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Merck KGaA sees FY adjusted profit gains of up to 9% on lab demand
Global Banking & Finance Review®
Company
By Ludwig Burger
(Reuters) – Germany’s Merck KGaA said it expects earnings growth of up to 9% this year, mainly driven by drugmakers’ demand for its laboratory gear business, but flagged risks related to lockdown measures in China.
In a statement on Thursday, the diversified group predicted growth of 5% to 9%, excluding the effect of currency swings and any acquisitions, for adjusted earnings before interest, tax, depreciation and amortisation (EBITDA), with the Life Science division as a key growth driver.
It said the forecast was based on expectations that energy and raw material prices remain high and that the COVID-19 lockdown in China remains locally restricted will be relaxed soon.
“The current forecast is subject to increased uncertainty and volatility,” the company added.
In response, it would keep higher stocks for critical raw materials, switch to e-commerce for its lab equipment in lockdown-affected areas and try to shift production to other factories, where necessary, Merck said in presentation slides.First-quarter adjusted EBITDA rose 7.8% to 1.63 billion euros ($1.71 billion), in line with analyst expectations, also driven by demand for chemicals for semiconductor makers as well as for cancer drug Bavencio and multiple sclerosis treatment Mavenclad.
($1 = 0.9508 euros)
(Reporting by Ludwig Burger; Editing by Maria Sheahan, Kirsti Knolle)
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a financial metric used to evaluate a company's operating performance by focusing on earnings generated from core business operations.
Adjusted profit refers to a company's earnings that have been modified to exclude certain items that may not be indicative of its core operating performance, providing a clearer picture of profitability.
The Life Science division typically refers to a sector within a company focused on products and services related to biological and pharmaceutical research, including laboratory equipment and supplies.
Currency swings refer to fluctuations in the value of one currency relative to another, which can impact international business operations, profits, and financial reporting.
E-commerce refers to the buying and selling of goods and services over the internet. It includes various online transactions, from retail purchases to business-to-business exchanges.
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