July 3, 2018 / 6:31 AM / a year ago

UPDATE 1-Germany's Merck sees performance materials unit turning corner in 2020

* Sees avg annual sales growth at unit of 2-3 pct

* Decline in liquid crystals to be offset by other business (Adds sales target for unit, divisional CEO comment)

FRANKFURT, July 3 (Reuters) - Germany’s Merck KGaA said it expects its performance materials business to return to sales and earnings growth after next year as it tackles tough competition from Chinese rivals in the market for liquid crystals for flat-screen televisions.

Average annual sales for the performance materials business are expected to grow by between 2 and 3 percent the year after next, said Merck, the world’s leading supplier of liquid crystals ahead of Japan’s JNC Corp and DIC Corp.

Merck, which also makes pharmaceuticals and laboratory supplies, has been losing market share to rivals in the highly profitable liquid crystals business.

Last year, it appointed Kai Beckmann as new chief to the performance materials division in a board reshuffle to improve the business.

The division said that growth in sales to the chip sector, from coatings, OLED (organic light-emitting diode) materials and light-sensitive materials would more than compensate for the decline in revenue from liquid crystals for displays after 2019.

In the long run, the performance materials unit sees its average annual margin on earnings before interest, tax, depreciation, amortisation (EBITDA) and one-offs coming to around 30 percent, Merck said. (Reporting by Maria Sheahan; Editing by Amrutha Gayathri and Louise Heavens)

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