UpdateBayer's Materials Q2 2008 profit falls 9%

30 July 2008 10:11  [Source: ICIS news]

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By Nigel Davis

LONDON (ICIS news)--Second-quarter profits from Bayer’s MaterialScience businesses slumped 9% to €372m ($581m) from €409m on raw material and energy cost increases and negative currency shifts, the diversified drugs-to-chemicals group said on Wednesday.

Sub-group profits are earnings before interest, tax, depreciation and amortisation (EBITDA) before special items. Sales were level with the prior-year quarter at €2.62bn, but up 5.3% on a currency- and portfolio-adjusted basis.

The polyurethanes-related businesses posted sales growth of 3.7% to €1.94bn but the polycarbonate Materials segment businesses were hit by price erosion and reported sales down 9.2% at €687m.

Sales grew, however, in thermoplastic polyurethanes.

Higher raw material and energy costs hit MaterialScience profits by more than €100m in the quarter, the negative impact not entirely offset by selling prices, volumes and cost savings, Bayer said.

These costs had risen €20m from the first quarter of 2008.

Third-quarter EBITDA before special items at MaterialScience were expected to be below the level of the second quarter and full-year results from the sub-group would not match last year’s, Bayer said.

Slower growth was expected to couple with higher costs for the businesses in the second half.

EBITDA before special items of Bayer CropScience in the second quarter increased 26.5% to €501m from €396m due to higher earnings from the crop protection business, the company said, while HealthCare profits before special items were up 2.6% at €994m from €969m.

Bayer posted a 13% year-on-year drop in its second-quarter net income to €574m from €660m, the prior year net figure including €244m of income from discontinued operations largely from the divestment of the Wolff Walsrode cellulosics business to Dow.

For the quarter, the company’s sales were up 3.6% to €8.51bn on good volume growth and its earnings before interest and tax (EBIT) rose 20.5% to €1.11bn, the company said.

For the first-half of 2008, the company’s net income fell 61.5% to €1.34bn whereas its sales rose 3% to €17.04bn.

For the full year, the company said it expected to increase its group sales by more than 5% over the previous year.

“The company aims to further improve EBITDA before special items and the underlying EBITDA margin from €6.77bn and 20.9%, respectively, in 2007,” it said.

Bayer's shares were down 2.3% at €54.72 in early trading on the Frankfurt Stock Exchange.

($1 = €0.64)

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By: Nigel Davis
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