03 March 2009 14:45 [Source: ICIS news]
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By Andy Brice and Hilde Ovrebekk
LEVERKUSEN, Germany (ICIS news)--Bayer’s fourth quarter net income after non-controlling interest rose 58% to €106m ($133m) year on year as the group's life-science businesses offset a weaker performance in the recession-hit plastics segment, the company said on Tuesday.
Underlying operating profits fell by 8.8% in the fourth quarter of 2008 to €706m. Sales came in at €1.36bn, down 4.6% from €1.42bn in the fourth quarter of 2007 due to a significant decline in MaterialScience.
Earnings before interest, tax, depreciation and amortisation (EBITDA) before special items from its MaterialScience business slumped to €54m from €367m in the fourth quarter of 2007, due mainly to the steep decline in volumes as a result of a sharp deterioration in the automotive, construction and furniture industries, Bayer said.
Chairman of the management board Werner Wenning said the company expected a substantial drop in 2009 earnings for MaterialScience.
"In the main sectors of importance for our MaterialScience business, we anticipate a very difficult year marked by a great deal of uncertainty. The high-tech materials business is heavily impacted by the global recession," said Wenning, speaking at the company’s annual results conference in ?xml:namespace>
"The start to the year...has been even weaker than anticipated, and we must expect a severe drop in this subgroup's sales and earnings for 2009," he added.
MaterialScience recently announced it would reduce the working hours of its German non-managerial employees by 6.7%, effective on 9 February, and cut wages and salaries accordingly for an initial nine-month period.
Wenning said the company was benefiting from its life-science businesses HealthCare and CropScience, which are less dependent on global economic development.
“We expect further growth in earnings [for 2009] at HealthCare and CropScience, along with a substantial reduction in net debt,” he said.
Bayer had committed to raising its research spending in 2009 to €2.9bn, the largest R&D budget in its history, Wenning said.
For the full year, the company reported a 63.5% slump in net income to €1.72bn from €4.71bn in 2007. Operating profits rose 12.4% to €3.54bn, while sales increased 1.6% to €32.92bn from €32.39bn.
“From an operational standpoint, 2008 was the most successful year in Bayer’s long history,” said Wenning.
Bayer shares had dropped over 1.3% from Monday’s close to €36.20 at 13:30 GMT.
($1 = €0.80)
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