MKGAF - Earnings call transcript Q1 2022

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Operator

Dear ladies and gentlemen, welcome to the Merck Investor and Analyst Conference Call on the First Quarter 2022. [Operator Instructions] May I now hand you over to Constantin Fest, Head of Investor Relations, who will lead you through this conference. Please go ahead, sir.

Constantin Fest

Thank you very much, Kevin. A very warm welcome to this Merck Q1 2022 Results Call. Fest. Constantin is name My I'm Head Merck. here Investor Relations at of me here CEO as I'm have with Marcus Belén CFO. well delighted to as today Garijo, Group; of Kuhnert, the Matthias Q&A CEO Guenter, Healthcare; as Beckmann, this for Science; Kai of part as for joining of Life the call Also are CEO Heinzel, well CEO Peter of Electronics. like of by followed this to a run through you now would presentation, We the slides key Q&A. kick CEO, off to directly presentation. hand to in this, order with Group to I'd like And this Belén over Garijo, Over to you.

Belén Garijo

you currency small up much, EBITDA Constantin, and go our increased inflationary challenging, by pre Organically, very against and Thank side being the the highlights. while operating everyone, with Even tough to X well the of comparables for the by with in billion, was Please €X.X almost of to revenue sales X% out the presentation, gate Slide sector welcome, the call. Overall, our my key EPS supply very know. chain strong Science was and EBITDA mounting group also increasingly we Paired year-on-year. pressure, XXXX. starting environment reported respectively, pre a as €X.XX with tailwinds significant pre driver. is billion and our effect, billion from up XX% QX you to came of earnings and €X.X amounted and X.X% portfolio Life

assumptions confirming the teams, year, year billion. these positive billion billion €XX.X strong remainder we and net However, presentation. the full strategic EBITDA thanks our of getting reasonably for navigating and Based our global this significant and billion outstanding are later XXXX, at pre details a range specific, €X.X performance we pre of a are we More with anticipating to And are agenda. our to to the QX of make billion we usual, with €XX.XX billion in now of the progress our to EPS to €XX.X of the €X.XX commitment as €X.X time guidance. well, challenges outlook on continue sales in more of on

by Turning overview to Slide sectors. our an business of #X, performance

As in X our contributed sales all QX. can business to strong growth organic you see, sectors

on Within is while the business February quarter out to COVID also against XX% by on was up growth, comparables delivering organic Despite is lower slightly to contributed drag Life in by sales, this Process levels. and slightly while remarkable XXXX. sale, growth in QX due Research engines, sales also COVID launches Applied group followed stand par tough [patients]. so-called the EBITDA electronics which the adding organically, was quarter. very track. acquisition Semiconductor And well rising know, XX% key by Solutions, board, in account Currency Science X% Solutions key significant XX% growth sales growth and you X%. was X.X% X, to to almost revenues again with new the BIG of a Process once driver with was continues slightly QX while down from the are of Our both Science, significantly those dilutive X.X% as the a with for almost Healthcare of the strength and to entirely Life core and tailwind were XX% closed, the across to Solution very Exelead, group The with Healthcare of driven pre. to X% earnings the on

slightly the oncology recent driven and in a remained growth portfolio by while mainly XX%, XX% highlight from more established launches, perspective, Surface while decline than Bavencio, was growth growth stable. organic very franchise of Display was Healthcare X-X%, the Solid From Mavenclad almost the growth quarter with Semi organic the in XX%. In strong up. organic was Electronics, delivered of our business offsetting of

slightly XX.X%, €X.XX terms. billion at margin absolute over however, of EBITDA margin in Life increased million] in with in earnings, pre of pre The Regarding €[XXX EBITDA to strong growth down came year-on-year. leading Science, a

Slide to on Moving X.

balanced of the breakdown and overall, is of to regions, our to growth that significant exposure in up Pacific. all and footprint Asia testament regional Europe and in very the another remains global the Healthcare strong these yet our at see Pacific across Asia in Electronics relevance the regions. strategic were a markets with sales nicely all You the with performance This organic is geographic was for growth Overall, while growth XX% portfolio. of a with well-diversified our of results. fastest hand and in by the With you. our with followed North XX% America additional this, Science North sales Among delivered over Life up Marcus growing with Asia call Marcus, followed largest double-digit regions, Europe on sales organically, Pacific QX X% by X%. organic let to XX%. QX to detail Europe some America, me at over both and our broad-based

Marcus Kuhnert

to Belén, our Net XX.X% due to year-on-year, and cash key start payables welcome very phasing for X.X% million, €XXX with the to had mainly much, also from EPS small now EBITDA overview Operating came from to pre to X.Xx. and stable debt-to-EBITDA remained and an was we financial pre. at increased sales while positions. to effect mainly of ratio net XXXX currency €X.XX. on and Exelead, Overall, effects increased tax million, the our flow €X.X December, acquisition €XXX rose quarter. due the billion, of up at the with to pre for a Thank by end sales and figures €X,XXX in debt XX% down a compared of by portfolio million account pre I'm you tailwinds first growth Slide of #X earnings acquisition double-digit share significant moving XX.X% into per my in net strong side. Taking on Exelead,

that, showed let's business this, by a Science more up with move organically. up QX guidance tax had on core results Net start comment financial rate on Slide debt. with robust Science the Process Within business with with than significantly in growth in remains XX%. and and EBITDA portfolio dilutive basically our to performance with perspective, pre. million is below #XX. income in were in Slide came From X.X% me XX.X%, the half reported sales first briefly improved Life the both EPS effective to on reported which sales The lower expenses sales so review now increased interest organically. €XXX terms, The increased of slightly Let liabilities XX%, to sector, strong from reduced tax absolute lower EBIT significantly the a driver by #XX. starting Life Solutions while key and mainly in the sales on results to With interest on quarter XX% COVID the year organic at by range. of line our financial due growth lower levels.

around Here, increased beginning of quarter. Solutions actives at further, although X.X%, output was intake minus COVID continued Bioprocessing the by the order in to growth, comps organically, challenges which remains followed tough turned growth supply is strong. tough by negative X%. the delivered impact while order remarkable of Research grow business formulations. despite impacted core the at led organic light The comparables. very bottleneck book and temporarily [The and increased] the by capacity areas XX% in of

which business and growth broad-based of lines. of were with COVID business wave. activity Solutions Omicron X% strong an was across in market Solid lower had Applied organic core dampened XX% a amid testing in growth organic sales, performance higher given up the temporarily outstanding all the sequentially though by quarter

and double reminder, pharma Geographically, in testing double-digit major and lower our From in As we double-digit was biotech, recorded up Industrial a demand. and we amidst Applied organic down lockdown digit in a impact China COVID sales QX all by in and perspective, in much. did The academia not slightly COVID are growth saw regions. diagnostics growth customer negligible. organic while

mix points the EBITDA cracked the a regard business investments. first business organically the a €XXX for offset reflects to a contraction positive and we share to margin QX. in strategic increase margin of the the rising as with product earnings, year. XX.X%. significant well a a continue pricing, we please However, lower time, pre for margin note of million in expect XX do Plus by slight operating record ongoing XX% With said, and That as effect mark full COVID leverage partly expect in favorable that core basis

more By performer #XX. of mentioned, start the by, than sales was strong franchise, organically launch sales star with This year-on-year doubling Health with also in into in plus Belén year portfolio. sales X.X% Erbitux the XX% oncology was Care to Slide a established organic a growth at driven up. XX% and strong strong of and Healthcare sales XX%. just growth fueled flattish with Bavencio, of recent growth Europe, especially continued of on Moving had momentum as a up by launches on our

growth was ongoing X% Mavenclad, organically offset our tough with more down CM&E flat market. markets. China. comps midterm round of ramp-up about in Our U.S. Rebif franchise N&I further slight to Fertility Gonal-f Glucophage at Sales in to a organically, Euthyrox XX% X% decline most line up the performance was increased of still X.X% reported rose franchise related VBP due and strong supported organically, minus in by The Concor by of by the as with program amid guidance in XX% dynamic while of growth than

pipeline, clinical every and has Ukraine our a The studies let company running posed Ukraine me on of that in terms to first in is war focus In challenge pharma Russia. evobrutinib.

looking ensure and regard. this highly development. of additional the no potent Also to studies Therefore, our selective our include TLRX/X Phase inhibitor of enpatoran, the exception in to for advanced patients taken we have outside are pipeline, We have countries. these we dual for II which integrity measures

confirm management million these about second been guidance euro €XX the about year in €XX a portfolio active comps. would XX.X%. from contraction Bavencio low low and included Please income income due another quarter. stemming stable. management. differences came in in in to GSK euro with That in QX the income million the €XX amount mainly EBITDA particular, line portfolio last X of only earnings, full deferred expect year and guidance. €XX million our QX margin for million, nonrecurring for In from double-digit €X points pre million from €[XXX] Regarding Adjusted low year nonrecurring of million double-digit to fully basis our income, million, this income around millions comprising around X% included of tough note margin and around said, nonrecurring for milestones, active was mid-double-digit portfolio down organically that from we at margin with of XXX management some have the million about active

start was which tough comparables growth challenges XX.X%, mainly minus amid at down margin due reported Turning was growth in further was sales up lower X% in on The with than Solutions had crystals, The decline due EBITDA Chinese declined organically, Slide material were to Semiconductor accelerated X.X%. Electronics to million, all coatings organically our project developments. The DS&S. organically. key again exceeding to guidance. solid with fueled but organic with across more XX% cosmetics points Surface utilization continued the inflationary against X% mid-teens margin €XXX to remained engine of the XX% strong demand #XX. terms some year customers. in in gross up sales to sales Solutions mainly liquid This midterm the by in amounted once the from on and as of performance automotive given to our a XXX Electronics roughly pre Semi organically, business offset categories basis up decline a pressure stable down materials, a from by Display and strong in Sales growth in in contributions Solutions industry. growth year-on-year

comment back on statement. handing Belén, cash our also balance sheet flow let briefly and Before me to

were of can growth the Main business and end the compared see strong XX, sheet behind You slightly FX. of balance development on December. this drivers our expanded to Slide

cash resulted fully the In and existing on acquisition sits and in equivalents in equity goodwill. the at between which cash Exelead, side, shifts the and addition, especially of reduction purchase the a of entirely moment assets price asset in difference resources, intangible the some was cash financed from as

higher. gains pension and decline actuarial which effects with the net FX liability saw side, a due in retained to provisions On earnings drove together positive equity we

to ratio equity almost the from result, improved further a As XX%. XX%

primarily and the cash of me CapEx flow at to by strong in repayment well activities to although Turning growth with out not payables. by Belén And higher XX. to on in of investing financial Exelead And ambitions. let down increased respect to was for Operating financing the for million, as support and be and compared to cash but debt. as explained hand last update least, QX ESG can outlook. phasing back significantly our Cash cash it positions year, significantly last came to the acquisition tax an with difference mainly flow flow Slide driven €XXX due on that, higher

Belén Garijo

#XX Slide brief evaluating of now the have Thank map. intensively I'm ESG road been you, Marcus. on mention and past achieved update to important In on climate we you milestone towards we an with a our that our XXXX. share neutrality path couple have months, by on

of as have science-based Scope XXXX. in we You SBTi XX% electricity science-based invested part limiting our as to X the started for targets intensity greenhouse gas confirmed the absolute target gas warming emissions, that emissions now initiatives in for energy this minus SBTi ambition, efficiency. may Scope global X X set target To confirmed reduction renewable by emissions, even our process-related exceed initiatives to remember being And of XX% target Scope we greenhouse profit. goals, emission for The the following production various for been we limit by with to our X and relation both gross X technologies and and requirements of to degrees. minus of of emissions, the purchase X.X have targets an reduction achieve

In targets, score. have launched climate our to further addition improve our several waste we programs to

Pack] in And smart sustainability be [indiscernible] to published packaging found projects can outlook. with by [Slim Life go XXXX, packaging in electronics More be in franchise. details smart this, our example, the now initiative will extended For report was me and ago. Fertility our in like our which let a month straight the Science additional so-called

refer challenging the environment. earlier I comments to Before numbers, operating that made increasingly I give the me about you let the

am Slide XX. I Now on

the have you and As say least, lockdowns challenges of call in to pressures in and already supply Ukraine during evolved remember, recent new our the pricing, and particular, chain QX then, the Well, XXXX. back addressed may China topic ones. has the added and inflationary existing the further the war earnings in we to November since in created situation

that preparing basis assumptions key the and we for mitigated While chart serve summarizes this are scenarios, guidance. for our obviously actions different the of some as

but raw assume afterwards our in we to regards this very lost normalize beyond should example, to pressure the up the HX clear, Science able year. outages material is will extend in alternative assume We the be For Life that end remainder for energy To this production costs, be are range. these anticipate still will only shortages challenges, throughout the of we situation that and around volatility minor In year and sales on assume the QX China, with continued the shortages. and considering channels. make lockdowns be but to last the we upward will June, that input business, supply China response covered especially Electronics limited with no and lockdowns of in expected. EMEA to guidance will in we by significantly we And believe

passing increases possible. are whenever We costs higher price on this is via input when and

we of group systems closer net [indiscernible] are our it Slide flexibly the end strong, increased and We the position stocks course, raw supply our to a provided I'm to rapidly that and pre for me in is billion is attractive, expected and our on are markets EPS against and based also X% EBITDA with €XX.X with tailwinds to and monitoring company, continue protect billion to and strength for provide €X.X of numbers. a X% X% organic EBITDA dollar. of a organic to critical XXXX and growth X% processes our comes #XX, in base. of to before, science strengthening our range now actively and you pre the X% pre this designed act mainly EBITDA billion business. technology expect situations, further March. environment are of X% in X% €X.X of we adapt are to €XX.X to the We to our sales have navigating of to a a to U.S. as safety X% from that This and look is take to range guidance range to in line to growth margins when a in guided effectively With between billion. to changing continue materials. sales going in €X.X and that, pre we for billion, challenging at And let €XX.X to to X% of due X% X%, X% sales qualitative our a billion Currency

expect For all as you some organic growth additional to business here, color go please by earnings to we business sectors. be And supported and sales by with in continue to Slide me X XXXX #XX. sector, see

sales, and sector sector. COVID sector, We reduced of testament Science we followed simply fastest-growing also our in care by offsetting Life and in of this the improved our to business expect and core the strong see outlook Science, to Science the is a terms our an for be still sustainability Within quality business, Life electronics. largest expectations, health growth Life

we that in million COVID, now COVID up announced. we up €XXX versus Regarding to Process to million previously the Solutions €XXX of expect sales

€XXX in While we for confirm our million solutions. guidance below reserve

We in down slightly be margin also the Life still to Science expect year-on-year.

now Care, margins With you in become qualitative Electronics, that, inflationary have expecting. more our guidance to be are take line pressures that and all And is for thank questions. very in the your quantitative we from with we Health attention, For our happy much March. on due cautious slightly to we statements will your

Constantin Fest

will Thank of my you heard yourself start first and place. the much, all per from This with let's maximum allow be please. questions to X I questions your the in yourself side. ask to very remark of ask would Q&A, you limit kindly -- One person. a to

Operator

from Suisse. comes today Matthew And of Instructions] first Weston question [Operator the Credit

Matthew Weston

questions, Two please.

you will noticeable guidance XQ. the just Marcus the must comp a about interested in then be hear But new acceleration? reassuring. in suggests bit range. business, half is visibility captured capacity your it of would you be Science Life it COVID. Belén, easy I has or confused the making And in that lockdown drag into really energy of And on QX, very organic on I but guidance the I'm but And go second your would XX% China second the around and German-domiciled I proportion rationing. did add up. really German love Is as what question, to numbers the relies added? mentioned within understand the understand happen, growth, I little book? order already is that to And growth for underlying extended your Life going protect an Any your your of on be that trajectory good it can range And that to first growth you do realize Chinese within about it not uncertainty driving commentary given In we fully love included Is year. growth. you Science a the optimism The manufacturing? really was it that business the to may But I'm what's what mentioned year-end? guidance accelerate

Belén Garijo

and Matthew, question I second on comment ask Life let to Matthias then the will me get growth. Science

I gas gas So in referring the potential Germany. the are embargo assume to you --

of So a embargo, and in in be there main course, would Europe makes Europe. if our XX% gas of risk would be gas consumption our Darmstadt

any confident offer and more So from are context prepared, perhaps, sites that is couple have highly disruption our beginnings very of in production we war, plan. on Darmstadt. now our within well avoid the of been prepared mitigation that we can to of plan, details on articulating obviously, very what the a very Kai But the are we

Kai Beckmann

Matt, Kai is speaking. this

and with that, cover replace order plans to electricity. oil are for consumption foresee Darmstadt. production our I confident think gas [full to And other to productive our we in stay in with including our space] sources, the by grid So energy

Belén Garijo

Matthias?

Matthias Heinzel

Matthias. it's Matthew,

fully Let the guidance indeed core XX%. the me are X% dissect cover dynamics the I question. Life it's we important business. demand Indeed, of confirming Science And your year from for we mean, our that for to

into Process X we business, As we is declining, very where [PS] order all we this X% in years overall the Solutions, Solutions for quarter we're a orders offset the the the are X%. intake, points is number for at key I above although core also, the look business have intake have and and that booked also driver core up full If book. the confidence demonstrated core quarter, show growth. strong extract coming A COVID quarter, like still the order our the the for I Research in Essentially, into the you total so mentioned, the going they with business, up. if order

order the it business, It's COVID So for up declining while And substantially slightly slightly year-over-year. business. portion the sequentially. is up intake is up of for it's core the

in that mentioned a core also, mean, take all I growing but is Belén our as mentioned, the as coming a capacity, are we if business. online. I very navigating, macro base we together, have we of yes, So challenges, before, of lot we're And we confident which

growing this demand capacity. core So is our meeting growing now

Operator

Our of comes Richard JPMorgan. next question from Vosser

Richard Vosser

your time Mavenclad. the be can you on question how then particular as more clinical evobrutinib, on if anything maybe the say sense. very there a makes And which across on patients clinical impact One pharma-related should that? Just also and the line helpful. impact in to would some program, trials. color Ukraine you for about we question But think measures Marcus, trial X highlighted of on looking additional

You U.S., U.S. the in on dynamics How patients looks the Mavenclad terms highlight a would patients. which XX% be new helpful, increase of in good. too. are patients in returning and demand new That ex of

Peter Guenter

questions. your Yes, for Richard, thanks

tackle I'll both. So

of as evobrutinib, a on challenging situation to obviously perspective, points within It's definitely Marcus that mitigation. a the from on is industry at is to not beginning, a generic and you. Merck. A surprise this and the the thing First, and limited clinical couple trial mentioned not a

Ukraine did study of we number that a also example, in regions. continue is they whether them for the by stock in to we our before And to mentioned of have Ukraine. study what the study affected ensure we So mitigation, on for place example, to patients where the put measures, first that or can outside affected participate in of levels by that all, we areas increasing moving in way, work is proactive keep in territories, hard

Now And your the leverage design, health from event-driven, have so And the [NS the and opportunity we question, you we the used to by will add is trials], by this which the under we to and impact important and protocol which, our circumstances. point, to more as decided really that's it best it amend outside to know, of circumstances. these to Marcus' also commonly submitted believe help and additional major to the way, took approach answer data is allow trial patients mitigate these make was indeed to caused us authorities, those in it remaining patients in to countries.

before Regarding measures are just we lines, heard this us and clinical for protocol, in-house trial and the change which explained the still having war in in all given you. aiming speaking QX time you to data mitigating the the about XXXX, I

accrual exact data the the driven, key the Of event like is the depend that BTKi competitors other the necessary would protocol the on given now course, of the in space. fact events

Regarding your Mavenclad. on question

mentioned you up patients indeed XX% So the U.S. in new

some here. market. is color market of the Atlantic a from positions, heard of the reinforce in efficacy dynamic But in we not side that new segment losing efficacy are continue countries bit globally. anti-CDXXs. to continue the the we piece, [indiscernible] U.S. then example, Let for U.S., as those still market little we also the To good to, in up and you have in in key little high on news And we is patients of share me the contrary because correction our the give peers a the to Europe, market. you the This market make have that necessarily you the more share, against other depressed, strong is high we market positions our in gain share This keep

the the with dynamic optimistic right of this fruits we new as million, year unfolds relatively good to spot I'm overall, on came in in the starts. the see patient consensus, and €XXX So

Operator

Steventon The BNP next from Paribas comes question Exane. of Gary

Gary Steventon

guidance, and Mavenclad on follow-up a Healthcare the please. Just perhaps

range. health might the previous like widened looks guidance line care just to it X% slightly the translating So top [solid] be X% new into the

So in for for here kind you a perhaps swing key really assumed what would factors a question X% it thoughts please. widened and recovery scenario helpful slightly could Science share of or on growth might then China are if Healthcare your what as X% and the guidance? versus And be be Life well, that Mavenclad

would be us if helpful exposure X the the Life the you remind just specifically Chinese in of each sales divisions it market. Science, announced for think investment you for could single-use then of I recently to And bioprocessing. capacity on the

might markets just and wondering support And Chinese should service to you significant the out fits driver mainly Or basis, more Is U.S. on margins network. within it how so, future I'm domestic growth, relative is So this market? it longer-term? China the do and of to kind a if shift which of kind be? how a production think to of European

Peter Guenter

Yes.

the I'll thanks. take question. first So

really with it's So of the especially reason. There right, product within X% plenty single recent one or the things X% range, to where one not are we single launches. in are

of is have launches the part we to range lot of obviously So variability Mavenclad but a still also Bavencio, come. that of

always of can Italy I in reimbursement bit a we Spain tell we when little occur. April. in just and May, in exactly you for example, a is Bavencio reimbursement in reimbursement know And pricing got in got don't and This the So that the variable. case we

to last in But is product continue So the add the perhaps And would Fertility to I we of that speak. of degree certain rollout with as we comes then this of a China. variability. element, course, the

China of on effect Although the parts China, certain may the temporary see is of less Fertility Fertility we business. lockdowns of for in course, XX% example, worldwide in than Shanghai, sales of of Fertility, certain the

Matthias Heinzel

All Peter. right. It's Thanks, Matthias here.

your on Life questions me X cover Let Science. then

and Life China from a First total across around Research and Asia Science our is business of is is Applied. that's XX% Overall, about spreading XX%, of entire regional split total all, about Solutions, way China. our in that Process and

of mean, We Wuxi, Nantong, and fully in are in operational. I are in fully our plants all, operational right? First we China

the by lockdown, most of However, are area. in the especially as Shanghai the other we impacted companies,

on getting So year. having warehouse short-term long the into the as on bit us, challenged. obviously, the look Depending currently that expect was full is impact but impact There that certainly of in to we recover how especially QX. that's no out a QX, a goes, we for that stuff

is that single-use. into the around our then baked So second And kind question guidance. part your all of of

in of use. the today, we footprint single Denver in for facility our have in As a strong U.S.

built China. announced end in Wuxi, strong And a regional with kind have Europe, steps. with And regional footprint. the we have want now indeed, We into facility at [indiscernible] a to went day, of X live very of up single-use we the capabilities expansion the we our announced

essentially, the China China. should out the of highly growing So facility market serve

Operator

question the next Morgan comes Stanley. And of Quigley from James

James Quigley

I've couple margin got development. on a

in be us development. the able you give So to would color more on little bit EBITDA a Electronics,

nudged a may an You give us Display sort in you mentioned some in in any end bottom initiatives of your on have pricing Solutions maybe is pharma. have the can levers -- Surface -- more Then semis and you of the bit. Solutions. guidance details or down little not and But in other

terms. You the was R&D that release mentioned in down absolute in

XXXX? And driver? certain investment expect an this be savings cancer. in-licensing to or should the be continue termination should any any plans rest lung would areas R&D the for that with in-licensing? So you in leave great. Or flexibility trend R&D bintrafusp we So in through to of can the comes for expect EBITDA thoughts to attached accelerate there investment you talk how to or the have in your of program we pharma Do flexibility the

Kai Beckmann

I first. James, electronics the take question

stable levers. margins So as in future definitely Semi while investing with development capacity weigh you pricing additional about Semi Semi, the development have well into course, already started, as And investments have do growth in of our R&D investments, we asked margin which margin we too. a on

So is margin -- there progression. is currently there no

However, we Surface too. enjoy is a In of by on reported a a meanwhile we market quarters do fully couple pricing positive at any present -- of couple a development. more Semi the compensated environment, And not we have that the pricing that this stable situation years. This margin. development is In for inflation. development continued is margin Display, is the is based impacted. That have not the

Surface, on in transformation [X expanded in too. initiatives activities and So margin parts], even based our our Surface which we cost slightly, is

forward combination So the we has guidance. our led assumptions margin in of mix factors. That there is put a a that different have in to

Peter Guenter

expect the James, R&D is point, we going the R&D lots of forward as that today be less your so stable in moving have the there And what on percentage more you to spend, parts, right, Yes, to is is or ratio spend, to the you question [indiscernible]. should a know, in moving as sales.

start that bought during enpatoran [indiscernible] Phase You the have summer. trial we studies II that have seen we will in catalyst into

our assets I have to to that sure we you we so maximize the the we that or making the to enough R&D And in what now. when at of have, portfolio the flexibility have time, look see and but that remains do less sales ratio think that we to ballpark do to same continue at that more

Operator

Our Jain next of of comes from Sachin question Bank America.

Sachin Jain

Just X questions, please. quick

COVID. So firstly, for Process

year. the you COVID sales So you across commented the of expect just phasing

we update drags COVID run is get quarter first term fair an the the to expect trying in million what should remaining is Just patent think phasing was from going the I -- to quarters? just idea given second of Mavenclad for expect an different on one the extension. forward, rate that And a 'XX? €XXX

it to European and it hear you countries, of the you're a was couple rejected U.K. Germany I from U.S. in think still and appealed and pending

there So be helpful. would any update very

Matthias Heinzel

Sachin, Yes. Matthias. it's

Indeed, of milder over and course, decline Omicron develops. depends Let kind of more and how have with But symptoms, kind development slightly prevalent, in me we with quarters, question. that our rather line the not we this COVID virus and of adjusted mean, answer expecting kind virus all the point, rollout guidance. top remains first more we it that's your the At expect I the for and kind of on a are kind of maybe throughout of flattish used of the growing year. this flattish what

Peter Guenter

Mavenclad there on situation, is the question no your Sachin, answer patent short is update.

the some to and the is appeal are by in the have And key what for France are future. as wait know, And we pending. in the still comes you a Italy. certain in so countries extension in such processes So country, as Spain, patent the and [SBCs] request out pending. Europe, These other country [SEPs] still have obtained we number of U.S., term

Operator

go to can Goldman Sachs. Keyur we And Parekh of

Keyur Parekh

please. questions, Two

guidance first flow you a a a The headwinds recovery the more from one, bit perspective. into into give quarter half about flagging second some us just or second can precise quarterly the and Clearly, wondering the if the you're kind year. of of

think from characterize Slide I cost separately And the talks as second it? would perspective, kind inflation it quarter, we kind of for over think then to XX you year-over-year bit. a what, kind of a wondering, kind of Just how of

be relative what more if kind wondering what kind bit Just or in especially assumed in kind can costs. input you to priced is a of of quantitative guidance, of your of is

Belén Garijo

The didn't precise we right? China influence challenges usually on our business about the QX. we way quarterly dependent have which Healthcare, be guidance, QX, very Life mentioned referring before, have influence in spoke the to Matthias that on on and exclusively or on for Look, little Science give as a made lockdowns, expecting lockdowns don't assumptions And QX our we the business and highly are to evolve. obviously, Electronics any we

distribution challenges have We basically.

expecting up want only that QX. So do for those the Marcus, this future speak inflation? quarters, you catch we is I are but challenge about mentioned to sales the on to specific in

Marcus Kuhnert

from my There's also not to much perspective. add

us by raw going as entire the on believe also we quarter. by first outlined prices, by one hand which also in the some the driven and inflation the XXXX, other guidance, has, energy we cost So cost year hand way, the that on relatively in freight high logistics throughout hit challenges, elevated prevail is the material to which is

further little year. inflationary we so move a bit into drag when as impact of into step we to we mentioned, Belén also said, the what them the just from the lockdown, year. enter which by more say, down be topic half quarter on second we second actually the a let's the news there, which there side, So major expect that step the The much relieve when visible not might should is, China

Operator

Falko We can Friedrichs Bank. of to go Deutsche

Falko Friedrichs

business. whether sales sorry, risk I any question it. on could quantify And the And whether precisely COVID-related I'm first question the materials there's second in My negatively that semiconductor that's on that be going the everything around a the be forward. not risk level, or by of much demand macro potentially on us affected missed could inflation, if is, is then a so the going is you QX, side everything

Matthias Heinzel

Falko, Yes. here. it's Matthias

of year over of the we was. and think before, colleague you upper if an kind that. annualize million. gives of did mentioned And QX gave the before you that number kind around phased mean, how I the I it, of asked close math of your an QX I I about out you to I €XXX mean COVID how guidance for think As indication kind pretty you're end

Kai Beckmann

semi don't the our running negative case. They have their demand are on question. the I as is backlog It's a catching full on of any crisis the what still and UT may They the side. factories. from customers take we up known continues. in the perspective are this opposite chip

pretty the on is intact. growth MSI in forecast which starts is market X% So or wafer

end continuous high semiconductor. are prepared different demand in areas of on the for use we here, So all

Operator

BHF. Our Wendorff question next from comes of ODDO Daniel

Daniel Wendorff

X from my side.

in is excluding this also bit strong from? number can for your particular, question Life order development Solutions. intake on coming where the in Process in you Process talk one part. in you Science. X a would the like development Maybe business, demand core a COVID also interested underlying I growth, mentioned The about Solutions. So order And strong be

So some follow-up also topics here. understanding, there, a rising maybe or certain there my products. question but that also would solutions. chain for depending business Falko's you see was part as on really supply Solutions, supplier any semiconductor in Display for that the provide question and color a To help of And you if be can can nice. on me risk Is Electronics that then you might you

Matthias Heinzel

Matthias. Yes. Daniel, it's

the Let address me question. first

So for talk and core We growth, at about core had if very across well, goes business, first strong really Applied all right? Applied you will, Research, X about all talk strong But we businesses. that you They all, look strong, if the as was Obviously, also Solutions. and Solutions. it of when our across it Process a business Process nice, usually very goes [the strong have in industry. very also sector. also nice in X%] a about but we testing, Also we Research, saw biotech Applied, midterm the example, if I in And industrial COVID and food which very goes take are guidance. update. beverage out here, we really pharma our also

all So regions. goes point the is business here, all really key it across across and segments

spate that And slight into and this sequential as Actually, a more very ratio. the intake important, But the versus a you intake dynamics out before, then from question business the and will, COVID. details. of business intake not to leading further healthy quality, still Solutions. if order increase I the of seeing intake order with to much we the order increase year-over-year and we is a core very QX, mentioned book-to-bill a also QX towards within sequential order strong the around book are still now are Process order Secondly, your splitting our a

business core order the me, is ask QX. you if sequentially, So intake QX up substantially to

Kai Beckmann

chain the supply question. let me Semi take Daniel,

very looking into materials And kudos direct raw possible, dependencies, dual any in any we whatever sourcing checking one So for very, on chain China, And team, the by U.S.; missed year we're this tightly. indirect. supply a down tracked customers to have of are our quarters of chains managing couple delivery. last supply congestions year, is not and with port one, let

don't very We this on but have ball, any very, our a So side. don't is tightly crystal limitations monitored. we foresee

shortages. how we stay foresee track course, whether that supply was today's materials with so see we Of other on From contact and And it's don't of mentioned knowledge, customers, they we situation. in any nothing may far. dependent our are shortages

Operator

Baker of next Our is Simon today Redburn. question from

Simon Baker

questions. Two

Just continuing semi cycle. on question the the of

is of slightly Conference probably is slower Lithography a take-up SPIE colleagues that impression and expected. One EUV couple the of people some my got at the ago than weeks

not well goes in to in a get Phase how you a QX. obviously wanted Does [gain the any all Merck. that much perspectives in on conducting then and EUV. has in really are Healthcare, there wanted your positively II for of end efforts it and genetic the or I frankly, TLRX your which paper function] of planned Are you with was to to your conducted somebody make on matters exposed variance just lupus. sequencing that at secondly, that difference? of that April, on And just found the faster get have to I rollout suggesting negatively So perspectives much started or study enpatoran whether nature it

Kai Beckmann

SPIE Simon, just not delay. a EUV, us. to related portion on is a the for business industry, it's of on materials the across small discussion the EUV It's still

delay that is of So of EUV not material. the adoption

I node look acceleration can indicated an easily across customers, the innovation right in projects NAND R&D some and On on, going [indiscernible] on more to side, that logic. edge see know, about we see probably that see accelerations other advanced our now, on the layers speed our the of that's of leading by not monitored industry, we of you smaller transitions don't leading-edge the I'm even opposite node customers. if sizes all pessimistic our

Peter Guenter

the the role actually Yes, reinforces our Simon, in it And hypothesis I is yes. on lupus. publication pathogenesis the nature to your of answer question, plays TLRX/X the that and think that

publication So only adaptive TLRX/X postulation role we the reinforced think immune responses. that and enforced indeed, in think, both I in And SLE pathogenesis. an our really the innate the important in it's playing Nature

systemic which a in lupus lupus. and both the of study with study, safety BASKET is cutaneous the the a concept dose-finding and proof study, enpatoran to WILLOW evaluate So efficacy and of

that, We dosed XXX enrollment patients. and we patients. our estimate We're recently roughly very with of an happy first have

Operator

Societe gentlemen, today comes of our Florent final question from Cespedes and Ladies General.

Florent Cespedes

ones. quick Two

color First, that the the a that the side, follow-up give on what there the bring low the to range guidance. could bit us of Could the inflation rest assumption We year. the the be please much not end of of of little understand during guidance. you of you a should could

the second is lockdown. uncertainties of seems on current are it first Fertility. and from that the So question. My That's China coming the most

X% the China. it but quarter, first You to growth situation line said kind are of a top plus that some for that facing have you in back seems you challenges with normal

So just more on give you very you bit Thank little color this performance business. of could if the us much. a

Belén Garijo

whenever multiple China whatever plans, the increase production your me is in very mentioned you of I have price right? first activated know, there passing the channels, question. navigating But end, -- costs and address as higher we So are uncertainty mean, complex and lockdowns. leveraging multiple asks input a Florent, at mitigation even lockdown is this possible, I of environment say let that safety a via our stocks. still our points, sales increases if alternative for I significantly is the this is covered This I for environment China the uncertainty question. what assumptions the the by you extends beyond is first very view but give volatility us guidance, transparent we reasonable to believe can I underpinning what June, mentioned believe and a the view guidance.

On the Fertility. to Peter second question, is going address

Peter Guenter

Belén. the is had Thanks, quarter guidance. we X.X%, our Look, with phase line with first what Yes. we all, a on midterm post-pandemic of which a [group] Fertility, call in nice in first the continues

your for and we and part happy to right? fertility call, year first -- And fraction, also So global the lockdown total in business last ease the one. catch-up the small the fraction on than small China within then relatively in example. have So China less effect And but temporary last that least, have seen mentioned fertility we a in very then that a Europe Fertility. it the not only have the We Shanghai, of past business China, lockdowns also quarter. that of you is look, with -- that in after I on we're in XX% is of a the saw U.S., that, already course,

would we also anticipate the So same.

it's an say. attention particularly would worried, we're point, I but not So

Constantin Fest

were think these closing Garijo hand this. I'm any words with Belén, for all over to to questions I the closing Belén happy remarks. Yes,

Belén Garijo

as of it our position environments. navigating a course, I remain We mind Thank sales your that continue keep to increasingly for executing the very the of act from for interest with continued organic on targets confirm to on quickly. operating technology company, brief, we what everyone, an very in science to challenging you, uncertain and double-digit comes laser-focused in a strategic a In environment. we Merck. Yes, earnings. strong year growth growth year before will had despite Please we start said and priorities. And strength our when

margins in team hosting possible. strong to With and due wanted adapt delighted as end our effectively our Day as X be details. our protect course, headquarter processes up of and you our to And Capital flexibly I many are are welcome and and announce in business. that will goodbye. here In our Thanks rapidly will Our designed are Markets extremely systems and October markets in Darmstadt. will just environment this, we follow IR with our this again, attractive, to we be changing to

Operator

thank and has Ladies attendance. for call you your This concluded. gentlemen,

disconnect. now may You

Merck KGaA (MKGAF) 13 May 222022 Q1 Earnings call transcript