The Bayer Group continued to grow in the second quarter of 2019. “Bayer is on track in its operational business,” said Werner Baumann, Chairman of the Board of Management, when presenting the half-year financial report on Tuesday. “Sales at Crop Science were primarily held back by the extreme weather conditions in North America, while at Pharmaceuticals we recorded encouraging growth,” he said. Business was also up at the Consumer Health Division. Baumann confirmed the Group outlook for 2019, but noted that it was becoming increasingly ambitious.

Sales of the Bayer Group rose by 0.9 percent on a currency- and portfolio-adjusted basis (Fx & portfolio adj.) to 11.485 billion euros in the second quarter. On a reported basis, sales were up by a substantial 21.1 percent. EBITDA before special items increased by 24.7 percent to 2.927 billion euros. Negative currency effects arising primarily from hedging diminished earnings by 59 million euros compared with the previous year. EBIT declined by 31.2 percent to 926 million euros after net special charges of 859 million euros (Q2 2018: 362 million euros). The special charges mainly comprised impairment losses in connection with the agreed divestment of Dr. Scholl’s™ and expenses related to the announced restructuring measures. 

Net income declined by 49.1 percent to 404 million euros. By contrast, core earnings per share from continuing operations rose by 5.9 percent to 1.62 euros. Free cash flow amounted to 751 million euros, down by 60.8 percent. This significant decline is due to the seasonality of the newly acquired Crop Science business. Since the acquisition closed in June 2018, the high cash outflows in April and May 2018 were not taken into account. Net financial debt as of June 30, 2019, increased to 38.808 billion euros, up 5.6 percent from March 31, 2019, due mainly to the dividend payment.

<b>Crop Science impacted by extreme weather conditions</b>

In the agriculture business (Crop Science), Bayer generated sales of 4.788 billion euros. On a reported basis, sales were up by 59.0 percent, thanks mainly to the acquisition of Monsanto. Overall, business at Crop Science in the second quarter was significantly impacted by extreme weather conditions. In particular, flooding and heavy rains in the Midwestern United States and drought in large parts of Europe and in Canada had a negative effect. Ongoing trade disputes also weighed on business. Sales were down by 3.1 percent after adjusting for currency and portfolio effects, with the development of the acquired business only taken into account for the period June 7 to June 30. This decline was mainly the result of a considerable drop in sales in North America. Significant sales gains in Latin America did not offset this effect.

On a pro-forma basis, sales of Crop Science declined by a currency-adjusted (Fx adj.) 9.9 percent. In this context, sales are presented as if the acquisition of Monsanto and the associated divestments had already taken place as of January 1, 2018. On this basis, business was down at Soybean Seed & Traits, Herbicides and Corn Seed & Traits in particular. By contrast, sales increased at Insecticides. 

EBITDA before special items of Crop Science rose by 66.9 percent to 1.075 billion euros. The increase was largely attributable to the earnings contribution from the acquired business. Earnings were diminished by the decline in sales, the absence of the earnings contribution from the businesses divested to BASF, inventory write-downs and a negative currency effect of 26 million euros.

As of July 11, 2019, lawsuits from approximately 18,400 plaintiffs had been served in the United States in connection with the crop protection product glyphosate. Bayer continues to believe that it has meritorious defenses and intends to defend itself vigorously in all of these lawsuits. In parallel to the continued litigation, Bayer will constructively engage in the mediation process ordered by a district judge in California.