Merck Reports Sales and Earnings Growth in Q2 2015

• All three business sectors contribute to reported sales growth of 14.4%
• Life Science drives organic sales growth
• Merck intensifies R&D activities in Healthcare
• EBITDA pre exceptionals up 6.3%
• Merck builds up net cash position
• Forecast for full year 2015 confirmed

Darmstadt, Germany, August 6, 2015 – Merck, a leading company for innovative, top-quality high-tech products in healthcare, life science and performance materials, today announced renewed strong sales growth, amounting to 14.4% in the second quarter of 2015. EBITDA pre exceptionals also rose by 6.3%. Merck thus continued on its growth course in the first half of 2015.

“All three business sectors contributed to our good double-digit sales growth. Foreign exchange movements did help us, yet our businesses grew even without these additional tailwinds,” said Karl-Ludwig Kley, Chairman of the Executive Board of Merck. “We confirm our forecast for the full year 2015.” Group net sales increased by 14.4% to € 3.2 billion in the second quarter of 2015 (Q2 2014: € 2.8 billion). Sales grew organically by 2.2%. Significantly positive currency effects of 10.2% and portfolio effects due to the integration of AZ Electronic Materials (AZ) amounting to 1.9% also contributed to growth. From a geographic perspective, the Asia-Pacific, Latin America, and Middle East and Africa regions fueled organic sales growth.

Driven by good operational performance and a favorable currency environment, EBITDA pre exceptionals, the key earnings indicator of the Merck Group, rose by 6.3% to € 899 million (Q2 2014: €  846 million). Higher research and development spending, mainly relating to the intensification of research in the Healthcare business sector, dampened EBITDA pre exceptionals. The absence of royalty and license income included in the previous year also had a negative impact on EBITDA pre exceptionals. Group EBIT increased 13.7% to € 501 million (Q2 2014: € 441 million). Net income rose in the second quarter by 13.2% to € 343 million (Q2 2014: € 303 million).

Earnings per share pre exceptionals rose in the second quarter of 2015 by 12.1% to € 1.30 (Q2 2014: € 1.16).
In the course of the second quarter of 2015, Merck built up a net cash position amounting to € 567 million on June 30. However, net financial debt is expected to soon increase significantly as a result of the planned acquisition of Sigma-Aldrich. Merck had 40,192 employees worldwide on June 30, 2015.

Merck businesses perform well in the first half
In the first half of 2015, net sales of the Merck Group increased by 15.0% to € 6.3 billion (Jan.-June 2014: € 5.4 billion). Foreign exchange movements led to a sales increase of 9.6% or € 523 million. All business sectors contributed to organic sales growth, which amounted to 1.8% in the first half of 2015. The acquisition of AZ also had a positive impact of 3.6% on sales.

In the first half of 2015, EBITDA pre exceptionals of the Merck Group totaled € 1.8 billion (Jan.-June 2014: € 1.7 billion), thus exceeding the previous year’s figure by € 100 million or 6.0%. Earnings per share pre exceptionals climbed by 4.7% to € 2.43 in the first half of 2015 (Jan.-June 2014: € 2.32).

Healthcare benefits from organic business in growth markets
The Healthcare business sector generated organic sales growth of 1.5% in the second quarter of 2015. Including positive foreign exchange effects of 7.8%, net sales rose overall by 9.2% to € 1.8 billion (Q2 2014: € 1.7 billion). The organic increase in sales was driven in particular by pharmaceuticals to treat diabetes (Glucophage), thyroid disorders (Euthyrox), and cardiovascular diseases (Concor), as well as Neurobion, a brand marketed by the Consumer Health business. From a geographic perspective, organic growth was mainly driven by the Latin America and Asia-Pacific regions.

Rebif, which is used to treat relapsing forms of multiple sclerosis, posted a sharp -12.0% organic decrease in sales in the second quarter of 2015 owing to strong competition from oral formulations. Amid currency tailwinds of 11.3%, Rebif sales were stable at € 461 million (Q2 2014: € 464 million). Despite a slight organic decline, sales of the oncology drug Erbitux rose to € 233 million (Q2 2014: € 229 million). Merck generated organic sales growth of 1.6% with the fertility medicine Gonal-f. Currency tailwinds increased sales to € 177 million (Q2 2014: € 161 million).

The second quarter saw not only higher net sales, but also higher investments, firstly in targeted marketing activities in growth markets and secondly in research and development. Consequently, EBITDA pre exceptionals of the Healthcare business sector declined by -2.8 % to € 480 million in the second quarter of 2015 (Q2 2014: € 493 million). “As announced, we have deliberately invested in research and development in order to drive important pipeline projects such as our anti-PD-L1 antibody avelumab,” said Karl-Ludwig Kley.

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Merck Appoints Marcus Kuhnert as Group CFO

• Kuhnert to join Merck Executive Board on Aug. 1, 2014
• New Merck CFO currently CFO of Henkel’s Laundry & Home Care business unit

Darmstadt, Germany, May 8, 2014 – The Board of Partners of E. Merck KG today appointed Marcus Kuhnert as Group Chief Financial Officer of pharmaceuticals and chemicals company Merck. Kuhnert will become a member of Merck’s Executive Board with unlimited personal liability as of Aug. 1, 2014.

Marcus Kuhnert (45) has been CFO of Henkel’s Laundry & Home Care business unit since 2010. With around 9.000 employees, the business unit generates annual sales of € 4.6 billion.

“With the appointment of Marcus Kuhnert, we’re completing Merck’s top management team with an internationally experienced finance manager. He will continue the realignment of our Finance organization, which we started three years ago, and keep up the successful communication with the capital markets,” said Johannes Baillou, Chairman of the Board of Partners of E. Merck KG, the body that appoints the Executive Board members of Merck. “He brings profound experience in the areas of transformation and efficiency enhancements to the table and is familiar with the challenges related to acquisitions and the integration of companies.”

With “Fit for 2018” Merck almost three years ago started the biggest transformation and growth program in its almost 350-year history. Through comprehensive efficiency measures and the introduction of a new leadership organization Merck created the basis for profitable growth. In the next years, the focus will be on implementing internal and external growth initiatives, which includes the acquisition of AZ Electronic Materials, the supplier of high-tech materials for the electronics industry, which was completed last week.

Marcus Kuhnert was born in Chicago in 1968. Following his studies at the Technical University of Darmstadt, Germany, where he earned a combined master’s degree in business administration and mechanical engineering and a Ph.D. at the Institute for Finance and Controlling, he started his career as Corporate Controller at Henkel in 1999, moved to Investor Relations and as of 2003 headed Group Financial Statements & Subsidiary Controlling. As of 2007, Kuhnert worked in Singapore as Regional General Manager for Henkel-Adhesive in South East Asia and played a key role in integrating the largest acquisition in Henkel’s history. In 2008 he took charge of the CEO Office and Strategy Development as well as Corporate Communications ad interim as of 2009. Marcus Kuhnert is married with two children.

At Merck, Kuhnert will succeed Matthias Zachert, who assumed the role of Chief Executive Officer of Lanxess on April 1.