Merck Kgaa · XETR:MRK
Merck Kgaa — Merck KGaA, Darmstadt, Germany — Q3 2022 Earnings Presentation
43 slides from Merck Kgaa's earnings presentation, Nov 10, 2022
Slide 1: Strong growth despite challenging macro environment
Strong growth despite challenging Macro environment Merck KGaA, Darmstadt, Germany Q3 2022 results Belén Garijo, CEO Marcus Kuhnert, CFO November 10, 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 Financial overview Outlook & Guidance 3 Merck KGaA, Darmstadt, Germany Q3 2022 Results Presentation | November 10, 2022
Slide 4: Executive summary
Executive summary 01
Slide 5: Highlights Q3 2022: Strong growth driven by LS and HC; FY guidance fully confirmed
Highlights Q3 2022: Strong growth driven by LS and HC; FY guidance fully confirmed Operations Financials Life Science: ▪ +9% organic sales growth backed by mid-teens growth in core1 business with Process Solutions as key driver (core business growth at +31%) ▪ Largest growth contribution (org. +€196
Slide 6: Life Science and Healthcare drive strong organic sales growth
Life Science and Healthcare drive strong organic sales growth; Sales and EBITDA pre further supported by significant positive FX effects Q3 YoY Net Sales Q3 YoY EBITDA pre Organic Currency Portfolio Total 8.8% 0.5% €1,810 m Life Science 8.7% 9.2% 1.3% 19.2% €1,552 m 7.5% Healthcare 8.7% 8.2% 0.0% 16
Slide 7: Europe largest growth contributor in absolute terms
Europe largest growth contributor in absolute terms with strong performance across all three sectors Regional breakdown of net sales [€m] Regional organic development Europe +9.4% org. ▪ APAC: Science & Lab Solutions, Health- 27.1% care and Semi main growth drivers, more than offsetting Display decl
Slide 8: Financial overview
Financial overview 02
Slide 9: Q3 2022: Overview
Q3 2022: Overview Key figures Comments [€m] Q3 2021 Q3 2022 Δ ▪ Life Science and Healthcare drive EBITDA pre growth organically, further boosted by Net sales 4,973 5,806 16.8% FX tailwinds EBITDA pre 1,552 1,810 16.7% ▪ EPS pre growth fueled by EBIT pre Margin (in % of net sales) 31.2% 31.2% 0.0pp c
Slide 10: Q3 2022: Reported figures
Q3 2022: Reported figures Reported results Comments [€m] Q3 2021 Q3 2022 Δ ▪ Life Science and Healthcare organic EBIT 1,047 1,234 17.8% drivers of +18% EBIT growth, further boosted by favorable FX effects amid Financial result -54 -47 -13.2% inflationary pressures Profit before tax 993 1,187 19.5% ▪
Slide 11: Life Science Q3: Core business as key growth driver
Life Science Q3: Core business (+16% org.) as key growth driver fueled by strong underlying demand and ongoing capacity expansions Life Science P&L Net sales bridge [€m] IFRS Pre 8.7% 9.2% 1.3% €2,681 m €2,249 m Q3 2021 Q3 2022 Q3 2021 Q3 2022 Net sales 2,249 2,681 2,249 2,681 M&S * -529 -634 -527 -
Slide 12: Healthcare Q3: Record sales quarter with +9% org. growth
Healthcare Q3: Record sales quarter with +9% org. growth; strong contribution from recent launches and established portfolio Healthcare P&L Net sales bridge [€m] IFRS Pre 8.7% 8.2% 0.0% €2,089 m €1,788 m Q3 2021 Q3 2022 Q3 2021 Q3 2022 Net sales 1,788 2,089 1,788 2,089 * M&S -386 -413 -386 -412 Q3 2
Slide 13: Electronics Q3: Semi Solutions offsetting Display decline
Electronics Q3: Semi Solutions offsetting significant decline in Display amid softening markets Electronics P&L Net sales bridge [€m] IFRS Pre €936 m 0.4% 10.2% 0.0% €1,036 m Q3 2021 Q3 2022 Q3 2021 Q3 2022 Net sales 936 1,036 936 1,036 M&S * -147 -173 -145 -172 +0.0% Q3 2021 Organic Currency Portfo
Slide 14: Balance sheet
Balance sheet Assets [€bn] Liabilities [€bn] 50.9 50.9 1.6 45.4 4.3 45.4 Cash & cash equivalents 1.9 Receivables 3.6 4.9 Inventories 3.9 28.3 21.4 Net equity 27.6 Intangible assets 24.6 10.8 Financial debt 11.1 3.2 Payables/refund liabilities Property, plant 3.4 7.2 7.9 3.6 Provisions for employee b
Slide 15: Cash flow statement
Cash flow statement Q3 2022 – Cash flow statement Cash flow drivers ▪ +21% profit after tax driven by strong [€m] Q3 2021 Q3 2022 Δ performance in Life Science and Profit after tax 764 926 162 Healthcare, further boosted by favorable FX and improved financial result D&A 447 470 22 ▪ Delta in changes
Slide 16: Outlook & Guidance
Outlook & Guidance 03
Slide 17: Group full-year 2022 guidance
Group Full-year 2022 guidance Net sales: Organic: +6% to +8% YoY FX: 5% to 8% YoY ~€22.00 – €22.90 bn EBITDA pre: Organic: +5% to +9% YoY FX: 6% to 10% YoY ~€6.80 – €7.20 bn EPS pre: ~€9.90 – €10.70 17 Merck KGaA, Darmstadt, Germany Q3 2022 Results Presentation | November 10, 2022
Slide 18: 2022 business sector guidance
2022 business sector guidance1 Net sales EBITDA pre Life Science ▪ Organic: +7% to +10%; FX: 5% to 8% YoY ▪ Organic:+8% to +11% YoY ▪ ~€10,200 m to €10,700 m ▪ FX: 4% to 7% YoY ▪ Strong core business, PS main growth driver ▪ ~€3,700 m to €3,900 m ▪ COVID-19 sales of up to ~€450 m in PS and up to ~€2
Slide 19: Appendix
Appendix
Slide 20: Additional financial guidance 2022
Additional financial guidance 2022 Further financial details Corporate & Other EBITDA pre ~ -€570 m to -€600 m Interest result ~ -€130 m to -€150 m Effective tax rate ~22% to 24% Capex on PPE1 ~ €1.6 bn FY 2022 hedge ratio ~50% Hedging/USD assumption at EUR/USD ~1.16 2022 Ø EUR/USD assumption ~1.02
Slide 21: Credit details
Classification: CONFIDENTIAL Credit details Maturity profile as of September 30, 2022 Credit rating information Coupon [€m / $m] 3.250% 0.125% Last LT LT ST Rating Outlook Rating Rating Change 1.625% 1.875% 1,600 A3 21.10.21 Stable P-2 1.625% 3.375% 1.000 0.500% 2.875% 0.875% 0.005% 500 0.375% A 29.
Slide 22: All three business sectors contribute to strong sales growth
All three business sectors contribute to strong sales growth supported by FX effects 9M YoY Net Sales 9M YoY EBITDA pre Organic Currency Portfolio Total 8.3% 0.2% €5,221 m Life Science 9.6% 7.2% 0.9% 17.7% €4,639 m 4.1% Healthcare 5.5% 5.9% 0.0% 11.4% Electronics 4.2% 8.4% 0.0% 12.6% Group 7.2% 6.9%
Slide 23: 9M 2022: Overview
9M 2022: Overview Key figures Comments [€m] 9M 2021 9M 2022 Δ ▪ Sales up +14%, driven by strong organic Net sales 14,474 16,572 14.5% performance and FX tailwinds EBITDA pre 4,639 5,221 12.6% ▪ Life Science fuels organic EBITDA pre Margin (in % of net sales) 32.0% 31.5% -0.5pp growth, boosted by FX
Slide 24: 9M 2022: Reported figures
9M 2022: Reported figures Reported results Comments [€m] 9M 2021 9M 2022 Δ ▪ EBIT up 14%, organically driven 3,140 3,585 14.2% mainly by strong Life Science EBIT business performance Financial result -208 -136 -34.4% ▪ Improved financial result primarily Profit before tax 2,932 3,448 17.6% from ongo
Slide 25: Life Science 9M: Strong YTD performance
Life Science 9M: Strong YTD performance with >€600m org. net sales growth, mainly driven by Process Solutions Life Science P&L Net sales bridge [€m] IFRS Pre adjustments 9.6% 7.2% 0.9% €7,774 m €6,605 m 9M 2021 9M 2022 9M 2021 9M 2022 Net sales 6,605 7,774 6,605 7,774 M&S * -1,535 -1,795 -1,532 -1,7
Slide 26: Process Solutions: Double-digit growth despite fading COVID-19 demand
Process Solutions: Double-digit growth despite fading COVID-19 demand Sales development [€m] - org. growth [%] 1,190 ▪ Further acceleration of core business (+31%) 1,149 drives double-digit organic sales growth in Q3 1 1 1,050 ▪ As expected, COVID-19 sales significantly 993 991 down YoY, sequentiall
Slide 27: Life Science Services: Near-term volatility but mid-term prospects intact
Life Science Services: Near-term volatility but mid-term prospects intact Sales development [€m] - org. growth [%] 1 262 266 244 ▪ Core business down in Q3 amid tough comps and near-term volatility in CDMO, esp. 27% unfavorable batch phasing and attrition in clinical pipelines of customers 189 1 196
Slide 28: Science & Lab Solutions: Strong and broad-based growth continuing
Science & Lab Solutions: Strong and broad-based growth continuing Sales development [€m] - org. growth [%] 1,233 1,246 1 1,199 1 1,133 1,067 ▪ Strong core business drives high single-digit growth in Q3, supported by pricing and slight pull-forward effects ahead of pricing round ▪ COVID-19 business w
Slide 29: Healthcare 9M: Bavencio & Mavenclad fuel organic growth
Healthcare 9M: Bavencio® & Mavenclad® fuel organic growth Healthcare P&L Net sales bridge [€m] IFRS Pre €5,214 m 5.5% 5.9% 0.0% €5,808 m 9M 2021 9M 2022 9M 2021 9M 2022 Net sales 5,214 5,808 5,214 5,808 M&S * -1,147 -1,205 -1,140 -1,202 +0.0% 9M 2021 Organic Currency Portfolio 9M 2022 Admin -229 -23
Slide 30: Healthcare organic growth by franchise/product
Healthcare organic growth by franchise/product Q3 2022 organic sales growth [%] 9M 2022 organic sales growth [%] by key product [€m] by key product [€m] 166 440 51% 67% 104 252 274 774 14% 4% 233 726 234 10% 636 19% 197 501 249 -4% 668 -13% 234 708 221 8% 620 3% 191 577 237 3% 682 -1% 209 639 143 10
Slide 31: Neurology & Immunology: Q3 Mavenclad sales up
Neurology & Immunology: Q3 Mavenclad® sales up +10% org. and muted Rebif decline drive franchise growth of +2.3% org. ® Sales development N&I, [€m] Mavenclad Y1+Y2 patients1 ® ▪ Mavenclad continues to be most prescribed oral HE drug org. org. org. org. org. in U.S. and EU-4 in dynamic [€m] 0.9% -5.2
Slide 32: Oncology: +24.5% org. growth driven by Bavencio and Erbitux
Oncology: +24.5% org. growth driven by continued Bavencio® mUC 1L ramp-up and record quarterly Erbitux® sales ® Sales development Oncology, [€m] Erbitux net sales, [€m] ▪ Growth across all regions, double-digit in China post 300 274 org. org. org. org. org. 233 261 242 258 Erbitux SCCHN1 NRDL2 [€m]
Slide 33: Fertility: Growth of +2.6%
Fertility: Growth of +2.6% amid fading impact of lockdowns in China Sales development Fertility, [€m] Gonal-f® net sales, [€m] 250 org. org. org. org. org. 221 7.2% 8.8% 4.3% -2.7% 2.6% 191 190 200 198 [€m] 200 400 150 ▪ Early recovery in China in Q3 373 339 341 351 100 ▪ Confidence in mid-term mid-
Slide 34: CM&E: Growth of +6.0%
CM&E: Growth of +6.0%, supported by strong Euthyrox® and Saizen® sales ® Sales development CM&E, [€m] Glucophage net sales, [€m] ▪ Glucophage® organic growth org. org. org. org. org. of +3.1% further boosted by [€m] -3.4% 2.8% 2.5% 2.7% 6.0% 237 +10.1% FX tailwinds 250 225 218 228 209 800 200 ▪ Slig
Slide 35: Company pipeline
Company pipeline November 10, 2022 Healthcare pipeline Phase 1 Phase 2 Phase 3 Registration Marketed7 evobrutinib (BTK inhibitor) Relapsing multiple sclerosis enpatoran (TLR7/8 antagonist) Cutaneous lupus erythematosus enpatoran (TLR7/8 antagonist) Systemic lupus erythematosus xevinapant (IAP inhibi
Slide 36: 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 Based on evaluation of data from Decision on PhIII confirmatory February 2022 PhII study, planned for H2 2022. study for EGFRm METamp in NSCLC Bintrafusp alfa (TG
Slide 37: Electronics 9M: Semi Solutions growth offsets Display softness
Electronics 9M: Double-digit year-on-year sales growth in Semi Solutions more than offsets Display softness Electronics P&L Net sales bridge [€m] IFRS Pre adjustments 4.2% 8.4% 0.0% €2,990 m €2,654 m 9M 2021 9M 2022 9M 2021 9M 2022 Net sales 2,654 2,990 2,654 2,990 M&S * -419 -491 -417 -490 +0.0% Ad
Slide 38: Semiconductor Solutions continues to drive top-line growth in Electronics
Semiconductor Solutions continues to drive top-line growth in Electronics with another record quarter and teens growth amid softening market Sales development [€m] - org. growth [%] 729 24% 653 ▪ Another strong quarter for 21% 1 1 601 581 Semiconductor Solutions amid first signs 573 20% market slowd
Slide 39: Cash flow statement
Cash flow statement 9M 2022 – cash flow statement Cash flow drivers [€m] 9M 2021 9M 2022 Δ ▪ +19% profit after tax growth driven by strong business performance in Life Profit after tax 2,258 2,680 421 Science, further boosted by favorable FX D&A 1,294 1,432 138 and improved financial result ▪ Delta
Slide 40: Adjustments in Q3 2022
Adjustments in Q3 2022 Adjustments in EBIT [€m] Q3 2021 Q3 2022 Adjustments thereof D&A Adjustments thereof D&A Life Science 18 0 41 0 Healthcare 9 0 29 0 Electronics 38 18 18 10 Corporate & Other 11 1 30 0 Total 76 19 118 11 40 Merck KGaA, Darmstadt, Germany Q3 2022 Results Presentation | November
Slide 41: Adjustments in 9M 2022
Adjustments in 9M 2022 Adjustments in EBIT [€m] 9M 2021 9M 2022 Adjustments thereof D&A Adjustments thereof D&A Life Science 26 0 78 1 Healthcare 30 3 124 91 Electronics 65 25 40 11 Corporate & Other 114 1 67 0 Total 235 30 309 103 41 Merck KGaA, Darmstadt, Germany Q3 2022 Results Presentation | Nov
Slide 42: Financial Calendar
Financial Calendar Date Event March 2, 2023 Q4 2022 Earnings release April 28, 2023 Annual General Meeting May 11, 2023 Q1 2023 Earnings release August 3, 2023 Q2 2023 Earnings release November 9, 2023 Q3 2023 Earnings release 42 Merck KGaA, Darmstadt, Germany Q3 2022 Results Presentation | November
Slide 43: Investor Relations contacts
CONSTANTIN FEST SVENJA DJAVAHERI PETRA HOLTZ 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] ADRIAN GORSKI GUNNAR ROMER FLORIAN
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