Merck High Margins in Liquid Crystals

On April 23, 2008, Merck, a pharmaceutical and chemical company based in Germany, announced net profits of €239.1 million in Q1’08 after posting a loss of €8.3 million (US$13.2 million) a year earlier. The Q1’07 loss was mostly due to high interest payments on debt and Serono acquisition-related write-downs. Growth was driven by all divisions according to the company. Merck expects 2008 revenues to increase 5% to 9% while operating margin is expected to be in the range of 23% to 27%.

Merck forecasts 5% to 10% revenue growth and 47% to 52% operating margin in its liquid crystals division in 2008. Operating margins in the 50% range is incredibly strong. Merck has a dominant position in the liquid crystal market with about a 65% market share due to its very popular liquid crystals for both vertical alignment (VA) and in-plane switching (IPS). Merck’s closest competitor is Chisso of Japan. Merck’s market position is strong because its liquid crystals leads in performance and that’s what is required in a fast growing segment: LCD TVs.

Update 2008.04.30
VA liquid crystals are used by companies such as Samsung, Sharp, AU Optronics (AUO), Chi Mei Optoelectronics (CMO) while IPS liquid crystals are used by LG Display, IPS Alpha, Hitachi and a couple of others.

Source: The Wall Street Journal

[tags]Chisso, In-Plane Switching, IPS, Liquid Crystal, Merck, VA, Vertical Alignment, LG Display, Samsung, Sharp, AU Optronics, AUO, Chi Mei Optoelectronics, CMO, Hitachi, IPS Alpha[/tags]

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