Merck’s Liquid Crystals Business Well Positioned for the Future

“As a pioneer and constant innovator in the field of liquid crystals, we have been able to build a unique leadership position by translating the changing needs of our display customers into chemical solutions,’’ Merck Executive Board Member Bernd Reckmann said today at an investor meeting in Darmstadt. “We are convinced that liquid crystals is a ‘living’ technology with many other potential applications – for example, energy-efficient LC windows that can automatically control sunlight levels in buildings. We are committed to further shaping the future of the display industry and will continue to seek out new applications beyond displays to fully exploit the commercial opportunities of liquid crystals.”

In 2012, the Performance Materials division generated total sales of about € 1.7 billion, of which more than 70% stemmed from liquid crystals, making it Merck’s third-largest division. The division reported an average annual sales growth of more than 7% over the past three years at continued strong EBITDA pre margins.

Merck, which had a market share in liquid crystals of more than 60% in 2012, expects to remain the industry leader not only because of its continuous innovations in a fast-paced industry, but also because of its wealth of intellectual properties with more than 100 new LC patents each year and its high quality standards and customer proximity that make it the partner of choice. With annual investments into research and development of around 10% of sales over more than a decade, Merck has continuously expanded its product portfolio. As a consequence, around 75% of the company’s 2012 liquid crystals sales were generated with products that were launched within the past 3 years.

Merck’s Liquid Crystals business comprises LCs for displays as well as organic light-emitting diode (OLED) materials for displays and lighting and phosphors for light-emitting diodes (LED). In the OLED business, Merck aims to apply the same value-adding strategic approach that has proven successful for liquid crystals. To that end, the company plans to expand to become a solutions provider rather than simply a materials supplier for OLEDs. According to market forecasts, OLEDs could amount to around 10%-15% of the total display market by 2019.

“While technology advancements and price levels of today’s liquid crystal displays are likely to ensure its dominant position in the large display market beyond 2020, Merck fortunately also began many years ago to invest in OLED technology,” Merck Chief Financial Officer Matthias Zachert said. “Should OLED displays enter the TV mass market, we are therefore well-positioned to benefit from our strong technology position, providing us an inherent hedge for our liquid crystals business. We therefore expect our display solutions activities to continue being a sustainable long-term value driver for Merck.”