October 26, 2011 / 6:33 AM / 6 years ago

Merck KGaA tones down sales forecast due to LCD outlook

DARMSTADT, Germany (Reuters) - German drugs and chemicals group Merck KGaA has cut the top end of its sales forecast for 2011 by 2 percent after sluggish demand for consumer electronics dimmed the prospects for its liquid crystals unit.

The world's largest maker of liquid crystals for display screens said in announcing third-quarter results on Wednesday that it now expects sales this year of between 10 billion and 10.2 billion euros ($13.9-14.2 billion), down from a previous range of 10.0-10.4 billion euros.

The operating margin at the liquid crystals business narrowed by more than 10 percentage points to 42.6 percent in the third quarter, below the 44.4 percent expected by analysts in a Reuters poll.

"Customers reduced stocks in the third quarter in response to a weaker economic environment," the company said.

Last week, South Korean flat-screen maker LG Display, which vies with local rival Samsung Electronics for the top position in LCD flat screens globally, posted its biggest quarterly loss on tepid demand for televisions and computers.

Earlier this month Corning, the largest maker of specialty glass for LCDs, said it expected the display industry supply chain to remain cautious.

Merck KGaA, however, still expects a group operating profit of about 1 billion euros in 2011 and an underlying core operating profit of 2.25 billion euros.

In the third quarter its underlying core operating profit, which includes a range of charges including writedowns on the value of acquired businesses, fell 11.6 percent to 552 million euros but came in above the 534 million predicted by analysts.

($1=0.719 euros)

Reporting by Ludwig Burger; Editing by Greg Mahlich

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