Merck Performance Materials updates strategy
Merck (Darmstadt, Germany), a leading science and technology company, recently presented its strategy to secure the future prospects of Performance Materials. The business sector comprises the specialty chemicals business of Merck and supplies solutions for displays, computer chips and surfaces of every kind. After 2019, Merck expects Performance Materials to resume earnings growth.
“With ‘Bright Future’ we have implemented a transformation programme designed to put Performance Materials back on a growth track. We want to further expand our position as a leading supplier of solutions for the electronics industry. To do so, we will align ourselves even more closely with the needs of this key market of the future and drive market-oriented innovations forward,” said Kai Beckmann, CEO of Performance Materials and member of the executive board of Merck.
In 2017, Performance Materials generated €2.4bn or 16% of group sales. The business sector is currently facing massive market shifts in liquid crystals for display applications. In the coming years, Merck expects to see a continuing market decline, which will also impact sales. However, this development should be more than offset by growth in OLED materials and photoresists as well as in the Semiconductor Solutions and Surface Solutions business units. In particular, Semiconductor Solutions is expected to be a main driver of this growth. Consequently, Merck assumes that average annual sales growth will range between 2% and 3% in Performance Materials after 2019. The EBITDA pre margin is expected to amount to around 30% in the long run, representing above-average profitability within the specialty chemicals market.
Performance Materials serves attractive growth markets in the electronics, automotive and cosmetics industries. Particularly the electronics sector is benefiting from megatrends such as digitalisation, mobility and urbanisation, supplies a wide variety of end-user markets and is thus more stable and less susceptible to industry cycles. Merck aims to further expand the leading role of Performance Materials as a supplier of solutions for the electronics industry. The company is also working to establish sustainable success out of the positive trend seen in the growth market of China in recent months. Merck opened an OLED technology centre in Shanghai in June.
Over the past year, Performance Materials has replaced almost its entire leadership team and organised itself into the three business units Display Solutions, Semiconductor Solutions and Surface Solutions. An integrated research and development team is steering the entire innovation process, thereby ensuring the efficient deployment of resources. To strengthen its technological leadership in the various markets and to secure long-term growth, Performance Materials will continue to invest heavily in innovations. New business fields and innovations such as liquid crystal windows offer additional growth potential.
Caption: Kai Beckmann, CEO of Merck Performance Materials (photo: Merck)