UpdateBayer swings to Q4 net loss of €145m on higher special charges

28 February 2011 13:20  [Source: ICIS news]

(adds further financial detail and more comment from the board)

LEVERKUSEN, Germany (ICIS)--Bayer posted a €145m ($199m) net loss in the fourth quarter of 2010 due to higher special charges, reversing a €153m profit made in the same period a year earlier, the German specialty chemicals maker said on Monday.

Sales for the three months to December rose 14.5% year on year to €9.01bn, while earnings before interest, tax, depreciation and amortisation (EBITDA) soared 34.9% to €1.51bn, Bayer said.

“Compared to the previous year, Bayer was back on track in 2010 from an operational point of view. We attained our targets for the group,” said Bayer chairman Marijn Dekkers.

Dekkers attributed the growths in sales and EBITDA to the strong growth in earnings at the company’s material science business, and to positive currency effects.

Bayer MaterialScience posted a 28.2% year-on-year rise in sales to €2.58bn in the fourth quarter, while EBITDA surged 85.6% to €297m.

“Not only were volumes back to pre-crisis levels, as in the two preceding quarters, but higher selling prices also continued to contribute to the positive development,” said Werner Baumann, a member of the board of management.

Growth in demand from key customer industries was a major factor for MaterialScience’s improved earnings, particularly in the automotive and electrical/electronics sectors, as business with raw materials for foams (polyurethanes) and high performance plastics (polycarbonates) expanded.

The largest contribution to group earnings came from Bayer’s HealthCare segment, in which EBITDA rose 10.4% year on year to €985m, although earnings in the group’s HealthCare business were hit slightly due to the effects of health system reforms in various countries.

EBITDA in the group’s CropScience business during the fourth quarter soared to €244m from €73m in the same period a year before, mainly driven by volume increases, Baumann said.

However, higher special charges caused the group’s total earnings before interest and taxes (EBIT) to fall 86.1% year on year to €51m in the fourth quarter of 2010.

The special charges related to impairments, write-downs and litigations.

The HealthCare subgroup accounted for €1.17bn in special charges and CropScience accounted for €526m, while there were no special items at MaterialScience, Baumann said.

For the full year of 2010, the company’s net profit slipped 4.3% year on year to €1.3bn, despite sales rising 12.6% to an all-time high of €35.1bn.

“Net income of the Bayer Group for 2010 was held back considerably by special charges of €1.72bn [from €766m in 2009],” Baumann said.

“We can be satisfied with what we achieved in 2010, both operationally and financially, despite the difficult market conditions for some parts of our HealthCare and CropScience businesses,” he added.

The company’s overall EBITDA rose 8.1% year on year to €6.29bn.

Additional reporting by Nurluqman Suratman

($1 = €0.73)

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By: Franco Capaldo
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