Bayer continues positive business momentum

The Bayer Group continued its positive business momentum in the third quarter of 2013, with substantial contributions from the Life Science businesses HealthCare and CropScience. "HealthCare registered encouraging growth, largely due to the outstanding sales performance for our new pharmaceutical products," Bayer Management Board Chairman Dr. Marijn Dekkers explained when the interim report was released on Thursday. CropScience benefited from a continuing favorable market environment and a good start to the season in Latin America, he said. At MaterialScience, sales (after adjusting for currency and portfolio effects) and earnings were level with the prior-year quarter in a persistently difficult market environment. "We are maintaining our guidance for the Group for 2013, although it is increasingly ambitious," said Dekkers.

Reported sales of the Bayer Group were level year on year (minus 0.2 percent) at EUR 9,643 million (Q3 2012: EUR 9,661 million). Adjusted for currency and portfolio effects (Fx & portfolio adj.), sales grew by 6.0 percent. EBIT improved by a substantial 47.5 percent to EUR 1,221 million (Q3 2012: EUR 828 million) due in part to a drop in net special charges to EUR 99 million (Q3 2012: EUR 356 million). The special charges largely comprised expenses for restructuring and the integration of acquired businesses. EBIT before special items rose by 11.5 percent to EUR 1,320 million (Q3 2012: EUR 1,184 million). EBITDA before special items increased by 7.7 percent to EUR 1,984 million (Q3 2012: EUR 1,842 million) despite negative currency effects of about EUR 130 million. Net income advanced by 42.1 percent against the prior-year period to EUR 733 million (Q3 2012: EUR 516 million), while core earnings per share rose by 8.5 percent to EUR 1.27 (Q3 2012: EUR 1.17).

Gross cash flow moved ahead by 35.9 percent to EUR 1,367 million (Q3 2012: EUR 1,006 million), mainly as a result of the significant improvement in EBIT. Net cash flow fell by 13.0 percent to EUR 1,728 million (Q3 2012: EUR 1,986 million) because less working capital was released than in the prior-year quarter. Net financial debt declined from EUR 9.0 billion on June 30, 2013, to EUR 7.7 billion on September 30, 2013, largely as a result of cash inflows from operating activities.

"Sales and earnings in the MaterialScience subgroup were level with the prior-year period, posting an improvement against the second quarter of 2013," Dekkers pointed out. Sales of this high-tech materials business came in at EUR 2,897 million (Q3 2012: EUR 2,990 million), down 3.1 percent year on year in a difficult market environment. On a currency- and portfolio-adjusted basis, sales rose by 1.1 percent. This growth was the result of higher volumes in the North America and Europe regions. Volumes in Asia/Pacific remained unchanged. Selling prices overall were slightly below the prior-year quarter. Price increases in Latin America/Africa/Middle East only partly offset the declines in Europe and Asia/Pacific. Prices in North America were flat with the prior-year quarter.

Business with foam raw materials (Polyurethanes) rose by 4.1 percent (Fx & portfolio adj.). This increase was attributable to higher volumes in all regions except Latin America/Africa/Middle East. Selling prices were down overall against the prior-year period. Sales in the high-tech plastics business (Polycarbonates) declined by 3.1 percent (Fx & portfolio adj.), mainly because selling prices as a whole were below the prior-year period on account of market overcapacities. In addition, volumes showed a year-on-year decline. Sales of raw materials for coatings, adhesives and specialties improved by 0.8 percent (Fx & portfolio adj.).

EBITDA before special items of MaterialScience rose by 2.7 percent to EUR 346 million (Q3 2012: EUR 337 million), including a EUR 17 million gain from the divestment of the business with non-waterborne raw materials for UV-curing coatings. Earnings were bolstered by the slight rise in volumes and by efficiency improvements, but diminished by a drop in selling prices and increases in raw material costs.

Source: Bayer