Bayer CropScience sales up 15.5% in 2012

Bayer CropScience’s sales increased by 15.5% to EUR 8,383 million (2011: EUR 7,255 million) in an attractive market environment of 2012 which ended December 31. 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 of Bayer emphasized.

Sales at Crop Protection business section climbed by 16 % in 2012, to €6,741 million. Crop Protection posted double-digit growth rates in all business units. The business benefited from the expansion of the seed treatment products business (SeedGrowth) and a sharp rise in sales of new products such as the insecticide Belt? and the fungicide Fox?. Sales of herbicides also showed a pleasing improvement. Seeds registered positive development, also with double-digit growth in sales.

Herbicide sales increased by 1.8% to €451 million in the final quarter of 2012. Revenues for the full year were up by 13.3% to €2,356 million.

Fungicide sales rose strongly, up by 12.1% to €445 million in the 4th quarter and 15.5 % to €1,974 million for the full year of 2012. Fox was the growth leader among fungicides, Bayer notes. The business benefited mainly from the introduction of the bixafen-based Xpro range in additional European countries and the development of Prosaro in the US.

The insecticide sales were up by some 20.8% for the 4th quarter to €424 million, and by 17.4% to €1,514 million for the year. Bayer highlights improved sales of its Belt insecticide.

Sales of seed treatments were up by 22.2% in the 4th quarter to €220 million, and by 22.7% for the full year to €897 million. The expansion in the final three months was particularly strong following a moderate performance in the preceding quarter.

Sales of the Seeds business unit were up by 17.3% to €962 million in 2012. All regions contributed to this performance, particularly North America.
Sales of the Environmental Science business unit increased by 8.6% to €680 million in 2012, with products both for professional users and consumers posting gains.

EBIT of CropScience rose significantly in 2012 from €562 million to €1,539 million, including net special items of €13 million (2011: minus €606 million). The net special gain in 2012 contained the income from the sale of a site in India, this being largely offset by provisions established in connection with litigations concerning genetically modified rice (LL RICE) in the United States and restructuring charges at Crop Protection. EBIT before special items climbed by 30.7% to €1,526 million. EBITDA before special items improved by 21.4% to €2,008 million. Earnings growth was mainly the result of substantially higher volumes and positive currency effects. Manufacturing costs grew more slowly than sales. In addition, Bayer incurred one-time gains of €52 million (2011: €38 million), mainly in connection with the outlicensing or divestment of active ingredients in Crop Protection.

Regional sales of Crop Protection

Sales in Europe rose by 8.4% to €2,350 million. The business was particularly successful with new products, which accounted for a considerably greater proportion of sales than in the prior year. Thanks to favorable market conditions, Bayer significantly raised sales of seed treatment products, especially in cereals. Business development was also supported by strong sales of insecticides and fungicides. Bayer saw good gains for herbicides, mainly in light of increased demand for products for fall application in cereals.

Sales in North America rose by 19.2% to €1,327 million. This increase was mainly the result of successful market penetration by new products, a generally favorable market environment for broad-acre crops and relatively high prices for agricultural commodities. Bayer achieved particularly high growth rates in the United States for herbicides and fungicides used in corn and cereals. The expansion of business with insecticides was largely due to demand for new products. Sales of seed treatment products were driven by the successful expansion of business with Poncho? / Votivo?, especially in corn. In Canada, sales also developed positively, chiefly as a result of higher demand for insecticides and fungicides.

Sales in the Asia / Pacific region advanced by 8.6% to €1,164 million, mainly driven by seed treatment products and herbicides. Fungicides and insecticides businesses also saw considerable growth in sales. Business in most important markets, India and Japan, trended positively. Bayer attained the highest percentage sales growth in Australia, largely thanks to the increase in demand for newly launched herbicide Sakura?. In China, Bayer also achieved significant growth for both fungicides and seed treatment products.

Sales in the Latin America / Africa / Middle East region advanced by 13.8% to €1,899 million, with a positive market environment leading to double-digit growth in all business units. In Latin America, Bayer continued to experience good growth for insecticides in Brazil and Argentina and scored a further improvement for seed treatment products (SeedGrowth). Sales of fungicides rose by a double-digit percentage despite adverse weather conditions at the start of the year. The expansion in herbicides business was mainly due to gratifying sales gains for products used in corn and cotton in Brazil. Sales in Africa, too, saw double-digit growth, while business in the Middle East was level with the prior year.

Outlook

Bayer CropScience predicts continued favorable market conditions for 2013. The subgroup expects business growth to outpace the market, with sales advancing by a high-single-digit percentage on a currency- and portfolio-adjusted basis toward EUR 9 billion. They also plan to raise EBITDA before special items by a high-single-digit percentage.

At CropScience, Bayer aims to grow faster than the market and improve sales toward EUR 10 billion by 2015. The crop protection products Bayer has introduced since 2006 or will launch in the future are intended to contribute about EUR 1.9 billion to this figure. For CropScience overall, this means average growth of about 6 percent annually and an EBITDA margin before special items of around 24 percent, which would continue to be a leading level of profitability.