Merck Q4 Profit Falls But Outlook Brightens

Fourth-quarter earnings at the German drug and chemical maker were down 18 percent due to the effect of deferred tax assets, but the company issued an upbeat forecast.

BERLIN (AP) -- Fourth-quarter earnings at German drug and chemical maker Merck KGaA were down 18 percent due to the effect of deferred tax assets, but the company cheered investors on Monday by issuing an upbeat forecast for this year and next.

Merck said it earned €46.5 million ($63.7 million) in the October-December period -- down from €56.7 million a year earlier, when the company saw favorable one-time effects on its tax rate. But revenues climbed by a quarter to €2.55 billion from €2.03 billion.

Merck's acquisition in July of Millipore Corp., a U.S. biotechnology equipment supplier, helped push up full-year revenues by 20 percent, to €9.29 billion from €7.75 billion. Full-year net profit rose by nearly three-quarters, to €632.1 million from €366.3 million.

Along with Millipore, Merck was helped by high demand for liquid crystals, used in flat-screen televisions and computer monitors. Revenues from its liquid crystal business were up 17 percent in the fourth quarter at €235 million and 38 percent on the year at €1.01 billion.

CEO Karl-Ludwig Kley said it was "a transformational year for Merck, with the acquisition of Millipore adding new capabilities, scale and innovative products."

Merck, based in Darmstadt, said it expects revenues to increase by between 13 and 18 percent in 2011, followed by further growth the year after.

It forecast that operating earnings -- which came in at €1.11 billion last year, an increase of 71.6 percent -- will grow by between 35 and 45 percent in 2011 and rise again in 2012.

Profit after tax also will improve, "irrespective of potential exceptional items," Merck said.

Merck's shares were up 3.6 percent in Frankfurt trading at €64.95 on the bright outlook, making them the strongest performer on the DAX index of blue-chip stocks.

Analysts had expected higher fourth-quarter net income of €87.7 million, but revenue beat their forecast of €2.48 billion.
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