Bayer agrochem sales up 18% in Q3

By CnAgri2012-11-02 19:08:07 Print

Bayer CropScience’s crop protection business grew by 17.8% to €1,414 million in the third quarter of 2012 and developed positively in all product groups and regions. SeedGrowth, the business with seed treatment products – especially the Poncho™ and Gaucho™ product families – showed particularly strong gains. Sales of the CropScience subgroup rose by 19.0% to €1,641 million, maintaining nearly the same momentum as in the preceding quarters. Sales growth was especially brisk in Europe and North America, but business also expanded by an encouraging double-digit percentage in Latin America / Africa / Middle East. Business was supported by the positive market conditions, which in turn benefited from factors such as the persistently high prices for agricultural commodities.

EBIT of CopScience rose from €24 million to €65 million. Special items amounted to minus €3 million. EBIT before special items advanced by 47.8% to €68 million, while EBITDA before special items increased by 14.5% to €189 million. This was attributable above all to higher volumes and to favorable currency effects. The progress made with efficiency improvement programs also had a positive impact on earnings. However, manufacturing and selling expenses increased.

The fungicides business rose by 21.5% to €361 million in third quarter which benefited mainly from sales of Fox™, the highly effective fungicide from Nativo™ product family. Insecticide sales also advanced significantly by 12.6% to €376 million, largely due to good business with Belt™ product family. Sales of herbicides increased moderately overall by 9.8% to €360 million, though with slight declines in Latin America. Cereal herbicides posted gains in Europe.

Regional sales

Sales in Europe rose by 16.7% (Fx adj.) to €361 million. This increase was mainly driven by strong SeedGrowth sales in Germany, France and the United Kingdom. The herbicides business also registered significant gains, mainly due to fall application in cereals. Fungicide and insecticide sales developed well.

The company also achieved strong third-quarter growth in North America, too, with sales up by 10.7% (Fx adj.) to €199 million. Business developed particularly well in the United States, especially in SeedGrowth. The drought in the United States had only a marginal effect on their business so far.

Sales in the Asia/Pacific region rose by a moderate 2.6% (Fx adj.) to €286 million. This was largely attributable to increases for herbicides and SeedGrowth products. Sales in China and Australia improved considerably, while business in Japan and Thailand was below the high level of the prior-year period.

Sales in the Latin America/Africa/Middle East region advanced by 10.5% (Fx adj.) year on year to €567 million. Growth was mainly driven by increases in Latin America, especially Brazil, where the fungicides business developed especially well in the third quarter. On the other hand, business with herbicides declined. In Argentina a sharp rise in sales of insecticides. The business also performed positively overall in Africa and the Middle East.

Sales of Seeds climbed by a substantial 39.1% (Fx & portfolio adj.) to €97 million. Growth was driven by the business in North America, particularly with canola seed. Sales of Nunhems™vegetable seeds were level with the previous year.

Sales of the environmental Science business unit developed positively overall, rising by 8.8% (Fx adj.) to €130 million. Business with products for professional users expanded by a double-digit percentage, while sales of products for private customers remained level year on year.

Nine months sales

CropScience sales in the first nine months of 2012 climbed by 17.0% to €6,527 million. The positive business development in 2012 has been driven by a successful season in the northern hemisphere. The realignment of the company’s sales and marketing activities and the streamlined product range, along with an attractive market environment, also contributed to the positive business development. All business units of Crop Protection posted double-digit growth rates worldwide in the first nine months of 2012. Seeds business developed well in the core crops of oilseed rape / canola, cotton and rice, while sales of vegetable seeds were slightly down. Sales in the Environmental Science business unit were level with the prior year.

EBIT of CropScience increased substantially in the first nine months of 2012 from €515 million to €1,298  million after special charges of €66  million. In the current year these mainly comprised expenses for restructuring at Crop Protection. EBIT before special items advanced by 33.3% to €1,364 million. EBITDA before special items increased by 24.5% year on year to €1,719 million thanks to the good business development, especially in the northern hemisphere. North American business contributed substantially to this improvement in earnings. In addition, Bayer benefited from one-time gains of €47 million, primarily in connection with outlicensing activities and the divestment of active ingredients at Crop Protection.

Outlook

Based on the continuing high prices for agricultural commodities, Bayer anticipates that the global seed and crop protection market will develop as positively as it did in 2011. Development should be especially favorable in Latin America and Eastern Europe. Despite the extreme summer drought, the company expects that the crop protection market in North America will also grow at a faster-than-average pace for the year as a whole.

Sales are expected to advance by approximately 10% on a currency- and portfolio- adjusted basis and that EBITDA before special items will improve by approximately 20%.