Merck KGaA's net falls but beats forecasts

Germany-headquartered Merck KGaA, now Europe's largest biotechnology firm as a result of its acquisition of Switzerland's Serono this year (Marketletter's passim), has posted strong sales for the third quarter of 2007 but net profit plunged more than 70%, though still exceeding consensus forecasts at an earnings per share level. The firm's stock dropped 1.2% to 88.00 euros by midday on October 24, when the figures were announced.

Group revenues for the reporting period leapt 60.6% to 1.74 billion euros ($2.46 billion), with sales up 54.9% to 1.67 billion euros and operating results 55.7% higher 291.5 million euros. However, due to exceptionals, including a 36.0 million-euro restructuring charge and 140.0 million euros from amortization of intangibles (mainly stemming from the Serono buy), after-tax profit slumped 74.9% to 40.8 million euros.

In upbeat mood, board chairman Karl-Ludwig Kley said: "Merck's solid results so far this year confirm our strategy to focus on innovative pharmaceuticals and chemicals. Even with the integration of Serono and the divestment of Generics [sold to US firm Mylan for 4.9 billion euros; Marketletter May 21], our underlying business continues to grow. We continue to expect an increase of more than 20% for the full-year operating result."