Fiscal 2022: Merck KGaA, Darmstadt, Germany, Delivers Profitable Growth Despite Challenges

Merck KGaA, Darmstadt, Germany delivered profitable growth despite challenges in fiscal 2022. Group net sales increased by 12.9% (organically: 6.4%) to € 22,232 million compared with the previous year.

02 Mar 2023 | Darmstadt, Germany

Fiscal 2022

  • Group net sales rise 12.9% to € 22.2 billion
  • EBITDA pre up 12.2% to € 6.8 billion
  • EBITDA pre margin at 30.8%
  • “Big 3” businesses generate almost 90% of organic sales growth
  • Dividend proposal: € 2.20 per share

Forecast for 2023

  • Net sales: slight to solid organic growth
  • EBITDA pre: organically moderate decline to about stable
  • Negative foreign exchange effects expected

Darmstadt, Germany, March 2, 2023 – Merck KGaA, Darmstadt, Germany, a leading science and technology company, delivered profitable growth despite challenges in fiscal 2022. Group net sales increased by 12.9% (organically: 6.4%) to € 22,232 million compared with the previous year. Sales growth was driven by all regions and business sectors, particularly Life Science. The Big 3 businesses – Process Solutions and Life Science Services, new Healthcare products as well as Semiconductor Solutions – accounted for almost 90% of the organic growth in sales. EBITDA pre rose by 12.2% (organically: 6.1%) to € 6,849 million. The EBITDA pre margin was 30.8%.

Earnings per share pre came in at € 10.05, an increase of 15.3% over the previous year. Based on this, the Executive Board and Supervisory Board will propose to the Annual General Meeting on April 28, 2023, a dividend of € 2.20 per share, equivalent to € 0.35 or 19% more than in the previous year.

“We delivered profitable growth in fiscal 2022 despite challenges,” said Belén Garijo, Chair of the Executive Board and CEO of Merck KGaA, Darmstadt, Germany. “The strong development of the Life Science core business more than offset the expected decline in Covid-19-related demand. Other strategic growth engines, namely new Healthcare products and our Semiconductor Solutions business unit, also performed well in fiscal 2022.”

Robust growth of sales and earnings

Organically, the company generated a 6.4% increase in Group sales in fiscal 2022. Positive foreign exchange effects of 6.1% resulted mainly from the development of the U.S. dollar and Chinese renminbi. The acquisition of the biopharmaceutical contract development and manufacturing organization Exelead, Inc., USA (Exelead), increased sales by 0.4%. EBITDA pre showed organic growth of 6.1% amid a positive foreign exchange effect of 6.4% and a slightly negative portfolio effect of ‑0.3%.

Further progress in strategic growth areas

In 2022, the Group continued with the global expansion of its capacities. The company is thus creating the basis for further organic growth, while at the same time diversifying and regionalizing its production and supply chains. The investments announced included the expansion of the Life Science sites in Cork, Ireland, Rockville, Maryland, USA, Molsheim, France, as well as Wuxi, China. Healthcare laid the cornerstones for the Translational Science Center and the Launch & Technology Center in Darmstadt, Germany. In February 2023, Electronics celebrated the groundbreaking of its integrated production facility for specialty gases and semiconductor materials in Kaohsiung, Taiwan.

Additionally, the Group invested in inorganic growth in 2022, successfully completing the acquisitions of the biopharmaceutical contract development and manufacturing organization Exelead, Inc., USA, as well as the chemical business of Mecaro Co. Ltd., a Korea-based supplier to the semiconductor industry.

In Healthcare, Merck KGaA, Darmstadt, Germany, presented strong data from its pipeline in 2022 with regard to Phase II studies for xevinapant (head and neck cancer) and evobrutinib (multiple sclerosis). In addition, the company announced in-licensing agreements for its Oncology franchise with Nerviano Medical Sciences S.r.l. as well as a collaboration agreement for antibody-drug conjugates with Mersana Therapeutics, Inc.

“Our innovative power and global diversification are key pillars of our resilience,” said Belén Garijo. “Thanks to our broad positioning, we are confident to achieve our mid-term financial target of € 25 billion in sales by 2025 based purely on organic growth – with the option of further accelerating our growth through potential acquisitions and in-licensing deals.”

Life Science: Double-digit growth in core business more than offsets expected decline in Covid-19-related demand

The Life Science business sector generated an organic sales increase of 8.2% in fiscal 2022. Including positive foreign exchange effects of 6.4% and the 0.8% increase in sales from the acquisition of Exelead, sales rose by 15.4% year-on-year to € 10,380 million. The core business of Life Science achieved growth in the mid-teens percentage range, which more than offset the significant decline in Covid-19-related demand. At 10.9%, the Process Solutions business unit delivered the highest organic growth rate within the business sector and accounted for around 44% of Life Science sales in fiscal 2022.

EBITDA pre of Life Science grew by 14.4% to € 3,760 million, reflecting an organic increase of 9.7%, foreign exchange effects of 5.0% and a slightly negative portfolio effect of ‑0.4%. The EBITDA pre margin was 36.2%.

Healthcare: New medicines drive sales growth

In fiscal 2022, medicines from the Group were used to treat 94 million patients worldwide. In addition, in partnership with the World Health Organization (WHO), the company provided praziquantel tablets for the treatment of the neglected tropical disease schistosomiasis in 80 million patients, mainly school-aged children. Net sales of the Healthcare business sector rose by 10.6% to € 7,839 million over the previous year. Organic sales growth of 5.5% was complemented by positive foreign exchange effects of 5.1%. New medicines contributed significantly to the increase in sales. The immuno-oncology drug Bavencio generated an organic sales increase of 57.9%. Sales of Mavenclad for the treatment of relapsing multiple sclerosis grew organically by 16.9%. Sales of Erbitux exceeded the € 1 billion mark for the first time since its market launch in 2004.

EBITDA pre of the business sector climbed by 15.0% to € 2,477 million. Apart from organic earnings growth of 3.3%, foreign exchange effects of 11.7% had a significant impact. The EBITDA pre margin of Healthcare was 31.6%.

Electronics: Double-digit growth in Semiconductor Solutions more than offsets decline in Display Solutions

The Electronics business sector reported sales of € 4,013 million in fiscal 2022. The increase of 11.3% over the previous year reflected organic sales growth of 3.7% and positive foreign exchange effects of 7.6%. Sales of the Semiconductor Solutions business unit rose organically by 15.4%, in other words significantly above market and the company’s mid-term guidance. This business unit now accounts for two-thirds of the sales of the Electronics business sector. By contrast, the Display Solutions business unit saw an organic sales decline of ‑20.1% due to weak demand and low customer utilization, especially in the liquid crystals field.

EBITDA pre of Electronics increased by 5.7% to € 1,192 million. Positive foreign exchange effects of 13.0% more than offset the organic decline of ‑7.3% in EBITDA pre. The EBITDA pre margin of Electronics was 29.7%.

Forecast for 2023: further growth in net sales expected despite increasing headwinds

Overall, the Group assumes that 2023 will be a challenging year. The slowing semiconductor market, decreasing Covid-19-related demand and persistently high inflation will contribute to this. Nevertheless, the company reaffirms its mid-term financial target of € 25 billion in net sales by 2025.

For fiscal 2023, the Group expects slight to solid organic growth in net sales. All business sectors will contribute to this, with the main growth drivers being Process Solutions and new Healthcare products. The core business – without Covid-19-related sales – is likely to deliver solid to strong organic net sales growth.

For EBITDA pre, which will be impacted by cost inflation, the company assumes a moderate decline to an about stable development organically.

Based on current assumptions, the Group expects negative foreign exchange effects of about ‑1% to ‑4% to weigh on both net sales and EBITDA pre.

Overview of the key figures for fiscal 2022

Group

Key figures

 

 

 

 

 

 

Change

€ million

 

2022

 

2021

 

€ million

 

%

Net sales

 

22,232

 

19,687

 

2,546

 

12.9 %

Operating result (EBIT)1

 

4,474

 

4,179

 

296

 

7.1 %

Margin (% of net sales)1

 

20.1 %

 

21.2 %

 

 

 

 

EBITDA2

 

6,504

 

5,946

 

558

 

9.4 %

Margin (% of net sales)1

 

29.3 %

 

30.2 %

 

 

 

 

EBITDA pre1

 

6,849

 

6,103

 

746

 

12.2 %

Margin (% of net sales)1

 

30.8 %

 

31.0 %

 

 

 

 

Profit after tax

 

3,339

 

3,065

 

274

 

8.9 %

Earnings per share (€)

 

7.65

 

7.03

 

0.62

 

8.8 %

Earnings per share pre (€)1

 

10.05

 

8.72

 

1.33

 

15.3 %

Operating cash flow

 

4,259

 

4,616

 

-357

 

-7.7 %

1 Not defined by International Financial Reporting Standards (IFRS).

2 Not defined by International Financial Reporting Standards (IFRS); EBITDA corresponds to operating result (EBIT) adjusted by depreciation, amortization, impairment losses, and reversals of impairment losses.

 

Life Science

Net sales by business unit1

€ million

 

2022

 

Share

 

Organic growth2

 

Exchange rate effects

 

Acquisitions /
divestments

 

Total change

 

2021

 

Share

Science & Lab Solutions

 

4,898

 

47%

 

6.2%

 

6.0%

 

 

12.2%

 

4,367

 

48%

Process Solutions

 

4,526

 

44%

 

10.9%

 

6.6%

 

 

17.5%

 

3,853

 

43%

Life Science Services

 

956

 

9%

 

6.1%

 

8.0%

 

9.8%

 

23.9%

 

772

 

9%

Life Science

 

10,380

 

100%

 

8.2%

 

6.4%

 

0.8%

 

15.4%

 

8,992

 

100%

1 Prior-year figures have been adjusted owing to the reorganization of the Life Science business sector completed on April 1, 2022 as well as to product reallocations between the Life Science and Electronics business sectors.

2 Not defined by International Financial Accounting Standards (IFRS).

 

Healthcare

Net sales by major product lines/products

€ million

 

2022

 

Share

 

Organic
growth1

 

Exchange
rate effects

 

Total change

 

2021

 

Share

Oncology

 

1,683

 

22%

 

16.9%

 

2.3%

 

19.2%

 

1,411

 

20%

thereof: Erbitux®

 

1,023

 

13%

 

2.7%

 

1.0%

 

3.6%

 

987

 

14%

thereof: Bavencio®

 

611

 

8%

 

57.9%

 

5.8%

 

63.8%

 

373

 

5%

Neurology & Immunology

 

1,743

 

22%

 

-0.5%

 

6.5%

 

6.0%

 

1,645

 

23%

thereof: Rebif®

 

887

 

11%

 

-13.2%

 

6.4%

 

-6.8%

 

952

 

13%

thereof: Mavenclad®

 

856

 

11%

 

16.9%

 

6.6%

 

23.6%

 

693

 

10%

Fertility

 

1,446

 

18%

 

3.9%

 

4.3%

 

8.2%

 

1,337

 

19%

thereof: Gonal-f®

 

825

 

11%

 

3.1%

 

4.4%

 

7.5%

 

767

 

11%

Cardiovascular, Metabolism and Endocrinology

 

2,806

 

36%

 

4.5%

 

6.0%

 

10.5%

 

2,540

 

36%

thereof: Glucophage®

 

930

 

12%

 

0.4%

 

7.2%

 

7.6%

 

864

 

12%

thereof: Concor®

 

590

 

8%

 

6.2%

 

6.7%

 

12.9%

 

523

 

7%

thereof: Euthyrox®

 

553

 

7%

 

12.8%

 

4.8%

 

17.7%

 

470

 

7%

thereof: Saizen®

 

266

 

3%

 

7.2%

 

-0.1%

 

7.1%

 

248

 

3%

Other

 

161

 

2%

 

 

 

 

 

 

 

157

 

2%

Healthcare

 

7,839

 

100%

 

5.5%

 

5.1%

 

10.6%

 

7,089

 

100%

1 Not defined by International Financial Reporting Standards (IFRS).

 

Electronics

Net sales by business unit1

€ million

 

2022

 

Share

 

Organic growth2

 

Exchange rate effects

 

 

Total change

 

2021

 

Share

 

Semiconductor Solutions

 

2,674

 

67%

 

15.4%

 

9.0%

 

 

24.4%

 

2,150

 

60%

 

Display Solutions

 

900

 

22%

 

-20.1%

 

6.1%

 

 

-14.0%

 

1,046

 

29%

 

Surface Solutions

 

439

 

11%

 

3.2%

 

3.9%

 

 

7.1%

 

410

 

11%

 

Electronics

 

4,013

 

100%

 

3.7%

 

7.6%

 

 

11.3%

 

3,606

 

100%

 

1 Prior-year figures have been adjusted due to product reallocations between the Life Science and Electronics business sectors and adjustments within the Electronics business sector.

2 Not defined by International Financial Accounting Standards (IFRS).

Notes to editors:

  • The press conference will take place at 10:00 a.m. (CET).
  • The respective presentation and further information for journalists, including a digital press kit, can be found here
  • The quarterly statement can be found here
  • Twitter and LinkedIn
  • Photos and images can be found here
  • Stock symbols
    Reuters: MRCG, Bloomberg: MRK GY, Dow Jones: MRK.DE
    Frankfurt Stock Exchange: ISIN: DE 000 659 9905 – WKN: 659 990

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About Merck KGaA, Darmstadt, Germany

Merck KGaA, Darmstadt, Germany, a leading science and technology company, operates across life science, healthcare and electronics. More than 64,000 employees work to make a positive difference to millions of people’s lives every day by creating more joyful and sustainable ways to live. From providing products and services that accelerate drug development and manufacturing as well as discovering unique ways to treat the most challenging diseases to enabling the intelligence of devices – the company is everywhere. In 2022, Merck KGaA, Darmstadt, Germany, generated sales of € 22.2 billion in 66 countries.

The company holds the global rights to the name and trademark “Merck” internationally. The only exceptions are the United States and Canada, where the business sectors of Merck KGaA, Darmstadt, Germany, operate as MilliporeSigma in life science, EMD Serono in healthcare and EMD Electronics in electronics. Since its founding in 1668, scientific exploration and responsible entrepreneurship have been key to the company’s technological and scientific advances. To this day, the founding family remains the majority owner of the publicly listed company.

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