Business Development by Segment

Crop Science

Market environment improves slightly

Overall, the global seed and crop protection market expanded slightly in 2017, growing by around 1% (2016: 0%). While demand for high-quality seed increased, sales of crop protection products stagnated worldwide. Positive growth momentum in 2017 came from the North America and Eastern Europe regions. Market volumes in Latin America declined as a result of high inventories of crop protection products and unfavorable macroeconomic conditions in Brazil. The Western European market also contracted, primarily as a result of relatively low fungal infestation levels.

Key Data – Crop Science

 

 

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

 

2,404

2,263

−5.9

1.1

 

9,915

9,577

−3.4

−2.2

Change in sales1

 

 

 

 

 

 

 

 

 

 

Volume

 

−0.4%

+5.3%

 

 

 

−1.3%

+0.3%

 

 

Price

 

−1.2%

−4.2%

 

 

 

+1.4%

−2.5%

 

 

Currency

 

+1.6%

−7.0%

 

 

 

−2.3%

−1.2%

 

 

Portfolio

 

0.0%

0.0%

 

 

 

+0.1%

0.0%

 

 

 

 

€ million

€ million

Reported %

Fx adj. %

 

€ million

€ million

Reported %

Fx adj. %

Sales by region

 

 

 

 

 

 

 

 

 

 

Europe / Middle East / Africa

 

431

440

+2.1

+3.7

 

3,290

3,335

+1.4

+1.5

North America

 

527

479

−9.1

−1.1

 

2,616

2,772

+6.0

+5.8

Asia / Pacific

 

384

358

−6.8

+0.5

 

1,548

1,563

+1.0

+2.0

Latin America

 

1,062

986

−7.2

+1.1

 

2,461

1,907

−22.5

−18.0

EBITDA1

 

314

193

−38.5

 

 

2,280

1,716

−24.7

 

Special items1

 

(37)

(111)

 

 

 

(141)

(327)

 

 

EBITDA before special items1

 

351

304

−13.4

 

 

2,421

2,043

−15.6

 

EBITDA margin before special items1

 

14.6%

13.4%

 

 

 

24.4%

21.3%

 

 

EBIT1

 

153

64

−58.2

 

 

1,755

1,235

−29.6

 

Special items1

 

(39)

(155)

 

 

 

(143)

(408)

 

 

EBIT before special items1

 

192

219

+14.1

 

 

1,898

1,643

−13.4

 

Net cash provided by operating activities

 

622

552

−11.3

 

 

2,071

1,884

−9.0

 

Sales down slightly against the previous year

Sales of Crop Science fell by 2.2% (Fx & portfolio adj.) in 2017 to €9,577 million. The decline was mainly attributable to the crop protection business in Brazil. High inventories in that market necessitated measures to normalize the situation that in turn led to negative sales development. When the Brazilian business is excluded, sales of Crop Science rose by 3.0% year on year on a currency- and portfolio-adjusted basis. Environmental Science posted a positive performance, in part due to the delivery of products to the company that acquired our consumer business.

Sales by Business Unit

 

 

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

1

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

Crop Protection / Seeds

 

2,224

2,080

−6.5

+0.4

 

9,317

8,906

−4.4

−3.2

Crop Protection

 

1,965

1,823

−7.2

−0.4

 

7,961

7,403

−7.0

−5.3

Herbicides

 

599

526

−12.2

−6.5

 

2,693

2,633

−2.2

−1.6

Fungicides

 

679

755

+11.2

+19.7

 

2,961

2,597

−12.3

−9.9

Insecticides

 

386

268

−30.6

−24.6

 

1,357

1,246

−8.2

−6.1

SeedGrowth

 

301

274

−9.0

−2.3

 

950

927

−2.4

−0.3

Seeds

 

259

257

−0.8

+6.6

 

1,356

1,503

+10.8

+9.1

Environmental Science

 

180

183

+1.7

+9.4

 

598

671

+12.2

+14.0

Sales by region

  • Sales in the Europe / Middle East / Africa region improved by 1.5% (Fx adj.) to €3,335 million. Insecticides developed very positively, thanks in part to increased demand and the introduction of new products. We also achieved sales growth in the Seeds business, particularly for vegetables. On the other hand, increased competitive pressure led to declines at SeedGrowth and Fungicides.
  • In the North America region, we posted a 5.8% (Fx adj.) increase in sales to €2,772 million. We registered a double-digit growth rate in the Seeds business, with robust sales gains for oilseed rape / canola – due to increased acreages in Canada – and for soybeans more than offsetting declines for cotton. SeedGrowth also developed very positively due to increased demand for products to treat soybean and wheat seed. In contrast, we recorded declines at Insecticides. Environmental Science, for its part, posted a considerable increase in sales.
  • Sales in Asia / Pacific moved forward by 2.0% (Fx adj.) year on year to €1,563 million. Business performance was encouraging at Fungicides, particularly in Southeast Asia, and at Herbicides, mainly due to new product launches in China and Japan. We also achieved sales growth in the Seeds business, particularly for cotton and oilseeds, but posted a decline at Insecticides.
  • Sales in Latin America decreased by 18.0% (Fx adj.) to €1,907 million. This decline was attributable to returns of crop protection products and to lower sales into the distribution channel to normalize inventories in Brazil. Price reductions also had an effect. We posted gains in sales overall in the other Latin American countries on a currency-adjusted basis.

Earnings

In 2017, EBITDA before special items of Crop Science declined by 15.6% to €2,043 million. Adjusted for negative currency effects of €63 million, earnings were down by 13.0%. The decline is largely attributable to the aforementioned situation in Brazil, which resulted in lower selling prices and volumes. Outside of Brazil, lower selling prices were offset by expanded volumes. Other operating income had a positive effect on earnings.

EBIT declined by 29.6% to €1,235 million, after special charges of €408 million (2016: €143 million) that primarily related to the planned acquisition of Monsanto and the execution of a divestment project.

Special Items Crop Science1

 

 

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)

(7)

 

(51)

(32)

 

(3)

(5)

 

(49)

(17)

Litigations

 

4

(1)

 

(1)

(4)

 

4

(1)

 

(1)

(4)

Acquisition costs

 

(34)

(103)

 

(86)

(273)

 

(34)

(103)

 

(86)

(273)

Impairment losses / reversals

 

(41)

 

(41)

 

 

Divestments

 

(4)

(3)

 

(5)

(58)

 

(4)

(2)

 

(5)

(33)

Total special items

 

(39)

(155)

 

(143)

(408)

 

(37)

(111)

 

(141)

(327)

Online Annex: A 2.2.2-3

limited assurance

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

Crop Science Quarterly Sales

Crop Science Quarterly Sales (bar chart)

Crop Science
Quarterly EBIT1

Crop Science Quarterly EBIT (bar chart)

Crop Science
Quarterly EBITDA before Special Items1

Crop Science Quarterly EBITDA before Special Items (bar chart)
Compare to Last Year