Merck (MRK) Q1 2025 earnings summary

Executive summary

• Achieved solid, profitable growth in Q1 2025 across all business sectors, with net sales up 3.1% to €5.28 billion and EBITDA pre rising 5.6% to €1.535 billion, despite macroeconomic and FX headwinds.

• All sectors contributed to organic sales and EBITDA pre growth, with margin expansion in Healthcare and Electronics; Process Solutions led with 11–12.4% organic growth.

• Regional diversification supported resilience, with strong growth in Europe, Asia-Pacific, Latin America, and Middle East & Africa, offsetting a decline in North America.

• Operating cash flow declined 46.3% to €556 million, mainly due to higher receivables, inventories, and tax payments.

• Announced acquisition of SpringWorks Therapeutics for $3.4 billion, expected to close in H2 2025, to strengthen rare tumor focus and U.S. presence.

Financial highlights

• Net sales rose 3.1% year-over-year to €5.28 billion, supported by acquisitions and slight FX tailwind.

• EBITDA pre increased 5.6% to €1.535 billion, with margin expanding to 29.1%.

• EBIT grew 8% to €1.006 billion; EPS pre up 2.9% to €2.12, reported EPS up 5.6% to €1.69.

• Net financial debt decreased slightly to €7.121 billion; equity ratio improved to 61%.

• Operating cash flow declined sharply due to working capital outflow and higher non-income related tax phasing.

Outlook and guidance

• 2025 sales guidance: €20.9–22.4 billion; EBITDA pre: €5.8–6.4 billion; EPS pre: €7.90–9.00.

• Organic sales growth guidance: +2% to +6%; EBITDA pre: +2% to +7%; FX expected to be a headwind.

• Sector guidance: Life Science sales +2% to +6%, Healthcare +2% to +6%, Electronics +1% to +6%.

• Effective tax rate guided at 21–23%; capex on PPE €1.6–1.8 billion; EUR/USD hedge ratio ~70% at 1.11.

• Guidance reflects macroeconomic and geopolitical headwinds, including FX and tariff risks; no tariff-driven recession assumed.