Gross profit declined 1.5% to € 1,896 million from € 1,925 million in the first quarter of 2011. The primary reasons for the year-over-year difference were higher start-up costs for the new biotech production plant in Corsier-sur-Vevey (Switzerland), lack of positive manufacturing variances and a slightly less favorable product mix. Likewise, currency fluctuations, particularly the Swiss franc, contributed negatively. This resulted in a first-quarter gross profit margin of 74.0% of sales, compared to 77.7% in the first quarter of 2011.
Merck Group | EBITDA pre one-time items by quarter
The operating result (EBIT) fell to € 311 million (Q1 2011: € 530), mainly due to lower operational performance and a one-time capital gain of € 157 million generated from the divestment of the Crop BioScience business in the first quarter of 2011. EBITDA pre (earnings before interest, taxes, depreciation, amortization and one-time items) declined to € 675 million, or 26.3% of sales in the first quarter of 2012 from € 737 million, or 29.7% of sales, in the year-ago quarter. The Group’s EBITDA pre in the first quarter of 2012 excluded € 30 million in one-time costs recorded under other operating expenses.
Merck’s financial result remained largely in line with last year, improving to € –65 million in the first quarter of 2012 compared to € –68 million in the year-ago quarter. Net financial debt as of March 31, 2012, declined to € 3,017 million from € 3,484 million at the end of 2011. This improvement reflects the ongoing good cash flow generation of the Group.
The Merck Group’s first-quarter 2012 profit before tax declined 47% to € 246 million compared to € 461 million in the year-ago quarter, which was inflated by the € 157 million gain on the divestment of the Crop BioScience business. The reported income tax ratio was 28.2% in the first quarter 2012, increasing from 25.4% in the first quarter of 2011.
Profit after tax declined 49% to € 177 million in the first quarter of 2012 from € 344 million in the first quarter of 2011. EPS pre one-time items (EPS adjusted by net of tax effect of one-time items and amortization of purchased intangible assets) declined to €1.67 from € 1.91 due to the lower operational performance previously mentioned. The free cash flow of the Merck Group was € 420 million in the first quarter of 2012 compared to € 645 million in the year-ago period. The change is due primarily to last year’s divestment of the Crop BioScience business and the receipt of the purchase price for Théramex.