Merck Kgaa

gentlemen welcome to the Merck investor and analyst conference call on first quarter 2025 as a reminder all participants will be in a listen-only mode I am now handing over to Florian Schrader head of investor relations who will lead you through this conference please go ahead sir thank you so much Heidi and a very warm welcome to this Merck q125 results call

My name is Florian Schreder. I'm the head of investor relations here at Merck. I'm delighted to be joined today by Belen Garrigio, our group CEO, as well as Helene von Röder, our group CFO. For the Q&A part of this call, we will also have Matthias Heinzel, CEO LifeScience, Jean-Charles Wirth, designated CEO LifeScience, Peter Günther, CEO Healthcare, Danny Barzohar, designated CEO Healthcare, as well as Kai Beckmann, CEO Electronics. In the first couple of minutes of this call, we would like to guide you through the key slides of the presentation. After that, we will be more than happy to take your questions. With this, I would now like to hand over to Belen to start.

Thank you, Florian, and welcome everybody from my side to our Q1 earnings call. I am now on slide number five of the presentation, starting with the highlights. First of all, you would agree with me that this quarter was characterized by a rapidly changing global economic landscape, to say the least. And we delivered very solidly, achieving profitable growth across our three business sectors in Q1. Organically, group revenues increased by 3%, and EBITDA P went up by 6%. Healthcare and life science showed the strongest organic sales growth at 3%, while electronic sales were up by 1%. Now, I would like to draw your attention to the highlight of the quarter, which is the remarkable progress in process solutions that is crossing to the double-digit growth level and delivering plus 11% in Q1, as the market conditions, mainly customer de-stocking, have been put behind. Order intake grew also very strongly, and book-to-bill was again comfortably above 1. Healthcare also delivered organic sales growth of 3%, driven by a strong performance of plus 11% in our CME portfolio, as well as mid to high single-digit growth of Herbitux and Mavenclad, respectively. With the recently announced acquisition of SpringWorks Therapeutics, we are securing the mid to long-term sustainability of our pharma pillar and positioning the pharma sector to accelerate growth immediately after closing. SpringWorks is fully aligned with the business and the M&A priorities of our healthcare sector, which is to continue to rely on external innovation via licensing primarily of later stage assets. Moving to electronics, it also showed a positive organic sales development in Q1. Once again, this was driven by the strong growth in semiconductor materials. At the same time, we saw some projects being pushed out further in our DS&S business as our customers are equally trying to manage the rapidly evolving business environment in which we operate. On the guidance for full year 2025, I want to remind you that we submitted a quantitative guidance for the first time already with our full year 2024 results back in March. Since then, we have gained more visibility on the macro, mainly FX and tariffs, And therefore, we are reflecting this development in our 2025 outlook. First, I want to let you know that around 80% of the adjustment to the absolute corridors is related to our assumptions on FX. Second, on the tariffs, it includes a scenario where this week's trade agreement between the U.S. and China is restricted to 90 days and no more. We have clearly proven our adaptability in this evolving macroeconomic environment already in Q1, and we are confident to achieve profitable organic growth in 2025. I will come back with more details on our assumptions for the guidance later. So let's move to slide number six for an overview of our performance by business sector. As you may see on the slide, organic sales growth in Q1 was plus 2.5%. Life science delivered organic sales growth of 2.5%, driven by stellar performance of process solutions. With 3.4% organic sales growth, healthcare was the largest contributor And within healthcare, our CM&E portfolio was the strongest franchise. Electronics grew slightly by 0.6 organically as our semi-business was up plus 2% driven by semi-materials. For the group, FX represented a slight tailwind of plus 0.4% on sales due to life science and electronics. together with a portfolio effect of plus 0.2% for the group in Q1, which is driven by the acquisition of Myros Bio and Unity SC, group sales increased by a total of 3.1% in the quarter. Regarding earnings, EBITDA pre amounted to 1.535 billion, growing more than twice as fast as organic sales, and delivering 5.8% growth compared to the same quarter of last year. FX also had a slight positive effect on EBITDA pre in the quarter, while the portfolio effect was slightly dilutive. With this, I would like to hand it over to Helene for a more detailed review of our financials.