Bayer reported lower first-quarter sales for its Crop Science business, hurt by currency exchange rates.
Sales of the agricultural business (Crop Science) came in at 2.861 billion euros, compared with 3.12 billion euros a year ago — however, sales were level with the prior-year quarter on a currency- and portfolio-adjusted basis.
“We grew in three out of four regions on a currency-adjusted basis, and this performance almost offset the decline in Europe/Middle East/Africa,” Werner Baumann, Chairman of the Board of Management, said. Growth was particularly strong in Asia/Pacific, where sales increased 10.4 percent (Fx adj.). Sales in Latin America advanced by 4.8 percent (Fx adj.), buoyed by stronger demand for fungicides and insecticides in Brazil and the continued normalization of inventories there.
A decline in other operating income and a higher cost of goods sold were among factors that held back earnings. Lower expenses for research and development and for general administration had an opposing effect.
Insecticides and Other (Seeds & Traits) delivered positive performance, registering growth of 8.0 percent (Fx & portfolio adj.) and 12.9 percent (Fx & portfolio adj.), respectively. By contrast, sales declined by 14.3 percent (Fx & portfolio adj.) at Environmental Science due to lower product deliveries to the purchaser of the consumer business. Adjusted for currency and portfolio effects, sales were also down at SeedGrowth (8.4 percent), Herbicides (6.6 percent), Vegetable Seeds (6.2 percent) and Fungicides (2.0 percent).
“We have made good headway strategically and have made major progress with the proposed acquisition of Monsanto,” Baumann said.
The European Commission and other regulators, including those in Brazil, China and Russia, have approved the transaction this year. This means that Bayer has now obtained two-thirds of the around 30 anti-trust approvals it seeks. The conditions imposed by the European Commission and other regulators include in particular the divestment by Bayer of various Crop Science businesses. The company reached agreements to this effect with BASF in October 2017 and April 2018. The Monsanto acquisition remains subject to customary closing conditions, including receipt of required regulatory approvals. Bayer is working closely with the authorities around the world with the goal of closing the transaction in the second quarter of 2018.
Looking ahead, Bayer has confirmed the currency-adjusted forecasts published in February for operating performance. The company continues to expect 2018 sales to increase by a low- to mid-single-digit percentage on a currency- and portfolio-adjusted basis. As before, it aims to increase EBITDA before special items and core earnings per share by a mid-single-digit percentage on a currency-adjusted basis. Taking into account the exchange rates as at March 31, 2018, reported sales would decline in 2018 overall by a low-single-digit percentage (previously: remain at the prior-year level). In absolute terms, sales would now come in at below 35 billion euros (previously: around 35 billion euros). EBITDA before special items would decline by a low-single-digit percentage (previously: match the prior-year level). Core earnings per share would come in at the prior-year level, as previously forecast.