Bayer crop protection sales increased by 3% in Q2

Date:08-04-2011

Q2 of 2011 results

Sales of Bayer CropScience rose by 9.2% to €1,943 million in the second quarter of 2011. Sales of Crop Protection / BioScience in the second quarter of 2011 amounted to €1,757 million, up 10.5% from the corresponding period of 2010. Total crop protection sales increased by 2.8% to €1,562 million. Business expansion in Crop Protection was driven by our fungicides and herbicides, and in BioScience by seeds for the large-area crops – canola, cotton and rice. However, total sales of insecticides were affected by the cessation of marketing for older products such as Temik™. High prices for agricultural raw materials led to a favorable market environment compared to the weak prior year quarter.

EBIT of CropScience posted an encouragingly strong 45.5% increase in the second quarter of 2011 to €272 million, after special charges of €81 million (Q2 2010: €66 million) incurred mainly for the ongoing restructuring program at Crop Protection. EBIT before special items climbed by 39.5% to €353 million. EBITDA before special items advanced by 23.9% to €471 million. This increase was chiefly due to the good business development, with significantly higher volumes and improved capacity utilization at our production facilities.

Bayer CropScience’s Sales Results (€ million)
Q2 ended June 30th	Q2 2011	Q2 2010	% change	First half of 2011	First half of 2010	% change
Crop Protection/ BioScience	1,757	1,685	+ 4.3	3,836	3,467	+10.6
Environmental Science	186	199	-6.5	364	369	-1.4
EBIT*	272	187	+45.5	491	547	-10.2
EBITDA**	405	314	+29.0	821	797	+3.0
Total	1,943	1,884	+3.1	4,200	3,836	+9.5
*earnings before interest and tax after special items **earnings before, interest, tax, depreciation and amortization after special items

Half year results

Bayer CropScience sales in the first half of 2011 advanced by 11.4% to €4,200 million. The six-month period was marked by a strong season in the northern hemisphere and high prices for agricultural raw materials. BioScience recorded double-digit growth rates for seeds in the core crops – canola, cotton, rice and vegetables – and in all regions.
Crop Protection sales also moved ahead in all the regions. Business recovered well in North America, especially for fungicides and herbicides.

The Environmental Science business was flat with the same period of 2010.

EBIT of CropScience declined in the first half of 2011 by 10.2% to €491 million after special charges of €486 million. These mainly comprised provisions established in connection with litigations concerning genetically modified rice (LL RICE) in the United States and expenses for restructuring at Crop Protection. EBIT before special items climbed by 47.8% to €977 million.

EBITDA before special items rose by 33.5% to €1,216 million thanks to the good business development, especially in the northern hemisphere. The principal growth drivers were our new crop protection products and our seed business in North America.

Bayer’s Crop Protection/BioScience sales by category (€ million)
Q2 ended June 30th	Q2 2011	Q2 2010	% change	First half of 2011	First half of 2010	% change
Herbicides	607	587	+3.4	1,308	1,190	+9.9
Fungicides	518	477	+8.6	1,015	894	+13.5
Insecticides	317	344	-7.8	605	640	-5.5
Seed Treatment	120	112	+7.1	310	272	+14.0
Total crop protection	1,562	1,520	+2.8	3,238	2,996	+8.1
BioScience	195	165	+18.2	598	471	+27.0
Total	1,757	1,685	+ 4.3	3,836	3,467	+10.6

Sales by region

Bayer significantly expanded Crop Protection business in all regions except Asia / Pacific.

Sales in Europe rose by 6.9% to €668 million, with growth rates for herbicides and insecticides running into double digits. Sales of fungicides posted a slight increase, while those of seed treatments declined. There was encouraging growth in Germany, particularly for herbicides and the new fungicide family Xpro™. Our business in eastern Europe matched the already strong first quarter, helped by favorable weather conditions. Our Adengo™ family of corn herbicides developed particularly well in eastern Europe following its successful launch. The prolonged drought had an adverse effect in parts of western Europe.

Crop Protection sales in North America posted a clear 20.6% increase to €386 million.

Sales of fungicides, herbicides and seed treatments advanced in the United States against a weak prior-year quarter. The new fungicide Stratego™ YLD, introduced this season for use in corn and soybeans, remains our principal growth driver. Sales of insecticides, however, declined. The successful launch and increased marketing of new products such as Movento™ partly offset the effects of streamlining the insecticide portfolio by discontinuing older products such as Temik™.
Sales in Canada rose by a double-digit percentage.

Sales in Asia / Pacific edged down by 0.2% to €244 million. Sharp declines for insecticides and herbicides were nearly offset by tangible increases for fungicides and seed treatments.

Our business in the region was held back by the cessation of marketing for older insecticides, while Australia and China suffered from extreme weather conditions. By contrast, sales advanced significantly in the countries of northern Asia.

Sales in the Latin America / Africa / Middle East region improved by 5.0% from the prior year quarter to €264 million. Business benefited mainly from the good market prospects for cotton and sugarcane in Latin America. In Brazil, sales of herbicides posted noticeable gains, whereas business with fungicides was down due to lower infestation rates in soybeans. We also registered substantial increases in the Middle East, while business in Africa was level with the same period of the previous year.

Bayer CropScience’s Sales Results by Region (€ million)
Q2 ended June 30th	Q2 2011	Q2 2010	% change	First half of 2011	First half of 2010	% change
Europe	777	737	+5.4	1,779	1,655	+7.5
North America	535	494	+8.3	1,205	1,021	+18.0
Asia/Pacific	334	343	-2.6	603	583	+3.4
Latin America/ Africa /Middle East	297	310	-4.2	613	577	+6.2
Total	1,943	1,884	+3.1	4,200	3,836	+9.5

Outlook

Bayer expects a continued positive trend in the global seed and crop protection market over the course of the year. Likely contributing to this will be the high prices for agricultural raw materials that have led to an increase in agricultural production.

Bayer considers that CropScience business continues to trend positively. As previously communicated, the company aims to improve sales by a high-single-digit percentage on a currency- and portfolio-adjusted basis in 2011. And Bayer plans to expand EBITDA before special items by about 20% compared to the weak prior year – or more if the season progresses well in the second half of 2011.