Merck KGaA has delivered record growth in fiscal 2021. In the course of the year, the company had already raised its business forecast three times. 

 

Group net sales increased by 12.3% to € 19.7 billion compared with the previous year. All three business sectors, first and foremost Life Science, contributed to this sales growth. Main drivers were the company’s Big 3 businesses – the Process Solutions business of Life Science, new Healthcare products and the Semiconductor Solutions business of Electronics. EBITDA pre of Merck advanced by 17.3% to € 6.1 billion, outpacing sales growth; the EBITDA pre margin of the Group rose by 1.3 percentage points to 31.0%. Earnings per share pre, which is a determinant of the Merck dividend, increased by 30.1% to € 8.72 in 2021. In line with the company’s dividend policy, the Executive Board and the Supervisory Board will propose to the Annual General Meeting on April 22, 2022, a dividend of € 1.85 per share, an increase of € 0.45 over the previous year. “2021 was a year of record growth and margin expansion. Our customer-centric teams have delivered outstanding results,” said Belén Garijo, Chair of the Executive Board and CEO of Merck.

 

“Despite a difficult environment, we have stayed a reliable partner for patients, scientists and our customers – and were hence able to achieve a record result. In 2021, we delivered growth in all business sectors and regions. Our Big 3 performed especially well. In parallel, we’ve successfully executed our strategic agenda, in particular by enhancing our position as a preferred supplier and solutions provider for traditional and novel modalities within Life Science,” Garijo emphasized.

 

At its Capital Markets Day last September, Merck announced its updated, medium-term growth plans. Accordingly, by 2025, around 80% of the planned sales growth is to come from the Big 3 businesses. From April 1, 2022, the Big 3 will comprise the Process Solutions business, which has been refocused as part of a reorganization of Life Science, and the newly established Life Science Services business. Together, these two units represent one of the Big 3 businesses. In addition, there are new products from Healthcare and the Semiconductor Solutions business of Electronics. To achieve its growth targets, the company plans to increase its total investments between 2021 and 2025 significantly compared with the period from 2016 to 2020.

 

With the acquisition of Exelead, a biopharmaceutical contract development and manufacturing organization (CDMO), Merck has further boosted its position in the CDMO market. The company also acquired Chord Therapeutics, a biotech company specializing in rare inflammatory disorders of the nervous system. In addition, Merck announced plans to invest significantly more than € 3 billion in innovations and capacities in its Electronics business sector by the end of 2025. Moreover, the company took further steps in the implementation of its sustainability strategy in 2021. Among other things, the Annual General Meeting in April 2021 approved the implementation of Merck's sustainability goals as an element of the compensation system for members of the Executive Board.

 

“Our focus is and remains our medium-term goal: around € 25 billion in Group sales by 2025. We will work tirelessly to accelerate Merck’s efficient growth by consistently and purposefully allocating our capital in future-oriented areas,” said Belén Garijo.

 

Merck expects strong organic growth of net sales in fiscal 2022, driven by all business sectors, particularly by Life Science. Foreign exchange effects are forecast to have a positive impact of 1% to 4%. For EBITDA pre in fiscal 2022, the company expects strong organic growth. Life Science is likely to be the key growth driver, yet Merck also expects positive contributions to the organic growth of EBITDA pre from Healthcare and Electronics. The forecast foreign exchange development is expected to have a positive effect of 2% to 5% on Group EBITDA pre; it is likely to be seen mainly in the Healthcare and Electronics business sectors.

 

The development of operating cash flow should largely mirror the forecasted strong operating performance, complemented by positive foreign exchange effects. Overall, Merck expects to see a strong increase in operating cash flow in fiscal 2022. In principle, however, the forecast for operating cash flow is subject to a higher fluctuation corridor than the forecast for net sales and EBITDA pre.