German pharmaceutical and chemical company Merck KGaA said Monday that its first-quarter net profit dropped by 76 percent as demand for chemicals declined due to the world economic slump.

Darmstadt-based Merck said net profit for the January-March quarter fell to euro57 million ($75 million) from euro239 million a year earlier.

Sales in the first quarter were stable at euro1.9 billion.

"This year will be a challenge for Merck, but I am happy to say that our pharmaceuticals business remains strong," chief executive Karl-Ludwig Kley said.

Liquid crystals, used in products including television and computer screens, were a weak point at the beginning of this year. But Kley said that "regarding liquid crystals, we are convinced we reached the bottom in the first quarter."

The company said its overall first-quarter operating profit fell 45 percent to euro198 million from euro360 million a year earlier, propelled by declines in the chemicals business.

Total sales of the chemical business — which includes liquid crystals as well as performance and life science chemicals — declined 22 percent to euro436 million. At the same time, expenses increased, bringing the business's operating profit down nearly 80 percent to euro37 million.

Total liquid crystals sales were down 44 percent to euro131 million from euro234 million a year earlier.

Performance and life science chemicals sales declined 6.2 percent to euro305 million from euro325 million. Merck said that pigment sales for paints were under particular pressure because of the decline in world car markets.

In the pharmaceuticals division, Merck saw sales increase at its Serono division, but they fell at the consumer health care division.

Serono, whose products include Rebif multiple sclerosis treatments and Gonal-f, used in the treatment of infertility, saw sales increase 11 percent to euro1.3 billion from euro1.2 billion.

Consumer health care sales, however, which include BION over-the-counter multivitamins, saw sales decline about 3 percent to euro108 million from euro111 million.

The company also saw added costs for research and development in the pharmaceutical division because of clinical trials, and higher sales and marketing expenses for new pharmaceutical products.

Merck said that, as a result of the world economic slowdown, it's expecting an overall growth rate of between zero and 5 percent in sales this year.

Serono could see sales growth of between 6 percent and 9 percent, and the consumer health care sales division growth of between 5 percent and 9 percent.

Merck forecast that liquid crystals sales will decline by between 20 and 30 percent, while performance and life science chemicals sales should be unchanged.

Merck of Germany is unrelated to Merck & Co. Inc. of the U.S.

Shares of Merck rose 2.1 percent to close at euro67.74 in Frankfurt.

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On the Net:

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