The diverse German company Merck KGaA (MRCG.DE) has raised the possibility of revenue growth returning in 2019. This is due to a rebound in demand for its specialty chemicals used to make semiconductors and biotech pharmaceuticals.
In an interview with Reuters on Thursday, CEO Belen Garijo said, “We are expecting to leave the transition year 2023 behind, returning to growth in 2024,” referring to profits adjusted for currency fluctuations.
At 07:35 GMT, its shares were up 5%, recovering this week’s losses, and JP Morgan analysts said the outlook should soothe the market.
Large clients will likely cease using inventories and place orders at the group’s core biotech process solutions division, which aids drugmakers in running cell cultures and bioreactors, “with sales picking up again in the first half of the year,” Merck said.
Merck’s resources, including filters and bioreactors, were acquired in excess by manufacturers of medications and vaccines during the epidemic and then used for other goods following the pandemic.
According to Merck, the market for semiconductor materials offered by the company’s Electronics business should “recover gradually in 2024.”
“It appears for Electronics the recovery in 2024 could be more muted,” analysts at JP Morgan wrote in a report.
Compared to last year, when sales were 22.2 billion euros, the business reiterated that this year’s sales would be about flat, at between 20.5 billion euros ($21.6 billion) and 21.9 billion euros.
Also reiterated was the forecast for adjusted core earnings of 5.8 to 6.4 billion euros this year, down from 6.85 billion in 2022.
A decrease in coronavirus-related activity has been exacerbated by higher interest rates, which have decreased investor interest in hazardous biotech medication initiatives.
Competitor manufacturers of laboratory equipment, Sartorius (SATG.DE), EuroAPI (EAPI.PA), and Lonza (LONN.S), from Switzerland, have also been impacted.
Even when worries surfaced that the experimental multiple sclerosis medicine ibrutinib may cause liver damage, CEO Garijo told Reuters that it might be a “blockbuster,” a phrase used in the business for products with more than $1 billion annual sales.
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