Merck Quarterly Financial Report Q3_2010 - Report on expected developments (optimized for printing)

The Merck Group’s total revenues and operating result continued to develop well in the third quarter of 2010. In fact, due to lower than previously anticipated research and development costs and cost of sales, the guidance for the core operating result of the Merck Serono division has been improved. Merck now expects the Merck Serono core operating result to rise by 26% rather than the previously forecast 12%.

On the other hand, late in the third quarter it became clear that Merck’s Liquid Crystals business, which is part of the very dynamic electronic display industry, was slowing slightly. Display manufacturers have begun reducing production due to lower demand and some over-stocking effects. This, coupled with anticipated negative currency effects caused by the weaker U.S. dollar, has caused Merck to lower this business’s previous full-year forecast. The company now expects Liquid Crystals total revenues to increase by 35% rather than 50% and the operating result to improve by 126% instead of 160%. Thus, the full-year return on revenues (ROS) for this business is expected to be 52% rather than the 54% previously mentioned.

The decline in sales and operating result of the Merck Millipore division is primarily due to anticipated negative currency effects.

Merck Group forecast for 2010 including Millipore

XLS

Growth in total revenues

Growth in operating result

1	Excludes costs related to the purchase of Serono (amortization of intangible assets)
2	Excludes costs related to the purchase of Millipore (write-offs of step-up inventories, amortization of intangible assets, EUR 66 million transaction and integration costs during 2010)

in %

New

From Q2

New

From Q2

Merck Serono

7.2%

7.5%

56%

60%

Merck Serono, Core¹

26%

12%

Consumer Health Care

–60%

–20%

Merck Millipore

80%

84%

–63%

Merck Millipore, Core²

167%

190%

Performance Materials

34%

43%

162%

194%

Corporate and Other

–28%

–22%

Merck Group

19%

21%

70%

90%

Merck Group, Core^1,2

58%

55%

Mainly due to the revised forecasts for the Merck Serono division and the Liquid Crystals business, plus a detailed examination of Millipore after its July 14 acquisition, Merck now expects the Group full-year operating result to increase by 70% rather than the previous guidance of 90%. The Group core operating result should increase by 58% compared to the previously stated 55%.