Chemicals business sector

Chemicals | Total revenues by division – Q3

Chemicals | Total revenues by by division – Q3 (pie chart)

Merck’s Chemicals business sector was reorganized during the third quarter due to the acquisition of the U.S.-based life-science company Millipore, which closed on July 14. The new acquisition was combined with most of the Performance & Life Science Chemicals division to form the Merck Millipore division. This division has three business units – Bioscience, Process Solutions and Lab Solutions. The second Chemicals division is Performance Materials. It consists of two business units – Liquid Crystals and Pigments.

With the addition of Millipore, the Chemicals business sector contributed 38% of the Group’s total revenues and 42% of the operating result (excluding Corporate and Other).

The Chemicals business sector’s third-quarter total revenues jumped 81% to EUR 919 million largely due to the inclusion of Millipore sales but also because of strong growth in Merck’s other chemicals businesses such as liquid crystals, lab solutions and effect pigments. In addition, Chemicals enjoyed a 9.9% boost from positive currency effects. Cost of sales, which included EUR 43 million in expenses for the preliminary purchase price allocation for the Millipore inventory step-up, still grew at a slower rate than revenues, so that the gross margin more than doubled to EUR 532 million. The business sector booked EUR 49 million for amortization of intangible assets, mainly for the Millipore acquisition. Therefore, the Chemicals business sector’s operating result rose 74% to EUR 162 million.

The most recent report from the German Chemical Industry Association (VCI), dated July 7, forecast that for 2010 German chemical production would increase by 8.5% and sales of German chemicals would rise by 10%.