First quarter of 2010:
Bayer achieves strong gains in sales and earnings
- Sales €8.3 billion (+5.3%)
- EBITDA before special items €1.9 billion (+13.2%)
- Net income €0.7 billion (+63.1%)
- Core earnings per share €1.20 (+31.9%)
- Group outlook raised for 2010
1. Overview of Sales, Earnings and Financial Position
The Bayer Group achieved strong gains in sales and earnings in the first quarter of 2010. MaterialScience posted a clear recovery, achieving better-than-expected sales growth against the very weak prior-year quarter in an increasingly stabilizing market environment. HealthCare saw a slight improvement in sales and earnings. The CropScience business, however, weakened distinctly in the first quarter of 2010 compared with the record prior-year quarter, mainly in light of market- and weather-related factors.
Group sales rose by 5.3% to €8,316 million (Q1 2009: €7,895 million). Adjusted for currency and portfolio effects (Fx & portfolio adj.), business grew by 6.2%. Sales of HealthCare increased by 0.7% (Fx & portfolio adj. +2.6%). In the CropScience business, sales receded by 7.9% (Fx & portfolio adj. -10.0%). Sales of MaterialScience advanced by a considerable 35.5% (Fx adj. +37.9%).
EBITDA before special items of the Bayer Group expanded by 13.2% to €1,918 million (Q1 2009: €1,695 million). The clear improvement at MaterialScience contributed substantially to this earnings growth. The EBITDA margin before special items climbed to 23.1% (Q1 2009: 21.5%).
HealthCare generated EBITDA before special items of €1,079 million (Q1 2009: €1,061 million). EBITDA before special items of CropScience, at €559 million, was down by 24.2% from the very good earnings level of the prior-year period (€737 million). This drop in earnings was largely due to the decline in sales caused by market- and weather-related factors. MaterialScience posted EBITDA before special items of €287 million after the very weak prior-year figure of minus €116 million, which was attributable to the slump in the economy.
EBIT before special items of the Bayer Group in the first quarter of 2010 improved by 25.3% to €1,274 million (Q1 2009: €1,017 million). Earnings were diminished by special charges of €77 million (Q1 2009: €44 million). Of the special charges, which related entirely to litigations, HealthCare accounted for €29 million and CropScience for €48 million. EBIT of the Bayer Group grew by 23.0% to €1,197 million (Q1 2009: €973 million).
After a non-operating result of minus €244 million (Q1 2009: minus €334 million), income before income taxes in the first quarter of 2010 was €953 million (Q1 2009: €639 million). The main components of the non-operating result were €117 million (Q1 2009: €179 million) in net interest expense, €90 million (Q1 2009: €102 million) in interest cost for pension and other provisions, and an exchange loss of €9 million (Q1 2009: €26 million). The drop in net interest expense was partly due to the reduction in financial debt and lower interest rates. Tax expense in the first quarter came to €259 million (Q1 2009: €215 million). Income after taxes increased to €694 million (Q1 2009: €424 million), of which €1 million (Q1 2009: minus €1 million) was attributable to non-controlling interest.
Bayer Group net income for the first quarter of 2010 came in at €693 million (Q1 2009: €425 million). Earnings per share were €0.84 (Q1 2009: €0.55). Core earnings per share rose to €1.20 (Q1 2009: €0.91). For calculation details see
“Core Earnings Per Share.”Gross cash flow of the Bayer Group increased by 5.1% year on year to €1,271 million (Q1 2009: €1,209 million) due especially to the upward business trend at MaterialScience. Net cash flow rose by 5.6% to €732 million (Q1 2009: €693 million).
Despite the usual seasonal first-quarter expansion of business and negative currency effects, net financial debt on March 31, 2010, remained level with the end of 2009 at €9.7 billion. The net pension liability – the aggregate of pension obligations and plan assets – rose by €0.5 billion compared with December 31, 2009, to €6.9 billion, due especially to lower long-term capitalmarket interest rates.