Merck KGaA: Q2 Profit Drops

Merck KGaA reported a worse-than-expected decline in second-quarter operating earnings of 42 % as it spent more on medical research, even though its liquid crystals unit saw a recovery. Quarterly earnings before interest and taxes (EBIT) fell to €184.5 million ($262.4 million), less than the 217 million expected by analysts in a Reuters poll, Merck said.
Quarterly sales were unchanged at €1.9 billion, in line with analysts' expectations, buoyed by an 18 % growth in its main cancer drug Erbitux, while its liquid crystals unit saw demand revive from a massive slump at the end of last year. The group's quarterly research and development costs jumped 23 % to €341 million due to a large number of expensive late-stage clinical trials. The liquid crystals unit, which is the world's largest supplier of the key chemicals used in television and computer screens, posted an EBIT margin of 27.4 %, up from 10 % in the first quarter but still far from the 50 percent the unit had for much of 2008. In early July, Samsung Electronics, the world's top maker of flat TVs, forecast second-quarter earnings well above market estimates. Corning of the last U.S. month raised its short-term forecast for sales of specialty glass for flat-panel displays, citing strong demand for flat-screen televisions especially in China. Merck's shares have risen more than 10 % over the last three months.