Merck KGaA 1st-qtr 2010 net profit more than triples to 195 million euros, though pharma weak

German drugs and chemical major Merck KGaA has reported a strong set of first-quarter 2010 results, with group revenues rising 13% to 2.1 billion euros ($2.8 billion), driven by an excellent performance in Liquid Crystals and Performance Chemicals, which produced EBIT of 112 million euros ($149.6 million) compared with consensus forecasts of 71 million euros. Group EBIT rose 123% to 294.8 million euros and net profit after tax more than trebled to 195 million euros. Earnings per share were 0.88 euros, versus 0.26 euros in the first quarter of 2009, with core EPS (excluding amortization) up 26.3% at 1.45 euros, the firm stated.

However, this headline strength masks weakness in both Pharma and Consumer when adjusted for the additional 20-days of stocking in the USA ahead of a new computer system introduction, comment analysts at Credit Suisse. Adjusting for the stocking effect, pharmaceutical sales were in line with CS expectations but missed consensus forecasts by 7%, they note.

The Chemicals divisions returned to its pre-economic crisis levels and the Merck Serono prescription drugs division continued on its growth path, said Merck. R&D costs rose by 11% to 347 million euros in the first quarter. The Merck Serono division currently has a large number of expensive late-stage clinical trials underway. Amortization of intangible assets, mainly stemming from the purchase of Serono in 2007, decreased 4.7% to 141 million euros. Amortization of intangible assets from the Serono purchase was 432 million euros, an increase of 26% on the year-ago quarter. The first-quarter figure was impacted by the arrangement of financing for USA-based life sciences firm Millipore, which Merck is in the process of acquiring for 5.3 billion euros.