Business Development by Segment

Crop Science

Persistently weak market environment

Overall, the global seed and crop protection market contracted slightly by around 1% in 2016 (2015: −2%). Whereas there was a small increase in demand for high-quality seed, sales of crop protection products decreased worldwide.

Positive growth momentum in 2016 came from the North America and Eastern Europe regions. Market volumes decreased in Latin America, due especially to macroeconomic developments, unfavorable weather conditions and high inventories of crop protection products, particularly in Brazil.

Key Data – Crop Science

 

 

Q4 2015

Q4 2016

Change

 

2015

2016

Change

 

 

€ million

€ million

Repor­ted %

Fx & p adj. %

 

€ million

€ million

Repor­ted %

Fx & p adj. %

2015 figures restated; Fx & p adj. = currency- and portfolio-adjusted; Fx adj. = currency-adjusted

1

For definition see Chapter “Alternative Performance Measures Used by the Bayer Group.”

Sales

 

2,405

2,404

0.0

−1.6

 

10,128

9,915

−2.1

+0.1

Change in sales

 

 

 

 

 

 

 

 

 

 

Volume

 

+5.8%

−0.4%

 

 

 

+1.3%

−1.3%

 

 

Price

 

−0.4%

−1.2%

 

 

 

+0.4%

+1.4%

 

 

Currency

 

+5.1%

+1.6%

 

 

 

+6.9%

−2.3%

 

 

Portfolio

 

+0.7%

0.0%

 

 

 

+0.7%

+0.1%

 

 

 

 

€ million

€ million

Repor­ted %

Fx adj. %

 

€ million

€ million

Repor­ted %

Fx adj. %

Sales by region

 

 

 

 

 

 

 

 

 

 

Europe / Middle East / Africa

 

470

431

−8.3

−7.0

 

3,368

3,290

−2.3

+1.8

North America

 

438

527

+20.3

+18.5

 

2,570

2,616

+1.8

+3.9

Asia / Pacific

 

365

384

+5.2

+2.5

 

1,530

1,548

+1.2

+2.7

Latin America

 

1,132

1,062

−6.2

−8.6

 

2,660

2,461

−7.5

−6.9

EBITDA1

 

642

314

−51.1

 

 

2,628

2,280

−13.2

 

Special items

 

295

(37)

 

 

 

222

(141)

 

 

EBITDA before special items1

 

347

351

+1.2

 

 

2,406

2,421

+0.6

 

EBITDA margin before special items1

 

14.4%

14.6%

 

 

 

23.8%

24.4%

 

 

EBIT

 

491

153

−68.8

 

 

2,094

1,755

−16.2

 

Special items

 

301

(39)

 

 

 

222

(143)

 

 

EBIT before special items1

 

190

192

+1.1

 

 

1,872

1,898

+1.4

 

Net cash provided by operating activities

 

175

622

.

 

 

749

2,071

+176.5

 

Sales level year on year

Crop Science posted sales of €9,915 million (Fx & portfolio adj. +0.1%) in 2016. At Crop Protection/Seeds, we matched the prior-year level despite a persisting weak market environment, particularly in Latin America. Environmental Science posted gratifying sales growth.

Since the conclusion in May 2016 of an agreement to divest the consumer business of Environmental Science, these activities are reported retrospectively for 2015 and 2016 under discontinued operations. Environmental Science therefore now comprises only the business for professional users. The divestment was closed at the start of October 2016.

Sales by Business Unit

 

 

Q4 2015

Q4 2016

Change

 

2015

2016

Change

 

 

€ million

€ million

Repor­ted %

Fx & p adj. %

 

€ million

€ million

Repor­ted %

Fx & p adj. %

2015 figures restated; Fx & p adj. = currency- and portfolio-adjusted

1

Environmental Science now comprises only the business for professional users. The key data and prior-year figures are restated accordingly.

Crop Protection / Seeds

 

2,230

2,224

−0.3

−1.8

 

9,548

9,317

−2.4

−0.2

Crop Protection

 

2,009

1,965

−2.2

−3.1

 

8,271

7,961

−3.7

−1.5

Herbicides

 

650

599

−7.8

−8.5

 

2,830

2,693

−4.8

−2.2

Fungicides

 

677

679

+0.3

−0.9

 

2,911

2,961

+1.7

+4.0

Insecticides

 

430

386

−10.2

−11.4

 

1,596

1,357

−15.0

−13.3

SeedGrowth

 

252

301

+19.4

+18.7

 

934

950

+1.7

+4.1

Seeds

 

221

259

+17.2

+10.4

 

1,277

1,356

+6.2

+8.3

Environmental Science1

 

175

180

+2.9

+1.1

 

580

598

+3.1

+4.5

Sales by region

  • Sales in the Europe/Middle East/Africa region improved by 1.8% (Fx adj.) to €3,290 million. SeedGrowth registered gains, due particularly to higher demand for products to treat cereal seed. We also slightly expanded business at Herbicides, while sales at Insecticides and Fungicides came in at the prior-year level. Sales of vegetable seed developed positively, as did sales at Environmental Science.
  • In the North America region, we posted a 3.9% (Fx adj.) increase in sales to €2,616 million. Sales at SeedGrowth developed very positively thanks to increased demand for products to treat corn and cereal seed. Sales at Fungicides increased as well. We also achieved strong, double-digit-percentage growth with soybean seeds. By contrast, we registered a substantial decline in sales of Insecticides resulting from weak demand. Sales at Environmental Science increased slightly.
  • Sales in Asia/Pacific increased by 2.7% (Fx adj.) year on year to €1,548 million. Our Fungicides business saw positive development particularly in Australia and India. Sales of vegetable seeds increased by a double-digit percentage. Business at Herbicides receded slightly, as did sales of Environmental Science.
  • Sales in Latin America declined by 6.9% (Fx adj.) to €2,461 million. Business was held back by the persisting weak market environment in Brazil, particularly at Insecticides, Herbicides and SeedGrowth. Lower pest pressure had an additional negative impact on Insecticides. We recorded gains in sales at Fungicides and Seeds. Business at Environmental Science expanded by a double-digit percentage.

Earnings

In 2016, EBITDA before special items of Crop Science was level year on year at €2,421 million (2015: €2,406 million; +0.6%). A positive currency effect of around €140 million and higher selling prices compensated lower volumes, increased spending on research and development and higher impairment losses recognized on inventories and receivables.

EBIT decreased by 16.2% to €1,755 million, including special charges of €143 million (2015: special gains of €222 million), primarily in connection with the agreed acquisition of Monsanto and efficiency improvement measures.

Special Items1 Crop Science

 

 

EBIT Q4 2015

EBIT Q4 2016

 

EBIT
2015

EBIT
2016

 

EBITDA Q4 2015

EBITDA Q4 2016

 

EBITDA 2015

EBITDA 2016

 

 

€ million

€ million

 

€ million

€ million

 

€ million

€ million

 

€ million

€ million

1

For definition see Chapter “Alternative Performance Measures Used by the Bayer Group.”

Restructuring

 

(5)

 

(51)

 

(3)

 

(49)

Litigations

 

303

4

 

285

(1)

 

303

4

 

285

(1)

Acquisition costs

 

(34)

 

(86)

 

(34)

 

(86)

Divestments

 

(4)

 

(50)

(5)

 

(6)

(4)

 

(50)

(5)

Revaluation of other receivables

 

(2)

 

(13)

 

(2)

 

(13)

Total

 

301

(39)

 

222

(143)

 

295

(37)

 

222

(141)

Online Annex: A 2.2.2-3

limited assurance

The development of Crop Science in 2016 is shown in the following graphics.

Crop Science Quarterly Sales

Crop Science Quarterly Sales (bar chart)Crop Science Quarterly Sales (bar chart)

2015 figures restated

Crop Science
Quarterly EBIT

Crop Science Quarterly EBIT (bar chart)Crop Science Quarterly EBIT (bar chart)

2015 figures restated

Crop Science
Quarterly EBITDA before Special Items

Crop Science Quarterly EBITDA before Special Items (bar chart)Crop Science Quarterly EBITDA before Special Items (bar chart)

2015 figures restated