Fiscal 2023: Proven Resilience During Transitional Year

Return to organic growth expected in 2024


Merck reported financial results for 2023 in line with its guidance published in August despite a challenging market environment, thus demonstrating the robustness of its business model. The strong development of the Healthcare business sector partly compensated for the market-related declines in sales and earnings in Life Science and Electronics. The company expects to gradually return to organic growth in the course of fiscal 2024.

Merck KGaA

Merck demonstrated the robustness of its diversified business model in a challenging market environment.

Fiscal 2023 was characterized by difficult market conditions:

  • the significant decline in Covid-19-related demand as expected
  • persistent inventory destocking by key customers of Merck in Process Solutions
  • and the cyclical slowdown in demand for semiconductor materials.

Overall, Group net sales decreased by 5.6% (organically: ‑1.6%) to € 20,993 million. EBITDA pre declined by 14.2% (organically: ‑9.0%) to € 5,879 million.

“We delivered solid results in a transitional year 2023 despite difficult market conditions, demonstrating the robustness of our businesses. Our diversified business will continue to benefit from the attractive market growth opportunities also in the medium term,” said Belén Garijo, Chair of the Executive Board and CEO of Merck. “Now, we are fully focusing on gradually returning to growth during fiscal 2024, while defining our strategic roadmap to ensure long term profitable and sustainable growth for Merck.”

Negative foreign exchange effects weigh on sales and earnings

In fiscal 2023, Group net sales decreased organically by 1.6% in comparison with the previous year. Foreign exchange effects, primarily from the development of the U.S. dollar and the Chinese renminbi, had an adverse impact of 4.1% on sales. EBITDA pre declined organically by 9.0%. Foreign exchange had an additional negative impact on earnings of 4.9%. The EBITDA pre margin was 28.0%.

Earnings per share pre were € 8.49. On this basis, the Executive Board and Supervisory Board will propose to the Annual General Meeting on April 26, 2024, a dividend of € 2.20 per share. This corresponds to the dividend of the previous year.

Life Science: Market environment affected by decline in Covid-19-related demand and inventory destocking among key customers of Merck

In fiscal 2023, the sales and earnings performance of the Life Science business sector was mainly impacted by two market factors. As expected, Covid-19-related sales declined significantly from around € 800 million in the previous year to around € 250 million. In addition, the core business of Process Solutions slowed down considerably due to inventory destocking by key customers, who consequently placed fewer new orders. This led to an overall organic sales decline in the core business (excluding Covid-19-related sales) of Life Science of around 2%. 

Overall, sales of the business sector decreased by 10.6% to € 9,281 million. Organically, the decline amounted to 7.9%. Foreign exchange had a negative impact of 2.7% on sales. As a result of the aforementioned market factors, the Process Solutions (‑14.4%) and Life Science Services (‑14.6%) business units recorded organic sales declines.

Science & Lab Solutions, which generated around half of the net sales of Life Science in fiscal 2023, saw an organic sales decline of 0.6%. The business unit offers products and services to support research, diagnostics and testing activities.

In fiscal 2023, EBITDA pre of Life Science decreased organically by 21.4% to € 2,820 million. Foreign exchange had a negative impact of 3.3% on earnings. The EBITDA pre margin was 30.4%.

Healthcare: Wave 1 launches remain major growth drivers, supported by resilient growth of the established product portfolio

Net sales of the Healthcare business sector increased organically by 8.5% in fiscal 2023. Amid negative foreign exchange effects of 5.8%, sales rose overall by 2.7% to € 8,053 million.

The key growth drivers were once again the so-called Wave 1 launches. The oncology medicine Bavencio grew organically by 23.4%. Sales of Mavenclad for the treatment of relapsing multiple sclerosis increased organically by 15.9%. Mavenclad exceeded the equivalent of US$ 1 billion in sales per year for the first time since its market launch, thus achieving blockbuster status. The same applied for the second year to the oncology drug Erbitux with sales of € 1,025 million. The Fertility (organically: +14.9%) and Cardiovascular, Metabolism & Endocrinology (organically: +4.0 %) franchises also generated organic sales increases. In Fertility, this was further supported by stock-outs of competitor products.

EBITDA pre of Healthcare rose organically by 17.1% to € 2,543 million. Foreign exchange had a negative impact of 14.4% on earnings. The EBITDA pre margin was 31.6%.

Electronics: Cyclical slowdown in demand for semiconductor materials impacts business performance

In the Electronics business sector, fiscal 2023 was mainly characterized by the ongoing cyclical slowdown in the semiconductor industry. Overall, sales decreased by 8.8% to € 3,659 million. In addition to the organic decline of 5.1%, foreign exchange had an adverse impact of 4.1% on the sales development. 

In the Semiconductor Solutions business unit, sales decreased organically by 3.9%, outperforming the market. The decline was mainly the result of weaker demand for semiconductor materials. This was partly offset by the project and equipment business within Delivery Systems & Services, which benefited from continued investments by key customers in long-term capacity expansion.

Persistent price pressure and low-capacity utilization by customers in the liquid crystals field, especially in the first half of 2023, were the main reasons for the organic sales decline of 9.2% in the Display Solutions business unit.

EBITDA pre of Electronics amounted to € 913 million. Apart from the organic decline of 17.1%, foreign exchange had an adverse impact of 5.6% on the earnings development. The EBITDA pre margin was 25.0%.

Outlook for fiscal 2024: Return to growth

Merck expects a gradual return to organic growth during 2024. The year is expected to be characterized by the following developments:

  • In the Life Science business sector, order intake in Process Solutions will gradually improve. Merck expects the inflection point during the first half of 2024. Sales will subsequently recover in the second half of 2024. In fiscal 2024, Merck expects the remaining Covid-19-related sales to phase out.
  • Sales of the Healthcare business sector are forecast to grow in line with medium-term expectations as tailwinds from competitor stock-outs fade out.
  • The semiconductor materials market in the Electronics business sector is expected to recover gradually in 2024 compared with 2023, with the turning point occurring early in the second half of the year. 

Overall, Merck assumes the following qualitative development. As in previous years, the company will announce a quantitative forecast with the publication of Q1 financial results on May 15, 2024.

  • Merck expects slight to moderate organic sales growth in fiscal 2024, with Healthcare as the main driver. Foreign exchange is expected to impact sales development by ‑3% to 0%.
  • For EBITDA pre, Merck also expects slight to moderate organic growth. Earnings growth will be mainly driven by the Healthcare business sector in fiscal 2024. Foreign exchange will likely have

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