Business Development by Segment

Animal Health

Slower market growth

The Animal Health market expanded by around 2% in 2017 (2016: 5%), with growth significantly lagging behind previous years. Alongside a difficult market environment in the farm animals business in Europe and North America, growth rates in the companion animals business, and in the important parasiticides market in particular, were also lower than in previous years. The slight recovery of the farm animals business in the core markets and an upturn in the American companion animals business at the end of the year were unable to offset the weaker market development in the first half of the year.

Key Data – Animal Health

 

 

Q4 2016

Q4 2017

Change1

 

2016

2017

Change1

 

 

€ million

€ million

Reported %

Fx & p adj. %

 

€ million

€ million

Reported %

Fx & p adj. %

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

 

329

322

−2.1

+1.8

 

1,523

1,571

+3.2

+2.0

Change in sales1

 

 

 

 

 

 

 

 

 

 

Volume

 

−1.0%

+2.1%

 

 

 

+2.6%

+0.4%

 

 

Price

 

+4.1%

−0.3%

 

 

 

+2.2%

+1.6%

 

 

Currency

 

0.0%

−6.1%

 

 

 

−2.6%

−0.9%

 

 

Portfolio

 

0.0%

+2.2%

 

 

 

0.0%

+2.1%

 

 

 

 

€ million

€ million

Reported %

Fx adj. %

 

€ million

€ million

Reported %

Fx adj. %

Sales by region

 

 

 

 

 

 

 

 

 

 

Europe / Middle East / Africa

 

84

82

−2.4

−1.2

 

445

442

−0.7

0.0

North America

 

129

126

−2.3

+5.4

 

621

655

+5.5

+6.4

Asia / Pacific

 

79

79

.

+7.6

 

300

317

+5.7

+7.3

Latin America

 

37

35

−5.4

+2.7

 

157

157

0.0

0.0

EBITDA1

 

34

28

−17.6

 

 

343

352

+2.6

 

Special items1

 

(4)

(21)

 

 

 

(6)

(29)

 

 

EBITDA before special items1

 

38

49

+28.9

 

 

349

381

+9.2

 

EBITDA margin before special items1

 

11.6%

15.2%

 

 

 

22.9%

24.3%

 

 

EBIT1

 

25

10

−60.0

 

 

313

307

−1.9

 

Special items1

 

(5)

(23)

 

 

 

(7)

(31)

 

 

EBIT before special items1

 

30

33

+10.0

 

 

320

338

+5.6

 

Net cash provided by operating activities

 

85

75

−11.8

 

 

193

209

+8.3

 

Sales growth driven by business in Asia / Pacific and the United States

Sales of Animal Health increased by 2.0% (Fx & portfolio adj.) to €1,571 million in 2017. Business in the Asia / Pacific region developed especially positively due to higher demand and price increases. We also registered currency-adjusted growth in North America, with the Cydectin™ product portfolio acquired in January 2017 from Boehringer Ingelheim Vetmedica, Inc., United States, contributing to sales gains. The Europe / Middle East / Africa and Latin America regions remained at the prior-year level.

Best-Selling Animal Health Products

 

 

Q4 2016

Q4 2017

Change1

 

2016

2017

Change1

 

 

€ million

€ million

Reported %

Fx adj. %

 

€ million

€ million

Reported %

Fx adj. %

Fx adj. = currency-adjusted

1

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

Advantage™ product family

 

102

87

−14.7

−10.1

 

535

488

−8.8

−7.8

Seresto™

 

28

32

+14.3

+26.0

 

174

218

+25.3

+25.1

Drontal™ product family

 

31

30

−3.2

+2.3

 

128

132

+3.1

+4.5

Baytril™

 

34

31

−8.8

−0.6

 

113

113

0.0

+2.5

Total

 

195

180

−7.7

−1.5

 

950

951

+0.1

+1.1

Proportion of Animal Health sales

 

59%

56%

 

 

 

62%

61%

 

 

+25.1%

growth in sales of Seresto™ (Fx adj.)

Sales by product

  • Sales of our Advantage™ family of flea, tick and worm control products were down year on year, due mainly to increased competitive pressure and the related decline in demand in the Europe / Middle East / Africa and North America regions.
  • We achieved continued strong growth with our Seresto™ flea and tick collar that resulted chiefly from increased demand in the United States and Europe.
  • Business with our Drontal™ family of dewormers expanded once again. Here we benefited particularly from increased prices and volumes in the United States and the Asia / Pacific region.
  • The increase in sales of our antibiotic Baytril™ was largely attributable to the United States, partly due to a one-time effect in connection with a change in the distribution model, and to expanded volumes in Mexico.

Earnings

In 2017, we raised EBITDA before special items by 9.2% to €381 million. Adjusted for negative currency effects of €8 million, earnings increased by 11.5%. Price increases, the Cydectin™ business we acquired and lower selling expenses contributed to the growth in earnings. In contrast, negative contributions came from net other operating expenses as well as higher research and development expenses.

EBIT of Animal Health declined by 1.9% to €307 million, after special charges of €31 million (2016: €7 million) in conjunction with efficiency improvement measures.

Special Items1 Animal Health

 

 

EBIT Q4 2016

EBIT Q4 2017

 

EBIT
2016

EBIT
2017

 

EBITDA Q4 2016

EBITDA Q4 2017

 

EBITDA 2016

EBITDA 2017

 

 

€ million

€ million

 

€ million

€ million

 

€ million

€ million

 

€ million

€ million

1

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

Restructuring

 

(5)

(23)

 

(7)

(31)

 

(4)

(21)

 

(6)

(29)

Total special items

 

(5)

(23)

 

(7)

(31)

 

(4)

(21)

 

(6)

(29)

Online Annex: A 2.2.2-4

limited assurance

The development of Animal Health in 2017 is shown in the following graphics (A 2.2.2-4/1, A 2.2.2-4/2 and A 2.2.2-4/3).

Animal Health Quarterly Sales

Animal Health Quarterly Sales (bar chart)

Animal Health
Quarterly EBIT1

Animal Health Quarterly EBIT (bar chart)

Animal Health
Quarterly EBITDA before Special Items1

Animal Health Quarterly EBITDA before Special Items (bar chart)
Compare to Last Year