Total revenues of the Liquid Crystals division continued to climb in the second quarter, jumping 50% to a record EUR 284 million in the second quarter compared to EUR 189 million in the year-ago quarter. During the first half of 2010, revenues were up 63% to EUR 523 million.
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Liquid Crystals | Key figures |
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EUR million |
2nd quarter |
Change |
Jan.–June |
Change |
|
Total revenues |
283,7 |
50,1 |
522,6 |
63,2 |
|
Gross margin |
204,2 |
132,7 |
366,9 |
155,8 |
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Research and development |
–22,7 |
2,3 |
–46,5 |
4,6 |
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Operating result |
151,1 |
191,9 |
262,9 |
308,0 |
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Exceptional items |
– |
– |
– |
– |
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Free cash flow |
125,9 |
113,0 |
229,5 |
171,7 |
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Underlying free cash flow |
125,9 |
113,0 |
229,5 |
171,7 |
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ROS in % |
53,2 |
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50,3 |
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Positive currency effects accounted for 13% of the revenue increase but the lion’s share – 37% – was due to the growing demand for Merck’s high-tech liquid crystals. For example, Merck’s liquid crystals based on patented Polymer Stabilized Vertical Alignment (PS-VA) technology offer better moving-picture quality, faster switching times, higher contrast and brightness, and lower power consumption – qualities desired by manufacturers of the new LED backlight LCD TVs.
On June 29, the market research organization DisplaySearch raised its forecast for the second time this year, now expecting shipments of LCD televisions to increase 29% to more than 188 million units in 2010. It expects annual shipments to exceed 260 million by 2014.
The organization said the higher demand for LCD TVs is due to new technologies such as LED (light-emitting diodes) backlighting, 3D programs and films, and internet connectivity.
Merck’s Liquid Crystals division is already supplying LC materials for 3D vision glasses for 3D televisions. The division also makes phosphorus materials for LED back-lighting under the brand name isiphor®.
With increased volumes, unit costs improved significantly in the second quarter because of higher efficiencies and better utilization of capacities. Therefore, the gross margin more than doubled in the second quarter to EUR 204 million from EUR 88 million in the year-ago quarter.
Such technological advances are due to the division’s investment in research and development, which rose 2.3% to EUR 23 million in the second quarter. Selling, general and administration costs also rose in the quarter.
Still, because of the high demand and high quality of its products, the Liquid Crystals division’s second-quarter operating result nearly tripled to EUR 151 million compared to a very low year-ago level of EUR 52 million. The half-year operating result improved fourfold to EUR 263 million from just EUR 64 million in the first half of 2009.
This resulted in an ROS of 53.2% in the second quarter compared to 27.4% in the year-ago quarter and a half-year ROS of 50.3% compared to 20.1% in the first half of 2009.
The division’s free cash flow jumped to EUR 126 million in the second quarter from EUR 59 million in the year-ago quarter.
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