• Group targets achieved in 2012 – sales and earnings before special items increase in all subgroups
• Sales increase by 8.8 percent to EUR 39,760 million
• EBIT EUR 3,960 million (minus 4.6 percent) –
Net income EUR 2,446 million (minus 1.0 percent)
• Further accounting measures for legal claims
• EBITDA before special items rises by 8.8 percent to EUR 8,284 million
• Core earnings per share improve by 10.8 percent to EUR 5.35
• Encouraging growth in the emerging markets
• Steady progress with innovation pipeline strengthens life-science businesses
• Forecast for anniversary year 2013: continuing record development
Leverkusen, February 28, 2013 – 2012 was a very successful year for the Bayer Group. “We continued to grow dynamically and achieved our targets for the Group. All the subgroups posted gains in sales and earnings before special items,” said Bayer CEO Dr. MarijnDekkers at the Financial News Conference in Leverkusen on Thursday. The life-science businesses registered particularly rapid growth and were strengthened by further progress in the innovation pipeline. Moreover, Bayer sharply expanded business in the emerging markets. Dekkers expressed his confidence for the company’s future development: “We expect to continue our record development in 2013 and beyond.”
Sales of the Bayer Group grew by 8.8 percent in 2012, to EUR 39,760 million (2011: EUR 36,528 million). “Sales thus reached the highest level in our company’s 150-year history,” said Dekkers. Adjusted for currency and portfolio effects (Fx& portfolio adj.), sales were up by 5.3 percent. The gain in the emerging markets, at 7.4 percent (Fx& portfolio adj.), was twice as large as in the industrialized countries. “In other words, our strategic focus on these markets of the future – and the investments we are making there – are paying off,” Dekkers remarked.
EBIT declined by 4.6 percent to EUR 3,960 million (2011: EUR 4,149 million). Special items totaled minus EUR 1,711 million (2011: minus EUR 876 million). They included EUR 1,186 million in litigation expenses in connection with the Yasmin™/YAZ™ line of oral contraceptives. Of this figure, EUR 455 million was taken in the fourth quarter of 2012, primarily in connection with further provisions for the settlement in the United States of venous clot injury claims of which Bayer is currently aware and anticipated future claims. Further special charges for the year overall included EUR 396 million for restructuring measures and EUR 289 million for impairment of intangible assets. An offsetting effect came from gains of EUR 158 million from divestitures and EUR 114 million in adjustments of benefit entitlements.
EBIT before special items increased by 12.9 percent to EUR 5,671 million (2011: EUR 5,025 million). EBITDA before special items rose by 8.8 percent to EUR 8,284 million (2011: EUR 7,613 million). Contributing to this were a good business performance and savings from the efficiency program successfully completed in 2012. Earnings also benefited from positive currency effects totaling about EUR 400 million. Net income declined slightly by 1.0 percent to EUR 2,446 million (2011: EUR 2,470 million). Core earnings per share, however, improved by 10.8 percent to EUR 5.35 (2011: EUR 4.83).
Gross cash flow fell by 11.1 percent to EUR 4,599 million (2011: EUR 5,172 million), while net cash flow declined by 10.4 percent to EUR 4,532 million (2011: EUR 5,060 million). Net financial debt was level with December 31, 2011, at EUR 7.0 billion. “This included additional funding of EUR 1.0 billion for our pension fund in the fourth quarter of 2012,” explained Chief Financial Officer Werner Baumann. “Our outstanding financial liabilities have a balanced maturity structure. We therefore intend to continue making repayments in the coming years entirely from our available liquidity and current cash flows,” Baumann added.
Good progress with products from the pharmaceuticals pipeline
Sales of the HealthCare subgroup increased by 8.4 percent (Fx& portfolio adj. 4.2 percent) in 2012 to EUR 18,612 million (2011: EUR 17,169 million). Both segments – Pharmaceuticals and Consumer Health – contributed to this increase.
Business in the Pharmaceuticals segment improved by 4.2 percent (Fx& portfolio adj.) to EUR 10,803 million. “At Pharmaceuticals, we made good progress with the marketing of new products from our pipeline,” Dekkers said. He explained that sales in the emerging markets and North America had developed particularly well, with growth rates of nearly 8 percent. In Europe, on the other hand, business was restrained due to the adverse economic conditions and a difficult health policy environment. Among the segment’s top products, the anticoagulant Xarelto™ achieved by far the highest growth rate (Fx adj. plus 265.9 percent) following its market introduction in further countries and indications. Sales of Aspirin™ Cardio to prevent heart attacks rose by 12.3 percent (Fx adj.), largely thanks to the steady expansion of marketing activities in China. Business with the hormone-releasing intrauterine device Mirena™ (Fx adj. plus 9.4 percent) developed positively in all regions, especially in the United States due to higher volumes. Sales of the segment’s two best-selling products – the multiple sclerosis drug Betaferon™/Betaseron™ (Fx adj. plus 4.2 percent) and the blood-clotting product Kogenate™ (Fx adj. plus 5.2 percent) – also increased further. Sales of the YAZ™/Yasmin™/Yasminelle™ line of oral contraceptives receded by 5.0 percent (Fx adj.), primarily as a result of generic competition in Western Europe. However, business with this product group developed positively in the Asia/Pacific region.
Sales of the Consumer Health segment advanced by 4.2 percent (Fx& portfolio adj.) to EUR 7,809 million, with all regions and divisions contributing to this growth. Bayer’s non-prescription medicines business (Consumer Care) performed particularly positively, achieving above-market sales growth. The Bepanthen™/ Bepanthol™ skincare line developed successfully, especially in Russia and Brazil, moving forward by 13.9 percent (Fx adj.). Business with the antifungal Canesten™ expanded by 7.8 percent (Fx adj.). The Medical Care Division raised sales of the Contour™ line of blood glucose meters by 8.5 percent (Fx adj.). However, sales of the contrast agent and medical equipment business matched the prior year. The Animal Health Division benefited from the positive development of the Advantage™ line of flea, tick and worm control products (Fx adj. plus 10.6 percent).
EBITDA before special items of HealthCare grew by 7.8 percent to EUR 5,068 million (2011: EUR 4,702 million), primarily as a result of the positive business development in both segments and of currency effects.
Strong year for CropScience
“We were particularly successful in our agriculture business – our second life-science area – in 2012,” Dekkers said. CropScience increased sales by 15.5 percent (Fx& portfolio adj. 12.4 percent) to EUR 8,383 million (2011: EUR 7,255 million) in an attractive market environment. This growth was due largely to good business with new products in Crop Protection and rapidly expanding sales at Seeds. Environmental Science also developed favorably. The realignment of marketing and distribution activities and streamlining of the product range contributed to the gratifying performance. “These successes are impressive, as 2011 was already a very good year for CropScience,” Dekkers emphasized.
All regions contributed to the growth in sales at Crop Protection. Moreover, all business units achieved double-digit growth rates, headed by seed treatments (SeedGrowth) at 17.2 percent (Fx& portfolio adj.). Insecticides improved by 14.8 percent (Fx& portfolio adj.), while fungicides advanced by 13.2 percent (Fx& portfolio adj.) and herbicides by 10.1 percent (Fx& portfolio adj.).
Thanks to growth in all regions, but particularly in North America, sales of the Seeds business advanced by 14.1 percent (Fx& portfolio adj.). That business achieved double-digit sales growth rates in each of the core crops oilseed rape/canola, rice and cotton. By contrast, sales of vegetable seeds declined slightly (Fx& portfolio adj.). Sales of the Environmental Science business unit moved forward by 5.3 percent (Fx& portfolio adj.).
EBITDA before special items of CropScience improved by 21.4 percent to EUR 2,008 million (2011: EUR 1,654 million). This growth resulted above all from significantly higher volumes and positive currency effects.
MaterialScience raises sales and earnings before special items
“Bayer MaterialScience also contributed to the very good full-year performance,” said Dekkers. Sales of the high-tech materials business rose by 6.2 percent (Fx& portfolio adj. 3.0 percent) to EUR 11,503 million (2011: EUR 10,832 million). While volumes were flat in Europe, the subgroup posted good gains in the other regions. In addition, MaterialScience was able to slightly raise prices in all regions except Asia/Pacific.