Management Report
5.2 CropScience
| Key Data – CropScience | [Table 7] |
|---|
| | 1st Quarter 2009 | 1st Quarter 2010 | Change |
| | € million | € million | % |
| Sales | 2,120 | 1,952 | -7.9 |
| Change in sales | | | |
| Volume | +3.4% | -9.9% | |
| Price | +4.0% | -0.1% | |
| Currency | -0.2% | +2.0% | |
| Portfolio | 0.0% | +0.1% | |
| Sales by segment | | | |
| Crop Protection | 1,734 | 1,476 | -14.9 |
| Environmental Science, BioScience | 386 | 476 | +23.3 |
| Sales by region | | | |
| Europe | 1,041 | 918 | -11.8 |
| North America | 576 | 527 | -8.5 |
| Asia/Pacific | 239 | 240 | +0.4 |
| Latin America/Africa/Middle East | 264 | 267 | +1.1 |
| EBITDA* | 733 | 511 | -30.3 |
| Special items | (4) | (48) | |
| EBITDA before special items* | 737 | 559 | -24.2 |
| EBITDA margin before special items* | 34.8% | 28.6% | |
| EBIT* | 609 | 388 | -36.3 |
| Special items | (8) | (48) | |
| EBIT before special items* | 617 | 436 | -29.3 |
| Gross cash flow** | 550 | 363 | -34.0 |
| Net cash flow** | (421) | (265) | +37.1 |
* For definition see “Calculation of EBIT(DA) Before Special Items.” ** For definition see “Financial Position of the Bayer Group.” |
Sales of CropScience came in at €1,952 million in the first quarter of 2010 (Q1 2009: €2,120 million), down 7.9% against the prior-year period. Business receded by 10.0% on a currency- and portfolio-adjusted basis. This was due above all to the unfavorable weather conditions in a number of important growing regions and high product inventories in the distribution channels. In addition, there was a decline in prices for major agricultural commodities such as wheat and corn. On the other hand, the market environment for high-quality seed was relatively favorable, leading to a further increase in demand. Overall, business got off to a weak start but picked up againsignificantly toward the end of the quarter.
EBITDA before special items was down by 24.2% to €559 million (Q1 2009: €737 million). This was mainly due to the weak business development in Crop Protection, higher production and idle capacity costs, and increased research expenses, particularly at BioScience. EBIT before special items fell by 29.3% to €436 million (Q1 2009: €617 million). Special charges totaling €48 million were incurred in connection with litigations concerning genetically modified rice in the United States. EBIT shrank by 36.3% to €388 million (Q1 2009: €609 million).
| Best-Selling CropScience Products* | [Table 8] |
|---|
| | 1st Quarter 2009 | 1st Quarter 2010 | Change | Currency-
adjusted change |
| | € million | € million | % | % |
Confidor®/Gaucho®/Admire®/Merit®
(Insecticides/Seed Treatment/Environmental Science) |
163 |
138 |
-15.3 |
-15.2 |
| Atlantis® (Herbicides) | 131 | 91 | -30.5 | -31.4 |
| Flint®/Stratego®/Sphere®/Nativo® (Fungicides) | 105 | 90 | -14.3 | -12.8 |
| Proline®/Input®/Prosaro® (Fungicides) | 107 | 80 | -25.2 | -27.4 |
| Basta®/Liberty®/Rely®/Ignite® (Herbicides) | 109 | 71 | -34.9 | -39.7 |
Folicur®/Raxil®
(Fungicides/Seed Treatment) | 75 | 62 | -17.3 | -20.5 |
| Fandango® (Fungicides) | 44 | 57 | +29.5 | +26.6 |
| Decis®/K-Othrine® (Insecticides/Environmental Science) | 39 | 48 | +23.1 | +16.7 |
| Hussar® (Herbicides) | 56 | 47 | -16.1 | -19.8 |
| Biscaya®/Calypso® (Insecticides) | 34 | 44 | +29.4 | +27.4 |
| Total | 863 | 728 | -15.6 | -17.5 |
| Proportion of CropScience sales | 41% | 37% | | |
| * Figures are based on active ingredient class. For the sake of clarity, only the principal brands and business units are listed. |
Crop Protection
| Key Data – Crop Protection | [Table 9] |
|---|
| | 1st Quarter 2009 | 1st Quarter 2010 | Change |
| | € million | € million | % |
| Sales | 1,734 | 1,476 | -14.9 |
| Herbicides | 739 | 603 | -18.4 |
| Fungicides | 509 | 417 | -18.1 |
| Insecticides | 290 | 296 | +2.1 |
| Seed Treatment | 196 | 160 | -18.4 |
| Sales by region | | | |
| Europe | 911 | 779 | -14.5 |
| North America | 378 | 267 | -29.4 |
| Asia/Pacific | 207 | 203 | -1.9 |
| Latin America/Africa/Middle East | 238 | 227 | -4.6 |
| EBITDA* | 607 | 380 | -37.4 |
| Special items | (4) | 0 | |
| EBITDA before special items* | 611 | 380 | -37.8 |
| EBITDA margin before special items* | 35.2% | 25.7% | |
| EBIT* | 500 | 276 | -44.8 |
| Special items | (6) | 0 | |
| EBIT before special items* | 506 | 276 | -45.5 |
| Gross cash flow** | 458 | 266 | -41.9 |
| Net cash flow** | (359) | (258) | +28.1 |
* For definition see “Calculation of EBIT(DA) Before Special Items.” ** For definition see “Financial Position of the Bayer Group.” |
In the Crop Protection segment, sales in the first quarter of 2010 came in 14.9% below the prior-year period at €1,476 million (Q1 2009: €1,734 million). Adjusted for currency effects, sales dropped by 16.4%. Business with herbicides, fungicides and seed treatment products was considerably weaker than in the first quarter of 2009, mainly as a result of the long winter in the northern hemisphere. Sales of insecticides, however, moved slightly higher.
In the Europe region, sales fell by 14.5% to €779 million (Q1 2009: €911 million). On a currency-adjusted basis, business shrank by 15.9%. A delayed start to the spring season following the long winter in Europe initially hampered business at the beginning of the year. While sales in France were significantly below the high prior-year level for market-related reasons, business in Germany matched the strong level of the first quarter of 2009. Sales were down considerably for herbicides, fungicides and seed treatment products, while business with insecticides expanded.
Crop Protection sales in North America dropped by 29.4% to €267 million (Q1 2009: €378 million). On a currency-adjusted basis the decrease came to 30.3%. The market as a whole was heavily impacted by the cold weather, which delayed sowing, and by the drought in Canada. In addition, market development was unfavorable as a result of lower prices for corn and wheat and high inventories in the distribution channels. We also considerably reduced prices for our canola herbicide Liberty® in Canada and our herbicide Ignite® in the United States, although there was a corresponding increase in the price of our canola seed. Sales of herbicides and fungicides fell substantially for the reasons mentioned, while business with insecticides developed well. Sales in the Seed Treatment business unit almost matched the level of the prior-year period.
Sales in the Asia/Pacific region were down by 1.9% to €203 million (Q1 2009: €207 million). After adjusting for currency effects, sales declined by 6.3%. Business got off to a slow start due to the exceptional weather conditions at the beginning of the year and to high inventory levels, but picked up again significantly toward the end of the quarter. The economic recovery in numerous countries of the Asia/Pacific region had a positive effect. Sales, especially of herbicides, rose in Australia, and business also increased in Southeast Asia. The adverse weather conditions in China had a negative effect.
Sales in the Latin America/Africa/Middle East region came in at €227 million, down 4.6% from €238 million in the prior-year period. Adjusted for currency effects, business was down by 5.0%. This was chiefly attributable to lower sales in Brazil, which were largely due to higher inventories in the distribution channels. By contrast, business trended positively in Argentina due to insect and disease infestation pressure. Sales in Africa and the Middle East were distinctly ahead of the prior-year period, mainly on account of the upward business trend in Turkey.
EBITDA before special items in the Crop Protection segment moved back 37.8% to €380 million (Q1 2009: €611 million), mainly as a result of the weak business performance caused by a significant reduction in volumes and by low prices. Earnings were also held back particularly by increased production and idle capacity costs and by shifts in the product mix. EBIT before special items fell by 45.5% to €276 million (Q1 2009: €506 million). There were no special items in the Crop Protection segment in the first quarter of 2010 (Q1 2009: special charges of €6 million). EBIT dropped by 44.8% year on year.
Environmental Science, BioScience
| Key Data – Environmental Science, BioScience | [Table 10] |
|---|
| | 1st Quarter 2009 | 1st Quarter 2010 | Change |
| | € million | € million | % |
| Sales | 386 | 476 | +23.3 |
| Environmental Science | 164 | 170 | +3.7 |
| BioScience | 222 | 306 | +37.8 |
| Sales by region | | | |
| Europe | 130 | 139 | +6.9 |
| North America | 198 | 260 | +31.3 |
| Asia/Pacific | 32 | 37 | +15.6 |
| Latin America/Africa/Middle East | 26 | 40 | +53.8 |
| EBITDA* | 126 | 131 | +4.0 |
| Special items | 0 | (48) | |
| EBITDA before special items* | 126 | 179 | +42.1 |
| EBITDA margin before special items* | 32.6% | 37.6% | |
| EBIT* | 109 | 112 | +2.8 |
| Special items | (2) | (48) | |
| EBIT before special items* | 111 | 160 | +44.1 |
| Gross cash flow** | 92 | 97 | +5.4 |
| Net cash flow** | (62) | (7) | +88.7 |
* For definition see “Calculation of EBIT(DA) Before Special Items.” ** For definition see “Financial Position of the Bayer Group.” |
Sales in the Environmental Science, BioScience segment posted a 23.3% increase in the first quarter of 2010, to €476 million (Q1 2009: €386 million). After adjusting for currency and portfolio effects, business was up by 18.6%.
Sales of the Environmental Science business unit rose by 3.7% to €170 million (Q1 2009: €164 million). The currency-adjusted increase was 3.9%. Business with products for private consumers advanced by 10.3% (Fx adj.), driven mainly by a very good performance in the United States as well as by increases in Europe. By contrast, sales of products for professional users receded in both these regions and were slightly below the prior-year period overall.
Sales of the BioScience business unit climbed by 37.8% to €306 million (Q1 2009: €222 million). When adjusted for currency and portfolio effects, sales grew by 29.4%. This growth was due primarily to markedly higher sales in cotton, canola and vegetables, which in turn were the result of positive market development. For cotton we registered considerable gains in North America, Latin America and Europe, due partly to an early start to the season. While canola revenues benefited particularly from the seed price increases we achieved in Canada, prices for our canola herbicide dropped at the same time. The vegetable seed business – especially onions and leeks – showed a positive trend.
EBITDA before special items in the Environmental Science, BioScience segment advanced by 42.1% to €179 million (Q1 2009: €126 million). Earnings of the Environmental Science business unit edged forward against the prior-year period, while the BioScience unit achieved significant gains, mainly because of the positive trend for canola and cotton. EBIT before special items climbed by 44.1% to €160 million (Q1 2009: €111 million). After special charges in connection with litigations concerning genetically modified rice in the United States, EBIT came to €112 million (+2.8%).