Merck 2014 Annual Report Download - page 124

Download and view the complete annual report

Please find page 124 of the 2014 Merck annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 271

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181
  • 182
  • 183
  • 184
  • 185
  • 186
  • 187
  • 188
  • 189
  • 190
  • 191
  • 192
  • 193
  • 194
  • 195
  • 196
  • 197
  • 198
  • 199
  • 200
  • 201
  • 202
  • 203
  • 204
  • 205
  • 206
  • 207
  • 208
  • 209
  • 210
  • 211
  • 212
  • 213
  • 214
  • 215
  • 216
  • 217
  • 218
  • 219
  • 220
  • 221
  • 222
  • 223
  • 224
  • 225
  • 226
  • 227
  • 228
  • 229
  • 230
  • 231
  • 232
  • 233
  • 234
  • 235
  • 236
  • 237
  • 238
  • 239
  • 240
  • 241
  • 242
  • 243
  • 244
  • 245
  • 246
  • 247
  • 248
  • 249
  • 250
  • 251
  • 252
  • 253
  • 254
  • 255
  • 256
  • 257
  • 258
  • 259
  • 260
  • 261
  • 262
  • 263
  • 264
  • 265
  • 266
  • 267
  • 268
  • 269
  • 270
  • 271

119GROUP MANAGEMENT REPORT → REPORT ON ECONOMIC POSITION → Life Science
1 Quarterly breakdown unaudited.
2014
2013
Q1 →
Q2 →
Q3 →
Q4 →
170
162
4.8
166
156
6.3
161
157
2.1
163
168
– 3.0
%
LIFE SCIENCE →
EBITDA PRE ONE-TIME ITEMS AND CHANGES BY QUARTER1
€ million / change in %
Despite higher production costs and slightly lower royalty, license
and commission income, gross profit rose by 2.3 % in 2014 to
€1,528 million, leading to a higher gross margin of 57.0 % (2013:
56.8 %). In comparison with the previous year, the Life Science
division increased its operating result (EBIT) by 10.4 % to €289
million. After eliminating depreciation and amortization, and
adjusted for one-time items, EBITDA pre one-time items, the most
important performance indicator, climbed 2.5 % to €659 million,
which was mainly due to an increase in gross profit. This resulted
in a stable EBITDA margin pre one-time items rise of 24.6 %.
(2013: 24.5 %).
The development of EBITDA pre one-time items in the indi-
vidual quarters in comparison with 2013 is presented in the fol-
lowing overview:
Development of business free cash flow
Despite higher EBITDA pre one-time items, business free cash flow
of the Life Science division decreased to €419 million in 2014
(2013: €494 million). The decline of –15.2 % was largely due to
the increase in trade accounts receivable in 2014. Higher capital
spending as well as an increase in inventories as of December 31,
2014 also lowered this key performance indicator. The increase
in the two balance sheet items inventories and receivables as of
December 31, 2014 was especially due to foreign exchange effects.
LIFE SCIENCE →
BUSINESS FREE CASH FLOW
€ million 2014 2013
Change
in %
EBITDA pre one-time items 658.6 642.8 2.5
Investments in property, plant and equipment, software
as well as advance payments for intangible assets
–141.0
–121.7 15.9
Changes in inventories – 44.2 –21.3 107.8
Changes in trade accounts receivable – 54.4 – 6.0 –
Business free cash flow 419.0 493.8 – 15.2