Bayer on track for a successful 2012

BayerThe Bayer Group remains on a path of growth. Sales of the Bayer Group advanced by 11.5 percent in the third quarter, to EUR 9,665 million (Q3 2011: EUR 8,670 million). The currency- and portfolio-adjusted increase was 5.5 percent. Earnings before interest and taxes (EBIT) fell by 23.7 percent to EUR 838 million (Q3 2011: EUR 1,099 million). Net special items totaled minus EUR 356 million (Q3 2011: minus EUR 75 million). Included here were EUR 205 million in further accounting measures taken - mainly based on additional claims asserted but not filed in court - for all cases in connection with the oral contraceptive Yasmin™/YAZ™ of which Bayer is currently aware and which the company considers to be worthy of settlement (venous clot injuries). Among the other special charges were EUR 134 million in restructuring expenses.

"The upward trend in our life science businesses - HealthCare and CropScience - continued in the third quarter of 2012," Management Board Chairman Dr. Marijn Dekkers said Tuesday following the publication of the interim report. HealthCare, particularly the Pharmaceuticals business, gained further growth momentum. At CropScience, the strong business development seen in the first half of the year continued unabated, and MaterialScience also registered good quarterly sales. However, net income was down year on year due to special charges - particularly for legal claims and restructuring. Bayer also made good progress from a strategic perspective in the third quarter, Dekkers explained. He said the company had strengthened its life science businesses through acquisitions and also made further progress with its innovation pipeline. "We remain on a successful path, and we confirm our guidance for 2012."

EBIT before special items increased by 1.7 percent to EUR 1,194 million (Q3 2011: EUR 1,174 million). Earnings before interest, taxes, depreciation and amortization (EBITDA) - before special items - were up by 2.2 percent to EUR 1,845 million (Q3 2011: EUR 1,805 million). Net income fell by 17.8 percent to EUR 528 million (Q3 2011: EUR 642 million). Core earnings per share advanced by 7.1 percent to EUR 1.20 (Q3 2011: EUR 1.12).

Gross cash flow declined by 22.9 percent to EUR 1,023 million (Q3 2011: EUR 1,327 million), mainly because of the lower EBIT. Net cash flow, however, rose by 26.1 percent to EUR 1,989 million (Q3 2011: EUR 1,577 million) due to a seasonal decrease in cash tied up in working capital. Net financial debt was reduced from EUR 7.9 billion on June 30, 2012, to EUR 6.8 billion on September 30, 2012 thanks to the operating cash flow.

Sales of the HealthCare subgroup climbed by 12.4 percent in the third quarter, to EUR 4,719 million (Q3 2011: EUR 4,200 million). Adjusted for currency and portfolio effects, the increase came to 5.5 percent. Both segments - Pharmaceuticals and Consumer Health - contributed to this growth. "Business developed favorably at HealthCare, especially in North America and the emerging markets," Dekkers pointed out. The growth momentum was undiminished, especially in China.

Sales of the Pharmaceuticals segment rose by 13.0 percent (Fx & portfolio adj. 6.1 percent) to EUR 2,734 million. Among the segment’s best-selling products, the anticoagulant Xarelto™ achieved the strongest growth following its market introduction in further countries and indications. The significant 22.5 percent (Fx adj.) increase in revenues from the hormone-releasing intrauterine device Mirena™ was based mainly on higher volumes in the United States. Sales of the antidiabetic Glucobay™ developed especially well in China, gaining 23.5 percent (Fx adj.). Business with the blood-clotting product Kogenate™ also developed positively, with sales advancing by 8.9 percent (Fx adj.). In this case growth was driven by increased shipments to a distribution partner and by tender business in Australia. The 4.2 percent (Fx adj.) increase in sales of the cancer drug Nexavar™ was mainly due to gains in China and in the United States. Business with the YAZ™/Yasmin™/Yasminelle™ line of oral contraceptives was hampered by generic competition, especially in Western Europe. Sales gains in the Asia/Pacific and Latin America regions only partly compensated for this effect, with sales of this product line down by 4.0 percent (Fx adj.) overall. Business with the multiple sclerosis treatment Betaferon™/Betaseron™ receded by 6.1 percent (Fx adj.).

Sales in the Consumer Health segment rose by 11.5 percent (Fx & portfolio adj. 4.7 percent) to EUR 1,985 million. All divisions contributed to this performance, especially the non-prescription medicines (Consumer Care) and the company’s veterinary pharmaceuticals (Animal Health). In the Consumer Care Division, business with the skincare product Bepanthen™/Bepanthol™ (Fx adj. plus 19.5 percent) and the antifungal Canesten™ (Fx adj. plus 18.4 percent) benefited from increased marketing activities in Europe. In the Medical Care Division, sales of the Contour™ line of blood glucose meters developed well (Fx adj. plus 11.7 percent), while business with contrast agents and medical equipment was slightly down. The growth driver at Animal Health was the Advantage™ line of flea, tick and worm control products, sales of which increased by 25.1 percent (Fx adj.) against a weak prior-year quarter, mainly due to sales gains in North America and successful marketing.

EBITDA before special items of HealthCare improved by 5.8 percent to EUR 1,297 million (Q3 2011: EUR 1,226 million), mainly thanks to the good business development at Pharmaceuticals and positive currency effects.

About Bayer HealthCare
The Bayer Group is a global enterprise with core competencies in the fields of health care, agriculture 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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