(Fixes spelling of cuts in headline)
* Q4 net income beats poll on strong liquid crystals unit
* Demand from China, strong dollar boosts unit
* Also benefiting from job cuts that followed drug setbacks
* Shares rise as much as 5.3 pct to record high
By Ludwig Burger
DARMSTADT, Germany, March 7 Germany's Merck KGaA
is predicting strong growth in earnings this year and
next as cost cuts and Chinese demand for liquid crystals used in
televisions outweigh recent setbacks in its drugs business.
Shares in the world's largest maker of liquid crystals for
flat panel TV displays jumped as much as 5.3 percent to a record
high on Thursday, after the family-controlled company beat
fourth-quarter profit expectations.
"The liquid crystals business really seems to have fared
better than expected, also supported by a strong U.S. dollar,"
said Thomas Kaufmann, who analyses healthcare stocks for Credit
Suisse's private banking arm.
A higher dollar versus the euro helps Merck's TV chemicals
unit because it incurs most of its costs in euros and exports
heavily to Asian TV panel makers, whose local currencies are
often linked to the U.S. currency.
Merck said it was benefiting from China's emerging TV
manufacturing industry, which has grown to become a bigger
market for Merck than Japan, a major home of TV production.
An oversupply of TV panels eased late last year and Corning
Inc, the largest maker of speciality glass for
liquid-crystal displays, said in January it expects the number
of TVs sold in 2013 to rise and a trend to larger TVs.
Merck, which is also looking to rebuild a drugs pipeline
weakened by setbacks, said it made fourth-quarter net income of
272 million euros ($354 million), beating analysts' average
forecast of 208 million in a Reuters poll.
Adjusted earnings before interest, taxes, depreciation and
amortisation (EBITDA) rose 16 percent to 790 million euros, also
topping a forecast for 785 million.
At 1120 GMT, Merck shares were up 4 percent at 113.4 euros,
off an earlier high of 114.8 euros but still among the biggest
rises by a European blue-chip stock.
Merck predicted a significant increase in net income in 2013
and 2014 as it continues to benefit from job cuts, but it
cautioned there would be no major technology launches at its
chemicals business over the next two years.
A big product upgrade helped Merck shore up its position as
the industry leader in liquid crystals over the last two years
and analysts have been eager to learn about new technologies
under development at the unit.
Analysts expect net income to jump to 1.77 billion euros in
2013 and 1.88 billion in 2014, up from 567 million in 2012,
according to Thomson Reuters I/B/E/S Estimates.
Merck, which traces its roots to a 17th century pharmacy, is
looking to buy rights to experimental medicines in early stages
of development to gradually rebuild its drugs pipeline.
Capping a string of setbacks, the company's Stimuvax cancer
vaccine and brain tumour treatment Cilengitide failed in recent
Merck has continued to raise prices in the United States for
its best-selling drug Rebif against multiple sclerosis, but the
injectable drug will face increasing competition from new oral
MS treatments, such as Novartis AG's Gilenya and
Sanofi SA's Aubagio.
($1 = 0.7692 euros)
(Editing by Mark Potter)