Bayer MaterialScience Q3 EBIT down 14% year on year

30 October 2012 11:51  [Source: ICIS news]

LONDON (ICIS)--The specialty materials division of German chemicals giant Bayer posted a 14% year-on-year decline in EBIT in the third quarter of the year to €168m ($215m), the company said on Tuesday.

According to company financial results, the decline in earnings before interest and taxes (EBIT) for Bayer MaterialScience comes in spite of an increase in net sales to €3bn from €2.8bn in the same quarter in 2011, with sales volumes growing in all regions apart from Europe.

Bayer’s group net income fell 17.8% year-on-year during the quarter to €528m, weighed by special charges relating to legal claims and restructuring expenses, the company said.

Polyurethanes third-quarter sales increased year-on-year from €1.4bn, to €1.6bn, representing a 10.2% increase in sales when currency conversions and portfolio adjustments are taken into account.

Representing the best-performing Bayer MaterialSciences division during the quarter, the increase in polyurethane sales was driven by increases in volumes in all regions, Bayer said.

Polycarbonates sales were down 10.5%, on a foreign currency and portfolio-adjusted basis, to €720m as a result of lower volumes and prices for granules and semi-finished products, while the coatings, adhesives and specialties division posted an adjusted 2.8% sales increase to €512m on the back of higher volumes.

Sales for the industrial operations division increased by €15m during the quarter to €188m, an adjusted percentage increase of 4.6% despite lower volumes, due to higher prices.

Bayer MaterialScience invested €60m on research and development during the quarter, bringing the total for the year so far to €178m, the company said.

Financial analyst Bernstein Research rated Bayer "market perform", meaning that it expects the company’s stock to perform in line with the general chemicals industry over the next few months.

It set a target share price for company stock at €67 per share, driven by forecast improvements in MaterialScience division margins. Bayer stock was €66.51 per share on Germany’s Xetra stock exchange at 11:07am GMT, .

“We expect Bayer MaterialScience margins to gradually improve through 2012 and beyond since the industry's capacity surplus is working its way through the system and prices are increasing again, though macro uncertainties remain,” the company said.

Bayer announced on Tuesday an agreement to acquire Schiff Nutrition International for $1.2bn and has announced the appointment of Liam Condon, former head of the company’s Bayer Vital subsidiary, as the new CEO of Bayer CropScience

By: Tom Brown
+44 208 652 3214

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