Bayer CropScience Sees Favorable Crop Protection Market in 2012
28 February 2012 Buoyed by higher volumes and pricing particularly in Eastern Europe, Bayer CropScience posted higher fourth-quarter and full-year sales and profits, and expects Latin America to be its strongest market this year.
“We expect the market environment for the global seed and crop protection business to remain favorable in 2012,” the Germany-based company said in its annual report issued Tuesday. “Against a background of limited arable land and steadily rising demand for food, feed and plant-based energy sources, we expect prices to remain relatively high despite the volatility of world agricultural markets.”
Soybean cultivation in Latin America will boost seed and crop protection growth this year, but Bayer cautioned that even emerging markets cannot escape the fragile global economy. It cited weaker prospects for exports to Europe due to the debt crises and the high government debt and tight employment levels in the US.
Sales for the quarter rose 2.8% to $2.26 billion, versus $2.23 billion in the year-ago period on a currency- and portfolio-adjusted basis. For the year, sales climbed 8.9% in “a very positive market environment,” the company said. Companywide, earnings soared nearly 90% as it took far lower special charges. The CropScience unit accounted for 19.9% of Bayer’s sales in 2011, compared with 19.5% in 2010.
“The main drivers of growth in Europe were Eastern European countries such as Ukraine and Russia. In Western Europe, however, the prolonged drought in the second quarter diminished demand, particularly for fungicides,” the company said regarding its 2011 results. Drought hurt otherwise strong growth in the Americas, and it cited “much stronger stimulus to growth coming from the Indian than from the Chinese market.”
Bayer CropScience Chairman Marijn Dekkers said it is increasing spending on its BioScience seed and trait business – it plans to about double research and development spending for the unit by 2015 to $539 million. Over the same period, CropScience’s R&D budget will rise some 20% to more than $1.14 billion, he said.
For 2012, how well its CropScience unit performs will depend partly on whether high agricultural commodities persist, Dekkers said in a statement, adding: “We also face the task of maintaining our focus on advanced seed technologies without abandoning our traditionally strong position in crop protection.”
Dekkers said the company’s Xpro fungicides for disease control in cereals, introduced last year, have a peak annual sales potential of more than $404 million.
For the company as a whole, Bayer plans to keep R&D spending level with recent years at about $4.04 billion total.
“In the coming years we intend to continue expanding our business, particularly in fast-growing markets such as Latin America, India, China, Southeast Asia and Eastern Europe. In these countries there is a major opportunity for the agricultural industry to respond to the increasing global demand for high-quality food and feed,” the company said.
Bayer’s BioScience business produces seeds at its own farms or under contract on a total area of more than 100,000 hectares. It distributes seed in the four core crops of oilseed rape (canola), cotton, rice and vegetables. In 2011, it also began marketing soybean seed in the US.
Source: Bayer CropScience
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