# Merck KGaA expects 2023 profit to slip as COVID demand wanes
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-03-02
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Merck KGaA Predicts 2023 Earnings Slide Due to Covid Impact
Meta Description: Germany's Merck KGaA forecasts a dip in 2023 profits from electronic chemicals unit decline and reduced Covid-19 lab supply demand. Despite challenges,
URL: https://financedigest.com/merck-kgaa-expects-2023-profit-to-slip-as-covid-demand-waneshtml

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By Ludwig Burger

FRANKFURT (Reuters) – Germany’s Merck KGaA on Thursday predicted 2023 earnings would slip due to a decline at its electronic chemicals unit and a drop in COVID-related demand for its lab supplies from drug and vaccine makers.

For 2023 earnings before interest, taxes, depreciation and amortisation (EBITDA), adjusted for one-offs, the company “assumes a moderate decline to an about stable development”, before any currency swings, it said in a statement.

Negative [foreign exchange](https://www.financedigest.com/small-business-strategies-for-foreign-exchange.html "Small business strategies for foreign exchange") effects would likely be an additional drag of between 1% and 4%, according to the maker of pharmaceuticals, lab equipment and specialty chemicals.

Overall, Merck assumes that 2023 will be a [challenging year](https://www.financedigest.com/yorkshire-bank-reveals-five-key-challenges-smes-face-year-ahead.html "Yorkshire Bank reveals five key challenges SMEs face in the year ahead"). The slowing semiconductor market, decreasing Covid-19-related [demand and persistently high inflation](https://www.financedigest.com/aussie-supermarkets-set-to-capitalise-on-high-inflation-but-softer-demand-ahead.html "Aussie supermarkets set to capitalise on high inflation, but softer demand ahead") will contribute to this,” the family-controlled group said in a statement.

Revenues from COVID-19 [related lab supplies would likely drop to 250 million euros from 800 million last year](https://www.financedigest.com/2020-the-paradoxical-year-that-has-reshaped-the-future-of-motor-insurance-and-related-sectors.html "2020: The paradoxical year that has reshaped the future of motor insurance and related sectors"), it added.

Pharmaceutical companies such as Pfizer, Moderna, Gilead and [Roche have this year warned of a plunge in pandemic-related product](https://www.financedigest.com/roche-flags-2023-earnings-decline-on-slump-in-covid-products.html "Roche flags 2023 earnings decline on slump in COVID products") sales after making billions from them over the past two years.

Still, Merck Chief Executive Belen Garijo upheld the German group’s goal of 25 [billion euros](https://www.financedigest.com/eu-seeks-clarification-on-italy-post-covid-plan-freezes-19-billion-euros.html "EU seeks clarification on Italy post-COVID plan, freezes 19 billion euros") ($26.6 billion) in sales by 2025, up from 22.2 billion last year, citing new product development and a diversified business.

Analysts have said that two important trial results, [expected at the end of the year](https://www.financedigest.com/philips-expects-to-reach-recall-settlements-this-year.html "Philips expects to reach recall settlements this year"), could boost longer-term earnings prospects at Merck’s drug business.

One is on a next-generation multiple sclerosis drug candidate, where Merck is ahead in a development race with Novartis, Sanofi and Roche, and the other on an experimental head and neck [cancer drug](https://www.financedigest.com/astrazeneca-lifts-2022-earnings-outlook-as-cancer-drugs-boost-results.html "AstraZeneca lifts 2022 earnings outlook as cancer drugs boost results") known as xevinapant.

Merck also reported fourth-quarter adjusted EBITDA rose 11% to 1.63 billion euros, slightly short of the average estimate of 1.69 billion [euros in an analyst poll](https://www.financedigest.com/euro-zone-inflation-seen-just-above-ecbs-target-in-2025-poll-shows.html "Euro zone inflation seen just above ECB’s target in 2025, poll shows") on the company’s website.

($1 = 0.9401 euros)

(Reporting by Ludwig Burger, Editing by Friederike Heine and Kim Coghill)


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