Merck Group reveals a massive hit to quarterly profit amidst the Coronavirus crisis

Merck
Group is the latest in the list of companies that anticipate a significant hit
to financial performance ascribed to the ongoing Coronavirus crisis. The German
multinational pharmaceutical company revealed on Thursday that its net profit
in the fourth quarter took a hit. The company also added in its statement that
its sales figure for 2020 is likely to remain under pressure in 2020.

In
its Q4 earnings report on Thursday, Merck Group printed €318 million in net
profit that dropped significantly from €2.45 billion recorded in the same
quarter last year. At €4.38 billion, Merck’s quarterly sales increased by 13%
in Q4 and came out slightly stronger than €4.33 billion that the analysts had
forecast, according to FactSet. As per Merck, the quarterly improvement in
sales was largely attributed to its life-science and healthcare business.

Merck
Group Records A 5.3% Organic Growth In Annual Sales

On
the sales front, organic growth was noted at 5.3% to €16.15 billion. In its
earlier estimate, the company had given a range of 3% to 5% for organic growth
in sales in 2019. Excluding items, the company said it made €1.21 billion in
earnings (EBITDA pre) in Q4 as compared to a much lower €950 million in the same
quarter last year.

In
its statement on Thursday, Merck Group also said that it is currently difficult
to accurately predict the extent of Coronavirus
impact on the company’s financial performance. It, however, commented that
it expects the virus to disrupt its earnings in the first quarter while the impact
will primarily vanish in 2020’s Q2. In terms of annual sales, the pharmaceutical
company said that the virus is likely to fuel a 1% decline. According to Merck:

“Should
the crisis grow or trigger a global recession, the company would adapt its
business forecast.”

Merck
Group’s Guidance For Fiscal 2020

In
its guidance for fiscal 2020, Merck
Group remained hawkish in terms of Ebitda pre and growth (organic) in
sales. The company also proposed a higher €1.30 per share of dividend this year
versus €1.25 in 2018.

At
the time of writing, Merck Group is exchanging hands at €110 per share in the
stock market that marks just under 5% of growth in 2020 so far. Its performance
in 2019, on the other hand, remained fairly upbeat with an annual gain of
around 17%. Merck Group currently has a market cap of €14.21 billion with a
price to earnings ratio of 13.81.