Merck KGaA Reports: '2004 Is Best Year in 336-Year History'


The Merck Group reported that its Profit After Tax for 2004 more than tripled to EUR 672 million as the result of exceptional gains, good business results, improved Financial Result and a lower tax rate. liquid crystals sales jumped 33% to EUR 583 million and Erbitux, with first-year sales of EUR 77 million, far exceeded expectations.

Full-year sales, excluding VWR, rose 6.7% to EUR 5,339 million with all divisions reporting increases. Liquid Crystals sales soared 33% in the year. Fourth-quarter sales rose 4.4% to EUR 1,339 million as Liquid Crystals sales were up only slightly in comparison to a very strong year-ago quarter. The weak U.S. dollar resulted in negative currency effects that reduced sales by 2.7% for both the year and the quarter.

The full-year Operating Result, excluding VWR, rose 15% to EUR 755 million as the gross margin rose and operating expenses declined. The fourth-quarter Operating Result improved by 19% to EUR 195 million. Merck's ROCE (return on capital employed) for 2004 was 16.0%, exceeding the company's mid-term target of 15%. ROS (return on sales) for the year was 14.1%, nearing the 15% target.

Full-year Earnings Before Interest and Tax (EBIT) without VWR jumped 60% to EUR 735 million as large exceptional charges in 2003 were not repeated. EBIT including VWR for 2004 nearly doubled to EUR 1,044 million from EUR 538 million in 2003.

Not only are all divisions doing well, Merck's financial house is also in good order. The company's Financial Result was improved by 28%, to -EUR 83 million in 2004 compared to -EUR 115 million the year before as the company is now free of net financial debt. The company's gearing ratio, net debt including pension provisions of EUR 931 million compared to net equity, was 0.27 at the end of 2004 compared to 1.01 at the end of 2003.

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