Bayer reported its third-quarter Crop Science sales rose 2.7% on a foreign exchange- and portfolio-adjusted basis to $2.4 billion (EUR 2,031 million.)
Crop Science achieved “gratifying business development in North America and Asia/Pacific, where sales rose by 9.8 percent (Fx adj.) and 7.4 percent (Fx adj.), respectively.” Sales in Europe/Middle East/Africa and Latin America matched the prior-year level.
“On the positive side, we were able to reduce provisions for product returns in Brazil, which shows that the measures we have implemented to normalize the situation in Brazil are taking hold,” Werner Baumann, Chairman of the Board of Management, said. In that country, Bayer had to establish provisions in the second quarter due to unexpectedly high inventories of crop protection products.
At Crop Protection, the Insecticides business delivered very positive performance, with sales rising by 13.2 percent (Fx & portfolio adj.). Sales declined at Fungicides (Fx & portfolio adj. minus 6.3%), Herbicides (Fx & portfolio adj. minus 1.9%) and SeedGrowth (Fx & portfolio adj. minus 1.1 percent). In contrast, Seeds (which also includes the traits business) reported strong gains, with sales rising by 29.6% (Fx & portfolio adj.). Environmental Science posted increased sales due to product deliveries to the acquirer of the consumer business divested in the fourth quarter of 2016 (Fx & portfolio adj. plus 6.8%).
EBITDA before special items of Crop Science decreased by 3.5% to EUR 307 million in the third quarter of 2017. Lower selling prices and a negative currency effect of around EUR 20 million stood against an increase in other operating income, a decline in the cost of goods sold and a decrease in selling expenses. Positive effects in the mid-double-digit millions were recorded in conjunction with the accounting measures taken in the previous quarter in Brazil.
For the full year, Bayer is still anticipating sales of below $11.6 billion (EUR 10 billion.) This corresponds to a low-single-digit-percentage decline on a currency- and portfolio-adjusted basis. Meanwhile, the company continues to expect EBITDA before special items to decline by a mid-teens percentage.
The third quarter of 2017 marked a period of further strategic and operational progress for the Bayer Group. “Last quarter we took some important strategic steps,” said Baumann.
As regards the planned acquisition of Monsanto, Baumann explained how the agreement to sell selected Crop Science businesses to BASF marked another important step. Bayer recorded an increase in sales (currency- and portfolio adjusted – Fx & portfolio adj.) and earnings at Pharmaceuticals in the third quarter. Business at Consumer Health declined, as expected. At Crop Science and Animal Health, sales moved ahead (Fx & portfolio adj.), while EBITDA before special items decreased year on year.
The agreed sale of selected Crop Science businesses to BASF for $6.9 billion (EUR 5.9 billion) is subject to the approval of the antitrust authorities. The transaction is also dependent on the successful closing of Bayer’s acquisition of Monsanto. “With this agreement, we are actively addressing the authorities’ possible concerns regarding the planned acquisition of Monsanto. However, it is not an attempt to preempt any decisions by the regulatory authorities,” Baumann stressed. Bayer continues to work closely with the authorities with the aim of facilitating a successful closing of the transaction by early 2018.