FULL YEAR: BAYER'S SALES UP 2%, PROFIT UP 13%
Feb. 22, 2017
Source: Bayer news release
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Bayer had a very successful year in 2016, both strategically and operationally. "We again posted a record operating performance - and are making good progress with the agreed acquisition of Monsanto as well," Management Board Chairman Werner Baumann said on Wednesday at the Financial News Conference in Leverkusen.
Pharmaceuticals once again posted encouraging sales and earnings growth.
Consumer Health recorded sales growth on a currency- and portfolio-adjusted basis (Fx & portfolio adj.), while earnings were down.
At Crop Science, currency- and portfolio-adjusted sales and clean EBITDA remained steady despite the persistently difficult market environment.
Animal Health posted currency- and portfolio-adjusted sales growth, while earnings were on a par with the prior-year level. Covestro raised earnings sharply, while sales attained the prior-year level after adjustment for currency and portfolio effects.
"We have every reason to be optimistic about the future and started the new business year well," said Baumann. He raised the prospect of further growth in sales and earnings in 2017.
Bayer last year took a major strategic step forward with the agreed acquisition of Monsanto, said Baumann. "This transaction is the perfect fit for our strategy of seeking leadership positions with our Life Science activities in attractive, innovation-driven markets."
Once the businesses have been combined, Bayer would be able to create substantial additional value in the long term through more innovation, stronger growth and greater efficiency. At a special meeting in December 2016, Monsanto's stockholders approved the transaction. Bayer has also made progress in the necessary antitrust proceedings and has already applied for clearance from some two-thirds of around 30 authorities. Bayer and Monsanto are working closely with the authorities. Bayer remains confident of closing the transaction before the end of 2017.
Sales of the Bayer Group increased in 2016 by 1.5 percent (Fx & portfolio adj. 3.5 percent) to EUR 46,769 million (2015: EUR 46,085 million). EBITDA before special items advanced by 10.2 percent to EUR 11,302 million (2015: EUR 10,256 million). EBIT rose by 12.8 percent to EUR 7,042 million (2015: EUR 6,241 million) after special charges of EUR 1,088 million (2015: EUR 819 million).
These resulted mainly from impairment losses on intangible assets, charges in connection with efficiency improvement programs and costs for the integration of acquired businesses. EBIT before special items climbed by 15.2 percent to EUR 8,130 million (2015: EUR 7,060 million). Net income improved by 10.2 percent to EUR 4,531 million (2015: EUR 4,110 million), and core earnings per share from continuing operations by 7.3 percent to EUR 7.32 (2015: EUR 6.82).
Crop Science successful in a difficult market environment
In the agriculture business, Bayer posted sales of EUR 9,915 million (2015: EUR 10,128 million; Fx & portfolio adj. plus 0.1 percent). "The market environment for our Crop Science Division remained weak last year, particularly in Latin America," said Baumann. Crop Science nonetheless held sales at the prior-year level, the Bayer CEO explained. The considerable 6.9 percent (Fx adj.) decline in Latin America was compensated by gains in the other regions. Sales rose by 3.9 percent (Fx adj.) in North America, 2.7 percent (Fx adj.) in Asia/Pacific and 1.8 percent (Fx adj.) in Europe/Middle East/Africa.
Seeds (seeds and traits) in particular developed positively, growing by 8.3 percent (Fx & portfolio adj.). The Crop Protection business posted gains of 4.0 percent for Fungicides and 4.1 percent for SeedGrowth (seed treatment products) on a currency- and portfolio-adjusted basis. By contrast, the Insecticides business was down sharply (Fx & portfolio adj. minus 13.3 percent). At Herbicides, sales declined slightly (Fx & portfolio adj. minus 2.2 percent). Environmental Science registered a sales gain of 4.5 percent (Fx & portfolio adj.).
EBITDA before special items of Crop Science came in level with the previous year (plus 0.6 percent) at EUR 2,421 million (2015: EUR 2,406 million). A positive currency effect of about EUR 140 million and higher selling prices were offset by lower volumes, higher research and development expenses and higher impairment losses on receivables.
Animal Health benefits from strong growth of Seresto
Sales of the Animal Health business advanced by 4.8 percent (Fx & portfolio adj.) to EUR 1,523 million (2015: EUR 1,490 million). The North America and Asia/Pacific regions developed especially positively due to higher demand. The Seresto™ flea and tick collar posted very strong sales growth of 55.4 percent (Fx adj.) that resulted chiefly from increased demand in the United States and Europe. Currency-adjusted sales of the Advantage™ family of flea, tick and worm control products were level with the previous year. EBITDA pre exceptionals was virtually flat year on year (plus 0.6 percent) at EUR 349 million (2015: EUR 347 million). Positive earnings contributions from volume and price increases stood against higher selling expenses and a higher cost of goods sold. Earnings were also diminished by a negative currency effect of about EUR 10 million.