Merck Kgaa · XETR:MRK

Merck Kgaa — Q1 2015 Earnings Presentation

35 slides from Merck Kgaa's earnings presentation, May 19, 2015

  1. Slide 1: Q1 2015 Results Conference Call

    Q1 2015 Results Conference Call A solid quarter in a challenging year 2015 Marcus Kuhnert, CFO May 19, 2015

  2. Slide 2: Publication of Merck KGaA, Darmstadt, Germany (EMD in US/Canada)

    D | sc | a | mM er Publication of Merck 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 bus

  3. Slide 3: Disclaimer

    Disclaimer Cautionary Note Regarding Forward-Looking Statements 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 words of similar meaning in

  4. Slide 4: Agenda

    Agenda Executive summary Financial review Outlook and guidance

  5. Slide 5: Q1 2015: Highlights

    Q1 2015: Highlights Healthcare stable despite Rebif decline Operations First avelumab* Phase III in NSCLC initiated Continued success with innovative UB-FFS technology Sales growth of 15.7% driven by AZ, organic performance and FX tailwinds Financials EBITDA pre increases by 5.7% to €853 m Guidance

  6. Slide 6: Top-line growth supported by FX

    Top-line growth supported by FX Q1 2015 YoY net sales Organic Currency Portfolio Total  Healthcare stable; Rebif declines, but offset by growth of other franchises Healthcare 0.3% 7.1% 0.0% 7.4%  Life Science benefits from ongoing Life Science 3.4% 9.8% -0.8% 12.4% biopharma demand  Performance M

  7. Slide 7: New regional split: APAC and Europe largest regions

    New regional split: APAC and Europe largest regions Group Q1 2015 net sales by region [in %] 33% North America Europe 20% 11% 33% Latin America Asia-Pacific (APAC) 3% Middle East & Africa (MEA) 7

  8. Slide 8: Europe and North America influenced by Rebif decline, offset by APAC and Latin America

    Europe and North America influenced by Rebif decline, offset by APAC and Latin America Regional development of net sales [€ m] Regional details +15.7%  Reported sales growth includes Organic sales AZ contribution especially in Asia- 3,041 growth Pacific and North America 2,628  Europe mainly impac

  9. Slide 9: Agenda

    Agenda Executive summary Financial review Outlook and guidance

  10. Slide 10: Q1 2015 overview

    Q1 2015 overview [€ m] Q1 2014 Q1 2015 Δ Q1 2015 Net sales 2,628 3,041 15.7%  EBITDA pre increases, while margin softens due to royalty loss, Rebif EBITDA pre 807 853 5.7% decline, higher R&D and LTIP* Margin (% of sales) 30.7% 28.0%  EPS pre decrease mainly driven by financial result EPS pre [€]

  11. Slide 11: Reported EPS reflects Sigma financing costs

    Reported EPS reflects Sigma financing costs [€ m] Q1 2014 Q1 2015 Δ Reported results  EBIT reflects D&A from AZ and costs EBIT 468 480 2.5% for acquisitions  Financial result impacted by higher Financial result -35 -101 >100% interest expenses (hybrid & USD bond) and LTIP* Profit before tax 434 37

  12. Slide 12: Healthcare: The start of an investment year

    Healthcare: The start of an investment year [€ m] Q1 2014 Q1 2015 Comments Net sales 1,569 1,686  Expected decline of Rebif driven by volume losses in EU & U.S.  XXX Marketing and selling -609 -660  Erbitux negative, mainly affected by tender phasing and EU pricing  Fertility and General Medicin

  13. Slide 13: Life Science: A solid quarter

    Life Science: A solid quarter [€ m] Q1 2014 Q1 2015 Comments Net sales 657 738  Process Solutions drives divisional growth mainly due to strong  XXX demand from biopharma for single-use and purification products Marketing and selling -210 -233  Lab Solutions with moderate growth especially in lab

  14. Slide 14: Performance Materials: Healthy market trends amid significant currency tailwinds

    Performance Materials: Healthy market trends amid significant currency tailwinds [€ m] Q1 2014 Q1 2015 Comments Net sales 402 617  Strong sales reflect portfolio effect, organic growth and FX tailwinds  XXX Marketing and selling -36 -46  Liquid Crystals volume trends remain largest organic contri

  15. Slide 15: Balance sheet reflects Sigma financing measures

    Balance sheet reflects Sigma financing measures Assets [€ bn] Liabilities [€ bn] 30.8 30.8 26.0 7.8 26.0 Cash & marketable securities 5.1 13.8 2.5 Receivables 2.2 1.8 11.8 Net equity Inventories 1.7 Intangible assets 11.7 7.9 11.4 5.6 Financial debt Property, plant & equipment 1.6 1.5 Payables 2.1 1

  16. Slide 16: Operating cash flow burdened by one-time tax payment relating to Pfizer upfront

    Operating cash flow burdened by one-time tax payment relating to Pfizer upfront [€ m] Q1 2014 Q1 2015 Δ Cash flow drivers Profit after tax 327 285 -42  D&A increase attributable to AZ  Higher LTIP* and currency adjustments D&A 302 325 23 in litigation provisions drive increase in -47 changes in pr

  17. Slide 17: Agenda

    Agenda Executive summary Financial review Outlook and guidance

  18. Slide 18: Sigma-Aldrich – Update

    Sigma-Aldrich – Update & U.S. and other* All pending antitrust Sigma shareholder anti-trust approvals approval processes approval (Dec. 5, 2014) (U.S. - Dec. 23, 2014) Anti-trust progressing Q3 Q4 Q1 Q2 2014 2014 2015 2015 Announcement Closing (Sept. 22, 2014) (depending on development of discussion

  19. Slide 19: Solid structure to finance Sigma-Aldrich transaction

    Solid structure to finance Sigma-Aldrich transaction Financing structure Update on funding structure  Acquisition 100% cash & debt financed Total: US$17.4 bn  Intention to replace the bridge until closing of acquisition through various Cash capital markets transactions ~US$2.4 bn  Accomplished tr

  20. Slide 20: High cost base in strong currencies and hedging losses partially offset FX tailwinds

    High cost base in strong currencies and hedging losses partially offset FX tailwinds Healthcare Life Science Performance Materials Sales Sales Sales  Global presence  Balanced regional sales split  ~80% of sales in Asia-Pacific  ~40% of sales in Europe between EU, NA and RoW  Industry is USD-dr

  21. Slide 21: Full year 2015 guidance

    Full year 2015 guidance Group guidance* for 2015, on existing platform Net sales: ~ €12.3 – 12.5 bn EBITDA pre: ~ €3,450 – 3,550 m EPS pre: ~ €4.60 – 4.80 *Without Sigma-Aldrich contribution 21

  22. Slide 22: 2015 business sector guidance

    2015 business sector guidance Healthcare Life Science* Performance Materials Net sales Net sales Net sales Organically stable Moderate organic growth Slight organic growth EBITDA pre EBITDA pre EBITDA pre ~ €1.9 – 2.0 bn ~ €730 - 760 m ~ €1.05 – 1.1 bn *Without Sigma-Aldrich contribution 22

  23. Slide 23: Merck KGaA Darmstadt - Germany

    Merck KGaA Darmstadt - Germany

  24. Slide 24: Appendix

    Merck KGaA

  25. Slide 25: Additional financial guidance 2015

    Additional financial guidance 2015 Further financial details Group royalty, license and commission income in 2015 ~€300 m Corporate & Other EBITDA pre ~ -€280 – -330 m Underlying tax rate ~23% to 25% Capex on PPE ~€550 m Hedging / USD assumption 2015 & 2016 hedge rate ~30% at EUR/USD ~1.24 to 1.26 2

  26. Slide 26: Healthcare organic growth by franchise/product

    Healthcare organic growth by franchise/product Q1 2015 organic sales growth [%] by key products [€ m] 430 -16% 459 Consumer 217 +13% Health 180 205 -6% 209 164 +2% 152 121 +16% 97 112 +26% 86 Q1 2015 Q1 2014 26

  27. Slide 27: Rebif: Defending the franchise – competitive pressure in the U.S. and Europe

    Rebif: Defending the franchise – competitive pressure in the U.S. and Europe Rebif performance - Regional sales evolution [€ m]  Rebif sales of €430 m in Q1  Organic decline of -15.9% is driven Trend North America Q1 drivers by lower volumes slightly mitigated by -16.7% org. U.S. pricing 300 Price

  28. Slide 28: Erbitux: A challenging quarter

    Erbitux: A challenging quarter Erbitux sales by region Erbitux performance  Sales decrease to €205 m as FX is -5.9% Q1 YoY [€ m] more than offset by organic decline organic growth 250  Europe facing tough environment with price declines in some countries 200 -35.7%  Phasing of tender business in

  29. Slide 29: Strong growth in General Medicine, Fertility and Endocrinology

    Strong growth in General Medicine, Fertility and Endocrinology Sales evolution Q1 drivers Fertility Q1 drivers  Fertility franchise with 5.8% organic [€ m] growth mainly driven by high demand 240 from fast-growing Chinese market 210 Organic  Solid volumes in Europe support solid 180 Q1 2014 Q2 201

  30. Slide 30: Clinical pipeline

    Clinical pipeline Phase I Phase II Phase III In registration 1  ATX-MS-1467 – Immune tolerizing agent  Evofosfamide (TH-302) –  Kuvan®  Tepotinib – c-Met kinase inhibitor 4 Multiple sclerosis Hypoxia-activated prodrug (Sapropterin dihydrochloride) Solid tumors Soft tissue sarcoma Phenylketonuria

  31. Slide 31: First avelumab Phase III initiated

    First avelumab Phase III initiated Phase III (avelumab1 NSCLC2) – Study design Study setup: JAVELIN Lung 200  Primary endpoint: Overall survival in patients 1 avelumab in non-small cell lung cancer with PD-L1+ stage IIIb/IV NSCLC Open-label, multicenter trial in subjects with NSCLC that has  Secon

  32. Slide 32: ASCO: Key avelumab abstracts

    ASCO: Key avelumab abstracts Avelumab*  Ovarian cancer  Avelumab*, an anti-PD-L1 antibody, in patients with previously treated, recurrent or refractory ovarian cancer: a phase Ib, open-label expansion trial  Lung cancer  Avelumab*, an anti-PD-L1 antibody, in advanced NSCLC patients: a phase 1b,

  33. Slide 33: Exceptional items in Q1 2015

    Exceptional items in Q1 2015 Exceptional items in EBIT [€ m] Q1 2014 Q1 2015 Exceptional items thereof D&A Exceptional items thereof D&A Healthcare 13 1 12 0 Life Science 6 0 20 0 Performance Materials 8 0 4 0 Corporate & Other 11 0 12 0 Total 38 1 48 0 Totals may not add up due to rounding 33

  34. Slide 34: Financial calendar

    Financial calendar Date Event August 06, 2015 Q2 2015 Earnings release November 12, 2015 Q3 2015 Earnings release March 08, 2016 Q4 2015 Earnings release April 29, 2016 Annual General Meeting 34

  35. Slide 35: Investor Relations contact details

    Investor Relations contact details Constantin Fest Head of Investor Relations +49 6151 72-5271 [email protected] Alessandra Heinz Annett Weber Assistant Investor Relations Institutional Investors / Analysts +49 6151 72-3321 +49 6151 72-63723 [email protected] alessandra.heinz@emdg

Merck KGaA — Q1 2015 Earnings Presentation on 6ix