Statements of Income
Overview of Sales, Earnings and Financial Position
Bayer Links
Gratifying performance in the second quarter of 2007:
Bayer continues on a path of growth
- Sales up 22.0 percent to €8.2 billion
- EBITDA before special items improves by 38.6 percent to €1.8 billion
- EBIT before special items rises 30.1 percent to €1.2 billion
- Net income advances by 46.0 percent to €0.7 billion
- Pharmaceutical research and development realigned
- Full-year EBITDA margin before special items expected to exceed 20 percent for the first time
Overview of Sales, Earnings and Financial Position
Second quarter of 2007
The Bayer Group had a very good second quarter in 2007, following on from the excellent figures for the first three months. Sales grew by 22.0 percent to €8,217 million (Q2 2006: €6,736 million). This figure includes a €1,489 million contribution from the acquired business of Schering AG, Berlin, Germany (Q2 2006: €144 million pro rata temporis). Adjusted for currency and portfolio effects, sales moved ahead by 5.4 percent, with business expanding by 9.3 percent at Bayer HealthCare, 1.9 percent at Bayer CropScience and 6.3 percent at Bayer MaterialScience.
EBITDA before special items climbed by 38.6 percent to €1,806 million (Q2 2006: €1,303 million). The figures for HealthCare jumped by 106.2 percent to €969 million (Q2 2006: €470 million), mainly as a result of the Schering acquisition and the pleasing performance of all the HealthCare divisions. CropScience increased its earnings contribution to €396 million (Q2 2006: €368 million), thanks largely to higher volumes and to savings from the cost-containment programs. EBITDA before special items at MaterialScience came in level with the preceding quarter, as expected, at €409 million (Q2 2006: €450 million), in light of increased raw material costs.
The Bayer Group had a very good second quarter in 2007, following on from the excellent figures for the first three months. Sales grew by 22.0 percent to €8,217 million (Q2 2006: €6,736 million). This figure includes a €1,489 million contribution from the acquired business of Schering AG, Berlin, Germany (Q2 2006: €144 million pro rata temporis). Adjusted for currency and portfolio effects, sales moved ahead by 5.4 percent, with business expanding by 9.3 percent at Bayer HealthCare, 1.9 percent at Bayer CropScience and 6.3 percent at Bayer MaterialScience.
EBITDA before special items climbed by 38.6 percent to €1,806 million (Q2 2006: €1,303 million). The figures for HealthCare jumped by 106.2 percent to €969 million (Q2 2006: €470 million), mainly as a result of the Schering acquisition and the pleasing performance of all the HealthCare divisions. CropScience increased its earnings contribution to €396 million (Q2 2006: €368 million), thanks largely to higher volumes and to savings from the cost-containment programs. EBITDA before special items at MaterialScience came in level with the preceding quarter, as expected, at €409 million (Q2 2006: €450 million), in light of increased raw material costs.
| Net Sales by Market |
| EBITDA Before Special Items |
EBIT before special items improved by 30.1 percent in the second quarter of 2007, to €1,185 million (Q2 2006: €911 million). Special charges amounted to €268 million (Q2 2006: €34 million), including €209 million for the acquisition and integration of Schering, Berlin, Germany. EBIT after special items rose by 4.6 percent to €917 million (Q2 2006: €877 million).
After a non-operating result of minus €257 million (Q2 2006: minus €228 million), income before income taxes was €660 million (Q2 2006: €649 million). The non-operating result contained net interest expense of €205 million (Q2 2006: €129 million), reflecting particularly the financing costs for the Schering acquisition. After tax expense of €247 million (Q2 2006: €198 million), income from continuing operations after taxes came to €413 million (Q2 2006: €451 million).
Income from discontinued operations after taxes was €244 million. This figure includes divestment proceeds of €231 million from the sale of Wolff Walsrode to Dow Chemical Company, which was completed in June 2007.
After minority stockholders’ interest, net income of the Bayer Group improved to €660 million (Q2 2006: €452 million). Earnings per share came to €0.83 (Q2 2006: €0.60).
Gross cash flow increased by 27.9 percent year on year to €1,187 million (Q2 2006: €928 million), due to the strong growth in business and the inclusion of Schering, Berlin, Germany. Net cash flow fell by €66 million to €816 million (Q2 2006: €882 million), mainly because of higher tax payments, bonus payments and disbursements for restructuring. Provisions for these payments had been recorded and recognized in income in previous quarters. The total net cash flow including discontinued operations was €780 million (Q2 2006: €1,002 million), with the decline attributable primarily to the discontinued operations.
After a non-operating result of minus €257 million (Q2 2006: minus €228 million), income before income taxes was €660 million (Q2 2006: €649 million). The non-operating result contained net interest expense of €205 million (Q2 2006: €129 million), reflecting particularly the financing costs for the Schering acquisition. After tax expense of €247 million (Q2 2006: €198 million), income from continuing operations after taxes came to €413 million (Q2 2006: €451 million).
Income from discontinued operations after taxes was €244 million. This figure includes divestment proceeds of €231 million from the sale of Wolff Walsrode to Dow Chemical Company, which was completed in June 2007.
After minority stockholders’ interest, net income of the Bayer Group improved to €660 million (Q2 2006: €452 million). Earnings per share came to €0.83 (Q2 2006: €0.60).
Gross cash flow increased by 27.9 percent year on year to €1,187 million (Q2 2006: €928 million), due to the strong growth in business and the inclusion of Schering, Berlin, Germany. Net cash flow fell by €66 million to €816 million (Q2 2006: €882 million), mainly because of higher tax payments, bonus payments and disbursements for restructuring. Provisions for these payments had been recorded and recognized in income in previous quarters. The total net cash flow including discontinued operations was €780 million (Q2 2006: €1,002 million), with the decline attributable primarily to the discontinued operations.
| Gross Cash Flow |
| Net Cash Flow |
Net debt amounted to €13.6 billion at June 30, 2007, exceeding the March 31 amount by €0.8 billion. This increase was mainly due to the €0.8 billion dividend payment. It should also be borne in mind that second-quarter interest and tax payments were at the expected high level.
Provisions for pensions and other post-employment benefits declined by €0.6 billion compared with March 31, 2007, to €5.6 billion, mainly because of higher capital market interest rates.
Provisions for pensions and other post-employment benefits declined by €0.6 billion compared with March 31, 2007, to €5.6 billion, mainly because of higher capital market interest rates.
First half of 2007
In the first half of 2007, too, the Bayer Group posted a further significant improvement in operating performance. Sales from continuing operations increased by 22.4 percent to €16,552 million (H1 2006: €13,527 million). On a currency- and portfolio-adjusted basis, sales rose by 6.4 percent.
EBITDA before special items advanced by 32.4 percent to €3,796 million (H1 2006: €2,867 million). EBIT before special items rose by 22.6 percent in the first half of 2007, to €2,560 million (H1 2006: €2,088 million). Net special charges came to €468 million (H1 2006: €162 million). The acquisition and integration of Schering, Berlin, Germany, led to special charges of €348 million, while net special charges of €87 million resulted from restructuring at CropScience and MaterialScience. After special items, EBIT of the Bayer Group moved ahead by 8.6 percent to €2,092 million (H1 2006: €1,926 million).
After a non-operating result of minus €475 million (H1 2006: minus €438 million), income before income taxes came in at €1,617 million (H1 2006: €1,488 million). The non-operating result contained net interest expense of €361 million (H1 2006: €272 million). After tax expense of €548 million (H1 2006: €475 million), income from continuing operations after taxes was €1,069 million (H1 2006: €1,013 million).
Income from discontinued operations after taxes was €2.4 billion, including divestment gains of €2.1 billion for the Diagnostics business and €0.1 billion for H.C. Starck in the first quarter and €0.2 billion for Wolff Walsrode in the second quarter.
After minority stockholders’ interest, the Bayer Group posted first-half net income of €3,469 million (H1 2006: €1,052 million). Earnings per share came to €4.27 (H1 2006: €1.41).
Gross cash flow in the first half of 2007 improved by 28.8 percent compared to the prior-year period, to €2,598 million (H1 2006: €2,017 million), due to the positive sales performance and the inclusion of Schering, Berlin, Germany. Net cash flow rose by €271 million to €1,191 million (H1 2006: €920 million) due to substantial cash receipts in the first quarter. The total net cash flow including discontinued operations was €1,193 million (H1 2006: €1,130 million).
In the first half of 2007, too, the Bayer Group posted a further significant improvement in operating performance. Sales from continuing operations increased by 22.4 percent to €16,552 million (H1 2006: €13,527 million). On a currency- and portfolio-adjusted basis, sales rose by 6.4 percent.
EBITDA before special items advanced by 32.4 percent to €3,796 million (H1 2006: €2,867 million). EBIT before special items rose by 22.6 percent in the first half of 2007, to €2,560 million (H1 2006: €2,088 million). Net special charges came to €468 million (H1 2006: €162 million). The acquisition and integration of Schering, Berlin, Germany, led to special charges of €348 million, while net special charges of €87 million resulted from restructuring at CropScience and MaterialScience. After special items, EBIT of the Bayer Group moved ahead by 8.6 percent to €2,092 million (H1 2006: €1,926 million).
After a non-operating result of minus €475 million (H1 2006: minus €438 million), income before income taxes came in at €1,617 million (H1 2006: €1,488 million). The non-operating result contained net interest expense of €361 million (H1 2006: €272 million). After tax expense of €548 million (H1 2006: €475 million), income from continuing operations after taxes was €1,069 million (H1 2006: €1,013 million).
Income from discontinued operations after taxes was €2.4 billion, including divestment gains of €2.1 billion for the Diagnostics business and €0.1 billion for H.C. Starck in the first quarter and €0.2 billion for Wolff Walsrode in the second quarter.
After minority stockholders’ interest, the Bayer Group posted first-half net income of €3,469 million (H1 2006: €1,052 million). Earnings per share came to €4.27 (H1 2006: €1.41).
Gross cash flow in the first half of 2007 improved by 28.8 percent compared to the prior-year period, to €2,598 million (H1 2006: €2,017 million), due to the positive sales performance and the inclusion of Schering, Berlin, Germany. Net cash flow rose by €271 million to €1,191 million (H1 2006: €920 million) due to substantial cash receipts in the first quarter. The total net cash flow including discontinued operations was €1,193 million (H1 2006: €1,130 million).
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