Merck KGaA 3rd quarter 2009 revenue up 2.7% but pretax profits plunge 31%

German drug major Merck KGaA says that total revenue rose 2.7% in the third quarter of 2009 to 1.94 billion euros ($2.92 billion) as the Pharmaceuticals divisions continued to grow and the Chemicals divisions continued to recover from the economic crisis. Royalty income declined 9.7% to 82 million euros. Mainly due to inventory adjustments and underutilization of capacities, the gross margin was little changed at 1.42 billion euros.

Profit before tax fell 31% to 190 million euros in the third quarter compared to 275 million euros in the like, year-ago period. Merck's underlying tax rate was 22.2% for which resulted in net profit of 148 million euros, 27% less than in the year-ago quarter. Core earnings were 1.26 euros a share, beating the median estimate of 1.25 euros of eight analysts in a Bloomberg survey. Merck's shares declined 1.63 euros, or 2.4%, to 67.87 euros as of 9:11 am in Frankfurt trading, after slipping as low as 67.51 euros. The stock has gained 5.2% this year, compared with a 3.1% increase in the Bloomberg Europe Pharmaceutical Index.

Forecasts 2% sales growth for full year

As a result, Merck now expects the group's total revenues for 2009 will grow by 2% (from a range of 0% to +5% given in July). Total revenue for the pharmaceutical business, Merck Serono, is forecast to improve by 6% (from +6% to +9% in July). Core ROS (operating result excluding amortization of intangible assets and integration costs as well as Generics/total revenues) for Merck Serono will rise 20% (from 20% to 25%).

For the reporting quarter, Merck Serono's total revenues increased 5.8% to 1.31 billion, with sales of top three products - the biologic therapies Rebif (interferon beta-1a) for the treatment of relapsing forms of multiple sclerosis, Erbitux (cetuximab) and Gonal-(f follitropin alfa recombinant) fertility agents - accounting for half of the division's total sales.