Merck uses derivative financial instruments to minimize currency risks and financing costs caused by exchange rate or interest rate fluctuations. Financing transactions in foreign currencies are generally hedged. In certain cases, the company also hedges anticipated sales and future costs for a period of up to two years. For more information, see Consolidated Financial Statements.
Material financial transactions involving credit risk are handled exclusively by first-class banks. In 2007, Merck entered into a new €2.0 billion syndicated multicurrency revolving credit facility with 19 first-class banks. As a result of the positive operating cash flow, the centralization of liquidity in the Group and the credit facility agreement with a term of seven years, long-term liquidity is ensured. Thanks to its broad customer base, Merck is likewise only exposed to a low credit risk in its sales markets.
