UpdateGermany’s Bayer raises full-year sales forecast

31 July 2012 10:43  [Source: ICIS news]

(adds further details for financial earnings and outlook)

BayerLONDON (ICIS)--Germany’s Bayer on Tuesday raised its sales forecast for the full year of 2012 after its CropScience and HealthCare business segments reported strong second-quarter results.

The company expects a currency- and portfolio adjusted sales increase of between 4-5% (previously 3%) which would result in higher group sales of between €39bn-40bn ($48bn-49bn) in 2012, from a previous estimate of €37bn.

“Following the good business performance in the first half of 2012, especially at CropScience and HealthCare, we are also confident for the second half of the year,” said chairman Marijn Dekkers.

“In addition, Bayer is benefiting from a very favourable currency environment. Against this background, the company is raising its sales and earnings forecast for the full year,” he added.

Bayer now expects to raise its earnings before interest, tax, depreciation and amortisation (EBITDA) before special items by a high-single-digit percentage, it said without going into specific detail. Previously, the company expected a slight improvement in EBITDA.

“The company expects to raise core earnings per share by about 10% (previously: slight improvement),” it added.

Bayer also said it now anticipates further expenses of between €100m and €200m for ongoing restructuring programmes in the second half of 2012.

The company’s total second-quarter sales rose 10% year on year to €10.2bn, thanks in part to positive currency effects, it said.

“All the subgroups contributed to the increase, especially CropScience which continued to grow strongly,” said Dekkers.

Sales in Bayer’s HealthCare subgroup in the second-quarter increased 10.0% year on year to €4.63bn with its Pharmaceuticals and Consumer Health business units both contributing to growth, while EBITDA before special items increased by 8.0% to €1.25bn.

The group’s CropScience segment reported sales rise by 17.1% year on year in the second quarter to €2.28bn, with particular growth in North America, while EBITDA before special items increasing by 16.6% to €549m thanks to higher volumes and prices, it said.

In its MaterialScience segment, second-quarter sales grew 6.5% year on year to €2.96bn, as its EBITDA before special items increased by 3.5% to €385m, largely as a result of higher selling prices, savings generated by efficiency improvement programs and positive currency effects.

“MaterialScience achieved slightly higher selling prices and volumes overall,” Dekkers said.

“Price increases in the Latin America/Africa/Middle East, North America and Europe regions more than offset declines in Asia/Pacific. The subgroup achieved higher volumes in Asia/Pacific, Latin America/Africa/Middle East and North America, while volumes declined in Europe,” he added.

However, overall Bayer reported a 33.9% year-on-year fall in its second-quarter 2012 net income to €494m, partly on heavy provisions.

“Net income for the Bayer Group in the second quarter of 2012 was impacted by special items of €800m. This sum included risk provisions of €500m for litigations,” the company said.

Its overall earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 18.1% year on year to €1.56bn, while operating profit was down by 41.1% year on year at €750m.

For the first half of 2012, Bayer’s net profit rose by 7.9% year on year to €1.54bn, with sales up by 8.4% at €20.2bn, the company said.

“We achieved a gratifying improvement in sales and earnings before special items in the first half of 2012, with CropScience making a particularly substantial contribution,” said Dekkers.

He added the emerging markets made an above-average contribution to sales growth in the first half of 2012, which increased by 6.4% year on year to €7.03bn.

($1 = €0.82)

Additional reporting by Nurluqman Suratman

By: Franco Capaldo
+44 (0)20 8652 3214

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