Sales of the Bayer Group rose by 1.0 percent in the third quarter to EUR 8,670 million (Q3 2010: EUR 8,581 million). The currency- and portfolio-adjusted (Fx & portfolio adj.) increase was 4.8 percent. Sales in the emerging markets rose by 9.5 percent on a currency-adjusted (Fx adj.) basis and accounted for a disproportionately large share of growth. The operating result (EBIT) advanced by a substantial 94.9 percent to EUR 1,099 million (Q3 2010: EUR 564 million).
The Bayer Group achieved further sales growth and significantly increased earnings in the third quarter of 2011. "It was a good quarter for Bayer," Management Board Chairman Dr. Marijn Dekkers said Thursday at the presentation of the interim report. He described the continuing growth momentum in the emerging markets as a key success factor. "Another highlight was the substantial increase in earnings at Bayer HealthCare and CropScience," Dekkers added. At MaterialScience, on the other hand, earnings were diminished by higher energy and raw material costs. He also said Bayer made encouraging progress in research and development, citing positive news from the late-stage pharmaceutical pipeline. "Based on a good quarter, we can confirm the full-year forecast for the Bayer Group that we already raised in the spring," said Dekkers.
Special charges totaled EUR 75 million (Q3 2010: EUR 436 million), including restructuring expenses of EUR 69 million. Earnings in the prior-year quarter were diminished by provisions for litigations concerning genetically modified rice (LL RICE) in the United States.
EBIT before special items climbed by 17.4 percent to EUR 1,174 million (Q3 2010: EUR 1,000 million). Earnings before interest, taxes, depreciation and amortization (EBITDA) - before special items - rose by 8.5 percent to EUR 1,805 million (Q3 2010: EUR 1,664 million). Net income more than doubled, increasing by 125.3 percent to EUR 642 million (Q3 2010: EUR 285 million). Core earnings per share rose by 17.9 percent to EUR 1.12 (Q3 2010: EUR 0.95).
Gross cash flow climbed by 49.6 percent to EUR 1,327 million (Q3 2010: EUR 887 million) due to the improved operating income and lower special charges, while net cash flow was level year on year at EUR 1,577 million (Q3 2010: EUR 1,555 million). Despite negative currency effects of approximately EUR 0.3 billion, net financial debt as of September 30 declined by EUR 0.4 billion compared with June 30, 2011, to EUR 7.0 billion.
Higher earnings at HealthCare
Sales of the HealthCare subgroup receded by 1.7 percent in the third quarter, to EUR 4,200 million (Q3 2010: EUR 4,271 million), due to negative currency effects. After adjusting for currency and portfolio effects, sales rose by 1.6 percent. "The trend in the pharmaceuticals business in the emerging markets was particularly encouraging," Dekkers said. On the other hand, pharmaceuticals sales were down in Europe and North America. The consumer health business developed positively in all regions on a currency-adjusted basis.
Sales in the Pharmaceuticals segment rose by 0.3 percent (Fx & portfolio adj.) to EUR 2,663 million, mainly on account of the positive development in Asia/Pacific and Latin America, especially China and Brazil. In North America and Western Europe, however, business continued to be held back by health system reforms. Among the segment's top products, the YAZ™ family of oral contraceptives developed particularly well. Sales of this product group advanced by 16.5 percent (Fx adj.) compared with a weak prior-year quarter. Double-digit growth was also posted by Aspirin™ Cardio for the prevention of heart attacks, with sales rising by 11.4 percent (Fx adj.). Sales of the cancer drug Nexavar™ rose by 4.5 percent (Fx adj.), mainly for the liver cancer indication. By contrast, sales of the blood-clotting drug Kogenate™ declined by 3.9 percent (Fx adj.) due to fluctuations in the ordering schedule of the distribution partner. In addition, the partial reorganization of distribution for general medicine products in the United States resulted in a 31.0 percent (Fx adj.) decline in sales of the erectile dysfunction treatment Levitra™ compared with the strong prior-year quarter.
Sales in the Consumer Health segment improved by 3.8 percent (Fx & portfolio adj.) to EUR 1,537 million. All regions contributed to growth, especially Latin America/Africa/ Middle East. In the non-prescription medicines business (Consumer Care), we saw sales gains particularly for the Bepanthen™/Bepanthol™ line of skincare products (Fx adj. plus 5.2 percent) and the pain-reliever Aspirin™ (Fx adj. plus 3.0 percent). The Medical Care Division benefited mainly from growth in the diabetes care business, with the Contour™ line of blood glucose meters gaining 11.2 percent (Fx adj.). By contrast, the animal health business stagnated at the prior-year level. Sales of the Advantage™ line of flea, tick and worm control products receded by 6.6 percent (Fx adj.).
EBITDA before special items of HealthCare improved by 9.3 percent to EUR 1,226 million (Q3 2010: EUR 1,122 million). The underlying EBITDA margin thus rose to 29.2 percent (Q3 2010: 26.3 percent). Earnings were driven by the pharmaceuticals business, where costs were lower in all functions. "This shows our efficiency programs are starting to bear fruit," said Dekkers. In addition, earnings were buoyed by lower development costs following the successful completion of most Phase III studies for the anticoagulant Xarelto™. Health system reforms and negative currency changes, however, had a negative effect.
About Bayer HealthCare
The Bayer Group is a global enterprise with core competencies in the fields of health care, nutrition and high-tech materials. Bayer HealthCare, a subgroup of Bayer AG with annual sales of EUR 16.913 billion (2010), is one of the world's leading, innovative companies in the healthcare and medical products industry and is based in Leverkusen, Germany. The company combines the global activities of the Animal Health, Consumer Care, Medical Care and Pharmaceuticals divisions. Bayer HealthCare's aim is to discover and manufacture products that will improve human and animal health worldwide. Bayer HealthCare has a global workforce of 55,700 employees (Dec 31, 2010) and is represented in more than 100 countries.