Somatropin (Merck Serono SA)

Financial results of Q1 2024 Healthcare with strong performance Electronics increases sales and earnings organically, driven by higher demand for semiconductor materials Inventory destocking in Life Science continues; sales recovery expected in the second half of the year Net sales down organically by 1.2% to € 5.1 billion EBITDA pre decreases organically by 5.2% to € 1.5 billion Forecast for fiscal 2024 Qualitative guidance confirmed with Group returning to organic growth Net sales: in a range of € 20.6 billion to € 22.1 billion, organically +1% to +5% EBITDA pre: in a range of € 5.7 billion to € 6.3 billion, organically +1% to +7% Merck KGaA, Darmstadt, Germany, a leading science and technology company, has had a good start to fiscal 2024. The Healthcare business sector performed strongly. Electronics also delivered solid organic sales growth, mainly driven by Semiconductor Solutions. Life Science recorded sales and earnings declines compared with the particularly high base of the year-earlier quarter. In the first quarter of 2024, thanks to the sound business performance and compared with the high base of the first quarter of 2023, Group sales decreased by only 3.3% (organically: ‑1.2%) to € 5,120 million. Foreign exchange effects, mainly from the Chinese renminbi, had a negative impact of 2.0% on the sales development. EBITDA pre fell by 8.4% (organically: ‑5.2%) to € 1,454 million. Negative foreign exchange effects impacted EBITDA pre by 3.2%. The EBITDA pre margin was 28.4% in the first quarter of 2024 and earnings per share pre were € 2.06. “We had a good start to the year and gained initial momentum in the first quarter of 2024, once again benefiting from our diversified business model,” said Belén Garijo, Chair of the Executive Board and CEO of Merck KGaA, Darmstadt, Germany. “We expect acceleration in the second half of the year, especially in Life Science, and thus a gradual return to organic growth for the Group in fiscal 2024.” Life Science: Decline in first quarter against high comparables, in line with expectation of a softer first half of the year Net sales of the Life Science business sector declined organically by 12.6% against the particularly high base of the first quarter of 2023. Foreign exchange had a negative impact of 1.2% on the sales development. Overall, sales of the business sector decreased by 13.8% to € 2,144 million in the first quarter of 2024. The main reason for this was the continued inventory destocking by customers of Process Solutions. Net sales of this business unit declined organically by 19.0%. As a positive signal, order income in Process Solutions increased sequentially as well as year-on-year. The company expects customers to reach their target inventory levels by the end of the second quarter of 2024. However, due to the manufacturing and delivery times for products ordered by customers, this will significantly increase sales only in the second half of the year. In addition to inventory destocking, the phase-out of Covid-19-related demand was also a headwind for the business development of Life Science in the first quarter of 2024. Compared with the high year-earlier figure, EBITDA pre of Life Science decreased organically by 30.3% and amounted to € 611 million. This was due, among other things, to the lower sales volume and the lower share of higher-margin products sold. The EBITDA pre margin of the business sector was 28.5%, a sequential increase against the 26.3% EBITDA pre margin in the fourth quarter of 2023. Healthcare: Double-digit organic sales growth of “Wave 1” products, further supported by strong performance of established product portfolio The Healthcare business sector performed strongly across all franchises in the first quarter of 2024 amid the market recovery in mainland China, where the year-earlier quarter had been adversely affected by the high rate of Covid‑19 infections. Sales of Healthcare rose organically by 10.1%. Including negative foreign exchange effects of 2.6%, sales increased overall by 7.5% to € 2,048 million. The “Wave 1” products Bavencio (+14.2%) and Mavenclad (+12.2%) achieved double-digit organic sales increases. The oncology drug Erbitux delivered very strong organic sales growth of 19.3%, boosted by the softer year-earlier comparables in mainland China. Net sales of the Fertility (+7.7%) and Cardiovascular, Metabolism & Endocrinology (+4.2%) franchises also rose organically. EBITDA pre of Healthcare went up organically by 28.3% to € 708 million, supported by the regaining of the exclusive worldwide rights to Bavencio and strong sales momentum. The EBITDA pre margin was 34.6%. Electronics: Positive start to the year, full market inflection still expected in the second half of the year Electronics delivered solid organic sales growth of 6.3%. This was particularly driven by Semiconductor Solutions, the sector’s largest business unit, which grew organically by 7.8%. The main reason for this was increased demand for certain semiconductor materials, for example materials used for leading-edge logic chips. However, the Group does not yet view this as a general inflection point, since demand in other end markets remained soft. The other two business units, Display Solutions (+4.2%) and Surface Solutions (+1.8%), also recorded organic sales increases. Amid negative foreign exchange effects of 3.2%, sales of the Electronics business sector rose overall by 3.1% to € 928 million. EBITDA pre increased organically by 3.9% compared with the year-earlier quarter. Due to negative foreign exchange effects of 4.2%, the earnings development saw a slight decline by 0.3% to € 237 million overall. The EBITDA pre margin of Electronics was 25.5%. Forecast for fiscal 2024: Qualitative guidance confirmed with Group returning to organic growth In fiscal 2024, Merck KGaA, Darmstadt, Germany, expects to return to organic sales and earnings growth for the Group. In particular, the company assumes the following development, in line with its qualitative guidance provided in March 2024: Net sales: in a range of € 20.6 billion to € 22.1 billion with organic growth of +1% to +5% and foreign exchange effects of ‑3% to 0%. EBITDA pre: in a range of € 5.7 billion to € 6.3 billion with organic growth of +1% to +7% and negative foreign exchange effects of ‑4% to ‑1%. EPS pre: € 8.05 to € 9.10. Overview of the key figures for Q1 2024 Group Key figures € million Q1 2024 Q1 2023 Change Net sales 5,120 5,293 -3.3% Operating result (EBIT) 1 931 1,035 -10.0% Margin (% of net sales) 1 18.2% 19.6% EBITDA 2 1,385 1,491 -7.1% Margin (% of net sales) 1 27.0% 28.2% EBITDA pre 1 1,454 1,587 -8.4% Margin (% of net sales) 1 28.4% 30.0% Profit after income tax 699 800 -12.5% Earnings per share (€) 1.60 1.83 -12.6% Earnings per share pre (€) 1 2.06 2.36 -12.7% Operating cash flow 1,035 853 21.4% Net financial debt 3 7,498 7,500 – Number of employees 4 62,345 64,011 -2.6% 1 Not defined by International Financial Reporting Standards (IFRS). 2 Not defined by International Financial Reporting Standards (IFRS); EBITDA corresponds to operating result (EBIT) adjusted by depreciation, amortization, impairment losses, and reversals of impairment losses. 3 Figures for the reporting period ending on March 31, 2024, prior-year figures as of December 31, 2023. 4 Figures for the reporting period ending on March 31, 2024, prior-year figures as of March 31, 2023. This figure refers to all employees at sites of fully consolidated entities. Life Science Net sales by business unit € million Q1 2024 Share Organic growth 1 Exchange rate effects Acquisitions/ divestments Total change Q1 2023 Share Science & Lab Solutions 1,169 55% -6.9% -1.5% – -8.4% 1,276 51% Process Solutions 817 38% -19.0% -1.1% – -20.0% 1,022 41% Life Science Services 157 7% -16.6% – – -16.7% 188 8% Life Science 2,144 100% -12.6% -1.2% – -13.8% 2,487 100% 1 Not defined by International Financial Reporting Standards (IFRS). Healthcare Net sales by major product lines/products € million Q1 2024 Share Organic growth1 Exchange rate effects Total change Q1 2023 Share Oncology 500 24% 19.3% -3.8% 15.5% 433 23% thereof: Erbitux ® 287 14% 19.3% -4.3% 15.0% 250 13% thereof: Bavencio ® 186 9% 14.2% -2.8% 11.4% 167 9% Neurology & Immunology 419 20% 8.8% -1.5% 7.3% 390 20% thereof: Mavenclad ® 261 13% 12.2% -2.0% 10.2% 237 12% thereof: Rebif ® 158 8% 3.7% -0.9% 2.8% 154 8% Fertility 383 19% 7.7% -3.3% 4.4% 366 19% thereof: Gonal-f ® 204 10% 6.8% -3.5% 3.3% 197 10% Cardiovascular, Metabolism and Endocrinology 689 34% 4.2% -2.4% 1.7% 677 36% thereof: Glucophage ® 221 11% 5.1% -3.7% 1.4% 218 11% thereof: Concor ® 140 7% 1.6% -3.6% -1.9% 142 7% thereof: Euthyrox ® 139 7% 8.9% -1.7% 7.2% 130 7% thereof: Saizen ® 89 4% 17.0% -0.2% 16.7% 76 4% Other 57 3% 38 2% Healthcare 2,048 100% 10.1% -2.6% 7.5% 1,905 100% 1 Not defined by International Financial Reporting Standards (IFRS). Electronics Net sales by business unit € million Q1 2024 Share Organic growth 1 Exchange rate effects Acquisitions/ divestments Total change Q1 2023 Share Semiconductor Solutions 633 68% 7.8% -3.0% -0.1% 4.7% 604 67% Display Solutions 187 20% 4.2% -4.3% – -0.1% 187 21% Surface Solutions 109 12% 1.8% -2.2% – -0.4% 109 12% Electronics 928 100% 6.3% -3.2% -0.1% 3.1% 901 100% 1 Not defined by International Financial Reporting Standards (IFRS). Notes to editors: The press conference for media representatives will take place at 9:30 a.m. (CEST). The respective presentation and further information for journalists, including a digital press kit , can be found here The quarterly statement can be found here Merck KGaA, Darmstadt, Germany, on LinkedIn Photos and videos can be found here Stock symbols Reuters: MRCG, Bloomberg : MRK GY, Dow Jones : MRK.DE Frankfurt Stock Exchange : ISIN : DE 000 659 9905 – WKN : 659 990 All Merck KGaA, Darmstadt, Germany, press releases are distributed by e-mail at the same time they become available on the EMD Group website. In case you are a resident of the USA or Canada, please go to www.emdgroup.com/subscribe to register for your online, change your selection or discontinue this service. About Merck KGaA, Darmstadt, Germany Merck KGaA, Darmstadt, Germany, a leading science and technology company, operates across life science, healthcare and electronics. Around 63,000 employees work to make a positive difference to millions of people’s lives every day by creating more joyful and sustainable ways to live. From providing products and services that accelerate drug development and manufacturing as well as discovering unique ways to treat the most challenging diseases to enabling the intelligence of devices – the company is everywhere. In 2023, Merck KGaA, Darmstadt, Germany, generated sales of € 21 billion in 65 countries. The company holds the global rights to the name and trademark “Merck” internationally. The only exceptions are the United States and Canada, where the business sectors of Merck KGaA, Darmstadt, Germany, operate as MilliporeSigma in life science, EMD Serono in healthcare and EMD Electronics in electronics. Since its founding in 1668, scientific exploration and responsible entrepreneurship have been key to the company’s technological and scientific advances. To this day, the founding family remains the majority owner of the publicly listed company.

Financial results of fiscal 2023 Net sales decrease organically by 1.6% to € 21.0 billion EBITDA pre down organically by 9.0% to € 5.9 billion “Transitional year” 2023 characterized by demanding market conditions in Life Science and Semiconductor Materials Strong sales and earnings performance of Healthcare demonstrates benefits of diversified business model of the Group Stable dividend proposal: € 2.20 per share Forecast for fiscal 2024 Return to organic growth expected in 2024 Sales and EBITDA pre: slight to moderate organic growth Merck KGaA, Darmstadt, Germany, a leading science and technology company, reported financial results for 2023 in line with its guidance published in August despite a challenging market environment, thus demonstrating the robustness of its business model. The strong development of the Healthcare business sector partly compensated for the market-related declines in sales and earnings in Life Science and Electronics. The company expects to gradually return to organic growth in the course of fiscal 2024. Fiscal 2023 was characterized by difficult market conditions: the significant decline in Covid-19-related demand as expected persistent inventory destocking by key customers in Process Solutions and the cyclical slowdown in demand for semiconductor materials. Overall, Group net sales decreased by 5.6% (organically: ‑1.6%) to € 20,993 million. EBITDA pre declined by 14.2% (organically: ‑9.0%) to € 5,879 million. “We delivered solid results in a transitional year 2023 despite difficult market conditions, demonstrating the robustness of our businesses. Our diversified business will continue to benefit from the attractive market growth opportunities also in the medium term,” said Belén Garijo, Chair of the Executive Board and CEO of Merck KGaA, Darmstadt, Germany. “Now, we are fully focusing on gradually returning to growth during fiscal 2024, while defining our strategic roadmap to ensure long term profitable and sustainable growth for our company.” Negative foreign exchange effects weigh on sales and earnings In fiscal 2023, Group net sales decreased organically by 1.6% in comparison with the previous year. Foreign exchange effects, primarily from the development of the U.S. dollar and the Chinese renminbi, had an adverse impact of 4.1% on sales. EBITDA pre declined organically by 9.0%. Foreign exchange had an additional negative impact on earnings of 4.9%. The EBITDA pre margin was 28.0%. Earnings per share pre were € 8.49. On this basis, the Executive Board and Supervisory Board will propose to the Annual General Meeting on April 26, 2024, a dividend of € 2.20 per share. This corresponds to the dividend of the previous year. Life Science: Market environment affected by decline in Covid-19-related demand and inventory destocking among key customers In fiscal 2023, the sales and earnings performance of the Life Science business sector was mainly impacted by two market factors. As expected, Covid-19-related sales declined significantly from around € 800 million in the previous year to around € 250 million. In addition, the core business of Process Solutions slowed down considerably due to inventory destocking by key customers, who consequently placed fewer new orders. This led to an overall organic sales decline in the core business (excluding Covid-19-related sales) of Life Science of around 2%. Overall, sales of the business sector decreased by 10.6% to € 9,281 million. Organically, the decline amounted to 7.9%. Foreign exchange had a negative impact of 2.7% on sales. As a result of the aforementioned market factors, the Process Solutions (‑14.4%) and Life Science Services (‑14.6%) business units recorded organic sales declines. Science & Lab Solutions, which generated around half of the net sales of Life Science in fiscal 2023, saw an organic sales decline of 0.6%. The business unit offers products and services to support research, diagnostics and testing activities. In fiscal 2023, EBITDA pre of Life Science decreased organically by 21.4% to € 2,820 million. Foreign exchange had a negative impact of 3.3% on earnings. The EBITDA pre margin was 30.4%. Healthcare: Wave 1 launches remain major growth drivers, supported by resilient growth of the established product portfolio Net sales of the Healthcare business sector increased organically by 8.5% in fiscal 2023. Amid negative foreign exchange effects of 5.8%, sales rose overall by 2.7% to € 8,053 million. The key growth drivers were once again the so-called Wave 1 launches. The oncology medicine Bavencio grew organically by 23.4%. Sales of Mavenclad for the treatment of relapsing multiple sclerosis increased organically by 15.9%. Mavenclad exceeded the equivalent of US$ 1 billion in sales per year for the first time since its market launch, thus achieving blockbuster status. The same applied for the second year to the oncology drug Erbitux with sales of € 1,025 million. The Fertility (organically: +14.9%) and Cardiovascular, Metabolism & Endocrinology (organically: +4.0 %) franchises also generated organic sales increases. In Fertility, this was further supported by stock-outs of competitor products. EBITDA pre of Healthcare rose organically by 17.1% to € 2,543 million. Foreign exchange had a negative impact of 14.4% on earnings. The EBITDA pre margin was 31.6%. Electronics: Cyclical slowdown in demand for semiconductor materials impacts business performance In the Electronics business sector, fiscal 2023 was mainly characterized by the ongoing cyclical slowdown in the semiconductor industry. Overall, sales decreased by 8.8% to € 3,659 million. In addition to the organic decline of 5.1%, foreign exchange had an adverse impact of 4.1% on the sales development. In the Semiconductor Solutions business unit, sales decreased organically by 3.9%, outperforming the market. The decline was mainly the result of weaker demand for semiconductor materials. This was partly offset by the project and equipment business within Delivery Systems & Services, which benefited from continued investments by key customers in long-term capacity expansion. Persistent price pressure and low-capacity utilization by customers in the liquid crystals field, especially in the first half of 2023, were the main reasons for the organic sales decline of 9.2% in the Display Solutions business unit. EBITDA pre of Electronics amounted to € 913 million. Apart from the organic decline of 17.1%, foreign exchange had an adverse impact of 5.6% on the earnings development. The EBITDA pre margin was 25.0%. Outlook for fiscal 2024: Return to growth Merck KGaA, Darmstadt, Germany, expects a gradual return to organic growth during 2024. The year is expected to be characterized by the following developments: In the Life Science business sector, order intake in Process Solutions will gradually improve. The company expects the inflection point during the first half of 2024. Sales will subsequently recover in the second half of 2024. In fiscal 2024, the Group expects the remaining Covid-19-related sales to phase out. Sales of the Healthcare business sector are forecast to grow in line with medium-term expectations as tailwinds from competitor stock-outs fade out. The semiconductor materials market in the Electronics business sector is expected to recover gradually in 2024 compared with 2023, with the turning point occurring early in the second half of the year. Overall, the company assumes the following qualitative development. As in previous years, the company will announce a quantitative forecast with the publication of Q1 financial results on May 15, 2024. The Group expects slight to moderate organic sales growth in fiscal 2024, with Healthcare as the main driver. Foreign exchange is expected to impact sales development by ‑3% to 0%. For EBITDA pre, the company also expects slight to moderate organic growth. Earnings growth will be mainly driven by the Healthcare business sector in fiscal 2024. Foreign exchange will likely have an impact of ‑4% to ‑1% on the earnings development. Overview of the key figures for fiscal 2023 Group Key figures Change € million 2023 2022 € million % Net sales 20,993 22,232 -1,239 -5.6% Operating result (EBIT) 1 3,609 4,474 -865 -19.3% Margin (% of net sales) 1 17.2% 20.1% EBITDA 2 5,489 6,504 -1,015 -15.6% Margin (% of net sales) 1 26.1% 29.3% EBITDA pre 1 5,879 6,849 -970 -14.2% Margin (% of net sales) 1 28.0% 30.8% Profit after tax 2,834 3,339 -505 -15.1% Earnings per share (€) 6.49 7.65 -1.16 -15.2% Earnings per share pre (€) 1 8.49 10.05 -1.56 -15.5% Operating cash flow 3,784 4,259 -475 -11.2% 1 Not defined by International Financial Reporting Standards (IFRS). 2 Not defined by International Financial Reporting Standards (IFRS); EBITDA corresponds to operating result (EBIT) adjusted by depreciation, amortization, impairment losses, and reversals of impairment losses. Life Science Net sales by business unit € million 2023 Share Organic growth 1 Exchange rate effects Acquisitions / divestments Total change 2022 2 Share Science & Lab Solutions 4,706 51% -0.6% -3.3% – -3.9% 4,898 47% Process Solutions 3,782 41% -14.4% -2.3% – -16.7% 4,540 44% Life Science Services 792 8% -14.6% -2.0% 0.6 % -15.9% 943 9% Life Science 9,281 100% -7.9% -2.7% 0.1 % -10.6 % 10,380 100% 1 Not defined by International Financial Accounting Standards (IFRS). 2 Prior-year figures have been adjusted due to internal realignment. Healthcare Net sales by major product lines/products € million 2023 Share Organic growth 1 Exchange rate effects Total change 2022 Share Oncology 1,819 22% 17.3% -9.2% 8.1% 1,683 22% thereof: Erbitux ® 1,025 13% 10.9% -10.6% 0.3% 1,023 13% thereof: Bavencio ® 713 9% 23.4% -6.8% 16.6% 611 8% Neurology & Immunology 1,665 21% -0.9% -3.5% -4.5% 1,743 22% thereof: Mavenclad ® 956 12% 15.9% -4.3% 11.7% 856 11% thereof: Rebif ® 709 9% -17.2% -2.9% -20.1% 887 11% Fertility 1,547 19% 14.9% -7.8% 7.0% 1,446 18% thereof: Gonal-f ® 847 11% 10.5% -7.8% 2.7% 825 11% Cardiovascular, Metabolism and Endocrinology 2,786 35% 4.0% -4.6% -0.7% 2,805 36% thereof: Glucophage ® 882 11% -0.5% -4.6% -5.1% 930 12% thereof: Concor ® 571 7% 1.6% -4.9% -3.3% 590 8% thereof: Euthyrox ® 565 7% 5.4% -3.2% 2.2% 553 7% thereof: Saizen ® 332 4% 35.7% -10.6% 25.1% 266 3% Other 235 3% 161 2% Healthcare 8,053 100% 8.5% -5.8% 2.7% 7,839 100% 1 Not defined by International Financial Reporting Standards (IFRS). Electronics Net sales by business unit € million 2023 Share Organic growth¹ Exchange rate effects Acquisitions/ divestments Total change 2022 Share Semiconductor Solutions 2,479 68% -3.9% -3.9% 0.5% -7.3% 2,674 67% Display Solutions 770 21% -9.2% -5.3% – -14.5% 900 22% Surface Solutions 411 11% -3.6% -2.9% – -6.5% 439 11% Electronics 3,659 100% -5.1% -4.1% 0.3% -8.8% 4,013 100% ¹ Not defined by International Financial Accounting Standards (IFRS). Notes to editors: The press conference for media representatives will take place at 10:00 a.m. (CET). The respective presentation and further information for journalists, including a digital press kit , can be found here The annual report 2023 can be found here Merck KGaA, Darmstadt, Germany, on LinkedIn Photos and videos can be found here Stock symbols Reuters: MRCG, Bloomberg : MRK GY, Dow Jones : MRK.DE Frankfurt Stock Exchange : ISIN : DE 000 659 9905 – WKN : 659 990 All Merck KGaA, Darmstadt, Germany, press releases are distributed by e-mail at the same time they become available on the EMD Group website. In case you are a resident of the USA or Canada, please go to www.emdgroup.com/subscribe to register for your online, change your selection or discontinue this service. About Merck KGaA, Darmstadt, Germany Merck KGaA, Darmstadt, Germany, a leading science and technology company, operates across life science, healthcare and electronics. Around 63,000 employees work to make a positive difference to millions of people’s lives every day by creating more joyful and sustainable ways to live. From providing products and services that accelerate drug development and manufacturing as well as discovering unique ways to treat the most challenging diseases to enabling the intelligence of devices – the company is everywhere. In 2023, Merck KGaA, Darmstadt, Germany, generated sales of € 21 billion in 65 countries. The company holds the global rights to the name and trademark “Merck” internationally. The only exceptions are the United States and Canada, where the business sectors of Merck KGaA, Darmstadt, Germany, operate as MilliporeSigma in life science, EMD Serono in healthcare and EMD Electronics in electronics. Since its founding in 1668, scientific exploration and responsible entrepreneurship have been key to the company’s technological and scientific advances. To this day, the founding family remains the majority owner of the publicly listed company.