After a significant increase in profits last year, the pharmaceutical and technology company Merck is preparing for increasing headwinds. Due to the weakening market for semiconductors, a further decline in corona demand and persistently high inflation, Merck expects 2023 to be a challenging year, the company announced on Thursday. Negative exchange rate effects are also likely to have a negative impact. Merck expects slight to solid organic sales growth. Adjusted operating profit is expected to decline moderately or remain stable at best.

In the Life Science business, which offers products for pharmaceutical research and drug manufacturing, Merck benefited from record demand during the coronavirus pandemic. However, demand already weakened last year. Nevertheless, the division made the strongest contribution to the 2022 result. Overall, adjusted operating profit (Ebitda) rose by a good twelve percent to 6.8 billion euros. Analysts had expected an average of just over 6.9 billion, slightly more.

Sales increased by almost 13 percent to 22.2 billion euros, also thanks to positive exchange rate effects. Organic sales growth amounted to more than six percent. "In a challenging environment, we achieved profitable growth in fiscal 2022," said Merck CEO Belen Garijo. "The good performance of Life Science's core business more than compensated for the expected decline in Covid-19-related demand." Since profits also rose sharply on balance, shareholders are to receive a dividend of EUR 35.2 per share, which is 20 cents higher.

The plastics group Covestro does not dare to make a concrete forecast for 2023 in the difficult economic environment. The operating result (Ebitda) is likely to fall significantly in the current year, as well as the free operating cash inflow, the Dax Group announced on Thursday. On average, analysts expect operating profit to decline to 1.2 billion euros.

In 2022, Covestro felt the effects of restraint in demand and high energy and gas prices. Operating profit fell by about half to just over 1.6 billion euros. All in all, impairments of deferred tax assets and write-downs on fixed assets resulted in a loss of EUR 272 million, which is slightly less than reported in January on the basis of preliminary results. Covestro will therefore not pay a dividend for 2022.

The specialty chemicals company Evonik also expects a decline in profits in 2023 in view of high energy prices and the uncertainties surrounding the economic development of the global economy. Operating income (adjusted EBITDA) is expected to be in a range of €17.19 billion to €2.1 billion with sales of €2 billion to €4 billion, Evonik announced on Thursday. "In view of the ongoing uncertainties, our forecast range is broader than in the previous year," said CEO Christian Kullmann. Especially in the first quarter, the negative development of the second half of 2022 is likely to continue, after which the situation should brighten.

In 2022, Evonik generated an operating result (adjusted EBITDA) of around €2.49 billion with products ranging from amino acids for animal fattening to lipids for the BioNTech corona vaccine, with sales rising by 24 percent to €18.5 billion. The shareholders around the RAG-Stiftung are to receive an unchanged dividend of EUR 1.17 per share. Evonik had forecast an operating profit (adjusted EBITDA) of €2022.2 billion to €5.2 billion for 6 and has now landed just at the lower end of its forecast.

Kullmann intends to concentrate the Group on high-margin specialty chemicals. To this end, Evonik is investing in growth businesses and intends to divest areas that no longer fit into its portfolio. "The transfer of our Lülsdorf site to new hands will be the next step in the sale of the businesses of our Performance Materials division," Kullmann announced.