In 2012, Merck continued successfully down the “road to tomorrow”. Not only did we make progress with one of the most extensive change programs in the 345-year history of the company, we also succeeded in further expanding our business in a challenging economic environment.
Karl-Ludwig Kley
Chairman of the Executive Board
The numbers prove this. Total revenues increased by 8.7% to € 11.2 billion. Our businesses grew mainly in emerging markets and in North America. Our strategy to focus on these centers of growth is thus paying off.
EBITDA pre one-time items, with which we measure the earning power of operating activities, also increased sharply – by 8.9% to € 3.0 billion. Owing to one-time effects in connection with the “Fit for 2018“ efficiency and growth program, profit after tax declined by 6.3% to € 579 million.
We reduced net financial debt, resulting primarily from the Millipore acquisition, by nearly € 1.6 billion to € 1.9 billion in 2012. We will continue to lower our debt in 2013.
At the Annual General Meeting on April 26 we will propose to increase the dividend by € 0.20 to € 1.70 per share. The level of the dividend payment reflects the robust financial strength and good business performance of Merck.
We also made good progress in 2012 with the internal realignment of Merck. We simplified our organizational structures, accelerated processes and thus started to lower costs considerably.
- For instance, we established a new global leadership organization at Merck. This involved numerous personnel changes at the upper levels of management. The new structure enables us to address customer wishes and requirements even faster and in a more targeted way than before.
- At Merck Serono, we streamlined our R&D organization and started to realign our development pipeline. Apart from focusing on the most promising internal projects, the efforts also included in-licensing agreements.
- And lastly, we created the foundations to lower our costs permanently and noticeably. The planned closure of the Merck Serono site in Geneva and the framework agreement with the employee representatives in Germany were just two steps among many. Nearly all countries and areas of the Group were and still are involved in this process, with which we are freeing up resources for future growth.
In 2013, we will initially be working to globally conclude the efficiency program started in 2012. It will then be superseded by a continuous improvement program, which will build on our achievements and optimize Merck going forward.
At the same time, we are setting the course for long-term profitable growth of our businesses by successively further developing our strategy, portfolio and the regional positioning of our divisions.
- At Merck Serono, we are working to improve our pipeline – also through in-licensing agreements – and to strengthen our regional presence, especially in the United States, Japan and China. At the same time, we continue to rely on collaborations with external research and development partners.
- Strengthening profitability and focusing on strategic brands are the main objectives of Consumer Health.
- In Performance Materials, firstly we want to defend our global market leadership in liquid crystals. Secondly, we are positioning ourselves in OLED technology as a reliable supplier and a provider of all-round solutions. And we are repositioning our Pigments business.
- In order to achieve even stronger growth with innovative products in the life science sector, at Merck Millipore we are investing heavily in research and development as well as in bolt-on acquisitions.
In addition to the divisional strategies, we defined strategic initiatives in areas of overriding importance to the future development of Merck. One example is the optimization of our internal talent management process, which we are using to even better promote prospective executives and prepare them for future assignments within the company.
Our goal is to transform Merck into a faster and more efficient company that delivers profitable growth through its innovative pharmaceutical, chemical and life science businesses.
In doing so, we will remain true to our well-established values of courage, achievement, responsibility, respect, integrity and transparency. They still form the coordinate system by which we align our entrepreneurial activity.
In 2018, we want to be a company that is synonymous with innovation, quality and sustainability. A company that remains recognized for performance, efficiency and the career opportunities that it offers around the world. And a company that is respected for its values, its culture, and for the fact that it always acts responsibly. In brief: We are committed to making great things happen at Merck. That is what our workforce of around 39,000 men and women are aiming for each and every day.
The “road to tomorrow”, which we began traveling down in 2011 and 2012, will also serve as our path in the coming years. As the German novelist Theodor Fontane once wrote: “Courage is good but persistence is better.”
I thank you for the trust and the support that you have shown us on this journey. Please remain with us as we continue along the road to tomorrow.
Karl-Ludwig Kley
Chairman of the Executive Board
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