Statements of Income
Performance by Subgroup and Segment
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Management Report
Bayer MaterialScience
The MaterialScience subgroup saw further growth in business, with sales rising to €2,623 million in the second quarter of 2007 (Q2 2006: €2,547 million). Adjusted for currency effects, sales advanced by 6.3 percent year on year. The increase was largely due to higher volumes in nearly all segments and regions. Despite heavy pressure on prices in a number of markets, we achieved slightly positive price effects overall.
EBITDA before special items in the second quarter of 2007 came to €409 million, down 9.1 percent from the high level of the prior-year period (Q2 2006: €450 million). Higher volumes and the slightly positive price effects did not compensate for the roughly €110 million in additional costs for raw materials and energy. EBIT before special items dropped 13.7 percent to €290 million, from €336 million in the second quarter of 2006. Earnings were impacted by special charges of €24 million (Q2 2006: €18 million) for restructuring. EBIT came to €266 million (Q2 2006: €318 million).
EBITDA before special items in the second quarter of 2007 came to €409 million, down 9.1 percent from the high level of the prior-year period (Q2 2006: €450 million). Higher volumes and the slightly positive price effects did not compensate for the roughly €110 million in additional costs for raw materials and energy. EBIT before special items dropped 13.7 percent to €290 million, from €336 million in the second quarter of 2006. Earnings were impacted by special charges of €24 million (Q2 2006: €18 million) for restructuring. EBIT came to €266 million (Q2 2006: €318 million).
Materials
Sales in the Materials segment climbed to €757 million in the second quarter of 2007. After adjusting for currency effects, business increased by 8.5 percent. Growth took place mainly in the Polycarbonates business unit, where sales rose in all regions thanks to higher volumes.
Second-quarter EBITDA before special items dropped to €71 million (Q2 2006: €139 million), with EBIT down from €101 million to €29 million. This significant drop in earnings resulted chiefly from a sharp rise in raw material costs. Prices for important feedstocks such as phenol reached record highs in the second quarter, while product selling prices registered a year-on-year decline. The earnings contributions from additional volumes only partially offset these effects.
First-half sales increased to €1,496 million (H1 2006: €1,433 million). On a currency-adjusted basis, sales rose 8.7 percent. EBITDA before special items came to €151 million (H1 2006: €309 million). First-half EBIT amounted to €67 million (H1 2006: €233 million).
Second-quarter EBITDA before special items dropped to €71 million (Q2 2006: €139 million), with EBIT down from €101 million to €29 million. This significant drop in earnings resulted chiefly from a sharp rise in raw material costs. Prices for important feedstocks such as phenol reached record highs in the second quarter, while product selling prices registered a year-on-year decline. The earnings contributions from additional volumes only partially offset these effects.
First-half sales increased to €1,496 million (H1 2006: €1,433 million). On a currency-adjusted basis, sales rose 8.7 percent. EBITDA before special items came to €151 million (H1 2006: €309 million). First-half EBIT amounted to €67 million (H1 2006: €233 million).
Systems
The Systems segment posted second-quarter sales of €1,866 million (Q2 2006: €1,824 million) due to slight increases in selling prices and volumes. Currency-adjusted sales improved by 5.4 percent. Our Coatings, Adhesives, Sealants business unit was the main contributor to the improvement, with currency-adjusted sales growth of 10.8 percent. We achieved slight increases in volumes and selling prices.
Second-quarter EBITDA before special items in the Systems segment advanced to €338 million (Q2 2006: €311 million). The higher selling prices and volumes offset increases in raw material costs and the charges attributable to continuing difficulties experienced by our supplier of crude MDI in Shanghai. EBIT before special items was €261 million (Q2 2006: €235 million). We took special charges of €24 million in the second quarter for the closure of our MDI plant in New Martinsville, West Virginia. EBIT after special items came to €237 million (Q2 2006: €217 million).
The Systems segment saw sales rise to €3,735 million in the first half of 2007, with the currency-adjusted increase amounting to 7.5 percent. EBITDA before special items remained nearly level with the prior-year period, at €667 million. EBIT before special items was €514 million (H1 2006: €526 million). Thanks to much lower special items in the first half of 2007, EBIT moved ahead by 22.2 percent to €484 million (H1 2006: €396 million).
Second-quarter EBITDA before special items in the Systems segment advanced to €338 million (Q2 2006: €311 million). The higher selling prices and volumes offset increases in raw material costs and the charges attributable to continuing difficulties experienced by our supplier of crude MDI in Shanghai. EBIT before special items was €261 million (Q2 2006: €235 million). We took special charges of €24 million in the second quarter for the closure of our MDI plant in New Martinsville, West Virginia. EBIT after special items came to €237 million (Q2 2006: €217 million).
The Systems segment saw sales rise to €3,735 million in the first half of 2007, with the currency-adjusted increase amounting to 7.5 percent. EBITDA before special items remained nearly level with the prior-year period, at €667 million. EBIT before special items was €514 million (H1 2006: €526 million). Thanks to much lower special items in the first half of 2007, EBIT moved ahead by 22.2 percent to €484 million (H1 2006: €396 million).
| Bayer MaterialScience | 2nd Quarter 2006 | 2nd Quarter 2007 | Change | 1st Half 2006 | 1st Half 2007 | Change |
| € million | € million | % | € million | € million | % | |
| Net sales | 2,547 | 2,623 | +3.0 | 5,033 | 5,231 | +3.9 |
| EBITDA1 | 432 | 389 | -10.0 | 859 | 798 | -7.1 |
| Special items | (18) | (20) | (130) | (20) | ||
| EBITDA before special items2 | 450 | 409 | -9.1 | 989 | 818 | -17.3 |
| EBITDA margin before special items | 17.7% | 15.6% | 19.7% | 15.6% | ||
| EBIT1 | 318 | 266 | -16.4 | 629 | 551 | -12.4 |
| Special items | (18) | (24) | (130) | (30) | ||
| EBIT before special items2 | 336 | 290 | -13.7 | 759 | 581 | -23.5 |
| Gross cash flow1 | 327 | 293 | -10.4 | 644 | 597 | -7.3 |
| Net cash flow1 | 251 | 278 | +10.8 | 524 | 315 | -39.9 |
2006 figures restated
1 for definition see Bayer Group Key
2 for definition see also Calculation of EBIT(DA) Before Special Items
1 for definition see Bayer Group Key
2 for definition see also Calculation of EBIT(DA) Before Special Items
| Materials | 2nd Quarter 2006 | 2nd Quarter 2007 | Change | 1st Half 2006 | 1st Half 2007 | Change |
| € million | € million | % | € million | € million | % | |
| Net sales | 723 | 757 | +4.7 | 1,433 | 1,496 | +4.4 |
| Polycarbonates | 670 | 703 | +4.9 | 1,326 | 1,386 | +4.5 |
| Thermoplastic Polyurethanes | 53 | 54 | +1.9 | 107 | 110 | +2.8 |
| EBITDA1 | 139 | 71 | -48.9 | 309 | 151 | -51.1 |
| Special items | 0 | 0 | 0 | 0 | ||
| EBITDA before special items 2 | 139 | 71 | -48.9 | 309 | 151 | -51.1 |
| EBITDA margin before special items | 19.2% | 9.4% | 21.6% | 10.1% | ||
| EBIT1 | 101 | 29 | -71.3 | 233 | 67 | -71.2 |
| Special items | 0 | 0 | 0 | 0 | ||
| EBIT before special items 2 | 101 | 29 | -71.3 | 233 | 67 | -71.2 |
| Gross cash flow 1 | 105 | 55 | -47.6 | 231 | 124 | -46.3 |
| Net cash flow 1 | 88 | 25 | -71.6 | 123 | 0 | -100.0 |
2006 figures restated
1 for definition see Bayer Group Key
2 for definition see also Calculation of EBIT(DA) Before Special Items
1 for definition see Bayer Group Key
2 for definition see also Calculation of EBIT(DA) Before Special Items
| Systems | 2nd Quarter 2006 | 2nd Quarter 2007 | Change | 1st Half 2006 | 1st Half 2007 | Change |
| € million | € million | % | € million | € million | % | |
| Net sales | 1,824 | 1,866 | +2.3 | 3,600 | 3,735 | +3.8 |
| Polyurethanes | 1,301 | 1,313 | +0.9 | 2,570 | 2,645 | +2.9 |
| Coatings, Adhesives, Sealants | 380 | 410 | +7.9 | 749 | 803 | +7.2 |
| Inorganic Basic Chemicals | 100 | 104 | +4.0 | 206 | 210 | +1.9 |
| Others | 43 | 39 | -9.3 | 75 | 77 | +2.7 |
| EBITDA1 | 293 | 318 | +8.5 | 550 | 647 | +17.6 |
| Special items | (18) | (20) | (130) | (20) | ||
| EBITDA before special items 2 | 311 | 338 | +8.7 | 680 | 667 | -1.9 |
| EBITDA margin before special items | 17.1% | 18.1% | 18.9% | 17.9% | ||
| EBIT1 | 217 | 237 | +9.2 | 396 | 484 | +22.2 |
| Special items | (18) | (24) | (130) | (30) | ||
| EBIT before special items 2 | 235 | 261 | +11.1 | 526 | 514 | -2.3 |
| Gross cash flow 1 | 222 | 238 | +7.2 | 413 | 473 | +14.5 |
| Net cash flow 1 | 163 | 253 | +55.2 | 401 | 315 | -21.4 |
2006 figures restated
1 for definition see Bayer Group Key
2 for definition see also Calculation of EBIT(DA) Before Special Items
1 for definition see Bayer Group Key
2 for definition see also Calculation of EBIT(DA) Before Special Items
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