Overview of Sales, Earnings and Financial Position

Earnings Performance of the Bayer Group1

First quarter of 2018

Group sales

Group sales in the first quarter of 2018 rose by 2.0% (Fx & portfolio adj.) to €9,138 million (reported: −5.6%). Germany accounted for €1,040 million of this figure.

Sales of Pharmaceuticals advanced by 2.9% (Fx & portfolio adj.) to €4,075 million. At Consumer Health, sales declined by 2.2% (Fx & portfolio adj.) to €1,409 million. Sales of Crop Science, at €2,861 million (Fx & portfolio adj. −1.0%), matched the level of the strong prior-year quarter, while business at Animal Health expanded by 3.0% (Fx & portfolio adj.) to €414 million.

1 For definition of alternative performance measures, see Annual Report 2017, Chapter “Alternative Performance Measures Used by the Bayer Group.”

EBITDA before special items

Group EBITDA before special items was down by 5.2%, at €2,896 million. Negative currency effects held back earnings by around €160 million. EBITDA before special items at Pharmaceuticals declined by 5.8% to €1,415 million. At Consumer Health, EBITDA before special items was significantly lower year on year, at €313 million (−20.2%). EBITDA before special items at Crop Science declined by 6.5% to €1,042 million, while EBITDA before special items at Animal Health rose by 3.0% to €139 million.

Depreciation and amortization

Depreciation, amortization and impairment losses declined by 11.2% to €508 million in the first quarter of 2018 (Q1 2017: €572 million), in part due to currency effects. This figure comprised €297 million (Q1 2017: €342 million) in amortization and impairments on intangible assets and €211 million (Q1 2017: €230 million) in depreciation and impairments on property, plant and equipment. Impairment losses amounted to €21 million (Q1 2017: €47 million). In the prior-year quarter, impairment losses on intangible assets had included an effect from the discontinuation of the Phase II trial with our cooperation partner Regeneron Pharmaceuticals, Inc.

EBIT and special items

EBIT of the Bayer Group declined by 4.8% to €2,310 million (Q1 2017: €2,427 million), after special charges of €78 million (Q1 2017: €102 million). The special charges consisted primarily of expenses of €61 million in connection with the planned acquisition of Monsanto and of €13 million resulting from efficiency improvement programs. EBIT before special items declined by 5.6% to €2,388 million (Q1 2017: €2,529 million).

In the first quarter of 2018, the following special effects were taken into account in calculating EBIT and EBITDA:

Special Items Reconciliation by Segment1

 

 

EBIT Q1 2017

EBIT Q1 2018

 

EBITDA Q1 2017

EBITDA Q1 2018

 

 

€ million

€ million

 

€ million

€ million

1

For definition see Annual Report 2017, Chapter “Alternative Performance Measures Used by the Bayer Group.”

Before special items

 

2,529

2,388

 

3,054

2,896

Pharmaceuticals

 

(36)

(1)

 

(3)

(1)

Consumer Health

 

(9)

(5)

 

(8)

(5)

Crop Science

 

(37)

(61)

 

(24)

(61)

Animal Health

 

 

Reconciliation

 

(20)

(11)

 

(20)

(11)

Restructuring

 

(15)

(5)

 

(15)

(5)

Litigations / legal risks

 

(5)

(3)

 

(5)

(3)

Acquisition costs

 

(3)

 

(3)

Total special items

 

(102)

(78)

 

(55)

(78)

Impairment losses / reversals

 

(33)

 

Litigations / legal risks

 

(5)

(4)

 

(5)

(4)

Acquisition costs

 

(21)

(61)

 

(21)

(61)

Restructuring

 

(43)

(13)

 

(29)

(13)

After special items

 

2,427

2,310

 

2,999

2,818

Special Items Reconciliation by Functional Costs1

 

 

EBIT Q1 2017

EBIT Q1 2018

 

EBITDA Q1 2017

EBITDA Q1 2018

 

 

€ million

€ million

 

€ million

€ million

1

For definition see Annual Report 2017, Chapter “Alternative Performance Measures Used by the Bayer Group.”

Total special items

 

(102)

(78)

 

(55)

(78)

of which cost of goods sold

 

(25)

(10)

 

(11)

(10)

of which selling expenses

 

(1)

(2)

 

(1)

(2)

of which research and development expenses

 

(36)

(3)

 

(3)

(3)

of which general administration expenses

 

(35)

(58)

 

(35)

(58)

of which other operating income / expenses

 

(5)

(5)

 

(5)

(5)

Income after income taxes from discontinued operations

Income after income taxes from discontinued operations declined to €8 million (Q1 2017: €564 million) due to the deconsolidation of Covestro in the third quarter of 2017.

Net income

Including a financial result of €130 million (Q1 2017: minus €296 million), income before income taxes was €2,440 million (Q1 2017: €2,131 million). The financial result included a gain of €275 million from the sale of Covestro shares at the beginning of the year and pro-rata income of €80 million from the interest in Covestro accounted for using the equity method. The financial result included €236 million in positive special items (Q1 2017: €35 million in negative special items), primarily in connection with the aforementioned gain from the sale of Covestro shares, which was partially offset by special charges in connection with the planned acquisition of Monsanto.

After income tax expense of €494 million (Q1 2017: €424 million) and adjusting for income from discontinued operations after income taxes and noncontrolling interest, net income for the first quarter of 2018 amounted to €1,954 million (Q1 2017: €2,083 million).

Core earnings per share

Earnings per share (total) declined by 6.3% to €2.24 in the first quarter of 2018 (Q1 2017: €2.39), while core earnings per share from continuing operations decreased by 1.3% to €2.28 (Q1 2017: €2.31).

Core Earnings per Share1

 

 

Q1 2017

 

Q1 2018

 

 

€ million

 

€ million

1

For definition see Annual Report 2017, Chapter “Alternative Performance Measures Used by the Bayer Group.”

EBIT (as per income statements)

 

2,427

 

2,310

Amortization and impairment losses / loss reversals on intangible assets

 

342

 

297

Impairment losses / loss reversals on property, plant and equipment, and accelerated depreciation included in special items

 

13

 

7

Special items (other than accelerated depreciation, amortization and impairment losses / loss reversals)

 

55

 

78

Core EBIT

 

2,837

 

2,692

Financial result (as per income statements)

 

(296)

 

130

Special items in the financial result

 

35

 

(236)

Income taxes (as per income statements)

 

(424)

 

(494)

Special items in income taxes

 

 

Tax effects related to amortization, impairment losses / loss reversals and special items

 

(138)

 

(107)

Income after income taxes attributable to noncontrolling interest (as per income statements)

 

2

 

Above-mentioned adjustments attributable to noncontrolling interest

 

 

Core net income from continuing operations

 

2,016

 

1,985

 

 

 

 

 

 

 

Shares

 

Shares

Weighted average number of shares

 

871,387,808

 

872,467,808

 

 

 

 

 

 

 

 

Core earnings per share from continuing operations

 

2.31

 

2.28

Personnel expenses and employee numbers

Personnel expenses decreased by 7.5% and totaled €2,438 million (Q1 2017: €2,636 million), in part due to currency effects. As of the closing date, the number of employees in the Bayer Group was largely unchanged year on year, at 100,110 (March 31, 2017: 99,860; +0.3%).

Compare to Last Year