Sales are recognized net of related taxes as well as revenue-lowering items. They are deemed realized once the goods have been delivered or the services have been rendered, the material opportunities and risks of ownership have been transferred to the purchaser, the amount of revenue can be reliably determined, and payment is sufficiently probable. When sales are recognized, estimated amounts are taken into account for expected revenue-lowering items, for example rebates, discounts and returns. In addition to revenue from the sale of goods, sales also include revenue from services, but the volume involved is insignificant. Depending on the substance of the relevant [...]

Overall our forecast assumes a moderate increase in energy and raw material prices, as well as increasing personnel costs. Since we produce specialty chemicals, the volatility of oil prices does not have a direct impact on our business. As a company that operates globally, Merck is exposed to a variety of foreign exchange risks, arising especially from the U.S. dollar. Targeted hedging measures are taken to offset these risks to a certain degree. Against the background of expected and the aforementioned overall economic developments, the Executive Board assumes that sales of the Merck Group will show moderate organic growth in 2013 and 2014. We do expect, however, [...]

Cost of sales primarily included the cost of manufactured products as well as goods purchased for resale. In accordance with IAS 2, the cost comprises overheads and, if necessary, inventory write-downs, in addition to directly attributable costs, such as the cost of materials, personnel and energy.

Sales were generated primarily from the sale of goods and to a limited degree also included revenues from services rendered. Merck Group sales totaled € 10,740.8 million in 2012 (2011: € 9,905.9 million), which represented an increase of 8.4% compared to 2011. Adjusted for the impact of foreign exchange rates and acquisitions, organic growth amounted to 4.5%. Sales are presented by division and region in the Segment Reporting (see Note ).

From a geographic perspective, Emerging Markets generated sales of € 1,218 million in 2012 (2011: € 998 million), or 73% of the division’s sales, reflecting the high concentration of liquid crystals customers in Asia. Divisional sales in this region showed a strong 13.9% organic increase also as a result of strong demand from the emerging Chinese display industry. As a result, Merck’s liquid crystals sales to China more than doubled, elevating China to the number three single market in terms of sales – behind South Korea and Taiwan – overtaking Japan. The sales decline in Japan, which is part of the Rest of World region, was due to the difficult market [...]