By Christopher Alessi
FRANKFURT--German pharmaceutical company Merck KGaA on Tuesday
said first-quarter net profit fell 13% because of financing costs
linked to its planned acquisition of U.S. laboratory testing
materials supplier Sigma-Aldrich Corp.
Net profit for the period ended March 31 fell to EUR281.7
million ($318.58 million) from EUR325.2 million a year earlier.
However, first-quarter sales rose 16% to EUR3.04 billion from
EUR2.63 billion last year, driven by strong sales growth in the
company's specialty chemicals business. That division, known as
Performance Materials, saw sales rise by 53% to EUR617 million,
boosted by the recent consolidation of the U.K.'s AZ Electronic
Materials SA.
Total sales at Merck's health care division--the company's
largest business area, comprising around half of group sales--grew
by 7.4% to EUR1.7 billion, largely driven by positive
currency-exchange effects. Overall earnings growth at the unit was
held back by reduced sales and a lack of royalty fees for multiple
sclerosis drug Rebif, as well as increased research and development
spending on cancer drugs.
The company's closely watched earnings before interest, taxes,
depreciation and amortization, or Ebitda, before one-time items
rose 5.7% to EUR853 million, reflecting a robust operational
performance and currency gains, it said. Analysts had forecast
Ebitda before special items of EUR862 million in a recent poll by
The Wall Street Journal.
Merck reiterated its guidance for the full year, saying it
expects organic sales to rise slightly, net sales to be in the
range of EUR12.3 billion to EUR12.5 billion and Ebitda before
one-off items to be in a range of EUR3.45 billion to EUR3.55
billion.
The outlook doesn't factor in the expected gains from the
planned $17 billion acquisition of Sigma-Aldrich. That deal,
announced last year, is part of a larger effort by Chief Executive
Karl-Ludwig Kley to diversify the business.
Chief Financial Officer Marcus Kuhnert said on Tuesday the
company continues to expect the acquisition to close by mid-2015,
but acknowledged the deal was being held up because of European
Union concerns over potential antitrust issues.
Merck KGaA isn't affiliated with Merck & Co. of the U.S.
Write to Christopher Alessi at christopher.alessi@wsj.com
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