Strength boosted Audited

Merck has combined its materials businesses and activities in the new Performance Materials division, which was created after completing the acquisition of the U.S. life science company Millipore on July 14. The division consists of the Liquid Crystals, Pigments and Cosmetics business units, as well as Advanced Technologies, which offers materials for LEDs (light-emitting diodes) and photovoltaics along with other innovative technologies.

Performance Materials | Key figures

XLS

 

 

 

 

EUR million

2010

2009

Δ in %

Total revenues

1,384

1,006

38

Gross margin

925

478

93

R&D

127

109

17

Operating result

580

218

166

Exceptional items

–1

1

Free cash flow

542

288

88

Underlying free cash flow

549

304

81

ROS in %

41.9

21.7

 

Production capacity utilization was at a high level for both liquid crystals and pigments, reflecting the recovery from the downturn in 2009. Total revenues of the division rose by 38% to EUR 1,384 million from EUR 1,006 million in 2009. Positive currency effects of 9.7% and organic growth of 27% contributed to this increase. The division generated more than 70% of its total revenues with liquid crystals. At EUR 925 million (2009: EUR 478 million), gross margin grew faster than expenses. Thus, the division’s operating result more than doubled, increasing to EUR 580 million from EUR 218 million in 2009. Return on sales (ROS) rose to 41.9% from 21.7% in 2009. Underlying free cash flow amounted to EUR 549 million, compared to EUR 304 million in 2009.

In order to defend and expand our leadership position in display materials, among other fields, we continued to invest in research and development. R&D spending rose to EUR 127 million from EUR 109 million in 2009. In September, the new Material Research Center was opened at the Darmstadt site. At EUR 50 million, this represents the largest single R&D investment in the Chemicals business sector to date. Covering a surface area of approximately 11,000 square meters, it houses some areas of liquid crystal research as well as OLED (organic light-emitting diodes) research, among other activities. Our researchers at the center are also working on materials for mobile energy storage systems, for example for use in hybrid or electric vehicles.