Merck KGaA's Shares Fall After 1Q Results -- Update
May 15 2018 - 5:21AM
Dow Jones News
By Donato Paolo Mancini
Merck KGaA (MRK.XE) shares fell by as much as 4.8% in early
trade Tuesday after the company said that, despite organic growth,
its first-quarter sales declined, dragged by currency headwinds and
continuing market-share decline in performance materials in
China.
The company reported a 4.4% group sales decline to 3.69 billion
euros ($4.41 billion), affected by negative exchange rates. Its net
income decreased to EUR341 million, dropping 35% from EUR523
million a year earlier, it said.
Earnings before interest, taxes, depreciation and amortization,
or Ebitda, before one-time items was EUR1.01 billion, down from
EUR1.24 billion a year earlier. The company said favorable one-time
effects in its health-care sector buoyed numbers from the year
before.
Sales in its performance-materials division decreased 12% to
EUR564 million, with Chinese competition in liquid crystals
amplifying the decline, the company said.
According to consensus estimates compiled by FactSet, the
company was expected to post group sales of EUR3.70 billion, Ebitda
of EUR998 million and net income of EUR596 million.
Merck said it continues to expect a moderate organic net sales
increase of between 3% and 5% in 2018, with sales in the region of
EUR15 billion to EUR15.5 billion. The planned sale of its
consumer-health business to Procter & Gamble Co. (PG) is likely
to reduce group sales by between EUR900 million and EUR1 billion,
lowering sales estimates to between EUR14 billion and EUR14.5
billion, it said. Ebitda before exceptional items is expected to be
between EUR3.95 billion and EUR4.15 billion, it said.
The company's drug pipeline suffered some setbacks. Avelumab,
codeveloped with Pfizer Inc. (PFE), didn't deliver in a lung-cancer
study, whereas relapsing multiple sclerosis drug Evobrutinib met a
phase 2 trial endpoint.
Tepotinib, a cancer drug, received its first regulatory
designation in Japan, with analysts closely watching its potential
to treat a specific sub-population--at least 13,000 individuals in
the U.S.--of lung cancer patients affected by mutation METex14.
Wimal Kapadia, an analyst at Bernstein, sees Novartis AG's
(NOVN.EB) Capmatinib and Pfizer's Xalkori as likely competitors to
the drug.
Write to Donato Paolo Mancini at
donatopaolo.mancini@dowjones.com
(END) Dow Jones Newswires
May 15, 2018 05:06 ET (09:06 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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