Business Development by Segment

Consumer Health

Market growth unchanged

In 2017, growth of the global Consumer Health market came in at slightly below 4% (2016: 4%). Important growth drivers included steady demand for self-care products and a strong cold season in Europe. In contrast, a weaker allergy season, pricing pressure in the e-commerce distribution channel, and intensified competition weighed on growth.

Key Data – Consumer 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

 

1,539

1,399

−9.1

−4.2

 

6,037

5,862

−2.9

−1.7

Changes in sales1

 

 

 

 

 

 

 

 

 

 

Volume

 

+1.5%

−4.2%

 

 

 

+0.6%

−3.0%

 

 

Price

 

+2.9%

0.0%

 

 

 

+2.9%

+1.3%

 

 

Currency

 

−2.2%

−4.9%

 

 

 

−4.1%

−1.2%

 

 

Portfolio

 

0.0%

0.0%

 

 

 

0.0%

0.0%

 

 

 

 

€ million

€ million

Reported %

Fx adj. %

 

€ million

€ million

Reported %

Fx adj. %

Sales by region

 

 

 

 

 

 

 

 

 

 

Europe / Middle East / Africa

 

499

491

−1.6

+0.8

 

1,918

1,962

+2.3

+2.1

North America

 

649

581

−10.5

−2.5

 

2,627

2,480

−5.6

−4.1

Asia / Pacific

 

194

145

−25.3

−19.6

 

781

738

−5.5

−4.0

Latin America

 

197

182

−7.6

−6.6

 

711

682

−4.1

−0.4

EBITDA1

 

334

197

−41.0

 

 

1,296

1,145

−11.7

 

Special items1

 

(38)

(54)

 

 

 

(115)

(86)

 

 

EBITDA before special items1

 

372

251

−32.5

 

 

1,411

1,231

−12.8

 

EBITDA margin before special items1

 

24.2%

17.9%

 

 

 

23.4%

21.0%

 

 

EBIT1

 

68

(110)

.

 

 

695

518

−25.5

 

Special items1

 

(199)

(258)

 

 

 

(292)

(300)

 

 

EBIT before special items1

 

267

148

−44.6

 

 

987

818

−17.1

 

Net cash provided by operating activities

 

221

297

+34.4

 

 

874

1,059

+21.2

 

Sales decline slightly against the previous year

Sales of Consumer Health fell by 1.7% (Fx & portfolio adj.) in 2017 to €5,862 million. This was attributable to persistently weak business development in the United States. Furthermore, the Chinese authorities changed the legal status of two of our medicated skincare brands from OTC (over-the-counter) designates the business with nonprescription medicines. to prescription, which led to sales declines of around €70 million in the fourth quarter of 2017. Sales in Latin America came in at the prior-year level (Fx adj.). By contrast, business expanded slightly in Europe / Middle East / Africa, and particularly in Germany.

Best-Selling Consumer 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.”

2

Trademark rights and distribution only in certain countries outside the European Union

Claritin™

 

122

113

−7.4

+3.2

 

605

585

−3.3

−2.4

Aspirin™

 

126

124

−1.6

+4.5

 

463

462

−0.2

+1.8

Bepanthen™ / Bepanthol™

 

90

96

+6.7

+13.6

 

362

379

+4.7

+6.6

Aleve™

 

115

103

−10.4

−2.8

 

416

375

−9.9

−7.9

Canesten™

 

64

68

6.3

−12.4

 

269

278

+3.3

+3.5

Alka-Seltzer™ product family

 

87

73

−16.1

−9.2

 

253

244

−3.6

−1.2

One A Day™

 

67

63

−6.0

+4.2

 

222

222

0.0

+2.3

Dr. Scholl’s™2

 

55

54

−1.8

+4.4

 

235

211

−10.2

−8.6

Coppertone™

 

17

11

−35.3

−22.7

 

219

208

−5.0

−6.5

Elevit™

 

48

42

−12.5

−5.6

 

182

189

+3.8

+4.7

Total

 

791

747

−5.6

+0.2

 

3,226

3,153

−2.3

−0.9

Proportion of Consumer Health sales

 

51%

53%

 

 

 

53%

54%

 

 

Sales by product

  • Sales of the antihistamine Claritin™ were down slightly against the previous year, in which we benefited from a product line extension in the United States. The main reason for this was intensified competition in the United States and Japan. Sales developed positively in China.
  • We posted slight growth for our analgesic Aspirin™ that resulted primarily from a positive business performance in North America and Europe / Middle East / Africa. Including business with Aspirin™ Cardio, which is reported under Pharmaceuticals, sales climbed by 6.5% (Fx adj.) to €1,043 million (2016: €1,001 million).
  • Business with our Bepanthen™ / Bepanthol™ wound and skin care products expanded. We achieved gratifying sales gains particularly in Europe / Middle East / Africa, and especially in Germany.
  • Sales of our analgesic Aleve™ fell sharply compared with the previous year, which benefited from a product line extension. The primary reason for the sales decline in 2017 was intense competition in the United States.
  • We achieved sales growth with our Canesten™ skin and intimate health products, in a development that was mainly attributable to a positive business performance in China and the United Kingdom.
  • Sales of our Alka-Seltzer™ product family to treat gastric complaints and cold symptoms declined slightly against the previous year. Sales declines in Latin America were partly offset by gains in the United States that resulted mainly from a strong cold season.
  • Sales of our One A Day™ vitamin product advanced further on a currency-adjusted basis, especially in the United States, where we benefited from the expansion of our regular and e-commerce distribution channels.
  • Sales of our Dr. Scholl’s™ foot care products declined markedly, particularly in the United States, due to the repositioning of the brand. The success that followed this move was not sufficient to fully offset the associated inventory reduction.
  • Sales of our sunscreen product Coppertone™ were lower, primarily as a result of intensified competition in the United States and Brazil.
  • Business with our prenatal vitamin Elevit™ developed well, due mainly to steady demand in Asia / Pacific.

Earnings

In 2017, EBITDA before special items declined by a substantial 12.8% to €1,231 million. Adjusted for negative currency effects of €25 million, earnings were down 11.0%. This decline was largely due to lower volumes, in part as a consequence of the reverse switch in China and the associated effect of around €50 million, as well as a higher cost of goods sold, primarily as a result of inventory impairments. Earnings were also held back by higher selling expenses. Positive contributions came from one-time gains of around €80 million, predominantly relating to the divestment of noncore brands.

EBIT of Consumer Health receded by 25.5% to €518 million, after special charges of €300 million (2016: €292 million). These comprised €202 million for impairment losses on intangible assets and €98 million for restructuring measures.

Special Items1 Consumer 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

 

(9)

(56)

 

(32)

(98)

 

(8)

(54)

 

(15)

(86)

Integration costs

 

(30)

 

(100)

 

(30)

 

(100)

Impairment losses / reversals

 

(160)

(202)

 

(160)

(202)

 

 

Total special items

 

(199)

(258)

 

(292)

(300)

 

(38)

(54)

 

(115)

(86)

Online Annex: A 2.2.2-2

limited assurance

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

Consumer Health Quarterly Sales

Consumer Health Quarterly Sales (bar chart)

Consumer Health
Quarterly EBIT1

Consumer Health Quarterly EBIT (bar chart)

Consumer Health
Quarterly EBITDA before Special Items1

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