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Merck KGaA’s earnings beat consensus on lab equipment, drug sales By Reuters

© Reuters. FILE PHOTO: A logo of drugs and chemicals group Merck KGaA is pictured in Darmstadt, Germany January 28, 2016. REUTERS/Ralph Orlowski
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By Ludwig Burger

FRANKFURT (Reuters) -Germany’s Merck KGaA reported better-than-expected quarterly earnings on higher revenues from drugs and biotech lab equipment, but signalled that growth of its semiconductor chemicals unit could lose momentum next year.

Third-quarter earnings before interest, taxes, depreciation and amortisation (EBITDA), adjusted for one-offs, rose 16.7% to 1.81 billion euros, surpassing the average estimate of 1.78 billion euros in an analyst poll on the company’s website.

The diversified group narrowed on Thursday its full-year target range for adjusted EBITDA to between 6.80 billion and 7.20 billion euros, against a previous forecast of 6.75 billion to 7.25 billion.

Merck said the outlook for its life science unit, which makes substances and gear for drugmakers, had brightened further after cost cuts and as drugmakers upgrade their lab equipment to pursue new technologies.

But the shares declined as the company said its electronics unit was now expected to see earnings fall as much as a currency-adjusted 10%, on a drop in demand for its liquid crystals used in display screens.

The stock was down 2.4% by 1010 GMT, paring some of its strong gains over the prior two trading sessions.

Within the electronics unit, demand for chemicals used by the semiconductor industry was still growing, but likely not next year, Chief Executive Belen Garijo said on a media call.

“A cool-down in semi chips could happen in 2023,” she said.

Last month Garijo told Reuters that she did not anticipate that a projected decline in smartphone sales this year would weigh on the semiconductor chemicals business any time soon.

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