Merck KGaA Stock Down On Weak Q3 Earnings; Lifts FY21 View

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Merck KgaA's shares were losing around 2 percent in German trading after the healthcare major reported weak earnings in its third quarter. However, quarterly sales grew strong, and the company raised its fiscal 2021 outlook.

Belén Garijo, Chair of the Executive Board and CEO of Merck, said, "The third quarter was another quarter of strong profitable growth for Merck with all three business sectors and all regions contributing. Our Big 3 growth engines, Process Solutions, new Healthcare products and Semiconductor Solutions performed superbly and enabled us to raise our outlook for the full year 2021."

For fiscal 2021, Merck now expects EBITDA pre, the most important financial indicator, to be 6.0 billion euros to 6.3 billion euros, higher than previously expected 5.6 billion euros to 6.0 billion euros range. Organic increase in EBITDA pre is now expected to 26 percent to 29 percent, while previous view was between 21 percent and 25 percent.

Further, earnings per share pre for the full year will now be in a range of 8.50 euros and 9.00 euros. Previously, it had estimated earnings per share pre in a range of 7.80 euros to 8.50 euros.

For fiscal 2021, Merck increased its net sales forecast to 19.3 billion euros to 19.85 billion euros from previous view between 18.8 billion euros and 19.7 billion euros. The company now expects organic growth of 13 percent to 15 percent. Prior organic growth forecast was between 12 percent and 14 percent.

According to Merck, all business sectors, mainly Life Science, will contribute to organic growth.

Merck also said it plans to join the Science Based Targets initiative as part of its sustainability strategy.

For the third quarter, Net income fell by 5.6 percent to 761 million euros. Earnings per share was 1.75 euros, down 5.4 percent from 1.85 euros last year.

Earnings per share pre was 2.24 euros, compared to 2.34 euros a year ago. Margin declined to 21.1 percent from 26.2 percent a year ago.

Operating result or EBIT declined 10.2 percent from last year to 1.05 billion euros.

Third-quarter EBITDA pre declined 8.7 percent to 1.6 billion euros due to the reversal of a provision in the year-earlier quarter. Excluding this effect, EBITDA pre would have increased 16.2 percent, the company said. Organically, EBITDA pre declined by 10.9 percent

Group net sales increased 11.8 percent to 4.97 billion euros from last year's 4.45 billion euros. Group organic sales growth was 10.9 percent in the third quarter.

In Germany, Merck KgaA shares were losing around 1.7 percent to trade at 202.90 euros.

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