Merck KGaA profit helped by Rebif sales, forex
FRANKFURT (Reuters) - German drugmaker Merck KGaA (MRCG.DE) nudged its earnings outlook higher after beating quarterly expectations, helped by higher sales of multiple sclerosis drug Rebif and a strong dollar.
Merck said on Tuesday it had seen a "solid top-line performance in all divisions driven especially by strong organic sales growth from (prescription drug unit) Merck Serono and favourable foreign exchange rates".
Second-quarter adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 14 percent to 747 million euros ($922 million), compared with a forecast for 706 million in a Reuters poll.
Revenue from Rebif and cancer drug Erbitux, its two best-selling prescription drugs, rose more than expected, and the euro's weakness boosted the value of overseas sales.
Adjusted for currency fluctuations, sales from Rebif were up 9.6 percent after Merck and its peers raised prices in the United States.
Merck said it now expected adjusted EBITDA rising to 2.85-2.95 billion euros this year from 2.73 billion a year earlier, moving it in line with a market consensus at 2.88 billion. It previously saw 2012 at 2.8-2.9 billion euros.
Merck Serono will generate the bulk of those earnings, at 1.75-1.80 billion euros, Merck said.
The second-biggest earnings generator, the liquid crystals business, will contribute 660-680 million euros.
That business was also helped by the weak euro in the second quarter as it incurs most of its costs in euros and exports heavily to North America and to Asian TV panel makers. Currency effects added 10 percentage points to quarterly sales, boosting the growth rate to 14.1 percent.
Also, consumer demand for flat-screen TVs, smart phones and tablet PCs remained strong.
"The liquid crystals business unit expects continued strong volumes in this year's third quarter and a softening of sales in the fourth quarter," said Merck, the world's No. 1 supplier of these substances.
Merck shares, up 7 percent year to date, rose 4.6 percent to 86.3110 euros by 1110 GMT, while Germany's blue-chip index DAX .GDAXI was up 0.7 percent.
At 60.5 million euros, the second-quarter net loss was worse than expected, though, weighed down by 376 million charges related to its cost-cutting program.
Merck said the bulk of charges have been booked for this year, with no more than 50-70 million euros earmarked for the third and fourth quarters.
It aims to cut annual costs at its prescription drugs unit by 300 million euros by 2014 - at a cost of 600 million - following a number of setbacks in drug development.
The company said earlier this year it would move the headquarters of its prescription drugs unit to its German group base from Geneva and that more measures would follow.
The consumer health business - whose products include decongestant spray Nasivin and Seven Seas Jointcare capsules - will incur restructuring costs in the second half as it seeks to reduce annual costs by 25 million euros after 2013.
($1 = 0.8096 euro)
(Editing by David Cowell and Dan Lalor)
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