MERCK KGaA has raised the prospect of faster operating profit growth than analysts expected, defying concerns about competition for its cutting-edge liquid crystals for flat-panel display.
The German chemical and pharmaceutical firm yesterday predicted a 35 to 45 per cent increase in operating profit for 2011.
Analysts on average had expected an increase of about 20 per cent to €1.4bn (£1.18bn), seeing only modest growth from Merck’s bestselling drugs Rebif and Erbitux.
Analysts had feared that Merck’s highly profitable liquid-crystals business, the world’s largest maker of the key chemicals for flat-panel displays, could soon face keener competition from its Japanese rivals who are catching up with Merck’s PS-VA technology.
But the unit posted earnings before interest and tax of 54 per cent of sales in the fourth quarter, above the 50 per cent predicted by analysts. Profits were boosted by demand for tablet computers, smartphones and 3D TVs, for which PV-SA crystals are particularly well suited. Merck’s dividend proposal of €1.25 per share, however, fell short of the €1.32 the market had factored in.