April 30, 2015
Strong start to the year for Bayer
Significant sales and earnings growth at HealthCare / CropScience performance steady in a weaker market environment / MaterialScience posts earnings growth / Group sales increase to EUR 12,117 million (plus 14.8 percent / Fx & portfolio adj. plus 2.7 percent) / EBITDA before special items advances by 9.6 percent to EUR 3.0 billion / EBIT down by 4.7 percent to EUR 1,998 million / Net income EUR 1,303 million (minus 8.4 percent) / Core earnings per share improve by 7.7 percent to EUR 2.10 / Guidance for full year 2015 raised due to currency effectsLeverkusen, April 30, 2015 - The Bayer Group had a strong start to 2015 and
once again expanded sales in the first quarter. "At HealthCare we continued to
benefit from the positive development of our recently launched pharmaceutical
products and the gratifying expansion of business in Consumer Health," Bayer
CEO Dr. Marijn Dekkers said on Thursday when the interim report was published.
The products newly acquired from Merck & Co., Inc., United States, also
contributed to growth at Consumer Care. HealthCare posted a strong increase in
earnings. Sales at CropScience slightly exceeded the strong prior-year quarter
despite a weaker market environment. Here, however, earnings were down year on
year. MaterialScience registered a slight decline in sales as expected on a
currency- and portfolio-adjusted basis but raised earnings before special
items. "Given the business development in the first quarter and especially in
view of the much more favorable exchange rates as of March 31, we are raising
our Group guidance for 2015," said Dekkers.
Sales of the Bayer Group moved ahead in the first quarter of 2015 by 14.8
percent to EUR 12,117 million (Q1 2014: EUR 10,555 million). Adjusted for
currency and portfolio effects (Fx & portfolio adj.), sales grew by 2.7
percent. EBITDA before special items climbed by 9.6 percent to EUR 3,000
million (Q1 2014: EUR 2,738 million). This good business development was
accompanied by higher R&D and selling expenses. Positive currency effects
buoyed earnings by about EUR 50 million. EBIT before special items increased by
7.3 percent to EUR 2,242 million (Q1 2014: EUR 2,089 million). On the other
hand, EBIT fell by 4.7 percent to EUR 1,998 million (Q1 2014: EUR 2,096
million). Earnings in the first quarter of 2015 were held back by net special
charges of EUR 244 million (Q1 2014: net special gains of EUR 7 million) that
mainly comprised expenses for the integration of acquired businesses, the
consolidation of production sites and additional efficiency improvement
measures. Net income came to EUR 1,303 million (Q1 2014: EUR 1,423 million),
down 8.4 percent year on year. By contrast, core earnings per share advanced by
7.7 percent to EUR 2.10 (Q1 2014: EUR 1.95).
Gross cash flow, at EUR 2,060 million, was on the level of the prior-year
quarter (Q1 2014: EUR 2,048 million). Net cash flow rose sharply to EUR 724
million (Q1 2014: EUR 163 million) due to a reduction in cash tied up in
working capital. Net financial debt rose by EUR 1.7 billion against December
31, 2014, to EUR 21.3 billion, mainly on account of negative currency effects.
HealthCare benefits from recently launched pharmaceutical products and
Sales of the HealthCare subgroup increased by 25.6 percent (Fx & portfolio adj.
7.2 percent) to EUR 5,742 million in the first quarter of 2015 (Q1 2014: EUR
4,572 million). "HealthCare achieved encouraging organic growth and also
benefited from the acquisitions at Consumer Care," Dekkers explained. The
subgroup registered persistently dynamic sales growth at Pharmaceuticals and
strong sales gains in the Consumer Health segment.
Sales of the Pharmaceuticals segment rose by 7.2 percent (Fx & portfolio adj.)
to EUR 3,200 million. The recently launched products - the anticoagulant
Xarelto™, the eye medicine Eylea™, the cancer drugs Stivarga™ and Xofigo™, and
Adempas™ to treat pulmonary hypertension - continued their dynamic development,
posting combined sales of EUR 898 million (Q1 2014: EUR 598 million). Sales of
Xarelto™ climbed by 38.4 percent on a currency-adjusted basis (Fx adj.), while
Eylea™ grew by an even more substantial 55.1 percent (Fx adj.). Among the
established best-selling products, sales of the Mirena™ line of
hormone-releasing intrauterine devices advanced by 14.2 percent (Fx adj.).
Sales of Aspirin™ Cardio for secondary prevention of heart attacks rose by 8.3
percent (Fx adj.). Sales of the blood-clotting medicine Kogenate™ were 9.8
percent below the prior-period level (Fx adj.) due to the use of production
capacities to develop the next-generation hemophilia medicines. Sales of the
multiple sclerosis product Betaferon™/ Betaseron™ declined by 1.0 percent (Fx
adj.). The Pharmaceuticals business grew in all regions on a currency-adjusted
basis. Development was particularly gratifying in North America and Europe.
Sales of Consumer Health climbed by 7.2 percent (Fx & portfolio adj.) to EUR
2,542 million. All divisions played a role in this positive development. The
products acquired from Merck & Co., Inc., United States, contributed EUR 495
million to the significant growth in Consumer Care and thus matched Bayer's
expectations. The Bepanthen™/ Bepanthol™ line of skincare products also
developed positively, with sales up by 14.1 percent (Fx & portfolio adj.). The
analgesics Aspirin™ and Aleve™ registered sales gains of 8.9 percent and 8.8
percent (Fx adj.), respectively. The Medical Care Division benefited in part
from a stabilized market environment for the Diabetes Care business in the
United States. Sales of the Contour™ family of blood glucose meters rose by
14.5 percent (Fx adj.). In the Radiology business, the contrast agent
Gadovist™/ Gadavist™ made an encouraging contribution to growth following its
approval in further indications, with sales up by 21.5 percent (Fx adj.). The
Animal Health Division registered significant sales growth, particularly for
its Seresto™ flea and tick collar.
EBITDA before special items of HealthCare advanced by a substantial 24.1
percent to EUR 1,615 million (Q1 2014: EUR 1,301 million). The improvement in
earnings resulted mainly from the favorable development of business at
Pharmaceuticals and Consumer Health, the contributions from the acquired
businesses, and positive currency effects of about EUR 50 million. Earnings
were held back by higher selling expenses in both segments, which at Consumer
Health were particularly due to the acquired consumer care businesses. There
was also an increase in research and development expenses at Pharmaceuticals.
Weaker market environment for CropScience in North and South America
Sales of the agriculture business (CropScience) increased by 6.6 percent (Fx &
portfolio adj. 1.0 percent) in the first quarter to EUR 3,092 million (Q1 2014:
EUR 2,900 million). "Despite a weakened market environment, particularly in
North and South America, Crop Protection/Seeds improved slightly against the
strong prior-year level," Dekkers said. The subgroup registered significant
growth in the Europe region, where business expanded by 16.9 percent (Fx adj.).
However, sales fell by 15.1 percent (Fx adj.) in North America, 4.3 percent (Fx
adj.) in Asia/Pacific and 3.2 percent (Fx adj.) in Latin America/Africa/ Middle
At Crop Protection, the Fungicides business posted double-digit growth of 22.4
percent (Fx & portfolio adj.). Sales of products for use in cereals developed
particularly well. The Seeds unit also developed positively (Fx & portfolio
adj. plus 8.2 percent), especially with products for oilseed rape/canola and
soybeans. By contrast, sales were down at SeedGrowth (Fx & portfolio adj. minus
16.7 percent), Insecticides (Fx & portfolio adj. minus 12.5 percent) and
Herbicides (Fx & portfolio adj. minus 8.5 percent). Sales of Environmental
Science rose by 4.2 percent (Fx & portfolio adj.), with positive development
both in the consumer business and in products for professional users.
EBITDA before special items of the subgroup came in 5.3 percent below the
strong prior-year quarter at EUR 1,040 million (Q1 2014: EUR 1,098 million).
Contributing to this decrease was a negative currency effect of about EUR 40
million. While higher selling prices had a positive effect, volumes were lower
and selling expenses increased.
Lower raw material prices lift earnings at MaterialScience
In the high-tech polymer materials business (MaterialScience), preparations for
the planned stock market flotation are on schedule. "As before, we plan to
carry out the flotation of MaterialScience by mid-2016 at the latest," said
Sales of this subgroup grew by 7.5 percent in the first quarter, to EUR 3,014
million (Q1 2014: EUR 2,803 million). Adjusted for currency and portfolio
effects, sales declined by 2.1 percent due to lower selling prices for
Polyurethanes and Polycarbonates. Raw material prices were down sharply in both
these business units. Volumes rose overall. Sales of foam raw materials
(Polyurethanes) fell by 6.6 percent (Fx & portfolio adj.), while business with
high-tech plastics (Polycarbonates) expanded by 3.9 percent (Fx & portfolio
adj.). Sales of raw materials for coatings, adhesives and specialties improved
by 4.9 percent (Fx & portfolio adj.), while Industrial Operations moved back by
4.2 percent (Fx & portfolio adj.).
EBITDA before special items of MaterialScience improved by 15.8 percent to EUR
424 million (Q1 2014: EUR 366 million). This increase resulted mostly from
significantly lower raw material prices that more than offset the decline in
selling prices. Earnings were additionally buoyed by positive currency effects
of approximately EUR 50 million.
Group sales in 2015 expected to climb to between EUR 48 billion and EUR 49
"We are raising our forecast for the full year 2015," said Dekkers, pointing
above all to the considerably more positive exchange rates prevailing on March
31, 2015. Bayer is now planning sales in the region of EUR 48 billion to EUR 49
billion (previously: in the region of EUR 46 billion). This corresponds to a
low-single-digit percentage increase on a currency- and portfolio-adjusted
basis. The company expects currency effects to boost sales by approximately 9
percent (previously: approximately 3 percent) compared with the prior year.
Bayer now plans to raise EBITDA before special items by a high-teens percentage
(previously: low- to mid-teens percentage), allowing for expected positive
currency effects of about 8 percent (previously: about 2 percent). Bayer now
aims to increase core earnings per share by a high-teens percentage
(previously: low-teens percentage), allowing for expected positive currency
effects of around 7 percent (previously: around 3 percent).
The Group continues to expect to take special charges in the region of EUR 700
million, with the integration of the acquired consumer care businesses and the
planned stock market listing of MaterialScience accounting for most of this
amount. Bayer expects net financial debt at year end to be below EUR 20 billion
(previously: below EUR 18 billion).
HealthCare now expects sales to rise to over EUR 24 billion (previously:
approximately EUR 23 billion). This corresponds to a mid-single-digit
percentage increase on a currency- and portfolio-adjusted basis. The subgroup
now plans to raise EBITDA before special items by a low-twenties percentage
(previously: mid-teens percentage). In the Pharmaceuticals segment, we now
expect sales to move ahead to approximately EUR 14 billion (previously:
approximately EUR 13 billion). This corresponds to a mid- to high-single-digit
percentage on a currency- and portfolio-adjusted basis. Pharmaceuticals intends
to raise sales of its recently launched products to over EUR 4 billion
(previously: toward EUR 4 billion) and to increase EBITDA before special items
by a mid-teens percentage (previously: low-teens percentage), allowing for an
additional EUR 350 million (previously: EUR 300 million) of investment in
research and development. As a result of the dilutive currency effects,
Pharmaceuticals expects the EBITDA margin before special items to be slightly
below the prior-year level (previously: slightly improve). In the Consumer
Health segment, Bayer expects sales to increase to over EUR 10 billion
(previously: toward EUR 10 billion), including those of the acquired consumer
care businesses. The segment plans to grow sales by a mid-single-digit
percentage (Fx & portfolio adj.). Consumer Health expects to raise EBITDA
before special items by a mid-thirties percentage (previously: a mid- to
high-twenties percentage), with the acquired consumer care businesses
contributing to the increase.
CropScience expects to continue growing faster than the market and now aims to
raise sales to approximately EUR 11 billion (previously: approximately EUR 10
billion). This corresponds to a low- to mid-single-digit percentage increase on
a currency- and portfolio-adjusted basis. In line with the clearly positive
currency changes, the subgroup now plans to improve EBITDA before special items
by a low- to mid-teens percentage (previously: a low- to mid-single-digit
MaterialScience continues to plan further volume growth in 2015 accompanied by
declining selling prices. This will lead to lower sales on a currency- and
portfolio-adjusted basis. However, MaterialScience expects to see a significant
increase in EBITDA before special items, partly due to lower raw material
costs. The subgroup aims to return to earning the full cost of capital in 2015.
MaterialScience expects sales and EBITDA before special items in the second
quarter of 2015 to come in at least at the level of the first quarter of 2015.
The tables below contain the key data for the Bayer Group and its subgroups for
the first quarter 2015.
The full report for the first quarter is available for online viewing and
download at www.investor.bayer.com.
Supplementary features at www.investor.bayer.com:
- presentation charts for the investor conference call at 12:00 noon CEST
- live webcast of the investor conference call from approximately 2:00 p.m. CEST
- recording of the investor conference call from approximately 6:00 p.m. CEST.