FX.co ★ Merck KGaA Posts Weak FY23 Results; Sees Organic Growth In FY24

The renowned German science and technology company, Merck KgaA, reported a reduction in profit and sales for the fiscal year 2023 due to tough market conditions. Despite an increase in sales within the Healthcare sector, overall profits were brought down by underperformance in the Life Science and Electronics sectors.

Merck forecasts a bounce back in fiscal 2024 with mild to moderate organic growth in sales and Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) pre, spearheaded by the Healthcare sector. Merck's Executive and Supervisory Boards also plan to propose a dividend of 2.20 euros per share, consistent with the previous year, at the Annual General Meeting on April 26.

Merck's CEO, Belen Garijo, has expressed their commitment to regaining growth momentum during fiscal 2024 and defining a strategic roadmap for long-term profitability and sustainable growth.

The year 2023 saw a post-tax profit drop of 15.1 percent to 2.83 billion euros from 3.34 billion euros the previous year. Earnings per share also decreased by 15.2 percent to 6.49 euros from 7.65 euros. On an adjusted basis, earning per share pre experienced a decline, resulting in 8.49 euros, compared with 10.05 euros the previous year.

The EBIT observed a 19.3 percent drop to 3.61 billion euros from 4.47 billion euros in the previous year, causing the EBIT margin to drop from 20.1 percent to 17.2 percent. The EBITDA pre also recorded a 14.2 percent year-over-year decrease to 5.88 billion euros, with the EBITDA margin pre falling from 30.8 percent to 28 percent.

Total annual sales fell 5.6 percent to 20.99 billion euros from 22.23 billion euros the previous year, with a 1.6 percent organic decrease in group net sales. The company attributed this decline to challenging market conditions, which included a significant drop in Covid-19-related demand, ongoing inventory reductions by major Merck customers in Process Solutions, and a cyclical slowdown in demand for semiconductor materials.

Sales within the Life Science sector fell by 10.6 percent to 9.28 billion euros, while the Electronics sector saw an 8.8 percent decrease in sales. Notably, the Semiconductor Solutions unit experienced a 3.9 percent drop in sales.

However, the Healthcare sector presented a silver lining with a 2.7 percent increase, raking in 8.05 billion euros, marking a robust 8.5 percent organic growth.

At present, shares of Merck KGaA in Germany are trading at 158.95 euros, marking a 0.41 percent increase.