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Bayer Crop Science sales up 3% in Q3 2017
Oct. 27, 2017
Bayer CropScience AG
GermanyFollow
GermanyBayer Crop Science posted sales of €2,031 million in the third quarter of 2017 (Fx & portfolio adj. + 2.7%). Crop Protection / Seeds registered gains on a currency- and portfolio-adjusted basis that resulted particularly from gratifying development in the Asia / Pacific and North America regions. Environmental Science posted increased sales due to product deliveries to the acquirer of the consumer business divested in the fourth quarter of 2016.
EBITDA before special items of Crop Science decreased by 3.5% to €307 million in the third quarter of 2017 (Q3 2016: €318 million). Lower selling prices and a negative currency effect in the amount of around €20 million stood against an increase in other operating income, a decline in the cost of goods sold and a decrease in selling expenses. Positive effects in the mid-double-digit millions were recorded in conjunction with the accounting measures taken in the previous quarter in Brazil.
EBIT declined by 37.8% to €84 million. This included special charges of €121 million (Q3 2016: €71 million), primarily in conjunction with the agreed acquisition of Monsanto and the execution of a divestment project.
Sales by region
Sales in Europe / Middle East / Africa matched the prior-year level at €525 million (Fx adj. – 0.2%). Business developed very positively at Seeds, particularly for vegetables, and at Insecticides, due in part to a successful tender business. In contrast, SeedGrowth and Herbicides posted considerable declines.
Sales in North America advanced by 9.8% (Fx adj.) to €386 million. The company achieved strong growth in the Seeds business, in particular for soybeans and oilseed rape / canola. However, the Insecticides and Fungicides businesses registered considerable declines in sales. Environmental Science posted a substantial increase in sales.
In the Asia / Pacific region, sales moved forward by 7.4% (Fx adj.) to €380 million. Business at Insecticides and Fungicides developed very positively in India after a weak second quarter in connection with the introduction of a new sales tax system. The Seeds business also saw gratifying development thanks above all to an early start to the season for oilseeds and cotton, while sales were down at Herbicides and SeedGrowth.
Sales in the Latin America region were flat year on year at €740 million (Fx adj. – 0.3%), with sales declining slightly in Brazil, where business was impacted in particular by price reductions. The company posted gains in sales overall in the other Latin American countries on a currency-adjusted basis.
First nine months of 2017
Sales Sales of Crop Science receded by 3.2% (Fx & portfolio adj.) in the first nine months of 2017, to €7,314 million. The decline mainly reflected higher provisions for crop protection product returns in Brazil.
In contrast, Bayer registered considerable gains at Seeds and Environmental Science. Gains in North America, Asia / Pacific and Europe / Middle East / Africa were not sufficient to offset the significant decline in sales in the Latin America region.
EBITDA before special items of Crop Science declined by 16.0% to €1,739 million in the first nine months of 2017 (9M 2016: €2,070 million). Earnings were significantly impacted by the provisions established in Brazil in the second quarter. Excluding the Brazil business, earnings were up slightly year on year.
EBIT fell by 26.9% to €1,171 million. Earnings were held back by special charges of €253 million (9M 2016: €104 million) that mainly related to the agreed acquisition of Monsanto, the execution of a divestment project and efficiency enhancement measures.
Research, Development, Innovation
In July 2017, Bayer and the Israeli company Netafim, which is based in Tel Aviv, joined forces to enhance the application of crop protection products. The new approach, called “DripByDrip”, will enable farmers to water their fields and apply crop protection products in a more targeted way using Netafim’s drip irrigation technology. The first launch is scheduled to take place in Mexico at the end of 2017.
In August 2017, Bayer and the Citrus Research and Development Foundation (CRDF), a non-profit organization supporting citrus growers in Florida, signed a research collaboration agreement to find solutions to Citrus Greening disease, which currently threatens the global citrus production and juice industry.
In addition, Bayer and Rothamsted Research, Harpenden, United Kingdom, formed a strategic alliance in August 2017 to develop holistic solutions to meet the individual needs of farmers. New technologies are also set to be deployed and developed as part of the alliance.
Bayer and the non-profit organization Quantified Plant, Vaxholm, Sweden, signed a licensing and cooperation agreement in August 2017. Under the agreement, Bayer is providing proprietary, crowd-sourced data from more than 70 countries on certain plant varieties and their location, prevalence and distribution. Quantified Planet makes this data available worldwide for use in scientific research in the field of biodiversity.
The new TwinLink Plus™ cotton technology was launched on the U.S. market in September 2017. With three modes of action against insect pests added to the double herbicide tolerance, it provides season-long protection and further improves resistance management.
In addition, Bayer and Bosch, Germany, signed a three-year cooperation agreement in September 2017, with the objective of developing a smart spraying technology to make the application of crop protection products more efficient and facilitate a more targeted use of herbicides.
Bayer and the Greek Institute of Molecular Biology and Biotechnology, which forms part of the Foundation of Research and Technology Hellas (IMBB-FORTH), announced a five-year research collaboration in September 2017. This collaboration will involve research into insect gut physiology, with the goal of developing new insecticides.
In addition, Bayer and Ginkgo Bioworks, Inc., United States, founded a new company focused on the plant microbiome in September 2017. The innovative joint venture will concentrate on transformational beneficial microbes for plants to minimize agriculture’s environmental impact. The company will have sites in Boston and Sacramento, United States.
Outlook
Bayer anticipates sales of Crop Science division below €10 billion. This corresponds to a low-single-digit-percentage decline on a currency- and portfolio-adjusted basis. Meanwhile, the company expects EBITDA before special items to decline by a mid-teens percentage.
Source: Bayer CropScience
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