Against the background of forecasts by leading economic research institutes and based on total revenues of € 7,747 million in 2009, Merck expects total revenues to increase in a range of 3% to 7%.
We assume that the Group operating result of € 649 million in 2009 will increase by between 20% and 30%. We also expect profit after tax (excluding exceptional items) to increase. For 2011, we expect total revenues and the operating result to increase further. Profit after tax excluding potential exceptional items will likewise improve in this period.
Merck had an equity ratio of 56.9% as well as low net debt of € 263 million in 2009. We expect to achieve similar capital ratios in the future. Following the very high level of € 852 million in 2009, underlying free cash flow is likely to be weaker in 2010, but will then return to a higher level. After a one-time high level in 2009, investments in property, plant and equipment will return to a more normal level for our company of between € 200 million and € 300 million during the period covered by this forecast. Merck will continue to increase research and development spending in 2010 and 2011, based on a level of € 1,345 million in 2009.
Merck has an extensive risk and opportunity management system, which is described in the Risk Report. Relative to the forecast period of two years published in the Report on Expected Developments, we mainly see business-related opportunities and risks – also against the background of the economic crisis that has not yet ended. Owing to the diversification and Merck’s broad product portfolio, a very different spectrum of important risks and opportunities result for each individual division.
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Merck forecast for 2010 |
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in % |
Growth in total revenues |
Growth in operating result |
|
Merck Group |
3 to 7% |
20 to 30% |
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Merck Serono |
2 to 5% |
30 to 40% |
|
Consumer Health Care |
5 to 10% |
–10 to 0% |
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Liquid Crystals |
5 to 10% |
15 to 25% |
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Performance & Life Science Chemicals |
3 to 8% |
15 to 20% |
Assumptions made by the Merck forecasts
Our forecasts for Merck take into account the company’s weighing up of risks and opportunities in accordance with our medium-term outlook and operational plans. These assume a moderate development of energy and raw material prices, as well as increasing personnel costs. Since we produce specialty chemicals, we are largely independent of oil price developments. Overall, we expect our businesses to see stable prices or market-oriented price increases. We only see ourselves exposed to significant price pressure in the Liquid Crystals division. The following forecast is based on the assumption of constant exchange rates. Possible acquisitions, divestments and exceptional items are not included in the calculation.
Dividend development
Based on our earnings expectations, the family of owners and Merck shareholders can expect to receive an earnings-oriented dividend. There are no plans to change the long-term dividend policy.
Summary
For the Merck Group, we expect continuous growth in total revenues and operating result for the next two years – with continuing solid balance sheet ratios.
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