Merck KGaA: Earnings in line but lower-than-expected conversion into FCF
NEUTRAL, Fair Value EUR110 (-13%)
Merck revealed this morning results for Q2 2013 with sales increasing by 3.3% to EUR2,744m which is in line with consensus expectations even though the CER increase was offset by negative currency effects of 3.5%. EBITDA is in line thanks to an improvement by around 300bp for both Merck Serono and Performance Materials. All in all, EPS reached EUR2.26 vs EUR2.22 estimated and Merck KGaA confirmed its guidance. However we can underline the low conversion of earnings in free cash flow due to an increase in working capital. Last point, an update of atacicept in SLE is expected in H2.
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