Chairman of the
2015 was a great year for Merck. By acquiring Sigma-Aldrich, we successfully completed the portfolio realignment that started ten years ago. We made research advances and future-oriented investments that have opened the door to future success. And our new branding demonstrates self-confidence; it shows what makes Merck unique.
But even more importantly, we again achieved profitable growth. In 2015, our net sales rose by 13% to € 12.8 billion. EBITDA pre exceptionals, our key earnings indicator, grew by 7.1% to € 3.6 billion. Profit after tax declined by 3.5% to € 1.1 billion.
In addition to acquisition-related effects, organic sales growth of 2.6% contributed to our good performance in 2015. Contrary to 2014, we additionally benefited from currency tailwinds in 2015.
Business free cash flow was € 2.8 billion, which was markedly higher than in 2014. In the first ten months of the year, we completely eliminated our net financial debt. However, owing to the acquisition of Sigma-Aldrich, it increased as expected to € 12.7 billion as of year-end. As was the case following major acquisitions in the past, our aim is to quickly reduce our debt.
Once again, our focus on global growth markets paid off in 2015. At 33%, Asia-Pacific not only generated the largest proportion of Group sales, but also achieved the highest sales growth. More than half our overall sales growth was achieved in this region.
The soaring stock markets at the beginning of 2015 also fueled Merck shares. On April 10, our share price hit a new all-time high of € 111.25. At the same time, our shares proved to be more resilient than other equities in the second half of the year. For the year as a whole, the Merck share price rose by 14%, outperforming the DAX® by nearly five percentage points.
We want the dividend to reflect the positive development of the company. Therefore, we will propose to the Annual General Meeting to increase the dividend by € 0.05 to € 1.05 per share.
Five changes that took place in 2015 were particularly important to Merck’s strategic development.
The acquisition of the life science company Sigma-Aldrich is the biggest takeover in our company’s history of nearly 350 years. Merck has thus become one of the world’s largest players in the life science industry. We can now offer our customers a broader product portfolio than any other company and we now have the leading e-commerce platform in the sector.
With this move, we have not only considerably expanded our Life Science business, but also completed the realignment of our portfolio for now. Since 2007, we have been repositioning Merck through acquisitions and divestments. This has fundamentally changed the company and secured its future viability. Today, Merck has three strong pillars: Healthcare, Life Science and Performance Materials. Each business sector can now further develop and grow its businesses, both with its own resources and in synergy with the other business sectors.
In 2015, our immuno-oncology research made good progress. Its aim is to harness the human immune system to fight cancer cells. As of the end of 2015, we had commenced 20 clinical trials designed to test the efficacy of our active ingredient avelumab. Lung, ovarian, gastric, and bladder cancer are the most important indications.
The results so far are promising and have been recognized by the regulatory authorities in Europe and the United States. We are convinced that Merck can make an important contribution in immuno-oncology and sustainably improve the lives of patients. We want to become a leader in this highly promising market.
Once again, Performance Materials proved to be a reliable source of strength and innovative ability in 2015. We clearly defended our global market leadership in liquid crystals, particularly thanks to continuous new developments. For example, UB- FFS technology represented a breakthrough in the energy efficiency of displays for mobile devices. We won the German Innovation Award for this in 2015.
The OLED (organic light-emitting diodes) business has exceeded our own expectations. It has grown rapidly and we have gained numerous new customers. By investing in research and production in Korea and Darmstadt, we are paving the way for further success in this future market.
We want to become even more innovative and pursue opportunities beyond our existing businesses. This is why we are building
an Innovation Center at the heart of our global headquarters in Darmstadt. The construction work is making good progress.
In 2015, a modular Innovation Center was inaugurated. Internal project teams and selected start-ups moved in to start work on interdisciplinary approaches and pursue new ideas. The businesses will still be responsible for product innovations and developing existing technologies further. But with the Innovation Center, we are creating scope to move beyond this. That’s because we not only want to be part of technological trends, we want to shape them.
The launch of our new branding attracted attention well beyond our company. It is vibrant and bold – and suits us splendidly. Merck has changed considerably in recent years. We are no longer a traditional supplier of chemicals and pharmaceuticals, but rather a leading science and technology company with global reach. With the new brand, we can present Merck the way it is today. The fascinating world seen through a microscope gave us inspiration for the design of the visual elements.
We’re showing that we are a strong, unified company, which is why we stopped using the independent business sector brands. Merck Serono and Merck Millipore are now simply called Merck. Unfortunately, nothing has changed in terms of the fact that we need to operate under different names in the United States and Canada. However, the new brand gives us creative possibilities to show on both sides of the Atlantic that we are one. And it strongly differentiates us from the competition. We are now universally unmistakable.
As you can see, a lot changed at Merck in 2015. At the same time, we remained true to our entrepreneurial values. We are resolutely focused on what customers and patients want and need. Our commitment to quality and our passion for discoveries are unabated. We are aiming for long-term, sustainable growth in line with our six company values – courage, achievement, responsibility, respect, integrity, and transparency – as the yardstick for our work.
This combination of a strong identity and a willingness to embrace change is what makes Merck successful – and always will.
Merck is better positioned than ever before. We can be proud of what Merck is today: a leading science and technology company whose ideas and products can really make a difference in the world. With our three business sectors Healthcare, Life Science and Performance Materials, we are not only successful, but also improve the lives of patients, customers and partners around the world.
Our nearly 50,000 employees make all of this possible. Across the globe, they seek new solutions and the best answers for our customers. Through their passion for discovery, creativity and personal commitment, they build Merck’s success each and every day. I owe my thanks to every single one of them.
As already announced in October 2015, I will resign as Chairman of the Executive Board at the end of April 2016. Over the past several years, my successor Stefan Oschmann and I have cooperated superbly. He has significantly helped to make Merck fit for the future. I know that the company is in good hands with him.
My years at Merck were challenging, exciting and fulfilling. It was a privilege to lead this great company through major changes and to set the course for a successful future. I thank you for your trust and support during this time. Please remain loyal to Merck and look forward to the next chapter of this company’s nearly 350-year success story.
Chairman of the Executive Board