MERCKKGAA/ (UPDATE 1)
* Sees 2011 oper income up 35-45 percent vs poll avg of 20 percent * Q4 EBIT margin at key liquid-crystals unit 54 percent
* Q4 core EPS 1.78 euros vs poll avg of 1.55 euros
* Proposes dividend of 1.25 euros/shr, less than expected
(Adds details, background)
DARMSTADT, Germany, Feb 21 (Reuters) - Merck KGaA raised the prospect of faster operating profit growth this year than analysts had expected, defying concerns about looming competition for its cutting-edge liquid crystals for flat-panel display.
The German drugmaker on Monday predicted a 35-45 percent increase in operating profit for 2011.
Analysts on average had expected an increase by about 20 percent to 1.4 billion euros ($1.9 billion), seeing only modest growth from Merck's best-selling drugs Rebif and Erbitux, a poll showed.
Merck's highly profitable liquid-crystals business, the world's largest maker of the key chemicals for flat-panel displays, could soon face keener competition from its Japanese rivals who are catching up with Merck's so-called PS-VA technology, analysts had also feared.
But the unit posted earnings before interest and tax (EBIT) of 54 percent of sales in the fourth quarter, above the 50 percent predicted by analysts, boosted by demand for tablet computers, smartphones and 3D TVs for which PV-SA crystals are particularly well suitedCorning, the largest maker of glass for liquid crystal displays, said this month it was looking to boost sales of its glass more than 50 percent by 2014, citing the boom in new display devices.
Merck's so-called core earnings per share, excluding a wide range of one-off items, rose 87 percent to 1.78 euros in the fourth quarter, above the 1.55 euro poll average.
Merck's dividend proposal of 1.25 euros per share, however, fell short of the 1.32 euros the market had factored in.
The company brought in fresh blood after devastating setbacks in drug development. Last month it named Matthias Zachert, the acclaimed finance chief of German specialty chemicals group Lanxess, to take the CFO role from July.
In December, it hired Stefan Oschmann, an executive from U.S. peer Merck & Co, as head of its drugs division to replace Elmar Schnee.
The European drugs watchdog in September dealt the German family-controlled group a blow by advising against the oral multiple-sclerosis (MS) treatment cladribine in the drug's potentially largest market.
In 2009, EU regulators came out against the use of Merck's blockbuster-hopeful Erbitux to fight lung tumours, the most common form of cancer.
To make things worse, Merck's established Rebif injection against MS is facing competition from an oral alternative brought to market by Novartis.
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