28 February 2014 15:50 [Source: ICIS news]
LEVERKUSEN, Germany (ICIS)--Slower economic growth in China during 2013 had a negative impact on earnings for Bayer’s chemicals operations, as well as the industry in general, the head of Germany-headquartered firm Bayer said on Friday.
Bayer CEO Marijn Dekkers said that China had served as a growth engine for the company’s MaterialScience division in the last few years, and that the reduced emphasis on economic expansion since the formation of China’s new government had led to a slowdown for chemicals earnings.
“Since the new government came into office, the growth and dynamism [of the Chinese economy] has fallen quite clearly over the last 18 months. We suffered from this in MaterialScience, as did the entire chemical industry.
“On the other hand, looking ahead, I think the situation will improve,” he added.
Bayer MaterialScience’s earnings before interest, tax, depreciation and amortisation (EBITDA) – before special items – fell by 15.1% year on year during 2013 to €1.1bn, on the back of higher raw materials costs and overcapacity for some divisions.
Growth had been relatively stable in Europe and patchy in most other regions, according to Bayer CFO Werner Baumann, with North America as the only region to generate noticeable growth during the year.
“Europe was essentially flat [for 2013], with about €4.4bn in sales across all product groups. We have seen... about 2.5% year on year currency-adjusted growth in North America,” he said.
“Asia-Pacific continues to be difficult, also in China, which has been a main driver growth in the past, also flattish [to] minimally positive in 2013, and all other regions –Latin America, Asia and Africa - slightly below 2012,” he added.
Dekkers added that the company continued to prioritise the development its chemicals business in China and Russia, with Brazil, Thailand and the Philippines also offering attractive opportunities. The company is also starting to focus on Africa, he added.
“We believe given the middle class development in Africa there is a significant opportunity for growth. [It is] not easy because no country in Africa is the same, but this is something we are taking very seriously at the moment,” he said.
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