Statements of Income
Performance by Subgroup and Segment
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Management Report
Bayer CropScience
Sales of our CropScience subgroup, at €1,786 million, showed a slight year-on-year increase (Q1 2006: €1,771 million). Adjusted for currency and portfolio changes, business expanded by a gratifying 5.9 percent.
EBITDA before special items advanced by €33 million, or 6.0 percent, to €584 million. The combined effect of higher volumes and cost savings more than offset the pressure on margins from adverse shifts in currency parities. EBIT before special items improved by €39 million, or 9.6 percent, to €447 million. Earnings were held back by special charges related to the restructuring project initiated in 2006. First-quarter EBIT was steady at €408 million.
EBITDA before special items advanced by €33 million, or 6.0 percent, to €584 million. The combined effect of higher volumes and cost savings more than offset the pressure on margins from adverse shifts in currency parities. EBIT before special items improved by €39 million, or 9.6 percent, to €447 million. Earnings were held back by special charges related to the restructuring project initiated in 2006. First-quarter EBIT was steady at €408 million.
Crop Protection
First-quarter sales in the Crop Protection segment grew to €1,434 million (Q1 2006: €1,413 million). When adjusted for currency and portfolio changes, sales moved ahead 6.5 percent. The early start to the season in Europe, the increased cultivation of plants for the production of biofuels and internationally high prices for crop commodities led to growth in business, particularly in the Seed Treatment, Herbicides and Fungicides business units.
Sales of the Insecticides business unit fell by €37 million to €311 million. When adjusted for currency and portfolio changes, sales decreased by 4.2 percent. The decline should be viewed in light of the impact on our North American business of factors including a shift from soil- and foliar-applied insecticides to seed treatment products in the first quarter of this year. Sales in Europe increased, thanks mainly to a strong performance by our new insecticide Biscaya®.
Sales of the Fungicides business unit grew by 1.6 percent in the first quarter of 2007, to €384 million. On a currency-adjusted basis, the increase amounted to 4.2 percent. Buoyed by the trend in Europe, sales of our new cereal fungicides Proline® and Fandango®, in particular, made good gains. Business with our Flint® line of fungicide products benefited from a recovery in the Latin American market. The downward sales trend for our Folicur® product line was largely the result of a drop in business in the United States. Sales were hampered by the fact that our customers had built up substantial precautionary inventories in 2005/2006 for the prevention of Asian rust in soybeans. Another factor was the planned switch to the active ingredient prothioconazole, which received marketing authorization in the United States at the end of the first quarter of 2007.
Sales of the Herbicides business unit advanced by 3.3 percent to €568 million, with currency-adjusted growth amounting to 7.2 percent. The main reason for the improvement was the strong performance of our young cereal herbicides Atlantis®, Hussar® and Sekator®, particularly in Europe.
Sales of the Insecticides business unit fell by €37 million to €311 million. When adjusted for currency and portfolio changes, sales decreased by 4.2 percent. The decline should be viewed in light of the impact on our North American business of factors including a shift from soil- and foliar-applied insecticides to seed treatment products in the first quarter of this year. Sales in Europe increased, thanks mainly to a strong performance by our new insecticide Biscaya®.
Sales of the Fungicides business unit grew by 1.6 percent in the first quarter of 2007, to €384 million. On a currency-adjusted basis, the increase amounted to 4.2 percent. Buoyed by the trend in Europe, sales of our new cereal fungicides Proline® and Fandango®, in particular, made good gains. Business with our Flint® line of fungicide products benefited from a recovery in the Latin American market. The downward sales trend for our Folicur® product line was largely the result of a drop in business in the United States. Sales were hampered by the fact that our customers had built up substantial precautionary inventories in 2005/2006 for the prevention of Asian rust in soybeans. Another factor was the planned switch to the active ingredient prothioconazole, which received marketing authorization in the United States at the end of the first quarter of 2007.
Sales of the Herbicides business unit advanced by 3.3 percent to €568 million, with currency-adjusted growth amounting to 7.2 percent. The main reason for the improvement was the strong performance of our young cereal herbicides Atlantis®, Hussar® and Sekator®, particularly in Europe.
| Bayer CropScience | 1st Quarter 2006 | 1st Quarter 2007 | Change |
| € million | € million | % | |
| Net sales | 1,771 | 1,786 | +0.8 |
| EBITDA* | 551 | 548 | -0.5 |
| Special items | 0 | (36) | |
| EBITDA before special items | 551 | 584 | +6.0 |
| EBITDA margin before special items | 31.1% | 32.7% | |
| EBIT* | 408 | 408 | 0.0 |
| Special items | 0 | (39) | |
| EBIT before special items | 408 | 447 | +9.6 |
| Gross cash flow* | 387 | 369 | -4.7 |
| Net cash flow* | (350) | (238) | +32.0 |
* for definition see Bayer Group Key Data
| Best-Selling Bayer CropScience Products* | 1st Quarter 2006 | 1st Quarter 2007 | Change | Currency- adjusted change |
| € million | € million | % | % | |
| Confidor®/Gaucho®/Admire®/Merit® (Insecticides/Seed Treatment/ Environmental Science) | 165 | 163 | -1.2 | +3.1 |
| Folicur®/Raxil® (Fungicides/Seed Treatment) | 95 | 77 | -18.9 | -16.1 |
| Atlantis® (Herbicides) | 49 | 76 | +55.1 | +57.1 |
| Proline® (Fungicides) | 58 | 72 | +24.1 | +24.7 |
| Basta®/Liberty® (Herbicides) | 72 | 72 | 0.0 | +8.0 |
| Puma® (Herbicides) | 68 | 69 | +1.5 | +7.5 |
| Flint®/Stratego®/Sphere® (Fungicides) | 49 | 60 | +22.4 | +29.1 |
| Poncho® (Seed Treatment) | 31 | 59 | +90.3 | +106.1 |
| Hussar® (Herbicides) | 32 | 47 | +46.9 | +44.6 |
| Betanal® (Herbicides) | 45 | 45 | 0.0 | +2.2 |
| Total | 664 | 740 | +11.4 | +15.8 |
| Proportion of Bayer CropScience sales | 37% | 41% |
* Figures are based on active ingredient class. For the sake of clarity, only the principal brands and business units are listed.
| Crop Protection | 1st Quarter 2006 | 1st Quarter 2007 | Change |
| € million | € million | % | |
| Net sales | 1,413 | 1,434 | +1.5 |
| Insecticides | 348 | 311 | -10.6 |
| Fungicides | 378 | 384 | +1.6 |
| Herbicides | 550 | 568 | +3.3 |
| Seed Treatment | 137 | 171 | +24.8 |
| EBITDA* | 406 | 425 | +4.7 |
| Special items | 0 | (36) | |
| EBITDA before special items | 406 | 461 | +13.5 |
| EBITDA margin before special items | 28.7% | 32.1% | |
| EBIT* | 285 | 304 | +6.7 |
| Special items | 0 | (39) | |
| EBIT before special items | 285 | 343 | +20.4 |
| Gross cash flow* | 285 | 282 | -1.1 |
| Net cash flow* | (289) | (113) | +60.9 |
* for definition see Bayer Group Key Data
Sales of the Seed Treatment business unit advanced by a substantial €34 million, or 24.8 percent, to €171 million. The currency-adjusted increase was 31.1 percent. Our new insecticidal seed treatment Poncho®, in particular, performed very well in the market in light of an early start to the season in Europe and especially because of the planned increase in corn acreages in the United States to meet heightened demand for biofuels.
First-quarter EBITDA before special items of our Crop Protection segment climbed by 13.5 percent year on year to €461 million, the positive overall sales trend and the savings achieved through our cost structure and efficiency improvement programs offsetting the currency-related squeeze on margins. EBIT before special items in the first quarter came in at €343 million (Q1 2006: €285 million). After special items, EBIT amounted to €304 million (Q1 2006: €285 million).
First-quarter EBITDA before special items of our Crop Protection segment climbed by 13.5 percent year on year to €461 million, the positive overall sales trend and the savings achieved through our cost structure and efficiency improvement programs offsetting the currency-related squeeze on margins. EBIT before special items in the first quarter came in at €343 million (Q1 2006: €285 million). After special items, EBIT amounted to €304 million (Q1 2006: €285 million).
Environmental Science/BioScience
Sales of the Environmental Science, BioScience segment edged down 1.7 percent to €352 million, but rose by 3.7 percent on a currency-adjusted basis.
The Environmental Science unit recorded sales of €188 million, which was 2.6 percent below the prior-year figure. Currency-adjusted sales moved ahead 2.4 percent thanks to good business with home and garden products for consumers.
Sales of the BioScience unit held steady year on year at €164 million, though on a currency-adjusted basis they increased by 5.3 percent. The improvement was due particularly to the good development of our vegetable seed business.
EBITDA before special items of the Environmental Science, BioScience segment fell by €22 million year on year to €123 million (Q1 2006: €145 million), due primarily to negative currency effects and increased research and development spending at BioScience. EBIT fell by €19 million to €104 million (Q1 2006: €123 million).
The Environmental Science unit recorded sales of €188 million, which was 2.6 percent below the prior-year figure. Currency-adjusted sales moved ahead 2.4 percent thanks to good business with home and garden products for consumers.
Sales of the BioScience unit held steady year on year at €164 million, though on a currency-adjusted basis they increased by 5.3 percent. The improvement was due particularly to the good development of our vegetable seed business.
EBITDA before special items of the Environmental Science, BioScience segment fell by €22 million year on year to €123 million (Q1 2006: €145 million), due primarily to negative currency effects and increased research and development spending at BioScience. EBIT fell by €19 million to €104 million (Q1 2006: €123 million).
| Environmental Science, BioScience | 1st Quarter 2006 | 1st Quarter 2007 | Change |
| € million | € million | % | |
| Net sales | 358 | 352 | -1.7 |
| Environmental Science | 193 | 188 | -2.6 |
| BioScience | 165 | 164 | -0.6 |
| EBITDA* | 145 | 123 | -15.2 |
| Special items | 0 | 0 | |
| EBITDA before special items | 145 | 123 | -15.2 |
| EBITDA margin before special items | 40.5% | 34.9% | |
| EBIT* | 123 | 104 | -15.4 |
| Special items | 0 | 0 | |
| EBIT before special items | 123 | 104 | -15.4 |
| Gross cash flow* | 102 | 87 | -14.7 |
| Net cash flow* | (61) | (125) | -104.9 |
* for definition see Bayer Group Key Data
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