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Investing.com -- Merck KGaA (ETR:MRCG) shares fell more than 5% Thursday after the company lowered its full-year outlook, citing weak demand in its Life Science and Electronics units, despite posting flat first-quarter sales and a modest earnings beat.
Group sales in the first quarter totaled €5.28 billion, matching company and Barclays (LON:BARC) consensus estimates.
EBITDA pre reached €1.53 billion, slightly below Barclays’ forecast of €1.55 billion but above consensus of €1.51 billion.
The EBITDA pre margin stood at 29.1%, compared to Barclays’ estimate of 29.4% and consensus of 28.6%.
Earnings per share before exceptionals came in at €2.12, missing Barclays’ estimate of €2.26 and the consensus of €2.17.
The company cut its full-year 2025 guidance, pointing to softening demand in early-stage biotech, macroeconomic uncertainty, and weaker customer activity in key segments.
Merck now expects group organic sales growth between 2% and 6%, compared to a prior forecast of 3% to 6%. Organic EBITDA pre growth is projected between 2% and 7%, down from 3% to 8%.
Life Science performance was flat in the quarter, with sales in line with expectations. Process Solutions, which had previously been affected by destocking, showed signs of recovery, supported by strong order intake.
Barclays analysts noted the business-to-business order book was “comfortably above 1x.” However, this was offset by declines in Research and Applied Solutions and Lab Supply Services.
The latter segments were impacted by reduced spending from U.S. academic and government customers and lower contract development activity amid fewer biotech project starts. Segment EBITDA pre declined 3% against both Barclays and consensus estimates, driven by product mix.
Healthcare was the strongest performer among the segments. Sales rose 1% versus consensus, while EBITDA pre was up 5%.
Growth was supported by solid demand for Erbitux and Glucophage, which benefited from favorable shipment timing.
These gains offset weaker sales from Bavencio, which faced increased competition, and Rebif, which continued to decline due to market contraction and price pressure. Lower R&D expenses and cost controls contributed to the margin improvement.
Electronics posted a 2% decline in revenue, slightly below consensus. The company cited weakness in Semiconductor Solutions and a small shortfall in semiconductors. Segment EBITDA pre was in line with consensus but 3% below Barclays’ estimate.
Merck reaffirmed that the planned divestment of the Semiconductor Solutions unit remains on track for the second half of 2025.
Guidance for Life Science was revised downward, with the company now expecting organic sales growth of 2% to 6%, compared to a previous range of 2% to 7%.
EBITDA pre growth for the segment is now forecast between 1% and 7%, down from 2% to 9%. Barclays had projected 5.7% organic sales growth and 5.1% EBITDA pre growth for the year.
The company raised guidance for Healthcare, now expecting sales to grow 2% to 6%, up from 1% to 5%. EBITDA pre growth is projected at 4% to 10%, compared to a previous range of 3% to 9%.
Electronics guidance was also lowered. Organic sales are now forecast to rise 1% to 6%, compared to 2% to 6% previously. EBITDA pre is expected to grow between -3% and 8%, revised from a prior range of 3% to 9%.