Bayer Declares Q1 2012 Results; Reports Continuing Margin Pressure at MaterialScience
LEVERKUSEN -- The Bayer Group saw a successful start to 2012. "All the subgroups contributed to the encouraging increase in sales, particularly CropScience, which experienced a strong start to the season," Management Board Chairman Dr. Marijn Dekkers explained on Thursday when the first-quarter interim report was published. Earnings of the Group rose sharply. "In view of the good start to 2012, we are increasingly confident for the rest of the year," Dekkers added. Given the continuing uncertainties, however, he said Bayer is currently adhering to the guidance for 2012 that was issued at the end of February.
Sales of the Bayer Group advanced by 6.8 percent in the first quarter, to a record EUR 10,056 million (Q1 2011: EUR 9,415 million). Adjusted for currency and portfolio effects (Fx & portfolio adj.), business expanded by 5.2 percent. The operating result (EBIT) climbed by 42.6 percent to EUR 1,637 million (Q1 2011: EUR 1,148 million). Special items totaled minus EUR 169 million (Q1 2011: minus EUR 442 million). EBIT before special items rose by 13.6 percent to EUR 1,806 million (Q1 2011: EUR 1,590 million). Earnings before interest, taxes, depreciation and amortization (EBITDA) - before special items - improved by 9.4 percent to EUR 2,442 million (Q1 2011: EUR 2,232 million). This was partly due to positive currency effects of EUR 85 million, which occurred mainly at Health Care and CropScience. Net income increased by 53.5 percent to EUR 1,050 million (Q1 2011: EUR 684 million). Core earnings per share rose by 15.9 percent to EUR 1.68 (Q1 2011: EUR 1.45).
Gross cash flow moved ahead by 21.8 percent to EUR 1,595 million (Q1 2011: EUR 1,309 million) due to the improved operating performance. Net cash flow, however, was down by 66.2 percent year on year at EUR 271 million (Q1 2011: EUR 801 million), because cash tied up in working capital increased markedly due to the expansion of business. Net financial debt fell since the start of the year from EUR 7.0 billion to EUR 6.9 billion as of March 31, mainly as a result of positive currency effects.
MaterialScience Burdened by Persisting High Raw Material Costs
Sales of the high-tech materials business rose by 3.8 percent (Fx & portfolio adj. 2.5 percent) in the first quarter, to EUR 2,788 million (Q1 2011: EUR 2,686 million). "Bayer MaterialScience achieved higher volumes in all regions, while selling prices as a whole were level with the prior-year quarter," said Dekkers. Price increases in the Latin America/Africa/Middle East, North America and Europe regions offset declines in Asia/Pacific. "However, earnings of MaterialScience remained under pressure because of high raw material costs," he explained.
Business with raw materials for foams (Polyurethanes) improved by 4.7 percent (Fx & portfolio adj.), while high-tech plastics (Polycarbonates) were down by 4.2 percent (Fx & portfolio adj.) mainly as a result of lower selling prices. Sales of raw materials for coatings, adhesives and specialties improved by 3.9 percent (Fx & portfolio adj.) thanks to growth in all product groups, while the Industrial Operations unit grew by 8.9 percent (Fx & portfolio adj.).
EBITDA before special items of Bayer MaterialScience was down by 19.4 percent year on year at EUR 278 million (Q1 2011: EUR 345 million). However, earnings more than doubled against the weak fourth quarter of 2011 (EUR 106 million). Earnings were diminished above all by a rise in raw material costs, while higher operating costs also had a negative impact. Positive effects came from efficiency improvement programs, increased volumes and one-time gains of EUR 19 million (Q1 2011: EUR 0 million) on the acquisition of the remaining interest in the joint venture Baulé S.A.S.