Third quarter of 2012: Bayer on track for a successful 2012

The Bayer Group remains on a path of growth. "The upward trend in our life science businesses - HealthCare and CropScience - continued in the third quarter of 2012," Management Board Chairman Dr. Marijn Dekkers said Tuesday following the publication of the interim report. HealthCare, particularly the Pharmaceuticals business, gained further growth momentum. At CropScience, the strong business development seen in the first half of the year continued unabated, and MaterialScience also registered good quarterly sales. However, net income was down year on year due to special charges - particularly for legal claims and restructuring. Bayer also made good progress from a strategic perspective in the third quarter, Dekkers explained. He said the company had strengthened its life science businesses through acquisitions and also made further progress with its innovation pipeline. "We remain on a successful path, and we confirm our guidance for 2012."

Sales of the Bayer Group advanced by 11.5 percent in the third quarter, to EUR 9,665 million (Q3 2011: EUR 8,670 million). The currency- and portfolio-adjusted (Fx & portfolio adj.) increase was 5.5 percent. Earnings before interest and taxes (EBIT) fell by 23.7 percent to EUR 838 million (Q3 2011: EUR 1,099 million). Net special items totaled minus EUR 356 million (Q3 2011: minus EUR 75 million). Included here were EUR 205 million in further accounting measures taken - mainly based on additional claims asserted but not filed in court - for all cases in connection with the oral contraceptive Yasmin™/YAZ™ of which Bayer is currently aware and which the company considers to be worthy of settlement (venous clot injuries). Among the other special charges were EUR 134 million in restructuring expenses.

EBIT before special items increased by 1.7 percent to EUR 1,194 million (Q3 2011: EUR 1,174 million). Earnings before interest, taxes, depreciation and amortization (EBITDA) - before special items - were up by 2.2 percent to EUR 1,845 million (Q3 2011: EUR 1,805 million). Net income fell by 17.8 percent to EUR 528 million (Q3 2011: EUR 642 million). Core earnings per share advanced by 7.1 percent to EUR 1.20 (Q3 2011: EUR 1.12).

Gross cash flow declined by 22.9 percent to EUR 1,023 million (Q3 2011: EUR 1,327 million), mainly because of the lower EBIT. Net cash flow, however, rose by 26.1 percent to EUR 1,989 million (Q3 2011: EUR 1,577 million) due to a seasonal decrease in cash tied up in working capital. Net financial debt was reduced from EUR 7.9 billion on June 30, 2012, to EUR 6.8 billion on September 30, 2012 thanks to the operating cash flow.

Sales of the high-tech materials business moved ahead by 8.1 percent (Fx & portfolio adj. 2.9 percent) in the third quarter, to EUR 2,992 million (Q3 2011: EUR 2,768 million). "This growth was due to higher volumes overall," said Dekkers. Volumes were flat with the prior year in Europe, while there was a gratifying increase in the other regions. Selling price declines in Asia/Pacific were nearly offset by increases in the other regions.

Business with raw materials for foams (Polyurethanes) increased by 10.2 percent (Fx & portfolio adj.), driven mainly by higher volumes in all product groups and regions and by price increases in all regions except North America. However, the high-tech plastics business (Polycarbonates) shrank by 10.5 percent (Fx & portfolio adj.) against the strong prior-year quarter. This was attributable to lower volumes and selling prices in both product groups - granules and polycarbonate sheet/semi-finished products. Sales of raw materials for coatings, adhesives and specialties advanced by 2.8 percent (Fx & portfolio adj.), while Industrial Operations grew revenues by 4.6 percent (Fx & portfolio adj.).

EBITDA before special items for this subgroup was down by 4.3 percent to EUR 333 million (Q3 2011: EUR 348 million). The lower earnings were largely the result of increases in raw material and energy costs and a slight drop in selling prices. These factors were only partly offset by volume growth, savings from efficiency programs, and positive currency effects.

Source: Bayer