Darmstadt, May 14, 2013 – “Merck got off to a solid and profitable start in 2013 with all four divisions contributing to our organic sales growth. In addition, we are making excellent progress on our ‘Fit for 2018’ program. This can clearly be seen in the 19% increase in EBITDA pre one-time items,” said Karl-Ludwig Kley, Chairman of the Executive Board of Merck. “In fact, we expect that by the end of the year, EBITDA pre should exceed € 3 billion.”

Key Figures
Merck Group (€ million)
Q1/2013
Q1/2012
(+/- %)
Total revenues
2,760.5
2,664.9
4.4
Sales
2,660.4
2,563.9
3.8
EBITDA pre one-time items*
801.1
674.3
18.8
Margin (% of sales)
30.1
26.3
-
Net income
266.0
172.7
54.1
EPS pre one-time items** (€)
2.11
1.66
27.1
-
Mar 2013
Dec 2012
(+/-%)
Net financial debt
1,567.1
1,925.9
- 18.6

* Earnings before interest, taxes, depreciation, amortization and one-time items
** EPS adjusted by net of tax effect of one-time items and amortization of purchased intangible assets. Reconciliation from reported results available on Merck Investor Relations website

Total revenues of the Merck Group increased by 4.4% to € 2,761 million in the first quarter of 2013 (Q1 2012: € 2,645 million), fueled by organic growth of 5.6%. First-quarter 2013 sales (total revenues less royalty, license and commission income) rose by 3.8% to € 2,660 million (Q1 2012: € 2,564 million). Organic sales growth of 5.0% was accompanied by a 1.4% decline from changes in foreign exchange rates.

The key operational indicator of the Group, EBITDA pre one-time items, rose by 19% to € 801 million € (Q1 2012: € 674 million), equivalent to 30.1% of sales. With this, the 30% mark was exceeded for the first time (Q1 2012: 26.3%).

The “Fit for 2018” efficiency program is progressing faster than planned. For 2013, Merck is now assuming it will achieve further savings of around € 165 million compared to 2012 while incurring related expenses of about € 230 million. In the first quarter of 2013, one-time items totaling € 47 million were reported, including € 42 million related to "Fit for 2018" (Q1 2012: € 21 million, € 11 million of which was attributable to "Fit for 2018"). This led to a 27% increase in other operating expenses to € 184 million (Q1 2012: € 145 million).

The 29% increase in the operating result (EBIT) to € 399 million, coupled with lower interest expenses and a comparatively low tax burden, led to a significant improvement in net income in the first quarter of 2013. Net income, i.e. profit after tax attributable to Merck shareholders, soared by 54% to € 266 million in the first quarter of 2013 (Q1 2012: € 173 million), translating into earnings per share of € 1.22 (Q1 2012: € 0.79). EPS pre one-time items climbed by 27% to € 2.11 (Q1 2012: € 1.66).

Free cash flow (net cash flow from operating activities less acquisitions/divestments, purchase/disposals of intangible assets, property, plant and equipment, non-current financial assets and marketable securities) rose 4.5% to € 439 million (Q1 2012: € 420 million) despite considerable negative effects such as cash outflow for the “Fit for 2018” program and expansion in the Emerging Markets. Net financial debt (financial liabilities minus cash and cash equivalents as well as short-term securities and financial assets) dropped 19% to € 1,567 million as of March 31, 2013 (December 31, 2012: € 1,926 million).

At the end of the first quarter of 2013, Merck had 38,311 employees worldwide, compared to 38,847 on December 31, 2012.

Merck’s four divisions
In the first quarter of 2013, the Merck Serono division maintained the strong momentum of the previous quarters. Total revenues increased by 3.5% to € 1,548 million (Q1 2012: € 1,495 million). This reflected robust organic growth of 4.9% and a decline of 1.4% due to changes in foreign exchange rates. The division's sales rose by 2.6% to € 1,454 million (Q1 2012: € 1,417 million) resulting from organic growth of 4.0% and a negative exchange rate impact of -1.4%.

All four geographic regions contributed to the organic sales growth of Merck Serono. Europe accounted for the highest proportion, or 43%, of the division's sales (Q1 2012: 44%). However, its organic growth was the lowest with 0.7%, resulting in sales of € 629 million (Q1 2012: € 625 million). Sales in Emerging Markets, the division's second-largest region by sales, grew organically by 8.3% to € 426 million (Q1 2012: € 408 million). Overall, Emerging Markets generated an unchanged 29% of divisional sales. Sales in North America benefited from Rebif price hikes, which were almost exclusively responsible for organic growth of 5.1% to € 304 million in this region (Q1 2012: € 288 million). North America's contribution to divisional sales rose slightly to 21% (Q1 2012: 20%). The Rest of World region reported organic sales growth of 4.5% to € 95 million (Q1 2012: € 97 million). The Rest of World region accounted for an unchanged 7.0% of the division's sales.

Merck’s largest single product, Rebif, for the treatment of relapsing forms of multiple sclerosis grew by 6.0% organically to € 454 million in the first quarter of 2013 due to price increases in the United States as well as improved sales in Europe. Sales of the targeted cancer treatment Erbitux rose 6.6% organically in the quarter to € 222 million.

Excluding one-time items, Merck Serono’s EBITDA pre grew by 15% to € 463 million in the first quarter of 2013 (Q1 2012: € 403 million) and the EBITDA margin pre one-time items rose to 31.8% (Q1 2012: 28.4%). The substantial EBITDA pre percentage increase reflects the improved cost structure of the division as an outcome of the “Fit for 2018” program.

The Consumer Health division reported sales of € 116 million in the first quarter of 2013, an increase of 7.9% (Q1 2012: € 108 million). This reflected organic growth of 9.3% and a 1.4% decrease from changes in foreign exchange rates. The healthy organic increase was apparent across all regions, with sales in Europe benefiting particularly from good development of cough & cold treatments as a result of the unusually long winter. In addition, growth was further stimulated by increased focus on strategic brands, like Bion and Femibion. The efficiency improvements Consumer Health initiated last year are well on track and are beginning to generate visible improvements to the division’s profitability.

EBITDA pre one-time items jumped 53% to € 14 million in the quarter under review (Q1 2012: € 9.4 million) due to a favorable product mix and effective management of operational spending. As a result, the EBITDA margin pre one-time items improved to 12.3% (Q1 2012: 8.7%).

The Performance Materials division continued to perform strongly in the first quarter of 2013, as in the preceding quarters. Reported sales increased by 9.0% to € 421 million (Q1 2012: € 386 million). While sales grew organically by 9.9%, changes in foreign exchange rates, especially relative to the Japanese yen, lowered sales by 0.9 percentage points, an impact not seen for several quarters.

Higher sales volumes of liquid crystal materials recorded in the Liquid Crystals business unit were the main driver of the strong organic growth rate. At the same time, the division has for several quarters been seeing signs of an inventory buildup in the display industry value chain, which, according to current estimates, could possibly be worked down in the second half of the year. Merck therefore assumes a softer sales dynamic in the second half of the year compared to the previous year.

Pigments & Cosmetics, the division's second business unit, also recorded organic growth in the first three months of 2013, driven both by higher demand for Xirallic pigments, which are used mainly in automotive coatings, and functional materials for security printing applications.

The division’s EBITDA pre soared by 27% to € 207 million (Q1 2012: € 163 million), equivalent to an EBITDA margin pre one-time items of 49.2% (Q1 2012: 42.3%).

In the first quarter of 2013, Merck Millipore’s sales increased 2.5% to € 669 million (Q1 2012: € 653 million). While organically sales were up 3.6%, changes in foreign exchange rates had an adverse impact of -1.6%. The division’s primary growth contributor once again was the Process Solutions business unit, which markets products that are used in drug production, generating an organic increase in sales of 6.9% to € 289 million (Q1 2012: € 270 million) due to higher volumes. This business unit now represents 43% of the division’s sales (Q1 2012: 41%).

Adjusted for one-time charges of € 10 million, the division’s EBITDA pre was 2.5% lower, yielding € 162 million, or 24.2% of sales (Q1 2012: € 166 million, 25.4% of sales).

Merck Guidance for 2013
With the publication of the results of fiscal 2012 on March 7, 2013, Merck provided qualitative guidance on the expected sales and results of its divisions and the Group for 2013.

Now, based on an analysis of the business climates in which the four divisions operate as well as the good business developments in terms of both sales and earnings in the past months, Merck assumes that the guidance for 2014 issued in May 2012 will be achieved in 2013, meaning one year earlier than expected. Based on these assumptions, the following detailed forecast results for the financial performance of the divisions and the Merck Group:

Guidance FY 2013

Merck divisions
Sales
EBITDA pre one-time items
-
-
€ million
Merck Serono
moderate organic growth
~ 1,900 – 2,000
Consumer Health
stable
~ 70 – 75
Performance Materials
stable
~ 700 – 740
Merck Millipore
moderate organic growth
~ 620 – 640
Corporate and Other
-
~ -210

Merck Groupin € billion
Sales~ 10.7 – 10.9
EBITDA pre one-time items~ 3.1 – 3.2
Earnings per share pre one-time items*~ € 8.50 – 9.00

Full-year FX assumptions for 2013: € 1 = US$ 1.30, CHF 1.20 or JPY 125

* EPS adjusted by net of tax effect of one-time items and amortization of purchased intangible assets. Reconciliation from reported results available on Merck Investor Relations website


Notes to Editors:
The complete interactive online version of the Q1 2013 Financial Report, as well as the related presentations, is available at: Merck Q1 2013-E

Click here for the analysts call at 2 p.m. CET, as well as the charts used for the call.

Merck KGaA stock symbols:
Reuters: MRCG, Bloomberg: MRK GY, Dow Jones: MRK.DE
Frankfurt Stock Exchange: ISIN: DE 000 659 9905 - WKN: 659 990



Note regarding forward-looking statements
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