sales and EBITDA pre, Life Science business performance remains main contributor Q4 YoY Net Sales Q4 YoY EBITDA pre Organic Currency Portfolio Total 11.0% 6.7% €1,464 m Life Science 14.2% 3.3% 0.0% 17.5% €1,245 m -0.1% Healthcare 4.7% 3.2% 0.0% 7.9% Electronics 10.4%
Slide 33: Q4 2021: Overview
Q4 2021: Overview Key figures Comments [€m] Q4 2020 Q4 2021 Δ ▪ Net sales up +13%, driven by strong Net sales 4,599 5,213 13.4% org. performance across all sectors, particularly Life Science EBITDA pre 1,245 1,464 17.6% Margin (in % of net sales) 27.1% 28.1% 1.0pp ▪ EBITDA pre up +18%, driven primar
Slide 34: Q4 2021: Reported figures
Q4 2021: Reported figures Reported results Comments [€m] Q4 2020 Q4 2021 Δ ▪ Strong performance across all 611 1,039 70.0% sectors, particularly in Life Science, EBIT drive +70% EBIT growth Financial result -52 -47 -10.0% ▪ Improved financial result driven by Profit before tax 559 992 77.4% ongoing
Slide 35: FY Life Science: Largest group contributor with +21.3% org. sales growth
FY Life Science: Largest group contributor with +21.3% org. sales growth driven by all three business units Life Science P&L Net sales bridge [€m] IFRS Pre adjustments 21.3% 0.0% €8,990 m €7,515 m FY 2020 FY 2021 FY 2020 FY 2021 -1.6% Net sales 7,515 8,990 7,515 8,990 M&S * -1,995 -2,119 -1,992 -2,1
Slide 36: Process Solutions: Record Q4 2021 in absolute terms
BIG 3 - Process Solutions: Record Q4 2021 in absolute terms, declining growth rate against high comps Sales development [€m] - org. growth [%] 1,260 1,186 ▪ Continued strong core business explaining 1,145 >50% of Q4 growth; additional COVID-19 1,054 demand (mainly vaccine related) fading 975 38% seq
Slide 37: Research Solutions: normalizing growth against rising comps
Research Solutions: normalizing growth against rising comps Sales development [€m] - org. growth [%] 644 631 628 602 31% 608 ▪ Organic growth slowing to +1.5% against 566 546 strong comps as Q4 2020 was elevated by 24% post lockdown laboratory rebound and 501 additional COVID-19 demand ▪ Core busine
Slide 38: Applied Solutions: Record absolute sales and robust growth
Applied Solutions: Record absolute sales and robust growth despite strong baseline Sales development [€m] - org. growth [%] 498 453 449 454 421 432 413 418 ▪ Strong finish with robust growth despite high comps with Q4 2020 benefitting from post- lockdown recovery 13% ▪ Core business as main driver w
Slide 39: FY Healthcare: 8.5% org. growth driven by launches and Fertility
FY Healthcare: 8.5% org. growth driven by recent launches and Fertility recovery; underlying EBITDA pre growing +17% organically Healthcare P&L Net sales bridge [€m] IFRS Pre €6,639 m 8.5% €7,089 m -1.4% -0.3% FY 2020 FY 2021 FY 2020 FY 2021 Net sales 6,639 7,089 6,639 7,089 M&S * -1,664 -1,600 -1,6
Slide 40: Today's commercialized products foundation for growth until 2025
Today’s commercialized products foundation for growth until 2025, fueled by recent launches; not yet reflecting further pipeline potential Commercialized products1 N&I Mavenclad® ▪ On its way to become a blockbuster product. In the MS short-term, headwind as suppressed dynamic market Rebif® ▪ Declin
Slide 41: Healthcare organic growth by product
Healthcare organic growth by product Q4 2021 organic sales growth [%] FY 2021 organic sales growth [%] by key product [€m] by key product [€m] 244 952 -12% -14% 268 1,131 225 864 -1% -4% 218 903 261 0% 987 +12% 255 891 190 +17% 767 +24% 158 630 137 +9% 523 0% 121 529 128 +12% 470 +4% 111 455 191 +5%
Slide 42: Neurology & Immunology: FY Mavenclad sales up +33% organically
Neurology & Immunology: FY Mavenclad® sales up +33% organically, dynamic market volume remains challenging Sales development N&I, [€m] Dynamic market volume [R3W] 1 ▪ U.S. dynamic market further suppressed as COVID 19 Omicron wave soaring org. org. org. org. org. ® [€m] 4.5% -4.3% 15.3% 0.9% -5.2% ▪
Slide 43: Oncology: Bavencio mUC 1L ramp-up drives 132% Q4 organic growth
Oncology: Bavencio® mUC 1L ramp-up drives 132% Q4 organic growth ® Sales development Oncology, [€m] Erbitux net sales, [€m] ▪ Growth across all major regions, mCRC supported by 300 273 Erbitux/Braftovi BRAFmt org. org. org. org. org. 255 261 [€m] 19.7% 20.1% 49.0% 26.4% 20.6% 250 219 233 combination
Slide 44: Bavencio UC 1L launch: Adoption continues to grow
Bavencio® UC 1L launch: Adoption of BAVENCIO in 1L maintenance continues to grow in both U.S. and ex-U.S. U.S. – > 1.5 years into launch, adoption of BAVENCIO in 1L maintenance still increases: YTD YTD YTD YTD YTD Newly diagnosed PT-based Maintenance 1L Maintenance Platinum metastatic ~85% ~75% chem
Slide 45: Fertility: Strong org. growth of +9% against softer comps
Fertility: Strong org. growth of +9% against softer comps, supported by +3% FX Sales development Fertility, [€m] Gonal-f® net sales, [€m] 200 191 200 186 190 org. org. org. org. org. 8.8% 158 [€m] 0.8% 22.0% 87.6% 7.2% 150 ▪ Gonal-f® org. YoY growth in 400 100 all markets 350 343 340 334 320 50 298
Slide 46: CM&E: Returning to growth post China VBP impact
CM&E: Returning to growth (+2.8% org. QoQ) post China VBP1 impact ® Sales development CM&E, [€m] Glucophage net sales, [€m] org. org. org. org. org. ▪ Glucophage slight organic [€m] -1.2% -4.2% 0.6% -3.4% 2.8% decline of -1.5% offset by 250 218 217 213 225 200 209 +4.6% FX tailwinds 700 662 622 615
Slide 47: Healthcare pipeline
Healthcare pipeline March 3, 2022 Phase I Phase II Phase III Registration M1231 peposertib berzosertib xevinapant tepotinib Bispecific MUC1xEGFR DNA-PK inhibitor ATR inhibitor IAP inhibitor MET kinase inhibitor ADC Solid tumors3 Small-cell lung cancer4 Locally advanced squamous cell carcinoma Non-sm
Slide 48: Healthcare catalysts
Healthcare catalysts Q1 2022 Q2 2022 Q3 2022 Q4 2022 Tepotinib Tepotinib (c-Met–inhibitor) (c-Met–inhibitor) EC approval in NSCLC METex14 Initiation PhIII confirm. study for February 2022 EGFRm METamp in NSCLC Bintrafusp alfa (TGFbeta trap/anti-PD-L1) 2L cervical (INTR@PID 017): Expected data read-o
Slide 49: FY Electronics: organic top-line growth of +8%
FY Electronics: organic top-line growth of +8% driven by strong Semiconductor Solutions performance & Surface Solutions recovery Electronics P&L Net sales bridge [€m] IFRS Pre adjustments €3,380 m 7.7% 0.0% €3,608 m FY 2020 FY 2021 FY 2020 FY 2021 -0.9% Net sales 3,380 3,608 3,380 3,608 M&S * -539 -
Slide 50: Semiconductor Solutions: Recording org. growth of +24%
BIG 3 - Semiconductor Solutions: Recording org. growth of +24% Sales development [€m] - org. growth [%] 601 573 ▪ Another record quarter for Semiconductor 24% Solutions, both in terms of absolute sales 501 21% 483 474 469 468 476 and organic growth 20% 12% 12% ▪ Semiconductor Materials biggest 9% co
Slide 51: Cash flow statement
Cash flow statement FY 2021 – cash flow statement Cash flow drivers [€m] FY 2020 FY 2021 Δ Profit after tax 1,994 3,065 1,071 ▪ Operating cash flow growing €1.1 bn or +33% vs. FY 2020 D&A 1,938 1,762 -176 ▪ Increase in profit after tax driven by Changes in provisions -110 196 305 strong operational
Slide 52: Adjustments in Q4 2021
Adjustments in Q4 2021 Adjustments in EBIT [€m] Q4 2020 Q4 2021 Adjustments thereof D&A Adjustments thereof D&A Healthcare 93 0 -17 3 Life Science 6 3 14 11 Electronics 29 11 26 8 Corporate & Other 23 0 -49 1 Total 151 14 -26 23 52 Merck KGaA, Darmstadt, Germany Q4 21 Results Presentation | March 3,
Slide 53: Adjustments in FY 2021
Adjustments in FY 2021 Adjustments in EBIT [€m] FY 2020 FY 2021 Adjustments thereof D&A Adjustments thereof D&A Healthcare 85 2 14 6 Life Science 21 3 40 11 Electronics 223 123 91 33 Corporate & Other 79 0 65 3 Total 407 128 210 53 53 Merck KGaA, Darmstadt, Germany Q4 21 Results Presentation | March
Slide 54: Financial Calendar
Financial Calendar Date Event 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 March 2, 2023 Q4 2022 Earnings release 54 Merck KGaA, Darmstadt, Germany Q4 21 Results Presentation | March 3,
Slide 55: Investor Relations contacts
CONSTANTIN FEST SVENJA DJAVAHERI 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 FLORIAN
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