Bayer CropScience sales down 5% in Q2 2016

Date:08-01-2016

In the second quarter of 2016, Crop Science posted sales of €2,518 million, decreased by 4.5% (Fx & portfolio adj. + 0.4%). Business at Crop Protection / Seeds was steady year on year despite an ongoing weak market environment. Environmental Science posted a slight decline in sales.

Sales at Crop Protection came in at €2,055 million (+1.4% Fx & portf. adj.). Fungicides (€840 million, +6.0% Fx & portf. adj.) and Herbicides (€769 million, +3.9% Fx & portf. adj.) developed positively while Insecticides (€302 million, -11.9% Fx & portf. adj.) and SeedGrowth (€144 million, -6.1% Fx & portf. adj.) declined. Sales in Seeds came in at €308 million (-4.8% Fx & portf. adj.).

Following the conclusion in May 2016 of an agreement to divest the Consumer business of Environmental Science, these activities are reported under discontinued operations. Environmental Science therefore now comprises only the business for professional users. The key data and prior-year figures are restated accordingly.

In light of the continuingly weak market environment, Bayer CropScience now expects the sales to be on the prior-year level (previously: increase by a low-single-digit percentage) on a currency- and portfolio adjusted basis. This is equivalent to reported sales of about €10 billion. Bayer CropScience now expects a low-single-digit percentage decrease (previously: low-single-digit percentage increase) in EBITDA before special items.   

Regional sales (currency-and portfolio-adjusted)

Sales in Europe were up slightly year on year at €808 million (Fx adj. + 0.9%). Sales increased by a double-digit percentage at SeedGrowth, Insecticides and Herbicides but declined considerably at Fungicides, particularly in Germany. Bayer CropScience registered encouraging growth in business with vegetable seeds. Sales at Environmental Science came in well below the prior-year figure. 

Sales in North America fell by 3.4% (Fx adj.) to €812 million. Compared with the prior-year quarter, sales at Seeds decreased substantially due to seasonal effects. Higher sales of soybean seeds were not sufficient to offset the decline in business with oilseed rape / canola and cotton seeds. Sales of seed treatments were down significantly year on year, as was the Insecticides business. By contrast, we registered very pleasing growth at Fungicides. Bayer CropScience also expanded business at Herbicides, while sales at Environmental Science declined slightly. 

In the Asia / Pacific region, we grew sales substantially (Fx adj. + 8.4%) to €455 million, driven especially by very gratifying development in China and Australia. Business in the region expanded in all Crop Protection units, particularly SeedGrowth and Fungicides. Sales in the Seeds unit climbed by a double-digit percentage. On the other hand, Environmental Science posted a considerable decline in sales. 

Sales in the Latin America / Africa / Middle East region were level year on year at €443 million (Fx adj. – 0.2%). Very gratifying performances at Fungicides and in the vegetable seeds business were more than offset by declines in sales at Herbicides and SeedGrowth and much lower sales at Insecticides in Brazil. Environmental Science posted double-digit percentage growth.

Earnings

EBITDA before special items of Crop Science declined by 8.2% to €663 million in the second quarter of 2016 (Q2 2015: €722 million). The higher cost of goods sold, slightly lower volumes and a negative currency effect of around €10 million were compensated only in part by higher selling prices and lower selling expenses.

EBIT decreased by 8.7% to €512 million, after special charges of €30 million (Q2 2015: €28 million), due largely to restructuring measures.

First half of 2016

Sales of Crop Science in the first half of 2016 were level year on year at €5,454 million (Fx & portfolio adj. + 0.8%) despite the difficult market environment. At Crop Protection / Seeds, the positive development of Fungicides compensated declining Insecticides sales. Bayer CropScience expanded business at Seeds and Environmental Science. Sales increased in the Asia / Pacific and Europe regions, whereas business remained at the prior-year level in North America and Latin America / Africa / Middle East. 

Earnings EBITDA before special items of Crop Science in the first half of 2016 was level year on year at €1,752 million (+ 0.5%; H1 2015: €1,743 million). Positive earnings contributions from higher selling prices stood against increased R&D expenses, lower volumes and a negative currency effect of around €25 million.

EBIT increased slightly by 3.6% to €1,467 million after special charges of €33 million (H1 2015: €75 million), which were largely attributable to restructuring measures.