Germany’s Merck flags decline in operating profit of up to 10% in 2023

By Ludwig Burger

FRANKFURT (Reuters) – Germany’s Merck KGaA on Thursday warned that adjusted operating earnings could decline by as much as 10% this year as the outlook for its specialty chemicals business darkened, offsetting an upswing in drug prescriptions.

The company said it was expecting between 6.1 billion euros ($6.71 billion) and 6.7 billion euros in 2023 earnings before interest, taxes, depreciation and amortisation (EBITDA), adjusted for one-offs. That is down from 6.8 billion last year.

It had previously predicted a “moderate decline to an about stable development”, before any currency swings.

Demand for Merck’s semiconductor materials “is expected to recover in the second half of 2023, but at a later point and from a lower base than previously assumed”, it said.

Merck also said that first-quarter adjusted EBITDA declined 7% to 1.6 billion euros, slightly above the average estimate of 1.54 billion euros in an analyst poll on the company’s website.

It highlighted as a particularly good performance the currency-adjusted sales growth of 30.6% of cancer immunotherapy Bavencio and 23% sales growth of multiple sclerosis drug Mavenclad.

CEO Belen Garijo said higher prescriptions of its new drugs were tempering the overall decline during 2023, which he described as a “transition year”.

“This proves the resilience of our diversified, multi-industry portfolio,” she said.