• Q1 earnings per share at $2.22 vs forecast at $2.14 a share

• World sales dip 2% to $15.5 billion vs forecast $15.3 billion

• Sales of Gardasil fall 41% to $1.3 billion

(Reuters) - Merck MRK.N on Thursday said its first-quarter adjusted profit rose 7% as lower costs helped offset a 2% decline in sales, reflecting a January decision to pause shipments of its Gardasil vaccine to China due to a downturn in demand.

For the full year, Merck lowered its earnings outlook slightly, citing an estimated $200 million in additional costs for tariffs implemented to date and a charge related to a licensing deal with Hengrui Pharma 600276.SS.

The drugmaker said it earned $5.61 billion in the first quarter, or $2.22 a share, excluding one-time items. Analysts had expected a profit of $2.14 a share, according to LSEG data.

Worldwide sales dipped 2% to $15.5 billion, exceeding the average analyst forecast of $15.3 billion. Excluding the impact of foreign exchange rates, sales rose 1%, Merck said.

Net earnings rose 7% to $2.01 per share.

Sales of Gardasil, a vaccine that prevents cancers caused by the human papillomavirus, fell 41% to $1.3 billion, which was in line with analyst expectations.

Sales of cancer immunotherapy Keytruda rose 4% to $7.2 billion, short of analyst estimates of $7.4 billion.

For the lung disease drug Winrevair launched last year, sales totaled $280 million. Animal health sales grew 5% to $1.6 billion.

For 2025, Merck said it still expects sales of $64.1 billion to $65.6 billion, but it lowered its adjusted earnings per share forecast to between $8.82 and $8.97, from a previous $8.88 to $9.03. Analysts have forecast 2025 earnings of $8.95 per share on revenue of $65 billion.

Merck said the outlook includes the $200 million impact of tariffs implemented to date by the U.S. government on imports from other countries, plus the cost of tariffs imposed by foreign governments on the United States, particularly those related to China.

The Trump Administration recently opened a national security investigation into pharmaceuticals aimed at showing why the U.S. needs tariffs to boost domestic manufacturing of medicines.