Q3/2000: Merck is committed to profitable growth

27-Oct-2000

London and Darmstadt/Germany, 26 October 2000 - The 3rd-quarter sales of the Merck Group rose +20 percent to EUR 1,712 million, mainly depending on favorable exchange-rate effects (+8 per-cent), strong organic growth (+7 percent), and acquisitions (+4 percent). For the first nine months of this year, a growth in sales by +33 percent to EUR 4,972 million has been achiev-ed. The continuingly favorable development of the company's business is reflected by the operating result, which in the 3rd quarter came to EUR 193 million, up +29 percent, while the EBIT grew by +53 percent to EUR 180 million.

"With this result the Merck Group has yet again demonstrated its high earnings power, and we are determined to increase our profitability further still", emphasized Prof Dr Bernhard Scheuble, Chairman und Chief Executive Officer of Merck KGaA, at the company's press briefing in London. For the first time in the long history of the company, Merck has agreed on binding profitability targets with regard to the ROS (return on sales) as well as ROCE (return on capital employed) indices, for its operating units and for the Group as a whole.

In the 3rd quarter, the Merck Group achieved a ROS of 11 percent and a ROCE of 12 percent. According to the targets, the Group is committed to achieve the 15 percent mark for both of these indices. The same yardstick has also been set for the Specialty Chemicals business. In case of Pharma-ceu-ticals, Merck is planning to increase profitability to 20 percent for both indices. The Laboratory Distribution business, which as a pure trading business is subject to entirely different economic conditions, is to achieve a ROS of five percent and a ROCE of ten percent.

"These are the targets by which we will be measuring ourselves, and we are committed to achieve them", said Scheuble. All employees of the company are exhorted to lead their own respective area of responsibility as if they were responsible-minded entrepreneurs. As a measure to enhance and reinforce its employees' sense of urgency and self-responsibility, Merck has meanwhile implemented the stock option program for its top executives worldwide that was passed by the 2000 General Meeting of shareholders. "We shall be consistent in pursuing this aim of allowing all our employees to directly participate in the success of our company", Scheuble announced.

Business sectors

Pharmaceuticals contributed 42 percent to sales and 63 percent to the operating result of the Merck Group, with sales up +2 percent to EUR 726 million. Ethicals (+15 percent to EUR 455 million), Generics (+16 percent to EUR 197 million), and Consumer Healthcare (+12 percent to EUR 70 million) made more or less equal contributions to the sales growth, thus being able to more than compensate for the loss of the contrast-media business (Brac-co) compared with the same quarter last year. Adjusted for this change (-9 percent) and exchange-rate effects (+7 percent), a generally gratifying organic sales growth of +5 percent was achieved.

The growth in sales of Ethicals continues to be driven by Glucophage, one of the leading products worldwide for the management of type 2 diabetes. In the 3rd quarter, sales of Glucophage rose +62 percent to EUR 587 million, resulting in worldwide sales of EUR 1,633 million in the first nine months of the year. The expansion of the company's bisoprolol business (Concor) into the indication heart-failure is also making satisfactory progress, with sales in the 3rd quarter rising +126 percent to EUR 418 million.

The four divisions of the Specialty Chemicals business made a contribu-tion of 16 percent towards total sales and of 32 percent to the overall operating result of the Merck Group. Sales climbed +34 percent to EUR 280 million, driven by an impres-sive organic growth of +20 percent. Exchange-rate effects made a 10 percent contribution to the sales growth.

The growth in sales by this business sector in the 3rd quarter was essentially fuelled by

https://www.chemeurope.com/en/news/250/q3-2000-merck-is-committed-to-profitable-growth.html