German drugs and chemicals company Merck KGaA reported a 15% rise in Q2 operating profit on Wednesday thanks to rising sales of liquid crystals and multiple-sclerosis and cancer drugs.Operating profit rose to €320.5 million ($510 million) from €277.5 million a year earlier, slightly missing the average estimate of €326 million in a Reuters poll of 15 analysts.
“Currency effects continued to have a considerable negative impact on total revenues,” the company said in a statement.
Merck KGaA said total revenues grew organically by 12% but this was reduced by 6.1 percentage points due to translation of local currencies into the strong euro.
Sales of its cancer medicine Erbitux rose 24% in the second quarter, while sales of its multiple-sclerosis drug Rebif increased 2.8%.
Merck KGaA is also the world's largest supplier of the liquid crystal compounds used in televisions, mobile phones and computer laptops.
Liquid crystals sales rose 7% to €238 million, despite negative currency effects. The operating profit margin for this business dipped to 45% in the quarter.
For 2008, Merck reiterated it expected group revenue to grow 5%-9% and its operating margin - excluding amortization and integration costs - to be 23%-27%.
Merck KGaA shares have fallen about 10% this year, roughly in line with the pan-European DJ Stoxx chemicals index and the drugs sector index , partly on worries over the impact of a slowdown in the US economy.
According to Reuters data, Merck shares trade at 16 times estimated 2009 profit, a premium to the chemicals and drugs sectors' 12 times thanks partly to upbeat outlook for Erbitux. (Reuters)