Statements of Income
Performance by Subgroup and Segment
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Management Report
Bayer CropScience
Our CropScience subgroup had sales of €1,562 million in the second quarter of 2007 (Q2 2006: €1,578 million). Currency- and portfolio-adjusted sales grew by 1.9 percent.
Second-quarter EBITDA before special items advanced 7.6 percent to €396 million, thanks largely to volume increases and savings from the cost-containment programs. These effects more than offset the negative impact of shifts in exchange rates and lower prices for some products. EBIT before special items came in at €262 million (Q2 2006: €230 million). Special charges totaling €51 million (Q2 2006: €0 million) were recognized for the restructuring project initiated in 2006 and for defense costs related to the legal proceedings pending in the United States concerning genetically modified rice. As a result of these charges, second-quarter EBIT dropped by 8.3 percent to €211 million.
Second-quarter EBITDA before special items advanced 7.6 percent to €396 million, thanks largely to volume increases and savings from the cost-containment programs. These effects more than offset the negative impact of shifts in exchange rates and lower prices for some products. EBIT before special items came in at €262 million (Q2 2006: €230 million). Special charges totaling €51 million (Q2 2006: €0 million) were recognized for the restructuring project initiated in 2006 and for defense costs related to the legal proceedings pending in the United States concerning genetically modified rice. As a result of these charges, second-quarter EBIT dropped by 8.3 percent to €211 million.
| Bayer CropScience | 2nd Quarter 2006 | 2nd Quarter 2007 | Change | 1st Half 2006 | 1st Half 2007 | Change |
| € million | € million | % | € million | € million | % | |
| Net sales | 1,578 | 1,562 | -1.0 | 3,349 | 3,348 | 0.0 |
| EBITDA1 | 368 | 348 | -5.4 | 919 | 896 | -2.5 |
| Special items | 0 | (48) | 0 | (84) | ||
| EBITDA before special items2 | 368 | 396 | +7,6 | 919 | 980 | +6,6 |
| EBITDA margin before special items | 23.3% | 25.4% | 27.4% | 29.3% | ||
| EBIT1 | 230 | 211 | -8.3 | 638 | 619 | -3.0 |
| Special items | 0 | (51) | 0 | (90) | ||
| EBIT before special items2 | 230 | 262 | +13,9 | 638 | 709 | +11,1 |
| Gross cash flow1 | 289 | 259 | -10.4 | 676 | 628 | -7.1 |
| Net cash flow1 | 534 | 494 | -7.5 | 184 | 256 | 39.1 |
1 for definition see Bayer Group Key Data
2 for definition see also Calculation of EBIT(DA) Before Special Items
2 for definition see also Calculation of EBIT(DA) Before Special Items
| Best-Selling Bayer CropScience Products* | 2nd Quarter 2006 | 2nd Quarter 2007 | Change | Currency- adjusted change | 1st Half 2006 | 1st Half 2007 | Change | Currency- adjusted change |
| € million | € million | % | % | € million | € million | % | % | |
| Confidor®/Gaucho®/ Admire®/Merit® (Insecticides/Seed Treatment/ Environmental Science) | 147 | 132 | -10.2 | -10.3 | 312 | 295 | -5.4 | -1.9 |
| Basta®/Liberty® (Herbicides) | 80 | 89 | +11.3 | +10.5 | 152 | 161 | +5.9 | +12.3 |
| Proline® (Fungicides) | 55 | 75 | +36,4 | +34,2 | 113 | 147 | +30,1 | +30,1 |
| Folicur®/Raxil® (Fungicides/Seed Treatment) | 72 | 61 | -15.3 | -15.0 | 167 | 138 | -17.4 | -14.8 |
| Puma® (Herbicides) | 74 | 69 | -6.8 | -6.8 | 142 | 138 | -2.8 | +1.6 |
| Flint®/Stratego®/ Sphere® (Fungicides) | 38 | 53 | +39.5 | +37.2 | 87 | 113 | +29.9 | +33.5 |
| Betanal® (Herbicides) | 57 | 61 | +7.0 | 7.9 | 102 | 106 | +3.9 | +6.2 |
| Decis®/K-Othrine® (Insecticides) | 56 | 52 | -7.1 | -7.4 | 100 | 97 | -3.0 | +0.4 |
| Atlantis® (Herbicides) | 21 | 15 | -28.6 | -31.4 | 70 | 91 | +30.0 | +29.8 |
| Poncho® (Seed Treatment) | 19 | 31 | +63.2 | +61.8 | 50 | 90 | +80.0 | +91.3 |
| Total | 619 | 638 | +3.1 | +2.6 | 1,295 | 1,376 | +6.3 | +9.8 |
| Proportion of Bayer CropScience sales | 39% | 41% | 39% | 41% |
* Figures are based on active ingredient class. For the sake of clarity, only the principal brands and business units are listed.
Crop Protection
Sales of the Crop Protection segment in the second quarter of 2007 amounted to €1,262 million (Q2 2006: €1,269 million). Adjusted for currency and portfolio changes, business expanded by 2.5 percent, the main contributions to this increase coming from our fungicides and seed treatment products.
Sales of the Herbicides business unit amounted to €479 million (Q2 2006: €519 million) in the second quarter of 2007. Adjusted for currency and portfolio effects, sales were down by 5.1 percent, the early start to the season in Europe having caused some cereal herbicide orders to be brought forward to the first quarter. In a difficult market environment in North America, pleasing sales of Basta® and Liberty® offset the negative impact of a reduction in cereal acreages in Canada.
Sales of our Fungicides business unit in the second quarter improved to €385 million (Q2 2006: €352 million). Currency- and portfolio-adjusted sales expanded by 10.8 percent, thanks mainly to our business in the United States, where we saw a gratifying sales increase in the second quarter following a weak start to the fungicide season. Very strong performers were our young cereal fungicide Proline® throughout the world and the potato fungicide Infinito® that was launched only last year in Europe.
Second-quarter sales of the Insecticides business unit came to €313 million (Q2 2006: €317 million). Adjusted for currency and portfolio effects, business expanded by 2.7 percent. In Europe we recorded very encouraging sales of our young insecticide Biscaya®.
Following pleasing growth in the first three months of the year, sales of our Seed Treatment business unit climbed to €85 million in the second quarter. Currency- and portfolio-adjusted sales moved ahead by 10.8 percent. Our young insecticidal seed treatments, such as Poncho® and the new mix product CropStar®, were the main contributors to this increase.
Sales of the Herbicides business unit amounted to €479 million (Q2 2006: €519 million) in the second quarter of 2007. Adjusted for currency and portfolio effects, sales were down by 5.1 percent, the early start to the season in Europe having caused some cereal herbicide orders to be brought forward to the first quarter. In a difficult market environment in North America, pleasing sales of Basta® and Liberty® offset the negative impact of a reduction in cereal acreages in Canada.
Sales of our Fungicides business unit in the second quarter improved to €385 million (Q2 2006: €352 million). Currency- and portfolio-adjusted sales expanded by 10.8 percent, thanks mainly to our business in the United States, where we saw a gratifying sales increase in the second quarter following a weak start to the fungicide season. Very strong performers were our young cereal fungicide Proline® throughout the world and the potato fungicide Infinito® that was launched only last year in Europe.
Second-quarter sales of the Insecticides business unit came to €313 million (Q2 2006: €317 million). Adjusted for currency and portfolio effects, business expanded by 2.7 percent. In Europe we recorded very encouraging sales of our young insecticide Biscaya®.
Following pleasing growth in the first three months of the year, sales of our Seed Treatment business unit climbed to €85 million in the second quarter. Currency- and portfolio-adjusted sales moved ahead by 10.8 percent. Our young insecticidal seed treatments, such as Poncho® and the new mix product CropStar®, were the main contributors to this increase.
| Crop Protection | 2nd Quarter 2006 | 2nd Quarter 2007 | Change | 1st Half 2006 | 1st Half 2007 | Change |
| € million | € million | % | € million | € million | % | |
| Net sales | 1,269 | 1,262 | -0.6 | 2,682 | 2,696 | +0.5 |
| Herbicides | 519 | 479 | -7.7 | 1,069 | 1,047 | -2.1 |
| Fungicides | 352 | 385 | +9.4 | 730 | 769 | +5.3 |
| Insecticides | 317 | 313 | -1.3 | 665 | 624 | -6.2 |
| Seed Treatment | 81 | 85 | +4.9 | 218 | 256 | +17.4 |
| EBITDA1 | 277 | 297 | +7.2 | 683 | 722 | +5.7 |
| Special items | 0 | (13) | 0 | (49) | ||
| EBITDA before special items2 | 277 | 310 | +11.9 | 683 | 771 | +12.9 |
| EBITDA margin before special items | 21.8% | 24.6% | 25.5% | 28.6% | ||
| EBIT1 | 159 | 180 | +13,2 | 444 | 484 | +9,0 |
| Special items | 0 | (16) | 0 | (55) | ||
| EBIT before special items2 | 159 | 196 | +23.3 | 444 | 539 | +21.4 |
| Gross cash flow1 | 227 | 219 | -3.5 | 512 | 501 | -2.1 |
| Net cash flow1 | 434 | 313 | -27.9 | 145 | 200 | +37.9 |
1 for definition see Bayer Group Key Data
2 for definition see also Calculation of EBIT(DA) Before Special Items
2 for definition see also Calculation of EBIT(DA) Before Special Items
EBITDA before special items in the Crop Protection segment expanded by 11.9 percent in the second quarter, to €310 million, due primarily to increased volumes and cost savings from the performance programs. EBIT before special items climbed by 23.3 percent to €196 million. After special charges of €16 million incurred in connection with the restructuring project initiated in 2006, EBIT rose by 13.2 percent to €180 million (Q2 2006: €159 million).
In the first half of 2007, sales of the Crop Protection segment reached €2,696 million (H1 2006: €2,682 million). After adjusting for currency and portfolio effects, business expanded by 4.6 percent. This was due to overall improvements in market conditions, such as the increased cultivation of plants for the production of biofuels and internationally high prices for crop commodities. First-half EBITDA before special items in the first six months increased by €88 million to €771 million. EBIT before special items, at €539 million, came in 21.4 percent above the prior-year period. After €55 million in special charges for restructuring, EBIT came in at €484 million (H1 2006: €444 million).
In the first half of 2007, sales of the Crop Protection segment reached €2,696 million (H1 2006: €2,682 million). After adjusting for currency and portfolio effects, business expanded by 4.6 percent. This was due to overall improvements in market conditions, such as the increased cultivation of plants for the production of biofuels and internationally high prices for crop commodities. First-half EBITDA before special items in the first six months increased by €88 million to €771 million. EBIT before special items, at €539 million, came in 21.4 percent above the prior-year period. After €55 million in special charges for restructuring, EBIT came in at €484 million (H1 2006: €444 million).
Environmental Science/BioScience
In the Environmental Science, BioScience segment, we achieved second-quarter sales of €300 million (Q2 2006: €309 million). Adjusted for currency changes, business was roughly level with the prior-year period (minus 0.2 percent).
Sales of Environmental Science came to €200 million (Q2 2006: €225 million). Here, currency-adjusted sales were down 8.1 percent. The positive trend in home and garden products for consumers did not compensate for a significant drop in sales of products for professional users that resulted primarily from increased generic competition in North America.
Sales of the BioScience unit improved to €100 million (Q2 2006: €84 million). On a currency-adjusted basis this was equivalent to a 21.3 percent increase. This positive performance was attributable above all to our canola seed marketed under the brand name InVigor®, as well as to our vegetable seed business, the cotton seed FiberMax® and our hybrid rice seed Arize®.
Second-quarter EBITDA before special items for the Environmental Science, BioScience segment receded to €86 million (Q2 2006: €91 million). The decline was due to lower sales of products for professional users in the Environmental Science unit and adverse shifts in currency parities. EBIT before special items was €66 million (Q2 2006: €71 million). After special charges totaling €35 million for restructuring in Environmental Science and provisions for the aforementioned defense costs, EBIT came in at €31 million (Q2 2006: €71 million).
In the first half of 2007 the Environmental Science, BioScience segment posted sales of €652 million (H1 2006: €667 million). Currency-adjusted sales moved ahead 1.9 percent. Segment EBITDA before special items came to €209 million (H1 2006: €236 million), while EBIT before special items amounted to €170 million (H1 2006: €194 million). After special charges of €35 million (H1 2006: €0 million), EBIT for the first half of 2007 was €135 million (H1 2006: €194 million).
Sales of Environmental Science came to €200 million (Q2 2006: €225 million). Here, currency-adjusted sales were down 8.1 percent. The positive trend in home and garden products for consumers did not compensate for a significant drop in sales of products for professional users that resulted primarily from increased generic competition in North America.
Sales of the BioScience unit improved to €100 million (Q2 2006: €84 million). On a currency-adjusted basis this was equivalent to a 21.3 percent increase. This positive performance was attributable above all to our canola seed marketed under the brand name InVigor®, as well as to our vegetable seed business, the cotton seed FiberMax® and our hybrid rice seed Arize®.
Second-quarter EBITDA before special items for the Environmental Science, BioScience segment receded to €86 million (Q2 2006: €91 million). The decline was due to lower sales of products for professional users in the Environmental Science unit and adverse shifts in currency parities. EBIT before special items was €66 million (Q2 2006: €71 million). After special charges totaling €35 million for restructuring in Environmental Science and provisions for the aforementioned defense costs, EBIT came in at €31 million (Q2 2006: €71 million).
In the first half of 2007 the Environmental Science, BioScience segment posted sales of €652 million (H1 2006: €667 million). Currency-adjusted sales moved ahead 1.9 percent. Segment EBITDA before special items came to €209 million (H1 2006: €236 million), while EBIT before special items amounted to €170 million (H1 2006: €194 million). After special charges of €35 million (H1 2006: €0 million), EBIT for the first half of 2007 was €135 million (H1 2006: €194 million).
| Environmental Science/ BioScience | 2nd Quarter 2006 | 2nd Quarter 2007 | Change | 1st Half 2006 | 1st Half 2007 | Change |
| € million | € million | % | € million | € million | % | |
| Net sales | 309 | 300 | -2.9 | 667 | 652 | -2.2 |
| Environmental Science | 225 | 200 | -11.1 | 418 | 388 | -7.2 |
| BioScience | 84 | 100 | +19.0 | 249 | 264 | +6.0 |
| EBITDA1 | 91 | 51 | -44.0 | 236 | 174 | -26.3 |
| Special items | 0 | (35) | 0 | (35) | ||
| EBITDA before special items2 | 91 | 86 | -5.5 | 236 | 209 | -11.4 |
| EBITDA margin before special items | 29.4% | 28.7% | 35.4% | 32.1% | ||
| EBIT1 | 71 | 31 | -56.3 | 194 | 135 | -30.4 |
| Special items | 0 | (35) | 0 | (35) | ||
| EBIT before special items2 | 71 | 66 | -7.0 | 194 | 170 | -12.4 |
| Gross cash flow1 | 62 | 40 | -35.5 | 164 | 127 | -22.6 |
| Net cash flow1 | 100 | 181 | +81.0 | 39 | 56 | +43.6 |
1 for definition see Bayer Group Key Data
2 for definition see also Calculation of EBIT(DA) Before Special Items
2 for definition see also Calculation of EBIT(DA) Before Special Items
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