Merck 2014 Annual Report Download - page 40

35TO OUR SHAREHOLDERS → Letter from Karl-Ludwig Kley
Our company has completed another good year. We again achieved profitable growth. The “Fit for 2018”
transformation program, with which we are shaping the future of our company, is showing its effect. With
the acquisition of AZ Electronic Materials (AZ), the offer to acquire Sigma-Aldrich and our alliance with
Pfizer in immuno- oncology, we have laid the foundations for future growth.
In 2014, our sales rose by 5.5 % to €11.3 billion.
EBITDA pre one-time items, our most important earnings
indicator, increased by 4.1 % to € 3.4 billion. Through solid organic growth and acquisition-releated
increases, we were able to make up for negative foreign exchange effects. Profit after tax declined slightly by
3.7 %to€1.2 billion.
Business free cash flow decreased to €2.6 billion, which was 12 .0 % below the very high level of 2013. At
the beginning of 2014, we completely eliminated our net financial debt. As a result of the acquisition of AZ
Electronic Materials in May 2014, it had temporarily increased to €2.2 billion as of June30, 2014. Yet by
year-end, we had already lowered it to below €0.6 billion.
The capital market has recognized the positive development. The share price soared by 20.4 % in 2014 – the
largest increase in the DAX. On November27, our shares even hit a new all-time high of €80.40. We are
pleased by this even though our company doesn’t think just in quarters, but also in generations.
We want our shareholders to partake in the successful development of the company. Therefore, we will
propose to the Annual General Meeting an increase in the dividend by € 0.05 to € 1.00 per share. The total
dividend payment takes into account the 1:2 share split in 2014 and also takes into consideration the capital
resources
required for the Group’s further transformation steps.
Please allow me to address the key strategic steps taken in 2014:
→ The measures to improve our efficiency were successfully completed. Consequently, in 2014 we embarked
on the next phase of “Fit for 2018”, sharpening our focus on growth.
→ The acquisition and integration of AZ Electronic Materials, a leading premium supplier of high-tech
materials, were also completed. The portfolio includes process chemicals for the manufacture of inte-
grated circuits, such as those used in smartphones, as well as photoresists used to manufacture flat-screen
televisions. Our liquid crystals remain the gold standard in display technology. With AZ, they are com-
plemented by specialty chemicals for the technology behind displays.
→ We will be working closely with the U.S. pharmaceutical company Pfizer on the development and global
commercialization of our immuno-oncology anti-PD-L1 antibody. With this groundbreaking alliance, we
are entering a highly promising growth market with a compound from our own pipeline.
→ In September, we announced our intention to acquire the U.S. life science company Sigma-Aldrich. This
would be the largest acquisition in the company’s almost 350-year history. Once we receive antitrust clear-
ance of this acquisition, we will be able to offer our customers a much broader product portfolio as well as
the industry’s leading e-commerce platform. At the same time, the acquisition would strengthen our global
presence in the life science market, above all in North America and in the fast-growing markets of Asia.