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Merck KGaA Q4 Net Profit Down, EBIT Rises; Sees Growth In FY20; Stock Up

merck march05 lt

Shares of Merck KGaA (MKGAY.PK) were gaining around 4 percent in the morning trading in Germany after the science and technology company on Thursday said that it sees organic growth in fiscal 2020 after reporting higher operating result and sales in its fourth quarter. Net profit for the quarter, meanwhile, plunged from last year. The company also lifted its dividend.

Stefan Oschmann, Chairman of the Executive Board and CEO of Merck, said, "We delivered on our promise and achieved growth for all our key performance indicators, namely net sales, EBITDA pre and EPS pre. We are resolutely executing our strategy and strengthening our innovation-driven businesses in all three business sectors. In addition, we are focusing on lowering our debt as planned. We intend to achieve profitable growth in 2020 as well."

For fiscal 2020, the company projects solid organic sales growth and strong organic growth of EBITDA pre, likely to be driven mainly by the Healthcare and Life Science business sectors. In fiscal 2019, the company generated EBITDA pre of 4.4 billion euros and sales of 16.2 billion euros.

Regarding the ongoing coronavirus epidemic, Merck projects the epidemic to reach its high point in the first quarter and subside in the course of the second quarter. The situation is expected to normalize in the second half of the year. Based on these assumptions, the coronavirus epidemic would have a negative effect of 1 percent on Group net sales in 2020.

If the crisis grow or trigger a global recession, the company said it would adapt its business forecast.

Further, Merck said its Executive Board and the Supervisory Board will propose a dividend of 1.30 euros per share, an increase of 0.05 euro over the previous year.

In its fourth quarter, the company reported 87 percent decline in net income to 318 million euros from last year's 2.45 billion euros. Earnings per share fell to 0.73 euro from 5.63 euros a year ago.

Earnings per share pre amounted to 1.54 euros, compared to 1.22 euros last year.

Operating result or EBIT climbed 51 percent from last year to 515 million euros, and EBITDA increased 26.4 percent to 1.07 billion euros. EBITDA pre grew 27 percent to 1.21 billion euros from last year's 950 million euros. EBITDA pre margin went up to 27.5 percent from 24.4 percent last year.

In the fourth quarter, Group net sales rose 12.7 percent to 4.38 billion euros from last year's 3.89 billion euros. Organic sales growth was 4.3 percent, driven by the Healthcare and Life Science business sectors.

In Germany, Merck KgaA shares were trading at 118.65 euros, up 3.53 percent.

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