Management Report
5.2 CropScience
| Key Data – CropScience | [Table 7] |
|---|
| | 2nd
Quarter
2010 | 2nd
Quarter
2011 | Change | 1st
Half
2010 | 1st
Half
2011 | Change |
|
€ million |
€ million |
% | Fx
(& p)
adj. % |
€ million |
€ million |
% | Fx
(& p)
adj. % |
| Sales | 1,884 | 1,943 | +3.1 | +9.2 | 3,836 | 4,200 | +9.5 | +11.4 |
| Change in sales | | | | | | | | |
| Volume | -2.8% | +11.1% | | | -6.6% | +12.0% | | |
| Price | -2.7% | -1.9% | | | -1.3% | -0.6% | | |
| Currency | +7.0% | -5.8% | | | +4.3% | -1.8% | | |
| Portfolio | +0.2% | -0.3% | | | +0.2% | -0.1% | | |
| Sales by business group | | | | | | | | |
| Crop Protection/BioScience | 1,685 | 1,757 | +4.3 | +10.5 | 3,467 | 3,836 | +10.6 | +12.6 |
| Environmental Science | 199 | 186 | -6.5 | -1.7 | 369 | 364 | -1.4 | +0.5 |
| Sales by region | | | | | | | | |
| Europe | 737 | 777 | +5.4 | +6.4 | 1,655 | 1,779 | +7.5 | +7.8 |
| North America | 494 | 535 | +8.3 | +19.2 | 1,021 | 1,205 | +18.0 | +21.3 |
| Asia/Pacific | 343 | 334 | -2.6 | +3.7 | 583 | 603 | +3.4 | +4.7 |
| Latin America/Africa/Middle East | 310 | 297 | -4.2 | +4.5 | 577 | 613 | +6.2 | +10.0 |
| EBIT | 187 | 272 | +45.5 | | 547 | 491 | -10.2 | |
| Special items | (66) | (81) | | | (114) | (486) | | |
| EBIT before special items* | 253 | 353 | +39.5 | | 661 | 977 | +47.8 | |
| EBITDA* | 314 | 405 | +29.0 | | 797 | 821 | +3.0 | |
| Special items | (66) | (66) | | | (114) | (395) | | |
| EBITDA before special items* | 380 | 471 | +23.9 | | 911 | 1,216 | +33.5 | |
| EBITDA margin before special items* | 20.2% | 24.2% | | | 23.7% | 29.0% | | |
| Gross cash flow** | 224 | 304 | +35.7 | | 559 | 618 | +10.6 | |
| Net cash flow** | 782 | 823 | +5.2 | | 517 | 609 | +17.8 | |
2010 figures restated Fx (& p) adj. = currency- (and portfolio-)adjusted (Fx & p adj.: Sales and Sales by business group; Fx adj.: Sales by region) * For definition see Chapter 6 "Calculation of EBIT(DA) Before Special Items." ** For definition see Chapter 8 "Financial Position of the Bayer Group." |
Sales of the CropScience subgroup in the second quarter of 2011 rose by 9.2% (Fx & portfolio adj.) to €1,943 million (reported: +3.1%). We continued to benefit from a generally good season in the northern hemisphere, with particularly strong growth in our BioScience business. High prices for agricultural raw materials led to a favorable market environment compared to the weak prior-year quarter.
Sales of Crop Protection/BioScience in the second quarter of 2011 amounted to €1,757 million, up 10.5% (Fx & portfolio adj.) from the corresponding period of 2010. Business expansion in Crop Protection was driven by our fungicides and herbicides, and in BioScience by seeds for the large-area crops – canola, cotton and rice. However, total sales of insecticides were affected by the cessation of marketing for older products such as Temik™.
| Sales – Crop Protection/BioScience | [Table 8] |
|---|
| | 2nd
Quarter
2010 | 2nd
Quarter
2011 | Change | 1st
Half
2010 | 1st
Half
2011 | Change |
|
€ million |
€ million |
% | Fx & p
adj. % |
€ million |
€ million |
% | Fx & p
adj. % |
| Sales | | | | | | | | |
| BioScience | 165 | 195 | +18.2 | +21.9 | 471 | 598 | +27.0 | +25.2 |
| Herbicides | 587 | 607 | +3.4 | +8.9 | 1,190 | 1,308 | +9.9 | +12.2 |
| Fungicides | 477 | 518 | +8.6 | +13.8 | 894 | 1,015 | +13.5 | +16.1 |
| Insecticides | 344 | 317 | -7.8 | +2.3 | 640 | 605 | -5.5 | -0.7 |
| Seed Treatment | 112 | 120 | +7.1 | +16.5 | 272 | 310 | +14.0 | +17.2 |
2010 figures restated Fx & p adj. = currency- and portfolio-adjusted |
The sharp increase at BioScience resulted from the significant expansion of business with our seeds for large-area crops. Seed sales benefited from increased crop acreages, particularly for canola in Canada, while business with cotton and rice seeds made strong gains above all in Asia. The vegetable seed business also developed well, especially in the Asia/Pacific and North America regions.
We significantly expanded our Crop Protection business in all regions except Asia/Pacific.
Sales in Europe rose by 6.9% (Fx adj.) to €668 million, with growth rates for herbicides and insecticides running into double digits. Sales of fungicides posted a slight increase, while those of seed treatments declined. There was encouraging growth in Germany, particularly for herbicides and the new fungicide family Xpro™. Our business in eastern Europe matched the already strong first quarter, helped by favorable weather conditions. Our Adengo™ family of corn herbicides developed particularly well in eastern Europe following its successful launch. The prolonged drought had an adverse effect in parts of western Europe.
Crop Protection sales in North America posted a clear 20.6% increase (Fx adj.) to €386 million. Sales of fungicides, herbicides and seed treatments advanced in the United States against a weak prior-year quarter. The new fungicide Stratego™ YLD, introduced this season for use in corn and soybeans, remains our principal growth driver. Sales of insecticides, however, declined. The successful launch and increased marketing of new products such as Movento™ partly offset the effects of streamlining the insecticide portfolio by discontinuing older products such as Temik™. Sales in Canada rose by a double-digit percentage.
Sales in Asia/Pacific edged down by 0.2% (Fx adj.) to €244 million. Sharp declines for insecticides and herbicides were nearly offset by tangible increases for fungicides and seed treatments. Our business in the region was held back by the cessation of marketing for older insecticides, while Australia and China suffered from extreme weather conditions. By contrast, sales advanced significantly in the countries of northern Asia.
Sales in the Latin America/Africa/Middle East region improved by 5.0% (Fx adj.) from the prior-year quarter to €264 million. Business benefited mainly from the good market prospects for cotton and sugarcane in Latin America. In Brazil, sales of herbicides posted noticeable gains, whereas business with fungicides was down due to lower infestation rates in soybeans. We also registered substantial increases in the Middle East, while business in Africa was level with the same period of the previous year.
Sales in the Environmental Science business group declined by just 1.7% (Fx & portfolio adj.) to €186 million. The consumer products business stagnated. Business with products for professional users was down in Europe, the Middle East and Africa.
EBIT of CropScience posted an encouragingly strong 45.5% increase in the second quarter of 2011 to €272 million, after special charges of €81 million (Q2 2010: €66 million) incurred mainly for the ongoing restructuring program at Crop Protection. EBIT before special items climbed by 39.5% to €353 million. EBITDA before special items advanced by 23.9% to €471 million. This increase was chiefly due to the good business development, with significantly higher volumes and improved capacity utilization at our production facilities.
CropScience sales in the first half of 2011 advanced by 11.4% to €4,200 million. The six-month period was marked by a strong season in the northern hemisphere and high prices for agricultural raw materials. BioScience recorded double-digit growth rates for seeds in the core crops – canola, cotton, rice and vegetables – and in all regions. Crop Protection sales also moved ahead in all the regions. Business recovered well in North America, especially for fungicides and herbicides. The Environmental Science business was flat with the same period of 2010.
EBIT of CropScience declined in the first half of 2011 by 10.2% to €491 million after special charges of €486 million. These mainly comprised provisions established in connection with litigations concerning genetically modified rice (LL RICE) in the United States and expenses for restructuring at Crop Protection. EBIT before special items climbed by 47.8% to €977 million. EBITDA before special items rose by 33.5% to €1,216 million thanks to the good business development, especially in the northern hemisphere. The principal growth drivers were our new crop protection products and our seed business in North America.