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Bayer reports small increase in Crop Science sales

The Bayer Group got off to a successful start in the new fiscal year. “All segments posted gains in their operating performance,” said CEO Dr. Marijn Dekkers when he presented the interim report for the first quarter on Tuesday. At Pharmaceuticals, Bayer again benefited from the very good development of its recently launched products. The Consumer Health business also developed positively. Crop Science outperformed the prior-year quarter despite a weak market environment. Animal Health posted substantial gains. Thus the Life Science businesses showed encouraging development. Sales at Covestro declined as anticipated, while earnings rose significantly. Dekkers remains optimistic for the year as a whole: “We confirm our outlook for 2016.”

Sales of the Bayer Group moved ahead in the first quarter of 2016 by 0.5 percent to EUR 11,941 million (Q1 2015: EUR 11,879 million). After adjusting for currency and portfolio effects (Fx & portfolio adj.), the increase was 3.2 percent. EBITDA before special items advanced by a substantial 15.7 percent to EUR 3,404 million (Q1 2015: EUR 2,941 million), despite higher research and development expenses at Pharmaceuticals and Crop Science and negative currency effects of around EUR 60 million. EBIT climbed by a robust 20.1 percent to EUR 2,335 million (Q1 2015: EUR 1,944 million) after special charges of EUR 272 million (Q1 2015: EUR 244 million). These mainly comprised impairment losses on intangible assets, costs for the integration of acquired businesses and costs associated with efficiency improvement measures. Net income grew 13.3 percent to EUR 1,511 million (Q1 2015: EUR 1,334 million). Core earnings per share from continuing operations advanced by 13.9 percent to EUR 2.37 (Q1 2015: EUR 2.08).

Gross cash flow from continuing operations advanced by 28.1 percent to EUR 2,576 million (Q1 2015: EUR 2,011 million), due mainly to the expansion of business. Net cash flow (total) was diminished by an increase in cash tied up in working capital but rose by 82.6 percent to EUR 1,322 million (Q1 2015: EUR 724 million), mainly because of the inflow from the divestiture of the Diabetes Care business. Net financial debt declined by EUR 1.1 billion against December 31, 2015, to EUR 16.3 billion on March 31, 2016.

Ongoing weak market environment at Crop Science
First-quarter sales of the agricultural business (Crop Science) moved ahead by 1.2 percent (Fx & portfolio adj.) to EUR 3,023 million. “We slightly expanded business at Crop Protection/Seeds despite an ongoing weak market environment,” explained Dekkers. In regional terms, the Crop Science business developed positively in North America in particular (Fx adj. plus 3.8 percent). In Latin America/Africa/Middle East, sales increased slightly by 1.0 percent (Fx adj.), whereas sales in Europe were level year on year (Fx adj. plus 0.7 percent). Business in the Asia/Pacific region declined by 2.5 percent (Fx adj.).

At Crop Protection, the SeedGrowth business grew by 5.4 percent (Fx. & portfolio adj.). The Fungicides business also developed positively (Fx & portfolio adj. plus 2.9 percent), whereas sales of Insecticides and Herbicides declined (Fx & portfolio adj. minus 12.2 percent and minus 3.8 percent, respectively). Sales of Seeds grew by a substantial 11.9 percent (Fx & portfolio adj.). Business at Environmental Science advanced by 3.0 percent (Fx & portfolio adj.).

EBITDA before special items of the Crop Science Division improved by 6.3 percent to EUR 1,106 million. Earnings contributions from higher selling prices and lower cost of goods sold stood against higher research and development spending and a negative currency effect of EUR 15 million.

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