The classification of asset and income figures as well as of other key figures by business sector or by region is in accordance with IFRS 8. The reportable segments presented correspond to the internal organizational and reporting structure of the Merck Group. Within the Merck Serono division, we focus on specialist therapeutic areas and market innovative prescription drugs of chemical and biotechnological origin. The Consumer Health Care division comprises Merck’s business with high-quality over-the-counter products for preventive health care and self-treatment of minor ailments. These two divisions form the Pharmaceuticals business sector.
The Merck Millipore life science division comprises the activities of the Millipore Corporation, which was acquired in 2010, and the majority of our former Performance & Life Science Chemicals division. The Performance Materials division consists mainly of the Liquid Crystals and Pigments & Cosmetics business units. As of 2011, the Cosmetic Actives business field is reported under the Performance Materials division. As of December 31, 2010, and in fiscal 2010, this business field was still part of the Merck Millipore division. The business field generated sales of € 68.1 million and an operating result of € –3.9 million in 2010. The previous year’s figures have been adjusted accordingly.
Corporate and Other mainly includes the income and expenses that cannot be allocated to the operating segments, e.g. expenses for central administrative functions. The financial result and taxes on income are also allocated in full to Corporate and Other. The fields of activity are described in detail in the sections about the divisions in the management report.
Apart from total revenues, the success of a segment is mainly determined by the division’s operating result as well as free cash flow and the key figures derived from these such as “Underlying free cash flow on revenues (FCR)“ and “Return on sales (ROS)”. The accounting standards used to calculate these performance indicators are the same as those used in external reporting (IFRS).
Transfer prices for intragroup sales are determined on an arm’s-length basis. There were no significant intercompany relations between the business segments.
Neither in 2011 nor in 2010 did any single customer account for more than 10% of Group sales.
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Information by business sector and division | ||||||||||||||||||||||||||
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Merck Serono |
Consumer |
Pharmaceuticals |
Merck Millipore* | ||||||||||||||||||||||
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€ million |
2011 |
2010 |
2011 |
2010 |
2011 |
2010 |
2011 |
2010 | ||||||||||||||||||
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Sales |
5,564.4 |
5,409.0 |
494.2 |
469.7 |
6,058.6 |
5,878.7 |
2,382.6 |
1,605.4 | ||||||||||||||||||
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Royalty, license and commission income |
355.6 |
344.5 |
2.0 |
2.3 |
357.6 |
346.8 |
10.2 |
7.2 | ||||||||||||||||||
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Total revenues |
5,920.0 |
5,753.5 |
496.2 |
472.0 |
6,416.2 |
6,225.5 |
2,392.8 |
1,612.6 | ||||||||||||||||||
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Gross margin |
4,888.3 |
4,792.8 |
338.7 |
316.9 |
5,227.0 |
5,109.7 |
1,387.5 |
844.5 | ||||||||||||||||||
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Marketing and selling expenses |
–1,414.4 |
–1,451.4 |
–233.0 |
–235.9 |
–1,647.4 |
–1,687.3 |
–608.1 |
–409.1 | ||||||||||||||||||
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Royalty, license and commission expenses |
–478.5 |
–456.2 |
–3.7 |
–1.2 |
–482.2 |
–457.4 |
–16.0 |
–9.4 | ||||||||||||||||||
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Administration expenses |
–257.8 |
–269.9 |
–23.7 |
–24.7 |
–281.5 |
–294.6 |
–106.7 |
–73.2 | ||||||||||||||||||
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Other operating expenses and income |
–408.8 |
–169.6 |
–5.1 |
–12.1 |
–413.9 |
–181.7 |
–104.6 |
–135.5 | ||||||||||||||||||
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Research and development |
–1,225.4 |
–1,167.1 |
–22.9 |
–24.9 |
–1,248.3 |
–1,192.0 |
–134.5 |
–74.5 | ||||||||||||||||||
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Operating result |
304.2 |
565.1 |
46.1 |
13.9 |
350.3 |
579.0 |
226.1 |
47.9 | ||||||||||||||||||
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Exceptional items |
25.1 |
68.6 |
– |
– |
25.1 |
68.6 |
– |
– | ||||||||||||||||||
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Earnings before interest and tax (EBIT) |
329.3 |
633.7 |
46.1 |
13.9 |
375.4 |
647.6 |
226.1 |
47.9 | ||||||||||||||||||
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Net operating assets |
9,207.2 |
10,359.7 |
321.1 |
310.8 |
9,528.3 |
10,670.5 |
6,608.6 |
6,435.6 | ||||||||||||||||||
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Segment liabilities |
–1,163.6 |
–1,268.9 |
–80.7 |
–86.4 |
–1,244.3 |
–1,355.3 |
–335.4 |
–361.4 | ||||||||||||||||||
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Capital spending on property, plant and equipment |
197.0 |
247.7 |
5.2 |
6.9 |
202.2 |
254.6 |
105.3 |
75.1 | ||||||||||||||||||
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Investments in intangible assets |
53.0 |
85.1 |
6.2 |
1.3 |
59.2 |
86.4 |
12.0 |
6.9 | ||||||||||||||||||
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Depreciation and amortization |
–840.8 |
–766.5 |
–11.3 |
–11.6 |
–852.1 |
–778.1 |
–283.7 |
–168.5 | ||||||||||||||||||
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Impairment losses |
–344.4 |
–171.0 |
–0.3 |
–7.1 |
–344.7 |
–178.1 |
–1.8 |
–10.7 | ||||||||||||||||||
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Net cash flows from operating activities |
1,374.0 |
1,590.1 |
48.6 |
46.6 |
1,422.6 |
1,636.7 |
404.0 |
252.7 | ||||||||||||||||||
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Net cash flows from investing activities |
101.3 |
–292.0 |
–8.8 |
–1.1 |
92.5 |
–293.1 |
–263.3 |
–4,924.6 | ||||||||||||||||||
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Free cash flow |
1,475.3 |
1,298.1 |
39.8 |
45.5 |
1,515.1 |
1,343.6 |
140.6 |
–4,671.9 | ||||||||||||||||||
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Underlying free cash flow |
1,205.2 |
1,307.8 |
39.8 |
45.5 |
1,245.0 |
1,353.3 |
308.7 |
263.4 | ||||||||||||||||||
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FCR in % |
20.4 |
22.7 |
8.0 |
9.6 |
19.4 |
21.7 |
12.9 |
16.3 | ||||||||||||||||||
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ROS in % |
5.1 |
9.8 |
9.3 |
2.9 |
5.5 |
9.3 |
9.4 |
3.0 | ||||||||||||||||||
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Performance Materials* |
Chemicals |
Corporate and Other |
Group | ||||||||||||||||||||||
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€ million |
2011 |
2010 |
2011 |
2010 |
2011 |
2010 |
2011 |
2010 | ||||||||||||||||||
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Sales |
1,464.7 |
1,444.8 |
3,847.3 |
3,050.2 |
– |
– |
9,905.9 |
8,928.9 | ||||||||||||||||||
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Royalty, license and commission income |
2.7 |
7.7 |
12.9 |
14.9 |
– |
– |
370.5 |
361.7 | ||||||||||||||||||
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Total revenues |
1,467.4 |
1,452.5 |
3,860.2 |
3,065.1 |
– |
– |
10,276.4 |
9,290.6 | ||||||||||||||||||
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Gross margin |
873.6 |
951.0 |
2,261.1 |
1,795.5 |
– |
– |
7,488.1 |
6,905.2 | ||||||||||||||||||
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Marketing and selling expenses |
–133.3 |
–135.2 |
–741.4 |
–544.3 |
–4.2 |
–2.9 |
–2,393.0 |
–2,234.5 | ||||||||||||||||||
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Royalty, license and commission expenses |
–2.3 |
–10.2 |
–18.3 |
–19.6 |
– |
– |
–500.5 |
–477.0 | ||||||||||||||||||
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Administration expenses |
–35.7 |
–41.7 |
–142.4 |
–114.9 |
–80.9 |
–68.7 |
–504.8 |
–478.2 | ||||||||||||||||||
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Other operating expenses and income |
–32.0 |
–52.0 |
–136.6 |
–187.5 |
–31.4 |
–21.2 |
–581.9 |
–390.4 | ||||||||||||||||||
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Research and development |
–134.3 |
–130.6 |
–268.8 |
–205.1 |
– |
– |
–1,517.1 |
–1,397.1 | ||||||||||||||||||
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Operating result |
524.9 |
576.1 |
751.0 |
624.0 |
–116.2 |
–89.5 |
985.1 |
1,113.5 | ||||||||||||||||||
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Exceptional items |
157.1 |
–1.0 |
157.1 |
–1.0 |
–30.4 |
–68.4 |
151.8 |
–0.8 | ||||||||||||||||||
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Earnings before interest and tax (EBIT) |
682.0 |
575.1 |
908.1 |
623.0 |
–146.6 |
–157.9 |
1,136.9 |
1,112.7 | ||||||||||||||||||
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Net operating assets |
1,331.0 |
1,289.7 |
7,939.6 |
7,725.3 |
–1.3 |
74.7 |
17,466.6 |
18,470.5 | ||||||||||||||||||
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Segment liabilities |
–131.7 |
–166.8 |
–467.1 |
–528.2 |
–22.9 |
–14.9 |
–1,734.3 |
–1,898.4 | ||||||||||||||||||
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Capital spending on property, plant and equipment |
64.1 |
64.3 |
169.4 |
139.4 |
0.3 |
2.2 |
371.9 |
396.2 | ||||||||||||||||||
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Investments in intangible assets |
2.7 |
3.9 |
14.7 |
10.8 |
5.8 |
7.0 |
79.7 |
104.2 | ||||||||||||||||||
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Depreciation and amortization |
–102.5 |
–102.4 |
–386.2 |
–270.9 |
–5.4 |
–3.2 |
–1,243.7 |
–1,052.2 | ||||||||||||||||||
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Impairment losses |
–9.5 |
–16.7 |
–11.3 |
–27.4 |
– |
–0.2 |
–356.0 |
–205.7 | ||||||||||||||||||
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Net cash flows from operating activities |
564.8 |
610.4 |
968.8 |
863.1 |
–1,120.2 |
–717.2 |
1,271.2 |
1,782.6 | ||||||||||||||||||
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Net cash flows from investing activities |
128.6 |
–68.2 |
–134.7 |
–4,992.8 |
–853.8 |
1,403.5 |
–896.0 |
–3,882.4 | ||||||||||||||||||
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Free cash flow |
693.4 |
542.2 |
834.0 |
–4,129.7 |
–912.7 |
–736.4 |
1,436.4 |
–3,522.5 | ||||||||||||||||||
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Underlying free cash flow |
492.6 |
548.8 |
801.3 |
812.2 |
–651.7 |
–495.7 |
1,394.6 |
1,669.8 | ||||||||||||||||||
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FCR in % |
33.6 |
37.8 |
20.8 |
26.5 |
– |
– |
13.6 |
18.0 | ||||||||||||||||||
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ROS in % |
35.8 |
39.7 |
19.5 |
20.4 |
– |
– |
9.6 |
12.0 | ||||||||||||||||||
| XLS |
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Information by country and region | ||||||||||
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Germany |
France |
Switzerland |
Rest of Europe |
Group | |||||
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€ million |
2011 |
2010 |
2011 |
2010 |
2011 |
2010 |
2011 |
2010 |
2011 |
2010 |
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Sales by customer location |
825.8 |
779.4 |
731.2 |
714.2 |
139.0 |
111.4 |
2,263.0 |
2,141.8 |
9,905.9 |
8,928.9 |
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Sales by company location |
1,394.5 |
1,315.0 |
853.6 |
810.4 |
168.0 |
149.9 |
1,946.2 |
1,819.4 |
9,905.9 |
8,928.9 |
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Total revenues |
1,430.7 |
1,333.2 |
862.6 |
821.6 |
382.3 |
364.6 |
1,955.0 |
1,836.3 |
10,276.4 |
9,290.6 |
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Intangible assets |
226.8 |
184.0 |
325.7 |
343.9 |
5,984.1 |
6,701.0 |
2,383.7 |
2,452.1 |
11,764.3 |
12,484.1 |
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Property, plant and equipment |
1,070.7 |
1,088.5 |
152.6 |
140.0 |
855.5 |
987.3 |
390.5 |
399.5 |
3,113.4 |
3,241.5 |
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Research and development |
677.9 |
–649.7 |
–50.0 |
–49.4 |
–609.2 |
–566.4 |
–41.2 |
–32.8 |
–1,517.1 |
–1,397.1 |
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Number of employees |
10,900 |
10,340 |
3,002 |
2,916 |
2,323 |
2,407 |
5,605 |
6,016 |
40,676 |
40,562 |
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North America |
Latin America |
Asia |
Africa, Australasia |
Group | |||||
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€ million |
2011 |
2010 |
2011 |
2010 |
2011 |
2010 |
2011 |
2010 |
2011 |
2010 |
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Sales by customer location |
1,789.1 |
1,529.6 |
1,196.7 |
1,080.6 |
2,674.4 |
2,305.5 |
286.7 |
266.4 |
9,905.9 |
8,928.9 |
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Sales by company location |
1,781.2 |
1,512.6 |
1,167.3 |
1,054.0 |
2,418.6 |
2,114.9 |
176.5 |
152.7 |
9,905.9 |
8,928.9 |
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Total revenues |
1,781.9 |
1,514.8 |
1,171.9 |
1,055.9 |
2,515.5 |
2,211.5 |
176.5 |
152.7 |
10,276.4 |
9,290.6 |
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Intangible assets |
2,599.6 |
2,537.9 |
11.4 |
15.4 |
232.7 |
249.2 |
0.3 |
0.6 |
11,764.3 |
12,484.1 |
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Property, plant and equipment |
366.0 |
358.6 |
82.1 |
79.7 |
190.7 |
181.1 |
5.3 |
6.8 |
3,113.4 |
3,241.5 |
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Research and development |
–95.2 |
–56.8 |
–10.9 |
–7.3 |
–28.6 |
–31.4 |
–4.1 |
–3.3 |
–1,517.1 |
–1,397.1 |
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Number of employees |
4,962 |
4,909 |
4,198 |
4,546 |
9,019 |
8,681 |
667 |
747 |
40,676 |
40,562 |
The following reconciliation applied to operating assets in the Segment Reporting:
| XLS |
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€ million |
Dec. 31, 2011 |
Dec. 31, 2010 |
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Assets |
22,120.1 |
22,388.0 |
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Monetary assets (cash and cash equivalents, loans, securities) |
–2,082.7 |
–1,042.4 |
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Financial assets covering pensions |
– |
–216.9 |
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Non-operating receivables, tax receivables, deferred taxes and deferred pension payments |
–836.5 |
–723.1 |
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Assets held for sale |
– |
–36.7 |
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Operating assets (gross) |
19,200.9 |
20,368.9 |
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Trade accounts payable |
–1,100.8 |
–1,200.1 |
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Other operating liabilities |
–633.5 |
–698.3 |
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Operating assets (net) |
17,466.6 |
18,470.5 |
The Merck Millipore division accounted for € –1.2 million (2010: € 0.9 million) and the Corporate and Other segment for € 0.2 million (2010: € 3.2 million) of the investment result disclosed in the income statement.