Overview of Sales, Earnings and Financial Position

Third Quarter of 2015

Bayer Group Quarterly Sales

2014 figures restated

Bayer Group Quarterly Sales (bar chart)Bayer Group Quarterly Sales (bar chart)

Sales of the Bayer Group moved ahead by 1.9% (Fx & portfolio adj.) in the third quarter of 2015 to €11,036 million (reported: +10.7%; Q3 2014: €9,967 million). HealthCare sales improved by 8.3% (Fx. and portfolio adj.) to €5,651 million (reported: +19.2%; Q3 2014: €4,740 million). Sales at CropScience came in slightly above the strong prior-year level, rising by 1.6% (Fx & portfolio adj.) to €2,113 million (reported: +9.5%; Q3 2014: €1,929 million). Sales of Covestro fell against the prior-year period by 7.7% (Fx & portfolio adj.), to €3,009 million (reported: −0.9%; Q3 2014: €3,036 million).

Bayer Group
Quarterly EBIT

2014 figures restated

Bayer Group Quarterly EBIT (bar chart)Bayer Group Quarterly EBIT (bar chart)
Bayer Group
Quarterly EBITDA Before Special Items

2014 figures restated

Bayer Group Quarterly EBITDA Before Special Items (bar chart)Bayer Group Quarterly EBITDA Before Special Items (bar chart)

EBIT of the Bayer Group climbed by a substantial 16.3% to €1,565 million (Q3 2014: €1,346 million) after special charges of €204 million (Q3 2014: special gains of €45 million). These mainly comprised €104 million in connection with the carve-out and stock market flotation of Covestro, charges of €32 million for litigations and €31 million in costs for the integration of acquired businesses. Further charges included expenses of €19 million for efficiency improvement measures and €18 million for the consolidation of production sites. EBIT before special items rose by 36.0% to €1,769 million (Q3 2014: €1,301 million).

EBITDA before special items climbed by a substantial 27.6% to €2,523 million (Q3 2014: €1,977 million). The good sales development was accompanied by higher R&D and selling expenses. Positive currency effects buoyed earnings by about €170 million. At HealthCare, EBITDA before special items rose by 22.6% to €1,677 million (Q3 2014: €1,368 million). This was chiefly attributable to the continuing very good development of business at Pharmaceuticals and Consumer Health – including particularly the contribution from the acquired businesses at Consumer Care – and currency effects of around €70 million. EBITDA before special items of CropScience advanced by 11.2% to €309 million (Q3 2014: €278 million), driven by a positive currency effect of around €30 million. Covestro registered a significant 41.3% increase in EBITDA before special items to €472 million (Q3 2014: €334 million). This was the result of considerably lower raw material costs – which more than compensated the decline in selling prices – and positive currency effects of €70 million. Earnings of the reconciliation improved year on year, largely on account of lower expenses for long-term stock-based compensation.

After a financial result of minus €280 million (Q3 2014: minus €302 million), income before income taxes was €1,285 million (Q3 2014: €1,044 million). After income tax expense of €296 million (Q3 2014: €236 million), income from discontinued operations after income taxes and non-controlling interest, net income in the third quarter of 2015 came to €999 million (Q3 2014: €826 million). Earnings per share were €1.21 (Q3 2014: €1.00). Core earnings per share for continuing operations advanced by 28.0% to €1.69 (Q3 2014: €1.32), calculated as explained in “Core Earnings Per Share.”

Quarterly Gross Cash Flow
From Continuing Operations

2014 figures restated

Quarterly Gross Cash Flow From Continuing Operations (bar chart)Quarterly Gross Cash Flow From Continuing Operations (bar chart)
Quarterly Net Cash Flow
From Continuing Operations

2014 figures restated

Quarterly Net Cash Flow From Continuing Operations (bar chart)Quarterly Net Cash Flow From Continuing Operations (bar chart)

Gross cash flow from continuing operations in the third quarter of 2015 declined by 2.7% to €1,427 million (Q3 2014: €1,466 million). The increase in earnings was partly offset by additional tax expenses connected with the carve-out of Covestro. Net cash flow (total) rose by 28.3% to €2,330 million (Q3 2014: €1,816 million) due mainly to a decrease in cash tied up in other working capital. We paid income taxes of €421 million in the third quarter of 2015 (Q3 2014: €685 million).

Net financial debt declined by 8.9%, from €21.1 billion on June 30, 2015, to €19.3 billion on September 30, 2015. This was mainly the result of cash inflows from operating activities. The net defined benefit liability for post-employment benefits – the difference between benefit obligations and plan assets – increased from €11.1 billion to €11.7 billion over the same period, due especially to a decline in long-term capital market interest rates for high-quality corporate bonds in Germany and the United States.

First Nine Months of 2015

Sales of the Bayer Group rose slightly in the first nine months of 2015, mainly as a result of the expansion of business at HealthCare. Sales of CropScience were flat with the strong prior-year level, while business at Covestro decreased as expected. On the other hand, Group EBITDA before special items improved significantly. All subgroups, particularly HealthCare and Covestro, contributed to this improvement.

Group sales increased by 2.8% (Fx & portfolio adj.) to €35,005 million (reported: +14.6%; 9M 2014: €30,547 million). HealthCare sales grew by 7.9% on a currency- and portfolio-adjusted basis (reported: +24.3%). Despite the difficult market environment, sales of CropScience were flat year on year (Fx & portfolio adj.: +0.6%; reported: +8.6%). At Covestro, however, sales declined by 3.2% (Fx & portfolio adj.; reported: +5.8%).

EBIT climbed by 10.2% to €5,342 million (9M 2014: €4,846 million). There were net special charges of €703 million (9M 2014: special gains of €4 million). EBIT before special items rose by 24.8% to €6,045 million (9M 2014: €4,842 million). EBITDA before special items increased by 22.0% to €8,363 million (9M 2014: €6,856 million), reflecting positive currency effects of about €470 million and additional R&D expenses of roughly €500 million.

After a financial result of minus €841 million (9M 2014: minus €634 million), income before income taxes was €4,501 million (9M 2014: €4,212 million). The financial result mainly comprised net interest expense of €409 million (9M 2014: €208 million), interest cost of €220 million (9M 2014: €211 million) for pension and other provisions, and exchange losses of €187 million (9M 2014: €182 million). After tax expense of €1,064 million (9M 2014: €1,087 million), income from continuing operations after income taxes was €3,437 million (9M 2014: €3,125 million).

After income from discontinued operations after income taxes and non-controlling interest, net income amounted to €3,497 million (9M 2014: €3,202 million). Earnings per share rose to €4.23 (9M 2014: €3.87), and core earnings per share (calculated as explained in “Core Earnings Per Share”) to €5.76 (9M 2014: €4.72).

Gross cash flow from continuing operations climbed by 9.0% to €5,611 million (9M 2014: €5,149 million). Net cash flow (total) rose sharply by 40.0% to €5,013 million (9M 2014: €3,580 million) due above all to a reduction in cash tied up in other working capital. This figure reflected income tax payments of €1,217 million (9M 2014: €1,420 million). Net financial debt fell by €0.3 billion compared with December 31, 2014 (€19.6 billion), to €19.3 billion as of September 30, 2015. The net defined benefit liability for post-employment benefits declined from €12.2 billion on December 31, 2014 to €11.7 billion, mainly due to a rise in long-term capital market interest rates for high-quality corporate bonds.