Statements of Income
Performance by Subgroup and Segment
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Management Report
Bayer MaterialScience
The MaterialScience subgroup got off to a good start in 2007, expanding its business once again. Sales rose by 4.9 percent to €2,608 million (q1 2006: €2,486 million), or by 9.4 percent on a currency-adjusted basis. Growth was mainly the result of higher volumes in all segments and regions. We also succeeded in holding selling prices steady overall in the face of continuing strong price pressure.
EBITDA before special items did not reach the high level of the previous year, coming in at €409 million (q1 2006: €539 million). We did not succeed in compensating for the approximately €140 million increase in raw material and energy costs through higher volumes. EBIT before special items fell by €132 million, or 31.2 percent, to €291 million. After special items, first-quarter EBIT declined by €26 million, or 8.4 percent, to €285 million. Earnings of the Systems segment in the prior-year quarter were diminished by one-time expenses of €112 million arising from an arbitration proceeding in the United States concerning the production of propylene oxide.
EBITDA before special items did not reach the high level of the previous year, coming in at €409 million (q1 2006: €539 million). We did not succeed in compensating for the approximately €140 million increase in raw material and energy costs through higher volumes. EBIT before special items fell by €132 million, or 31.2 percent, to €291 million. After special items, first-quarter EBIT declined by €26 million, or 8.4 percent, to €285 million. Earnings of the Systems segment in the prior-year quarter were diminished by one-time expenses of €112 million arising from an arbitration proceeding in the United States concerning the production of propylene oxide.
Materials
Sales in the Materials segment advanced by 4.1 percent to €739 million, or by 9.0 percent on a currency-adjusted basis. The Polycarbonates business unit, with sales of €683 million, saw a currency-adjusted 9.1 percent increase in business despite lower selling prices. Volumes advanced in all regions. Sales of the Thermoplastic Polyurethanes business unit moved ahead 8.0 percent when adjusted for currency changes, thanks largely to higher volumes in Europe.
First-quarter EBITDA before special items dropped by €90 million, or 52.9 percent, to €80 million, with higher volumes not fully offsetting selling price erosion and raw material cost increases. EBIT fell by 71.2 percent to €38 million.
First-quarter EBITDA before special items dropped by €90 million, or 52.9 percent, to €80 million, with higher volumes not fully offsetting selling price erosion and raw material cost increases. EBIT fell by 71.2 percent to €38 million.
Systems
Sales of our Systems segment in the first quarter gained 5.2 percent from the prior-year period, to €1,869 million. Currency-adjusted sales improved by a substantial 9.6 percent.
Thanks to price increases and volume gains, our Polyurethanes business unit improved sales by 5.0 percent to €1,332 million. Adjusted for shifts in currency parities, growth came to 9.7 percent. The Coatings, Adhesives, Sealants business unit saw sales advance by 6.5 percent. The currency-adjusted increase amounted to 10.3 percent. Here, too, price increases and higher volumes were contributory factors.
EBITDA before special items of our Systems segment was down by €40 million, or 10.8 percent, from the excellent level of the prior-year period, to €329 million. Although we almost completely absorbed the increase in raw material costs by raising prices and boosting volume sales, earnings were weighed down by other factors, including the problems experienced by our supplier of raw MDI in Shanghai. EBIT before special items fell by €38 million, or 13.1 percent, to €253 million. The closure of our MDI plant at New Martinsville, West Virginia, United States, led to €6 million in special charges for the first quarter. After special items, EBIT rose by €68 million, or 38.0 percent, to €247 million.
Thanks to price increases and volume gains, our Polyurethanes business unit improved sales by 5.0 percent to €1,332 million. Adjusted for shifts in currency parities, growth came to 9.7 percent. The Coatings, Adhesives, Sealants business unit saw sales advance by 6.5 percent. The currency-adjusted increase amounted to 10.3 percent. Here, too, price increases and higher volumes were contributory factors.
EBITDA before special items of our Systems segment was down by €40 million, or 10.8 percent, from the excellent level of the prior-year period, to €329 million. Although we almost completely absorbed the increase in raw material costs by raising prices and boosting volume sales, earnings were weighed down by other factors, including the problems experienced by our supplier of raw MDI in Shanghai. EBIT before special items fell by €38 million, or 13.1 percent, to €253 million. The closure of our MDI plant at New Martinsville, West Virginia, United States, led to €6 million in special charges for the first quarter. After special items, EBIT rose by €68 million, or 38.0 percent, to €247 million.
| Bayer MaterialScience | 1st Quarter 2006 | 1st Quarter 2007 | Change |
| € milltion | € milltion | % | |
| Net sales | 2,486 | 2,608 | +4.9 |
| EBITDA* | 427 | 409 | -4.2 |
| Special items | (112) | 0 | |
| EBITDA before special items | 539 | 409 | -24.1 |
| EBITDA margin before special items | 21.7% | 15.7% | |
| EBIT* | 311 | 285 | -8.4 |
| Special items | (112) | (6) | |
| EBIT before special items | 423 | 291 | -31.2 |
| Gross cash flow* | 317 | 304 | -4.1 |
| Net cash flow* | 273 | 37 | -86.4 |
2006 figures restated
* for definition see Bayer Group Key Data
* for definition see Bayer Group Key Data
| Materials | 1st Quarter 2006 | 1st Quarter 2007 | Change |
| € million | € million | % | |
| Net sales | 710 | 739 | +4.1 |
| Polycarbonates | 656 | 683 | +4.1 |
| Thermoplastic Polyurethanes | 54 | 56 | +3.7 |
| EBITDA* | 170 | 80 | -52.9 |
| Special items | 0 | 0 | |
| EBITDA before special items | 170 | 80 | -52.9 |
| EBITDA margin before special items | 23.9% | 10.8% | |
| EBIT* | 132 | 38 | -71.2 |
| Special items | 0 | 0 | |
| EBIT before special items | 132 | 38 | -71.2 |
| Gross cash flow* | 126 | 69 | -45.2 |
| Net cash flow* | 35 | (25) | • |
2006 figures restated
* for definition see Bayer Group Key Data
* for definition see Bayer Group Key Data
| Systems | 1st Quarter 2006 | 1st Quarter 2007 | Change |
| € million | € million | % | |
| Net sales | 1,776 | 1,869 | +5.2 |
| Polyurethanes | 1,269 | 1,332 | +5.0 |
| Coatings, Adhesives, Sealants | 369 | 393 | +6.5 |
| Inorganic Basic Chemicals | 106 | 106 | +0.0 |
| Others | 32 | 38 | +18.8 |
| EBITDA* | 257 | 329 | +28.0 |
| Special items | (112) | 0 | |
| EBITDA before special items | 369 | 329 | -10.8 |
| EBITDA margin before special items | 20.8% | 17.6% | |
| EBIT* | 179 | 247 | +38.0 |
| Special items | (112) | (6) | |
| EBIT before special items | 291 | 253 | -13.1 |
| Gross cash flow* | 191 | 235 | +23.0 |
| Net cash flow* | 238 | 62 | -73.9 |
* for definition see Bayer Group Key Data
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