0
Home
News
Directory
E-newsletter
Magazine
Events
Data
AgReport
Subscribe
Bayer's fiscal 2017: business at prior-year level – on track with strategy
Mar. 1, 2018
• Group sales increased by 1.5 percent (Fx & portfolio adj.) to 35.015 billion euros
• Crop Science business down against prior year due to situation in Brazil – measures taking effect
• Monsanto acquisition expected to close in second quarter of 2018
In 2017, Bayer’s operational business was at the prior-year level. The company made good progress strategically. “We took major steps toward the proposed acquisition of Monsanto,” Management Board Chairman Werner Baumann said on Wednesday at the Financial News Conference in Leverkusen. Sales and earnings declined at Crop Science, however, this development was attributable to the difficult situation in Brazil. “We remain focused on our objectives and are convinced of our long-term perspective. We therefore have every reason to look to the future with optimism,” said Baumann.
Bayer received further approvals last year for the proposed acquisition of Monsanto. “Only recently, the Brazilian antitrust authorities gave the green light. That is an important milestone on the road to closing this transaction. After all, Brazil is one of the world’s most important agricultural markets,” Baumann said. Overall, more than half of the around 30 authorities worldwide have now approved the acquisition. Although Bayer is continuing to cooperate closely with the institutions involved, it is becoming evident that the examination procedures will require more time. “Our goal now is to be able to close the transaction in the second quarter of 2018,” Baumann explained. “This does not affect our expectation of a successful conclusion to the regulatory review, nor our conviction that this is the right step.”
Of importance last year in connection with the proposed acquisition of Monsanto and the associated merger control proceedings was the contractual agreement to sell certain Crop Science businesses to BASF. “We have now also committed to divest our entire vegetable seed business. Certain additional business activities of Bayer and Monsanto may also be sold or out-licensed,” Baumann said. Thus Bayer is actively addressing observations expressed by antitrust authorities. Any sales and licenses would be subject to a successful closing of the proposed acquisition of Monsanto, which remains subject to customary closing conditions, including receipt of required regulatory approvals.
Crop Science held back by situation in Brazil
Sales in the agriculture business (Crop Science) moved back by 2.2 percent (Fx & portfolio adj.) to 9.577 billion euros. This was mainly due to the situation in the Brazilian crop protection business, where volumes were held back by unexpectedly high inventories in the market. “We have initiated a number of measures to normalize this situation. For example, we took back crop protection products from our distribution partners and concluded new agreements at amended terms,” said Baumann. “We are now seeing that these measures are taking effect.” When the Brazilian business is excluded, sales of Crop Science rose by 3.0 percent (Fx & portfolio adj.). Sales declined by 18.0 percent (Fx adj.) in Latin America but grew strongest, by 5.8 percent (Fx adj.), in North America, followed by Asia/Pacific and Europe/Middle East/Africa.
The Seeds business (seed and plant traits) posted positive development, with sales gains of 9.1 percent (Fx & portfolio adj.). Environmental Science, the business with products for nonagricultural applications, saw sales increase by an even more substantial 14.0 percent (Fx & portfolio adj.). By contrast, there was a decline of 5.3 percent (Fx & portfolio adj.) at Crop Protection. Fungicides (Fx & portfolio adj.: minus 9.9 percent) and Insecticides (Fx & portfolio adj.: minus 6.1 percent) saw disproportionate declines in sales – unlike Herbicides and SeedGrowth (seed treatment products), where the declines were much less marked at 1.6 and 0.3 percent (Fx & portfolio adj.), respectively.
Sales by region
Sales in the Europe / Middle East / Africa region improved by 1.5% (Fx adj.) to €3,335 million. Insecticides developed very positively due to increased demand and the introduction of new products. It also achieved sales growth in the Seeds business, particularly for vegetables. On the other hand, increased competitive pressure led to declines at SeedGrowth and Fungicides.
In the North America region, the company posted a 5.8% (Fx adj.) increase in sales to €2,772 million. It registered a double-digit growth rate in the Seeds business, with robust sales gains for oilseed rape / canola – due to increased acreages in Canada – and for soybeans more than offsetting declines for cotton. SeedGrowth also developed very positively due to increased demand for products to treat soybean and wheat seed. In contrast, Bayer recorded declines at Insecticides. Environmental Science, for its part, posted a considerable increase in sales.
Sales in Asia / Pacific moved forward by 2.0% (Fx adj.) year on year to €1,563 million. Business performance was encouraging at Fungicides, particularly in Southeast Asia, and at Herbicides, mainly due to new product launches in China and Japan. It also achieved sales growth in the Seeds business, particularly for cotton and oilseeds, but posted a decline at Insecticides.
Sales in Latin America decreased by 18.0% (Fx adj.) to €1,907 million. This decline was attributable to returns of crop protection products and to lower sales into the distribution channel to normalize inventories in Brazil. Price reductions also had an effect. Bayer posted gains in sales overall in the other Latin American countries on a currency-adjusted basis.
Earnings
In 2017, EBITDA before special items of Crop Science declined by 15.6% to €2,043 million. Adjusted for negative currency effects of €63 million, earnings were down by 13.0%. The decline is largely attributable to the aforementioned situation in Brazil, which resulted in lower selling prices and volumes. Outside of Brazil, lower selling prices were offset by expanded volumes. Other operating income had a positive effect on earnings.
EBIT declined by 29.6% to €1,235 million, after special charges of €408 million (2016: €143 million) that primarily related to the planned acquisition of Monsanto and the execution of a divestment project.
Outlook
For Crop Science, Bayer expects the sales coming in at more than 9.5 billion euros in 2018. This corresponds to a mid-single-digit percentage increase on a currency- and portfolio-adjusted basis. Bayer expects to increase EBITDA before special items by a mid- to high-single-digit percentage (Fx adj.: mid-teens percentage increase).
Source: Bayer CropScience
More from AgroNews
Change
Hot TopicSubscribe
| Subscribe Email: | * | |
| Name: | ||
| Mobile Number: | ||
Comment
0/1200
NEWSLETTER