Bayer Group reported strong sales and earnings growth in the first quarter. 

“At Pharmaceuticals, we once again benefited from the very good performance of our key growth products,” CEO Werner Baumann said when he presented the interim report for the first quarter on April 27. Consumer Health, Crop Science and Animal Health also registered increases in sales and EBITDA before special items.

Sales of the Bayer Group increased 11.7% to EUR 13,244 million (Q1 2016: EUR 11,854 million) in the first quarter. Adjusted for currency and portfolio effects sales advanced by 9.4%. Sales of the Life Science businesses amounted to EUR 9,680 million, up by 4.9% year on year. Group EBITDA before special items improved by 14.9% to EUR 3,893 million (Q1 2016: EUR 3,387 million). EBIT climbed by a substantial 34.3% to EUR 3,116 million (Q1 2016: EUR 2,320 million) after special charges of EUR 85 million (Q1 2016: EUR 272 million). These mainly resulted from expenses related to efficiency improvement programs, impairment losses on intangible assets, and costs in connection with the agreed acquisition of Monsanto. EBIT before special items moved ahead by 23.5% to EUR 3,201 million (Q1 2016: EUR 2,592 million). Net income climbed by 37.9% to EUR 2,083 million (Q1 2016: EUR 1,511 million), and core earnings per share from continuing operations by 11.5% to EUR 2.62 (Q1 2016: EUR 2.35).

Cash flow provided by operating activities from continuing operations climbed by 49.6% to EUR 826 million (Q1 2016: 552 million) due to the improvement in EBITDA. Net financial debt of the Bayer Group declined by EUR 1.4 billion to EUR 10.4 billion between December 31, 2016, and March 31, 2017, due mainly to cash inflows from the sale of Covestro shares. 

Crop Science
Sales of the agriculture business increased by 3.2% to EUR 3,120 million (Q1 2016: EUR 2,936 million).

“Crop Science benefited primarily from encouraging performance in North America,” Baumann said. Sales in that region grew by 8.9%. Business development was also positive in Europe/Middle East/ Africa and in Asia/Pacific while sales in Latin America declined by 9.8%.

Sales at Seeds (which also includes the traits business) rose by 8%. At Crop Protection, gains were primarily recorded at SeedGrowth and Herbicides, which posted increases of 7.1% and 5.3%, respectively. Business at Insecticides expanded by 3.9%, while sales at Fungicides were 6.2% lower than in the prior-year quarter. Sales growth of 20.5% at Environmental Science was based on the delivery of products to the company that acquired the consumer business in October 2016.

EBITDA before special items of Crop Science increased by 2.4% to EUR 1,115 million (Q1 2016: EUR 1,089 million). Positive earnings effects resulted primarily from higher volumes. These stood against an increase in the cost of goods sold and in research and development expenses.

Group outlook for 2017 raised
Sales are now expected to increase to around EUR 51 billion (previously: more than EUR 49 billion). This now corresponds to a mid- to high-single-digit (previously: low- to mid-single-digit) percentage increase on a currency- and portfolio-adjusted basis. EBITDA before special items is now expected to improve by a low-teens percentage (previously: mid-single-digit percentage). Bayer now aims to grow core earnings per share from continuing operations by a mid- to high-single-digit percentage (previously: mid-single-digit percentage). Excluding capital and portfolio measures, net financial debt is targeted to be around EUR 8 billion at the end of 2017 (previously: around EUR 10 billion).

This forecast is based on the exchange rates as of March 31, 2017. There were no significant changes in this regard compared with December 31, 2016.

Source: Bayer