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Merck KGaA predicts strong earnings growth on lab demand

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FILE PHOTO: A logo of drugs and chemicals group Merck KGaA is pictured in Darmstadt
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By Ludwig Burger

FRANKFURT (Reuters) -Germany's Merck KGaA expects strong earnings growth this year as its laboratory gear division benefits from drugmakers' efforts to explore new biotechnologies, even as demand related to COVID-19 has probably reached its peak.

In a statement on Thursday, the diversified group predicted strong growth, excluding the effect of currency swings and any acquisitions, for sales and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA).

"Life Science will remain the strongest growth engine for Merck," said the company, which also makes pharmaceuticals and speciality chemicals for semiconductor manufacturers.

Fourth-quarter adjusted EBITDA rose 17.6% to 1.46 billion euros ($1.62 billion), slightly below an analyst consensus of 1.48 billion euros posted on Merck's website.

The Life Science division, mostly comprising businesses previously known as Millipore and Sigma Aldrich, achieved a more than 28% jump in quarterly adjusted earnings on buoyant demand for bioreactor equipment.

The group's strong outlook comes despite a levelling off in demand related to COVID-19 vaccines and treatments.

COVID-related sales accounted for 1.15 billion euros of sales of 9 billion at the Life Science division in 2021, but that contribution will be about 900 million at most this year, according to a presentation posted on its website.

The group is helping biopharmaceutical companies to develop and produce new substances such as messenger RNA, targeted cancer treatments known as antibody-drug conjugates and viral vectors for gene therapies.

($1 = 0.9010 euros)

(Editing by David Goodman)