In 2013, the Merck Group delivered a significant increase in the operating result (EBIT), which soared by 67.2% to € 1,611 million (2012: € 964 million), as well as in EBITDA (operating result before depreciation and amortization), which rose by 30.0% to € 3,069 million (2012: € 2,360 million). This was due on the one hand to the good performance of operating business and on the other hand to the sharp decline in the very high level of one-time items incurred in 2012. Adjusted for one-time expenses (excluding impairments) totaling € 184 million (2012: € 605 million), EBITDA pre one-time items, the key financial indicator used to steer operating business, grew 9.7% to € 3,253 million (2012: € 2,965 million). The resulting EBITDA pre margin thus increased from 27.6% to 30.4%. The profitability improvement of nearly three percentage points stemmed mainly from the organic sales growth achieved in 2013 as well as strict cost management. Above all, the faster implementation of the efficiency measures within the scope of the “Fit for 2018” transformation and growth program had a positive effect on profitability.
The development of EBITDA pre one-time items in the individual quarters in comparison with 2012 is presented in the following table:
Merck Group | EBITDA pre one-time items and change by quarter 1
All divisions contributed to the increase in EBITDA pre one-time items and the EBITDA pre margin. With an improvement of € 130 million in EBITDA pre to € 1,955 million, Merck Serono achieved the strongest absolute increase of all the operating divisions. Consequently, at 57% (2012: 56%) the division’s contribution to EBITDA pre was the highest among all the operating divisions (excluding the decline in Group EBITDA pre by € –197 million due to Corporate and Other). Contributing 23% of EBITDA pre as in 2012, the Performance Materials division reported EBITDA pre one-time items of € 780 million (2012: € 742 million). Owing to its good business performance, the division increased this key indicator by € 38 million or 5.1%. At 18%, Merck Millipore’s percentage share of EBITDA pre one-time items declined slightly (2012: 19%, excluding Corporate and Other), although this division also posted earnings growth of 4.6% or € 28 million. With EBITDA pre one-time items of € 72 million (2012: € 67 million), the Consumer Health division once again contributed 2% to the EBITDA pre one-time items of all operating divisions.
Merck Group | EBITDA pre one-time items by division – 2013
The financial result of the Group improved by 12.7% to € –222 million (2012: € –255 million). This mainly reflects the lower interest expense on borrowed capital following the sharp drop in net financial debt as well as the decline in net interest expense for pension provisions. More information on the financial result can be found in the consolidated financial statements under Note [31].
Income taxes amounted to € –180 million (2012: € –130 million) and led to a tax ratio of 12.9% (2012: 18.3%). The low tax ratio in 2013 resulted mainly from one-time deferred tax income owing to changes in the applicable tax rates. More information on income taxes can be found in the consolidated financial statements under Note [32].
Owing to this development of expenses and income, profit after tax more than doubled, totaling € 1,209 million (2012: € 579 million). Net income, i.e. profit after tax attributable to Merck shareholders, for 2013 was € 1,202 million (2012: € 567 million), yielding earnings per share of € 5.53 (2012: € 2.61). Adjusted for one-time items, earning per share (EPS adjusted by net of tax effect of one-time items and amortization of purchased intangible assets) increased by 15.4% to € 8.78 (2012: € 7.61).
