Q4 2012 Earnings Call Transcript

Transcript Call Date 03/07/2013

Operator: Dear ladies and gentlemen, welcome to the Merck Investor and Analyst Conference Call on the Full Year Results 2012. As a reminder, all participants will be in a listen-only mode.

May I now hand you over to Constantin Fest, Head of Investor Relations who will lead you through this conference. Please go ahead, sir.

Constantin Fest - Head of IR: Thanks a lot Suzanna. Welcome on the call for full year 2012 results. I'm very happy to have our CEO, Karl-Ludwig Kley; and our CFO, Matthias Zachert with me today. As always, we'd like to briefly go through a few slides in the presentation and then we'll be happy to take your questions. Joining this call is also Annalisa Jenkins, Head of Global Direct Development and Medical for Merck Serono to participate during the Q&A session.

With this, I'd like to immediately hand over to Karl.

Karl-Ludwig Kley - Chairman of the Executive Board: Good afternoon, ladies and gentlemen. I would like to begin with Slide Number 4 and presenting the key highlights of the year 2012. First, Merck delivered a strong financial performance in 2012. Secondly, we delivered these results whilst undergoing a significant transformation program. It can be clearly stated that all the initiatives which we've taken care are executed on or ahead of plan. Thirdly, we improved the operational strength of our business. And lastly, we made first efforts to prepare for future growth. I will now touch on all these four categories in more detail. I will walk you through the presentation, and I will begin with the numbers, the financial achievements on Slide number 5.

As you can see, we delivered on our Company guidance that we shared with you in November last year both on top and bottom line. We reported EUR11.2 billion in Group revenue which represents 9% growth over 2011. Group sales increased 8% to EUR10.7 billion. Excluding the effects of currency and acquisitions, we generated a 5% organic sales growth in 2012. This solid contribution is from three of our four divisions, which is affecting the healthy balance and the fundamentals strengths which we have.

On profitability we delivered an EBITDA pre one-time items (totaled at) EUR2.96 billion representing a margin of 27.6%. EPS pre one-time items were up double-digit increasing 12% to EUR7.61 a share.

These results reflect good operational performance in the challenging year. Not only did we successfully manage external challenges like the continued software economy in Europe and pricing pressures from healthcare austerity measures, what I am particularly pleased about is that we have generated solid and profitable growth during a time of significant transformation in fundamentals parts of the Merck organization on Group and divisional levels.

Turning Slide 6, I would like to summarize the key highlights of divisional levels, starting with Merck Serono. Sales of Merck Serono reached EUR6 billion in 2012 as a result of solid organic growth of 5% and the 3% support from FX. On a product level, Rebif, Gonal-f and Glucophage were the largest organic growth contributors. By geographically, North America and emerging markets performed strongly.

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