UpdateHealthcare, crop treatment drives rise in Bayer Q3 net profit

31 October 2013 12:34  [Source: ICIS news]

(updates on quarterly financial performance throughout)

Bayer headquarters in Leverkusen, GermanyLONDON (ICIS)--Strong healthcare and agriculture sector earnings helped to drive a 42.1% rise in third-quarter net profit for Bayer to €733m ($1bn), despite flat sales for its polymers and performance plastics division, the Germany-based chemicals producer said on Thursday.

Group sales for the three months ending September 2013 were at €9.64bn, slightly lower than the €9.66bn recorded in the same period last year. However, adjusting for currency and portfolio effects, third-quarter sales were up by 6% year on year, Bayer added.

Earnings before interest, tax, depreciation and amortisation (EBITDA) for the September quarter before special items increased by 7.7% to €1.98bn, while EBIT rose by 47.5% to €1.22bn the company said.

“The life science businesses – HealthCare and CropScience – recorded very encouraging growth in the first nine months, compensating for the market-related weakness at MaterialScience. Bayer expects this development to continue in the fourth quarter,” said CEO Marijn Dekkers, adding that currency effects are weighing on operational earnings.

Healthcare earnings increased by 0.5% during the quarter compared to the corresponding  period in 2012 – or 7.4% excluding currency effects – to €4.74bn, as a strong pharmaceuticals revenue growth in all regions offset a weaker performance for consumer health products. EBITDA before special items for the division was up by 4.6% year on year at €1.39bn.

CropScience division sales rose by 4.3%, or 12.1% adjusted for currency effects, to €1.71bn, driven by strong crop protection product development and large gains in Latin America, Africa and the Middle East.

Asia Pacific revenues were also up, while European sales were steady. North American business fell by 6.5% compared to a “very strong” prior-year quarter, Bayer said. EBITDA before special items for the division rose by 13.7% year on year to €224m during the quarter.

MaterialScience division sales division were down 3.1% year on year – or up 1.1% on a currency-adjusted basis – during the quarter at €2.90bn, due to overall lower selling prices.

Polyurethanes business improved on higher volumes, while polycarbonates sales declined as market overcapacities impacted on pricing. Overall MaterialScience EBITDA before special items rose by 2.7% year on year to €346m, including a €17m gain from the sale of a non-core business.

The company expects full-year sales to increase by a currency- and portfolio-adjusted 4-5% to about €40bn, and “aims to increase EBITDA before special items by a mid-single-digit percentage and improve core earnings per share by a high-single-digit percentage”, the company said.

The company has €18bn of future research and development spending planned for the period between 2013-15, Bayer added.

"We are maintaining our guidance for the group for 2013, although it is increasingly ambitious," Dekkers added.

For the first nine months of 2013 Bayer recorded a net income of €2.73bn, up by 34.2% year on year, while sales grew by 1.3% year on year to €30.3bn.

($1 = €0.73)

Additional reporting by Tahir Ikram


By: Tom Brown
+44 208 652 3214



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