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Merck KGaA raises 2019 sales, earnings guidance in wake of Versum takeover

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By Reuters
Merck KGaA raises 2019 sales, earnings guidance in wake of Versum takeover
FILE PHOTO: A logo of drugs and chemicals group Merck KGaA is pictured in Darmstadt, Germany January 28, 2016. REUTERS/Ralph Orlowski   -   Copyright  Ralph Orlowski(Reuters)

By Michelle Martin

BERLIN (Reuters) – Germany’s Merck KGaA <MRCG.DE> on Thursday raised its full-year 2019 forecast for sales and adjusted earnings after completing the takeover of semiconductor materials maker Versum Materials <VSM.N> in October.

Merck said 2019 earnings before interest, taxes, depreciation and amortisation (EBITDA), adjusted for special items, would come in between 4.23 billion euros and 4.43 billion euros (£3.82 billion), up form a previous prediction of between 4.15 billion euros and 4.35 billion euros.

It said its 2019 net sales would come in between 15.7 billion euros and 16.3 billion euros – up from a previous estimate of 15.3 billion euros to 15.9 billion euros.

Shares in Merck were up 1.2% in early Frankfurt trade.

The takeover of Versum was a bet on a recovery in electronic materials markets for semiconductor makers. Merck maintained its guidance that the accrued business would contribute around 270 million euros to group sales in fiscal 2019 and add around 80-90 million euros to adjusted EBITDA.

Merck’s third-quarter EBITDA adjusted for special items rose by 15.4% to 1.11 billion euros, beating the analyst estimate of 1.06 billion euros in a poll posted on the company’s website, underpinned by its healthcare and its lab supplies units while foreign currencies also had a positive impact.

Its healthcare unit saw adjusted EBITDA rise by 31.3% to 501 million euros, helped by strong demand for its multiple sclerosis pill Mavenclad and cancer immunotherapy Bavencio.

Merck’s Life Science unit, which makes supplies and gear for the biotech industry, saw adjusted EBITDA gain 15.4% to 531 million euros. The unit is benefiting from a race in the drug industry to develop new treatments.

(Additional reporting by Ludwig Burger)