Merck KGaA CEO: Must Significantly Reduce Costs, Slash Jobs

Merck KGaA CEO: Must Significantly Reduce Costs, Slash Jobs

April 20th, 2012 // 12:59 pm @

German pharmaceutical company Merck KGaA (MRK.XE) must significantly reduce costs and cut staff, Chief Executive Karl-Ludwig Kley said Friday at the company’s annual shareholder meeting.

Merck’s personnel expenses have to be reduced notably, said Kley, without specifying. Personnel costs accounted for almost 40% of last year’s around EUR8 billion operating expenses, according to the CEO.

In Germany, where Merck has most of its staff, the company wants to reach an agreement with the employee representatives and carry out the decisions in a socially responsible manner and preferably on a voluntary basis, said Kley.

“Both sides expect at the moment that we can conclude the talks relatively soon,” he said.

Merck announced efficiency measures in February, but didn’t specify the amount it wants to save. The company employs more than 40,000 staff globally, of which 9,000 are based at its headquarters in Darmstadt.

During the savings program’s first phase, which lasts until the end of 2013, Merck doesn’t want to make a major acquisition. Smaller acquisitions, however, remain possible, reiterated Kley.

The management confirmed the cautious guidance for this year. It forecasts slight increases both for sales as well as earnings before interest, tax, depreciation and amortization, or Ebitda. One-offs might affect reported earnings.

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