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Net profit down 76% at Merck

GERMAN pharmaceutical and chemical company Merck KGaA said yesterday that its first-quarter net profit dropped by 76 percent as demand for chemicals declined due to the world economic slump.

Merck said net profit for the January-March quarter fell to 57 million euros (US$75 million) from 239 million euros a year earlier.

Sales in the first quarter were stable at 1.9 billion euros.

"This year will be a challenge for Merck, but I am happy to say that our pharmaceuticals business remains strong," Chief Executive Karl-Ludwig Kley said.

Liquid crystals, used in products including television and computer screens, were a weak point at the beginning of this year. But Kley said that "regarding liquid crystals, we are convinced we reached the bottom in the first quarter."

The company said its overall first-quarter operating profit fell 45 percent to 198 million euros from 360 million euros a year earlier, propelled by declines in the chemicals business.

Total sales of the chemical business - which includes liquid crystals as well as performance and life science chemicals - declined 22 percent to 436 million euros. At the same time, expenses increased, bringing the division's operating profit down nearly 80 percent to 37 million euros.

Liquid crystals dry up

Total liquid crystals sales were down 44 percent to 131 million euros from 234 million euros a year earlier.

Performance and life science chemicals sales declined 6.2 percent to 305 million euros from 325 million euros. Merck said that pigment sales for paints were under particular pressure because of the decline in world car markets.

In the pharmaceuticals division, Merck saw sales increase at its Serono division, but they fell at the consumer health care division.

Serono, whose products include Rebif multiple sclerosis treatments and Gonal-f, used in the treatment of infertility, saw sales increase 11 percent to 1.3 billion euros from 1.2 billion euros.

Shares of Merck were up 2.61% to 67.89 euros by afternoon trading in Frankfurt yesterday.


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