Merck KGaA Profit Falls, Trim Forecast

On October 24, Merck KGaA stated Q3 profits fell 20% and trimmed its forecast for liquid crystal sales as demand slowed for LCD TVs and LCD monitors. Net income came down to 144.3 million euros (about US$181 million) or 76 cents per share from 181.5 million euros or 95 cents per share in Q3 of 2005. Eleven analysts that Bloomberg surveyed were expecting a profit of 172.5 million.

Although Merck is expecting revenues to increase 10% in 2006 compared to last year, due to rising inventories at electronics companies that use LCDs, LCD manufacturers have been sluggish to increase procurement of liquid crystals. Merck is the leading supplier of liquid crystals to LCD manufacturers. Liquid crystals generate roughly 40% of operating profits for Merck.

Sales from liquid crystals rose 4.4% to 207.5 million euros in Q3 that came slightly under analyst estimates of 211 million euros. Operating profits for liquid crystals will grow more than 10% in 2006 according to Merck.

Source: Bloomberg

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