Merck KGaA announces profit falls

Merck KGaA announced today that its profits fell in the last quarter by 20 per cent.

The German drug and pharmaceutical manufacturer said that the decline follows a drop in net income observed a year ago, where it fell by GBP96.8 million, equivalent to GBP0.51 per share.

As a consequence, Merck KGaA states that it has revised its sales forecast and expects performances to be not quite as robust as previously expected. It also believes that revenue will grow at “just a double-digit rate”.

Jack Scannell, pharmaceuticals analyst at Sanford C Bernstein, told Bloomberg: “It’s not a great set of results. The cut in sales guidance was inevitable, the first two quarters just weren’t good enough.

“But the operating profit guidance looks absolutely solid, there’s an underlying margin improvement that’s hidden by a strong third quarter in 2005.”

Erbitux is one Merck KGaA product that has performed better than expected, achieving sales of GBP58 million in comparison with predicted sales of GBP57 million. It adds that it will now focus on sales for Serono, which it describes as its “main theme” moving forward.

Serono was purchased by the German manufacturer after it failed to acquire Schering AG, with analysts suggesting that Serono will help boost Merck KGaA’s pharmaceuticals division and limit the company’s reliance on liquid crystals, which are partly responsible for its profit falls.

Serono specialises in the manufacture products for the treatment of multiple sclerosis, reproductive health, dermatology and HIV-associated wasting and growth deficiencies.