Corporate and Other comprises Group administration expenses for Group functions like Finance and Accounting, Tax, Procurement, Communication, Investor Relations or Human Resources that are not directly managed by the divisions. Corporate costs also include expenses for central, non-allocated IT functions and corporate IT projects related to the expansion and harmonization of IT systems within the Merck Group. As a result, Corporate and Other has no sales to report. Gains or losses on currency hedging are also reported in Corporate and Other.
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Corporate and Other | Key figures | ||||||
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€ million |
Q2 2012 |
Q2 2011 |
Change |
Jan.–June |
Jan.–June |
Change |
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Total revenues |
– |
– |
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– |
– |
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Sales |
– |
– |
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– |
– |
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Operating result (EBIT) |
–232.9 |
–50.6 |
360.3% |
–286.8 |
–84.9 |
237.7% |
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Margin (% of sales) |
n.m. |
n.m. |
|
n.m. |
n.m. |
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|
EBITDA |
–231.0 |
–49.4 |
367.4% |
–283.0 |
–82.3 |
244.0% |
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Margin (% of sales) |
n.m. |
n.m. |
|
n.m. |
n.m. |
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EBITDA pre one-time items |
–48.2 |
–32.1 |
50.0% |
–97.7 |
–65.0 |
50.4% |
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Margin (% of sales) |
n.m. |
n.m. |
|
n.m. |
n.m. |
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During the second quarter of 2012, administration expenses of Corporate and Other increased 13.7% to € 34 million (Q2 2011: 30 million). Other operating expenses increased about nine fold to € 200 million (Q2 2011: € 20 million), including a total of € 183 million of one-time costs comprising expenses of € 158 million for restructuring costs and € 25 million for costs from discontinued businesses. Accordingly, the effect of these costs lowered EBIT and EBITDA by more than three fold to € –233 million (Q2 2011: € –51 million) and € –231 million (Q2 2011: € –49 million), respectively. Adjusted for one-time charges, EBITDA pre one-time items was down by 50.0%, totaling € –48 million in the second quarter of 2012 (Q2 2011: € –32 million). The majority of the difference of € –16 million stems from hedging losses that Merck started to book under Corporate and Other as of January 1, 2012. Until end of last year, the results of currency hedging were booked under the respective divisions’ income statements.
Half-Year 2012 Performance
In the first half of 2012, EBITDA pre one-time items of Corporate and Other decreased 50.4% to
€ –98 million (H1 2011: € –65 million), driven by changes in booking of hedging gains and losses as explained above for the second quarter of 2012.
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