Bayer CropScience’s Americas Sales Strong, But Can’t Offset Currency Woes

Posted by Jackie Pucci|30 July 2014

Bayer CropScience saw strong gains in its North and Latin American businesses in the second quarter, but its profit was again hurt by currency effects.

Sales rose 3.3% to $3.31 billion in the period. “Both Crop Protection/Seeds and Environmental Science contributed to this encouraging growth,” said Bayer Chairman Dr. Marijn Dekkers. Sales climbed 20.7% adjusted for foreign exchange rates in the Latin America/Africa/Middle East region and 18.5% in North America, also adjusted for foreign exchange rates. Increases were also recorded in Asia/Pacific at 8.2%, while sales in Europe were flat with a year ago at an increase of 0.7%, on a foreign exchange rate-adjusted basis.

Its crop protection business posted positive development in all units, with the new products launched since 2006 again accounting for a major share of the increase. Bayer’s fungicides and insecticides portfolios rose more than 11% on a foreign exchange rate basis, while its seed treatment business — called SeedGrowth — surged 20.5%. Herbicides sales showed steady growth, rising 6% adjusted basis, and its seeds business jumped 15.9% on an adjusted basis.

EBITDA before special items of CropScience dropped 1.4% below the prior-year quarter at $824 million. “Earnings benefited from the favorable business development, with significantly higher volumes and selling prices. However, this did not fully offset the negative currency effects of roughly $53.6 million, or about 6%, and increases in marketing costs and research and development expenses,” the company stated.

Looking ahead, CropScience “expects to grow faster than the market and raise sales by a high-single-digit (previously: mid- to high-single-digit) percentage” on an adjusted basis. It anticipates negative currency effects of about 5% compared to 2013. EBITDA before special items is still expected to increase by a low-single-digit percentage, allowing as before for negative currency effects of approximately $201 million.