04 August 2022 | Thursday | News
Results of the second quarter of 2022
Forecast for fiscal 2022
Merck, a leading science and technology company, continued its growth trajectory in the second quarter of 2022 despite a challenging environment. Net sales increased by 14.3% compared with the second quarter of 2021 to € 5,568 million. All business sectors contributed to the strong organic sales increase of 6.6%, especially the “Big 3” growth drivers of Merck: Process Solutions and Life Science Services in Life Science, new Healthcare products as well as Semiconductor Solutions in Electronics. Despite the price increases for raw materials and logistics, EBITDA pre rose organically by 3.2% to € 1,782 million. For fiscal 2022, Merck confirms its guidance for organic growth of Group net sales and EBITDA pre.
“The second quarter of 2022 underlines the resilience of our strategy to generate growth and with that, value for our patients and customers. We continued to deliver despite major external challenges in our operating environment. A record quarter in Life Science, strong performance of our new Healthcare products, and the double-digit growth of Semiconductor Solutions within our Electronics business demonstrate the strength of our globally diversified business,” said Belén Garijo, Chair of the Executive Board and CEO of Merck.
In the second quarter of 2022, Merck realized further strategically important investments that will contribute to its medium-term growth target of € 25 billion in sales by 2025. In Cork, Ireland, the company is investing around € 440 million until 2027 to expand its production capacity for filtration products and membranes. At the Chinese site in Wuxi, Merck is spending around € 100 million on additional local production capacities for biopharma single-use assemblies. Since opening a € 59 million facility in Verona, Wisconsin, United States, in June 2022, Merck is one of the leading contract development and manufacturing organizations (CDMO) of high-potent active pharmaceutical ingredients. These ingredients are used in novel cancer therapies, including antibody drug conjugates (ADCs). Targeted capital allocation measures such as these are enabling Merck to strengthen the basis for efficient future growth.
Organic sales growth in all business sectors
In the second quarter of 2022, Merck achieved strong organic sales growth of 6.6%. Foreign exchange effects had a positive impact of 7.2%. These were due especially to the development of the U.S. dollar, the Chinese renminbi and the Taiwanese dollar. The acquisition of the biopharmaceutical contract development and manufacturing organization Exelead Inc., USA, (Exelead) was responsible for a portfolio-related sales increase of € 25 million or 0.5%.
EBITDA pre, the most important financial indicator used to steer operating business, rose by 13.1% to € 1,782 million. Organic earnings growth was 3.2%, driven by the Life Science business sector. EBITDA pre benefited from a positive foreign exchange effect of 9.5%. Relative to net sales, the EBITDA pre margin was 32.0%.
Earnings per share pre improved by 17.9% to € 2.64. Net financial debt amounted to € 10.2 billion on June 30, 2022. Operating cash flow was € 852 million. The decrease of –4.1% compared with the second quarter of 2021 was mainly due to higher working capital. The increase in working capital reflects the strong overall business development but also the consequences of global supply chain disruptions.
Good business performance in the first half of 2022
In the first half of 2022, Merck increased net sales by 13.3% (organically 7.2%) compared with the same period of 2021 to € 10,766 million. All business sectors contributed to this positive development, with Life Science and Electronics in particular delivering strong organic growth. In the first six months of 2022, EBITDA pre grew by 10.5% (organically: 2.4%) to € 3,411 million and earnings per share pre rose 14.3% to € 5.05.