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Bayer Crop Science posts substantial Q1 sales and earnings gains following the acquisition
Apr. 26, 2019
Bayer Crop Science generated sales of 6.444 billion euros in the first quarter of 2019, up 125.2 percent on a reported basis, thanks mainly to a positive portfolio effect of 119.5% due to the acquisition of Monsanto (€4,329 million) less the prorated contribution from the divested businesses in the prior-year period (€909 million). The 5.5 percent increase after adjusting for currency and portfolio changes was driven by growth in the Latin and North America regions, with the effects of the service agreements with BASF also apparent in both regions. Sales also increased slightly in the Europe/Middle East/Africa region on a currency- and portfolio-adjusted basis. By contrast, sales were down slightly in Asia/Pacific after adjusting for currency and portfolio effects.
Regional sales
Sales in Europe / Middle East / Africa rose by 37.7% (Fx adj.) to €1,764 million. The portfolio effect amounted to €471 million. Sales increased by 1.3% on a currency- and portfolio-adjusted basis. Insecticides registered double-digit sales growth, partly due to favorable weather conditions and to product launches. Our Herbicides business also expanded for weather-related reasons. Sales of SeedGrowth (Other) declined, however, due to loss of registrations in Europe, as did business in Fungicides, primarily in Germany and Ukraine.
Sales in North America advanced by 261.2% (Fx adj.) to €3,524 million. There was a portfolio effect of €2,481 million. The currency- and portfolio-adjusted growth of 5.2% resulted in large part from sales effected under the aforementioned service agreements relating to the SeedGrowth business (Other). At Environmental Science, however, business was down, due in part to a planned reduction in product shipments to the acquirer of the consumer business we divested in 2016.
In the Asia / Pacific region, sales increased by 2.8% (Fx adj.) to €388 million. The portfolio effect here was €16 million. Business declined by 1.7% (Fx & portfolio adj.). Sales of Insecticides and Fungicides suffered especially from a late start to the season in India. For Fungicides, the sharp decline from the prior-year quarter was also due to the late monsoon onset in Southeast Asia. These decreases were not offset by the rise in sales of Herbicides.
Sales in the Latin America region advanced by 238.0% (Fx adj.) to €768 million. There was a portfolio effect of €452 million. Business grew by 41.3% (Fx & portfolio adj.). In Brazil, Herbicides, Fungicides, Insecticides and other units benefited from shifts in demand from the previous quarter. In Mexico, sales of Fungicides also were bolstered by favorable weather conditions.
On a pro-forma basis, with sales presented as if the acquisition of Monsanto and the associated divestments had already taken place as of January 1, 2017, sales of Crop Science were level year on year after adjusting for currency effects (minus 0.2 percent). Sales advanced at Herbicides and Insecticides on a currency-adjusted basis, while the business entity Other saw particularly strong growth that was driven by an increase in cotton seed market share in the United States and Brazil. Business at Corn Seed & Traits matched the prior-year level. Soybean Seed & Traits recorded the sharpest decline, with performance held back by demand shifts into prior quarters in Latin America and by lower acreages and increased competitive pressure in North America.
EBITDA before special items of Crop Science rose by 122.8 percent to 2.322 billion euros. This increase was primarily attributable to the earnings contribution from the newly acquired business. The absence of the earnings contribution from the businesses divested to BASF had an opposing effect. Earnings were also diminished by negative currency effects of 67 million euros for the pre-acquisition Bayer businesses.
As of April 11, 2019, lawsuits from approximately 13,400 plaintiffs had been served in the United States in connection with the crop protection product glyphosate. Bayer continues to believe that it has meritorious defenses and intends to defend itself vigorously in all of these lawsuits.
Source: Bayer CropScience
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