Quick Summary
- Merck KGaA delivered first quarter net profit of €669 million, declining 9.4% annually, yet surpassed EPS expectations with €2.11 versus consensus of €1.99.
- Revenue decreased 2.8% to €5.13 billion, still exceeding analyst projections of €5.09 billion.
- Management upgraded 2026 adjusted EBITDA forecast to €5.7–€6.1 billion from €5.5–€6.0 billion previously.
- Electronics segment delivered exceptional performance, fueled by artificial intelligence and advanced computing materials demand.
- The anticipated generic launch for multiple sclerosis treatment Mavenclad shifted from March to May, providing additional revenue protection for Life Science operations.
Merck KGaA delivered first quarter results on Wednesday that exceeded lowered expectations, despite year-over-year profit declines. Shares surged 8% to reach a two-month peak following the announcement.
The company reported net profit of €669 million, representing a 9.4% decline compared to last year’s corresponding period, translating to €2.11 per share — comfortably beating analyst estimates of €1.99. Revenue totaled €5.13 billion, down 2.8% year-over-year, though marginally surpassing the €5.09 billion consensus forecast. Currency fluctuations created headwinds, yet core business momentum proved more resilient than anticipated.
Management also enhanced full-year 2026 projections, a strategic move that energized investor sentiment.
The revised adjusted EBITDA guidance now ranges from €5.7 billion to €6.1 billion, up from the earlier €5.5 billion to €6.0 billion target. Full-year net sales are projected between €20.4 billion and €21.4 billion. The organic sales growth forecast improved to 0%–3%, compared with the previous -1% to 2% range.
Electronics Division Shines
The Electronics segment emerged as the quarter’s top performer. Strong demand for specialized materials used in cutting-edge semiconductor manufacturing — especially components supporting AI infrastructure and high-performance computing applications — generated robust growth.
While this trend isn’t entirely new for Merck, the ongoing AI-powered semiconductor boom continues delivering consistent momentum for this business unit.
First quarter adjusted EBITDA reached €1.53 billion, declining a modest 0.3%, significantly outperforming the €1.46 billion analyst consensus.
Life Science Division Receives Timeline Extension
The Life Science segment also delivered results above forecasts. Currency-adjusted revenue expanded 8.3%, partially attributed to a customer establishing a new distribution facility and additional clients stockpiling laboratory supplies amid supply chain challenges related to the Iran conflict.
Merck had previously indicated that U.S. revenue from Mavenclad, its multiple sclerosis medication, would face pressure starting March when generic alternatives entered the market. That timeline has now extended to May, providing several additional weeks of full-margin sales.
To offset Mavenclad’s eventual revenue decline, Merck is banking on specialized cancer treatments obtained through its $3.9 billion acquisition of SpringWorks Therapeutics completed last year.
Morgan Stanley analyst Thibault Boutherin indicated expectations for Merck to exceed market performance following the first quarter results, noting that implied full-year figures, incorporating improved foreign exchange assumptions, point to approximately 1% upside versus consensus EBITDA and EPS projections.
These results also represent an early success for newly appointed CEO Kai Beckmann, who advanced from leading the electronics division earlier this month.
Organic EPS guidance increased to €7.50–€8.20 from €7.10–€8.00, while EBITDA organic growth expectations improved to -2% to 2% compared with the prior -4% to 1% range.
