MKGAF Merck KGAA (PK)

Merck KGaA (MKGAF) reported fourth quarter 2012 earnings per American Depository Receipt (ADR) of $2.66, up 18.8% year over year.

Revenues for the reported quarter were up 8% year over year with currency movement boosting revenues by 1.8%.

Full year 2012 earnings per share were $9.78, up 3.5%. Revenues in 2012 increased 8.7%.

Segment Sales in Detail

The company operates under four divisions: Merck Serono, Consumer Health Care, Merck Millipore and Performance Materials.

Merck Serono’s revenues increased 7.8% in 2012, driven by strong performance in North America and the emerging markets. Due to price increases in the US, Rebif sales grew organically by 7.5% in 2012. Erbitux sales grew organically by 1.9% in 2012.

The Consumer Health Care division’s revenues decreased 4.3% in 2012, primarily due to lower sales in Europe, its largest market.

The Merck Millipore division’s revenues went up 9% in 2012. Growth was driven by positive exchange rate effects and acquisitions in the areas of cell culture media, cell imaging and microbial testing.

The Performance Materials division’s revenues jumped 14.3% in 2012 due to strong demand for liquid crystals materials.

In 2012, research and development (R&D) expenses were €1.5 billion, down 0.2%. In 2012, administration expenses were €552.2 million, up 3.1% and selling and marketing expenses were €2.4 billion, up 1.1%.

Outlook

For 2013 and 2014, Merck KGaA expects revenues to grow organically at a moderate pace.

While the company expects Rebif sales to remain stable, an additional competitior is expected to enter the market by the end of March. As a result, Rebif is expected to show growth in the first two quarters of 2013 and contract in the second half of the year. Meanwhile, Erbitux is expected to remain stable or increase slightly.

Merck KGaA carries a Zacks Rank #3 (Hold). Currently, companies like Lannett Company, Inc. (LCI), SIGA Technologies, Inc. (SIGA) and QLT Inc. (QLTI) look more attractive with a Zacks Rank #1 (Strong Buy).
 

 
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