Bayer reports strong business performance in the second quarter of 2012

BayerSales of the Bayer Group grew by 10.0 percent in the second quarter, to EUR 10,177 million (Q2 2011: EUR 9,252 million). The currency- and portfolio-adjusted (Fx & portfolio adj.) increase was 5.0 percent. The operating result (EBIT) fell by 41.1 percent to EUR 750 million (Q2 2011: EUR 1,273 million). Special items totaled minus EUR 762 million (Q2 2011: minus EUR 144 million). This sum included risk provisions of EUR 496 million for all litigations in connection with the oral contraceptive Yasmin™/YAZ™ of which Bayer is currently aware and which it considers to be worthy of settlement (venous clot injuries). Special items additionally comprised impairment losses on intangible assets (EUR 137 million) and restructuring charges (EUR 107 million). EBIT before special items increased by 6.7 percent to EUR 1,512 million (Q2 2011: EUR 1,417 million). Earnings before interest, taxes, depreciation and amortization (EBITDA) - before special items - increased by 6.7 percent to EUR 2,172 million (Q2 2011: EUR 2,035 million). Positive currency effects contributed around EUR 70 million to this figure. On account of the high special items, net income declined by 33.9 percent to EUR 494 million (Q2 2011: EUR 747 million). Core earnings per share rose by 14.0 percent to EUR 1.47 (Q2 2011: EUR 1.29).

Gross cash flow in the second quarter of 2012 declined by 20.0 percent to EUR 1,226 million (Q2 2011: EUR 1,532 million) due especially to the high special charges. Net cash flow was down by 10.5 percent year on year at EUR 1,369 million (Q2 2011: EUR 1,530 million), particularly on account of significantly higher tax payments. Net financial debt rose from EUR 6.9 billion on March 31, 2012, to EUR 7.9 billion on June 30, 2012. Cash provided by operating activities only partly offset the outflows for the dividend and interest payments. In addition, the weak euro resulted in a higher disclosure of foreign currency debt. The net amount recognized for post-employment benefits increased from EUR 8.1 billion on March 31, 2012, to EUR 9.3 billion, due especially to lower long-term capital market interest rates.

Sales of the HealthCare subgroup increased by 10.0 percent (Fx & portfolio adj. plus 4.1 percent) to EUR 4,628 million (Q2 2011: EUR 4,208 million). The Pharmaceuticals and Consumer Health segments both contributed to this growth. "The gratifying business in the emerging markets contributed particularly to this development," said Dekkers.

Sales in the Pharmaceuticals segment rose by 4.3 percent (Fx & portfolio adj.) to EUR 2,685 million. Growth was achieved mainly in North America and the emerging markets, especially China. Seen alongside these increases were slight declines in Europe, particularly in Western Europe. Among the segment’s leading products, sales of the anticoagulant Xarelto™ increased markedly following market launches in further countries and the expansion of indications. Revenues from the hormone-releasing intrauterine device Mirena™ increased by a substantial 26.7 percent (Fx adj.) as a result of higher volumes and a major order in the United States. Business with the multiple sclerosis treatment Betaferon™/Betaseron™ also developed positively, expanding by 10.2 percent (Fx adj.), due partly to one-time effects in the United States. Sales of the cancer drug Nexavar™ moved ahead by 7.5 percent (Fx adj.). On the other hand, business with the YAZ™/Yasmin™/Yasminelle™ line of oral contraceptives declined by 6.4 percent (Fx adj.), mainly because of generic competition in Western Europe and North America. By contrast, sales of this product line rose in Japan. Sales of the erectile dysfunction treatment Levitra™ receded by 16.9 percent (Fx adj.), declining particularly in the United States.

Sales in the Consumer Health segment rose by 3.8 percent (Fx & portfolio adj.) to EUR 1,943 million, with all divisions contributing to growth and business developing especially well in the emerging markets. Among the leading products in the non-prescription medicines (Consumer Care) business, the skincare product BepanthenTM/BepantholTM (Fx adj. plus 18.3 percent) and the analgesic AleveTM/naproxen (Fx adj. plus 10.1 percent) benefited from increased demand. In the Medical Care Division, the contrast agent and medical equipment business developed positively. The Animal Health Division registered sales gains particularly in Europe.

EBITDA before special items increased by 8.0 percent to EUR 1,248 million in the second quarter of 2012 (Q2 2011: EUR 1,156 million). This was attributable to good business development in the Pharmaceuticals segment and positive currency effects.

"In view of the strong business performance, we are raising our guidance for the full year 2012," said Management Board Chairman Dr. Marijn Dekkers on Tuesday at the presentation of the interim report. He reported that Bayer had achieved sales of approximately EUR 10.2 billion - a new record - thanks in part to positive currency effects. "All the subgroups contributed to the increase, especially CropScience which continued to grow strongly," said Dekkers. In operational terms, this subgroup posted new records for second-quarter sales and EBITDA before special items. HealthCare even had its best quarter of all time for these same indicators. MaterialScience generated the highest quarterly sales in its history, as well as its best underlying EBITDA in a second quarter since 2007. Net income for the Bayer Group in the second quarter of 2012 was impacted by special items of EUR 0.8 billion. This sum included risk provisions of EUR 0.5 billion for litigations. Overall, net income declined to EUR 0.5 billion.

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 17.2 billion (2011), 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, develop, manufacture and market products that will improve human and animal health worldwide. Bayer HealthCare has a global workforce of 55,700 employees (Dec 31, 2011) and is represented in more than 100 countries.

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