Merck 2014 Annual Report Download - page 139

134 GROUP MANAGEMENT REPORT → Report on Expected Developments
REPORT ON EXPECTED DEVELOPMENTS
The key financial performance indicators of the Group, namely
sales,
EBITDA pre one-time items and business free cash flow,
remain unchanged. Based on these steering parameters, the fol-
lowing report provides a forecast for fiscal 2015 of the develop-
ment of the Group and its three business sectors: Healthcare, Life
Science and Performance Materials. Since the internal planning
process for 2015 was already based on the new segmentation, the
Report on Expected Developments also reflects this new structure.
Key changes relate to the composition of the pharmaceutical
business – consisting of the previous the Biopharmaceuticals and
Consumer Health businesses – under the umbrella of the new
Healthcare business sector as well as the renaming of the Life
Science business to the Life Science business sector. Information
on the segmentation, which took effect on January1, 2015, can be
found under “The Group” (pages 44 – 49) in this Annual Report.
In September 201 4, Merck KGaA, Darmstadt, Germany, an d the
U.S. life science company Sigma-
Aldrich entered into a merger
agreement according to which the company would acquire Sigma-
Aldrich. Sigma-Aldrich shareholders approved the merger with
the Group at an extraordinary shareholders’ meeting on Decem-
ber 5, 2014. From today’s perspective, the acquisition is still
expected to close by mid-2015. The successful completion of the
transaction is subject to the required antitrust clearances.
The forecast for expected business developments in 2015 will
initially be presented without taking the Sigma-Aldrich acquisition
into account. Separate forecasts for the effect of the acquisition of
Sigma-Aldrich have been prepared for the Group as well as the
Life Science business sector of Merck KGaA, Darmstadt, Germany,
to which the acquisition relates. They are based on a potential
first-time consolidation of Sigma-Aldrich in mid-2015.
FORECAST FOR THE GROUP
GROUP →
FORECAST 2015
€ million Actual results 2014 Forecast 2015 Key assumptions
Sales 11,291.5 – Slight organic
growth
– Slight portfolio
effect
– Moderately positive
foreign exchange
effect
– Healthcare: organic at the 2014 level; significant decline in Rebif® sales,
compensated for by growth contribution from Emerging Markets and other key
products by sales
– Life Science: moderate organic growth
– Performance Materials: slight organic increase compared with 2014; strong
portfolio effect due to the inclusion of AZ Electronic Materials for a full fiscal year
EBITDA pre
one-time items
3,387.7 Slight increase due
to operating business
developments and
positive foreign
exchange effects;
at least at the 2014
level
– Targeted intensification of R&D programs and thus higher research and
development costs for the Biopharmaceuticals business
– Adverse impact due to the absence of Humira® royalty income and declining
Rebif® sales for the Biopharmaceuticals business
– Low double-digit percentage increase for Performance Materials due to the
consolidation of the AZ acquisition for a full year and a moderate increase for
Life Science
– Low double-digit percentage increase in expenses for Corporate and Other due
to the absence of currency hedging gains in 2014 as well as to the expected
expenses for the "ONE Global Headquarters" project in 2015.
Business free
cash flow
2,605.1 Slight increase – Expected slight increase in EBITDA pre one-time items
– Further improvement in working capital management