Crop Science

Key Data – Crop Science

 

 

Q2 2016

Q2 2017

 

Change

 

H1 2016

H1 2017

 

Change

 

 

€ million

€ million

 

Reported %

Fx & p adj. %

 

€ million

€ million

 

Reported %

Fx & p adj. %

2016 figures restated; Fx & p adj. = currency- and portfolio-adjusted; Fx adj. = currency-adjusted

1

For definition see Annual Report 2016, Chapter “Alternative Performance Measures Used by the Bayer Group.”

Sales

 

2,518

2,163

 

−14.1

−15.8

 

5,454

5,283

 

−3.1

−5.4

Change in sales1

 

 

 

 

 

 

 

 

 

 

 

 

Volume

 

−1.0%

−13.7%

 

 

 

 

−0.8%

−4.3%

 

 

 

Price

 

+1.4%

−2.1%

 

 

 

 

+1.6%

−1.1%

 

 

 

Currency

 

−5.2%

+1.7%

 

 

 

 

−4.3%

+2.3%

 

 

 

Portfolio

 

+0.3%

0.0%

 

 

 

 

+0.2%

0.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

€ million

€ million

 

Reported %

Fx adj. %

 

€ million

€ million

 

Reported %

Fx adj. %

Sales by region

 

 

 

 

 

 

 

 

 

 

 

 

Europe / Middle East / Africa

 

897

908

 

+1.2

−0.2

 

2,317

2,370

 

+2.3

+1.4

North America

 

812

865

 

+6.5

+5.0

 

1,721

1,907

 

+10.8

+7.1

Asia / Pacific

 

455

459

 

+0.9

−2.0

 

797

825

 

+3.5

+0.3

Latin America

 

354

(69)

 

.

.

 

619

181

 

−70.8

−73.5

EBITDA1

 

633

233

 

−63.2

 

 

1,719

1,324

 

−23.0

 

Special items1

 

(30)

(84)

 

 

 

 

(33)

(108)

 

 

 

EBITDA before special items1

 

663

317

 

−52.2

 

 

1,752

1,432

 

−18.3

 

EBITDA margin before special items1

 

26.3%

14.7%

 

 

 

 

32.1%

27.1%

 

 

 

EBIT1

 

512

117

 

−77.1

 

 

1,467

1,087

 

−25.9

 

Special items1

 

(30)

(95)

 

 

 

 

(33)

(132)

 

 

 

EBIT before special items1

 

542

212

 

−60.9

 

 

1,500

1,219

 

−18.7

 

Net cash provided by operating activities

 

1,088

1,170

 

+7.5

 

 

422

491

 

+16.4

 

Second quarter of 2017

Sales

Sales of Crop Science in the second quarter of 2017 fell by 15.8% (Fx & portfolio adj.) to €2,163 million. This decline is mainly due to significantly higher provisions for product returns – specifically crop-protection products – in Brazil. At the end of the harvest season, regular stocktaking revealed high channel inventories in the Brazilian market, requiring measures to be taken to normalize the situation. Excluding the €428 million decline in sales in Brazil, business at Crop Science was up slightly year on year on a currency-adjusted basis. Environmental Science delivered positive performance, in part due to the delivery of products to the company that acquired our consumer business.

Sales by Business Unit

 

 

Q2 2016

Q2 2017

 

Change

 

H1 2016

H1 2017

 

Change

 

 

€ million

€ million

 

Reported %

Fx & p adj. %

 

€ million

€ million

 

Reported %

Fx & p adj. %

Fx adj. = currency- and portfolio-adjusted;

for definition see Annual Report 2016, Chapter “Alternative Performance Measures Used by the Bayer Group.”

Crop Protection / Seeds

 

2,363

1,971

 

−16.6

−18.2

 

5,182

4,944

 

−4.6

−6.8

Crop Protection

 

2,055

1,637

 

−20.3

−21.6

 

4,237

3,888

 

−8.2

−9.8

Herbicides

 

769

742

 

−3.5

−6.0

 

1,614

1,654

 

+2.5

+0.2

Fungicides

 

840

502

 

−40.2

−40.2

 

1,667

1,289

 

−22.7

−23.3

Insecticides

 

302

256

 

−15.2

−16.9

 

586

557

 

−4.9

−6.7

SeedGrowth

 

144

137

 

−4.9

−6.3

 

370

388

 

+4.9

+1.9

Seeds

 

308

334

 

+8.4

+4.6

 

945

1,056

 

+11.7

+6.8

Environmental Science

 

155

192

 

+23.9

+20.6

 

272

339

 

+24.6

+21.0

Sales by region

  • Sales in Europe / Middle East / Africa matched the prior-year level at €908 million (Fx adj. −0.2%). The Insecticides business delivered very positive performance due to higher pest pressure. This development stood against substantial declines at Fungicides due to lower infestation levels as a result of drought in western Europe, as well as increased competitive pressure. The Seeds business developed positively.
  • Sales in North America advanced by 5.0% (Fx adj.) to €865 million. We recorded strong gains at SeedGrowth, particularly with products to treat soybean seed in the United States and cereal seed in Canada. We also achieved growth in the Seeds business due to expanded oilseed rape / canola acreages in Canada, as well as at Fungicides. This was partly offset by a substantial decline at Insecticides in the United States.
  • Sales in the Asia / Pacific region fell by 2.0% (Fx adj.) to €459 million. Business at Insecticides declined noticeably, due to sales declines in China and restrained demand in India. In contrast, business at Fungicides and Herbicides expanded.
  • Sales in the Latin America region amounted to minus €69 million. This negative development is largely due to significantly higher provisions, primarily for product returns, as well as lower sell-in to the distribution channel in Brazil. At the end of the harvest season, regular stocktaking revealed high channel inventories of crop protection products in the Brazilian market. This situation was caused by weaker demand due to significantly lower insect and fungal infestation levels, while the level of inventory-building among distributors was high. We slightly increased sales in the other countries in the Latin America region overall.

Earnings

EBITDA before special items of Crop Science declined by 52.2% to €317 million in the second quarter of 2017 (Q2 2016: €663 million), in particular due to the situation in Brazil, where we recorded a substantial negative impact on earnings in the amount of €355 million in total. This included provisions for product returns in the amount of €173 million, impairment losses recognized on receivables in the amount of €53 million, inventory write-offs in the amount of €56 million, and other effects totaling €73 million. Excluding our business in Brazil, earnings were up slightly year on year.

EBIT decreased by 77.1% to €117 million, and included special charges in the amount of €95 million (Q2 2016: €30 million) related mainly to the agreed acquisition of Monsanto and the completion of a divestiture project.

Special Items1 Crop Science

 

 

EBIT
Q2 2016

EBIT
Q2 2017

 

EBIT H1 2016

EBIT H1 2017

 

EBITDA Q2 2016

EBITDA Q2 2017

 

EBITDA H1 2016

EBITDA H1 2017

 

 

€ million

€ million

 

€ million

€ million

 

€ million

€ million

 

€ million

€ million

1

For definition see Annual Report 2016, Chapter “Alternative Performance Measures Used by the Bayer Group.”

Restructuring

 

(28)

(6)

 

(28)

(22)

 

(28)

(5)

 

(28)

(8)

Litigations

 

(2)

(2)

 

(5)

(2)

 

(2)

(2)

 

(5)

(2)

Acquisition costs

 

(47)

 

(68)

 

(47)

 

(68)

Divestments

 

(40)

 

(40)

 

(30)

 

(30)

Total special items

 

(30)

(95)

 

(33)

(132)

 

(30)

(84)

 

(33)

(108)

First half of 2017

Sales

Sales of Crop Science in the first half of 2017 declined by 5.4% (Fx & portfolio adj.) to €5,283 million. Sales fell at Fungicides and Insecticides in particular due to the aforementioned adjustments made to provisions for product returns and weak business in Brazil. In contrast, we achieved gains at Seeds and Environmental Science. Higher sales in North America and Europe / Middle East / Africa were insufficient to offset the substantial decline in business in Latin America. Sales in Asia / Pacific came in at the prior-year level. Excluding Brazil, sales increased slightly overall.

Earnings

EBITDA before special items of Crop Science declined by 18.3% to €1,432 million (H1 2016: €1,752 million) in the first half of 2017, significantly weighed down by the aforementioned effects in Brazil. Excluding Brazil, earnings were higher than in the prior-year period.

EBIT declined by 25.9% to €1,087 million. Earnings were held back by special charges of €132 million (H1 2016: €33 million) largely related to the agreed acquisition of Monsanto, the completion of a divestiture project and efficiency improvement programs.