Total revenues of the Merck Group increased 3.8% to € 2,532 million in the third quarter from € 2,438 million in the year-ago quarter with solid contributions from the Pharmaceuticals divisions and the Merck Millipore life science division. Exchange rate movements reduced third-quarter revenue growth by 2.2% and divestments subtracted a further 0.9%. Adjusted for these items, third quarter organic revenue growth was 6.9%.
Administration expenses decreased by 2.7% to € 124 million in the third quarter of 2011. Other operating expenses and income declined by 1.3% to € 90 million from € 91 million in the year-ago quarter. Research and development spending increased 6.4% to € 371 million in the third quarter of 2011 mainly due to expensive late-stage clinical trials of Merck Serono and a strong Swiss franc during the quarter.
Amortization of intangible assets rose 7.4% to € 213 million from € 198 million in the year-ago quarter. This includes amortization of intangible assets from the Millipore purchase price allocation amounting to € 47 million and € 164 million from Merck Serono.
Third-quarter earnings before interest and tax (EBIT) declined 8.4% to € 333 million, or 13.2% of total revenues, compared to € 363 million, or 14.9% of total revenues, in the year-ago quarter. The third-quarter underlying core operating result, which excludes Merck Serono- and Merck Millipore-related amortization of intangible assets and other one-time charges, was € 552 million, or 21.8% of revenues, compared to € 624 million, or 25.6% of revenues, in the year-ago quarter. The primary reason for the decline in profitability was a weakening of the Performance Materials division, which faced a slowdown in its respective end-user industries, and the increase in R&D costs.
The Merck Group's third-quarter profit before tax was down 9.2% to € 263 million compared to € 289 million in the year-ago quarter. Due to a 56% reduction in taxes to just € 33 million, profit after tax in the third quarter of 2011 increased 7.2% to € 230 million from € 215 million in the third quarter of 2010.
Merck had 40,849 employees worldwide on September 30, 2011, compared to 40,562 on December 31, 2010.
"The Merck Group produced solid third-quarter revenue growth in a difficult environment, driven mainly by good performances from the Merck Serono and Merck Millipore divisions. Net profit rose by 8% on higher revenues and as one-time costs from last year were not repeated, leaving us well positioned as we head into the end of the year," said Karl-Ludwig Kley, Chairman of the Executive Board of Merck KGaA. "We are making progress in driving our change agenda forward and we will provide important updates on this endeavor in the first half of 2012."
About Merck KGaA
Merck is a global pharmaceutical and chemical company with total revenues of € 9.3 billion in 2010, a history that began in 1668, and a future shaped by more than 40,000 employees in 67 countries. Its success is characterized by innovations from entrepreneurial employees. Merck's operating activities come under the umbrella of Merck KGaA, in which the Merck family holds an approximately 70% interest and shareholders own the remaining approximately 30%. In 1917 the U.S. subsidiary Merck & Co. was expropriated and has been an independent company ever since.