Merck (MRK) Q2 2024 earnings summary

Executive summary

• Q2 2024 delivered strong results, with organic and reported sales growth led by Healthcare and Electronics, while Life Science faced headwinds from destocking and post-pandemic normalization but showed sequential improvement.

• Healthcare achieved record sales, driven by Oncology (+9% organic) and Cardiology Metabolism & Endocrinology (+13% organic); Electronics posted 8% organic growth, fueled by Semiconductor Solutions and AI demand.

• The quarter was marked by the termination of the Xevinapant program, resulting in a €140 million impairment and additional provisions, and the strategic divestiture of Surface Solutions.

• Acquisition of Mirus Bio for $600 million was completed, expanding cell and gene therapy capabilities; UnitySC acquisition and Surface Solutions divestiture were also announced.

• Group net sales for H1 2024 declined 1.2% year-over-year to €10,472 million, but Q2 sales grew 0.9% to €5,352 million.

Financial highlights

• Q2 2024 group sales increased 0.9% year-over-year to €5,352 million; organic growth was 1.7%.

• EBITDA pre was €1,509 million, down 2.9% year-over-year; EBITDA pre margin at 28.2%.

• EPS pre was stable at €2.20; reported EPS declined 13.6% to €1.40 due to higher D&A and impairments.

• Operating cash flow rose 38.4% to €861 million in Q2; net financial debt increased to €7,950 million, mainly due to dividend payments.

• H1 2024 EBITDA pre was €2,963 million (down 5.7%); profit after tax was €1,305 million (down 13.3%).

Outlook and guidance

• Upgraded 2024 guidance: net sales €20.7–22.1 billion (organic growth +2% to +5%), EBITDA pre €5.8–6.4 billion (organic growth +4% to +10%), EPS pre €8.20–9.30.

• Healthcare organic sales growth guidance lifted to +6% to +9%, Electronics to +4% to +8%, Life Science confirmed at -2% to +2%.

• Operating cash flow for FY 2024 forecast at €4.0–4.6 billion; effective tax rate expected at 21%–23%.