Overview of Sales, Earnings and Financial Position

Earnings Performance of the Bayer Group1

First quarter of 2017

Group Sales

Sales of the Bayer Group increased by 9.4% to €13,244 million in the first quarter of 2017 after adjusting for currency and portfolio changes (Fx & portfolio adj.; reported: +11.7%). Germany accounted for €1,394 million of this figure. Sales of the Life Science businesses amounted to €9,680 million (Fx & portfolio adj. +4.9%).

Pharmaceuticals posted encouraging sales growth of 7.4% (Fx & portfolio adj.) to €4,263 million. The continued strong business performance of our key growth products contributed significantly to this increase. Consumer Health sales grew by 2.6% (Fx & portfolio adj.) to €1,601 million. Sales at Crop Science increased by 3.2% (Fx & portfolio adj.) to €3,120 million. Animal Health posted a 2.9% (Fx & portfolio adj.) gain in sales to €440 million. Sales of Covestro improved considerably, increasing by 23.6% (Fx & portfolio adj.) to €3,564 million.

EBITDA before special items

Group EBITDA before special items increased by 14.9% to €3,893 million. EBITDA before special items at Pharmaceuticals grew by a substantial 19.1% to €1,502 million. EBITDA before special items of Consumer Health improved by 2.3% to €392 million. At Crop Science, EBITDA before special items climbed by 2.4% to €1,115 million. Animal Health registered a gratifying 10.7% improvement in EBITDA before special items, to €135 million. The Life Science businesses overall posted EBITDA before special items of €3,054 million (+5.9%). Covestro raised EBITDA before special items by a considerable 66.5% to €839 million.

Depreciation, amortization and special items

Depreciation, amortization and impairment losses amounted to €730 million in the first quarter of 2017 (Q1 2016: €1,039 million), and comprised €349 million (Q1 2016: €667 million) in amortization and impairments on intangible assets and €381 million (Q1 2016: €372 million) in depreciation and impairments on property, plant and equipment. A total of €38 million (Q1 2016: €244 million) in impairments constituted special items. These largely related to the discontinuation of the Phase II trial with our cooperation partner Regeneron Pharmaceuticals, Inc. In the prior year, €231 million in impairments on intangible assets were recognized in connection with Essure™.

In the first quarter of 2017, the following special effects were taken into account in calculating EBIT and EBITDA:

Special Items Reconciliation1

 

 

EBIT Q1 2016

EBIT Q1 2017

 

EBITDA Q1 2016

EBITDA Q1 2017

 

 

€ million

€ million

 

€ million

€ million

2016 figures restated

1

For definition see Annual Report 2016, Chapter “Alternative Performance Measures Used by the Bayer Group.”

Before special items

 

2,592

3,201

 

3,387

3,893

Pharmaceuticals

 

(231)

(36)

 

(3)

Consumer Health

 

(32)

(9)

 

(19)

(8)

Crop Science

 

(3)

(37)

 

(3)

(24)

Animal Health

 

(1)

 

(1)

Reconciliation

 

(5)

(20)

 

(5)

(20)

Restructuring

 

(5)

(15)

 

(5)

(15)

Litigations

 

(5)

 

(5)

Total special items Life Sciences

 

(272)

(102)

 

(28)

(55)

Covestro

 

17

 

8

Total special items

 

(272)

(85)

 

(28)

(47)

of which cost of goods sold

 

(183)

(8)

 

(8)

(2)

of which selling expenses

 

(41)

(1)

 

(5)

(1)

of which research and development expenses

 

(35)

(36)

 

(2)

(3)

of which general administration expenses

 

(13)

(35)

 

(13)

(35)

of which other operating income / expenses

 

(5)

 

(6)

After special items

 

2,320

3,116

 

3,359

3,846

EBIT

EBIT of the Bayer Group rose by a substantial 34.3% to €3,116 million (Q1 2016: €2,320 million) after special charges of €85 million (Q1 2016: €272 million). These mainly comprised €43 million in connection with efficiency improvement programs and €33 million for impairment losses on intangible assets, while €21 million were connected with the agreed acquisition of Monsanto. EBIT before special items moved forward by 23.5% to €3,201 million (Q1 2016: €2,592 million).

Net income

Including a financial result of minus €349 million (Q1 2016: minus €315 million), income before income taxes was €2,767 million (Q1 2016: €2,005 million). After income tax expense of €595 million (Q1 2016: €474 million) and adjusting for income from discontinued operations after income taxes and noncontrolling interest, net income for the first quarter of 2017 amounted to €2,083 million (Q1 2016: €1,511 million).

Core earnings per share

Earnings per share (total) rose by 30.6% in the first quarter of 2017, to €2.39 (Q1 2016: €1.83), while core earnings per share from continuing operations improved by 11.5% to €2.62 (Q1 2016: €2.35).

Core Earnings per Share1

 

 

Q1 2016

 

Q1 2017

 

 

€ million

 

€ million

2016 figures restated

1

For definition see Annual Report 2016, Chapter “Alternative Performance Measures Used by the Bayer Group.”

EBIT (as per income statements)

 

2,320

 

3,116

Amortization and impairment losses / loss reversals on intangible assets

 

667

 

349

Impairment losses / loss reversals on property, plant and equipment

 

18

 

6

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

 

28

 

47

Core EBIT

 

3,033

 

3,518

Financial result (as per income statements)

 

(315)

 

(349)

Special items in the financial result

 

(10)

 

35

Income taxes (as per income statements)

 

(474)

 

(595)

Special items in income taxes

 

 

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

 

(218)

 

(138)

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

 

(70)

 

(188)

Above-mentioned adjustments attributable to noncontrolling interest

 

(2)

 

3

Core net income from continuing operations

 

1,944

 

2,286

 

 

 

 

 

 

 

Shares

 

Shares

Weighted average number of shares

 

826,947,808

 

871,387,808

 

 

 

 

 

 

 

 

Core earnings per share from continuing operations

 

2.35

 

2.62

Core earnings per share from discontinued operations

 

0.07

 

0.12

Core earnings per share from continuing and discontinued operations

 

2.42

 

2.74

Our calculations for determining net income and core earnings per share took into account our sale, effective March 3, 2017, of 22 million shares in Covestro AG to insitutional investors at a price of €66.50, in a move that reduced Bayer’s stake from 64.2% to 53.3% of the shares issued.

Personnel expenses rose by 10.3% compared with March 31, 2016, to €3,124 million (Q1 2016: €2,832 million). Compared with the closing date of the first quarter of 2016, the number of employees in the Bayer Group was largely unchanged at 115,578 (March 31, 2016: 116,225; −0.6%).

[1] For definition of alternative performance measures, see Annual Report 2016, Chapter “Alternative Performance Measures Used by the Bayer Group.”