UPDATE 3-Merck KGaA profit down as crystals lose shine

* Q4 core oper. profit down 29 percent, missing forecasts

* FY liquid crystal margin falls further than expected

* Swings to net loss on Raptiva drug charges

* Says giving 2009 outlook would be 'irresponsible'

(Updates shares, adds CEO comment, analyst, background)

DARMSTADT, Germany, Feb 18 - German chemicals -to-drugs hybrid Merck KGaA missed fourth-quarter profit targets and declined to give a forecast for 2009 as consumers put off purchases of TVs and computer screens.

The world's largest maker of the liquid crystals used in flat-panel displays said on Wednesday that core operating profit fell 29 percent, and it swung to a net loss on one-off charges in its pharmaceuticals division.

Looking ahead, Chief Executive Karl-Ludwig Kley said it was "irresponsible to make forecasts today that might need to be adjusted in two months' time".

The performance of the chemicals unit had disappointed, he said, after the company missed its margin target on sales of liquid crystals, which are its biggest cash generator.

"(The fourth quarter) was a disaster," Frankfurt-based Equinet analyst Martin Possienke said.

Core operating profit -- excluding writedowns and costs linked to its 2007 takeover of Swiss biotech company Serono -- slipped to 306 million euros ($387 million), missing the average estimate of 421 million in a Reuters poll of 12 analysts.

The 2008 EBIT margin on crystals fell to 44.6 percent from 53.1 percent a year earlier. Merck had forecast a margin of 47-48 percent for the business, which accounts for about one third of operating profits.

The world's two largest makers of flat-screen displays, Samsung Electronics and LG Display, posted quarterly losses earlier this month as the impact of economic crisis on consumer purchases of electronic equipment deepened.

Corning, a maker of specialty glass for flat-panel displays, offered a rare hint of optimism earlier this month, saying it expected demand to improve in the second half, though Japanese niche player Pioneer Corp said last week it would pull the plug on its loss-making flat-screen TV business.

Merck took exceptional charges of 400 million euros, in part because expectations of future sales of psoriasis drug Raptiva reflected in the Serono takeover price were dashed by cases of deadly side-effects.

This led to a quarterly group net loss of 279.5 million euros, compared to a year-earlier profit of 3.39 billion euros, inflated by a gain from the disposal of its generics business.

Full-year sales of cancer treatment Erbitux, Merck's most promising drug, came in at 565 million euros, below Merck's projection of 600 million. A genetic test needed to use the drug for bowel cancer patients had a slower uptake than expected.

The discrepancy had been largely expected by analysts.

"The (margin) decline at liquid crystals was a major negative though the charges stemming from the Serono takeover were foreseeable," said Heino Ruland, an analyst with Ruland Research.

Merck shares eased 1.25 percent to 62.23 euros by 1016 GMT, while the German DAX blue chip index fell 1.4 percent.

Merck shares trade at about 11 times estimated 2009 earnings, according to StarMine, which weighs analysts' projections based on their track record.

That is below the multiple of 12.6 for the healthcare sector as a whole because of dwindling margins at liquid crystals.