Merck KGaA, a Germany-based health-care and technology company, announced its results for the second quarter. Here is a summary of the key details:
Sales for the second quarter were 5.30 billion euros ($5.80 billion), which slightly exceeded the consensus expectations of 5.22 billion euros. However, this marked a decrease from the previous year's second quarter sales of 5.57 billion euros.
The net profit for the quarter was 706 million euros, falling short of the consensus expectations of 758 million euros. This represented a decline from the previous year's second quarter net profit of 870 million euros.
The company's EBITDA PRE, a metric that excludes certain one-off items, was 1.55 billion euros for the second quarter. Although this was lower than the previous year's second quarter figure of 1.78 billion euros, it slightly surpassed the consensus expectations of 1.50 billion euros.
Key Points to Watch
There are several important points to note from the earnings report:
Merck KGaA has revised its guidance for the full year, attributing the lower sales to high inventory levels of its life science customers, delayed recovery in the semiconductor materials market, and foreign-exchange headwinds. Analysts at Stifel believe that further deterioration is unlikely and anticipate additional positive commentary during the Capital Markets Day in October.
Life Science and Electronics Businesses
As predicted, the life science division underperformed, resulting in a downgraded outlook for the division. Stifel analysts suggest that destocking effects have primarily impacted life science companies. On the other hand, the electronics division delivered stronger-than-expected results in the second quarter. However, there are concerns over deteriorating conditions in the semiconductor and surface businesses.
The healthcare division surpassed expectations, driven by the success of fertility drugs, cancer-drug Bavencio, and multiple-sclerosis treatment Mavenclad. Stifel analysts predict that this positive trend will continue throughout the year, with strong performances in oncology and endocrinology.