Bayer Reports Strong Q2 Growth and Raises Full-Year Outlook

Leverkusen, GermanyAugust 4, 2022/PR Newswire/ -- Bayer AG achieved significant growth in the second quarter of 2022. "Our operational performance was strong. In terms of sales, both the Crop Science and Consumer Health divisions saw substantial growth, while the Pharmaceuticals division experienced slight growth. Our EBITDA before special items increased by as much as 30%," said Werner Baumann, Chairman of the Board of Management of Bayer AG, when releasing the company's half-year financial report on Thursday. "Given our solid business performance and higher growth expectations, we have raised our full-year outlook."

Bayer AG Reports 9.6% Growth in Q2 2022 Sales (After Adjustments for Currency and Portfolio), Reaching €12.819 Billion. EBITDA Before Special Items Increases by 30.0% to €3.349 Billion. Positive Currency Effects Boost Sales by €915 Million (Q2 2021: -€524 Million) and EBITDA Before Special Items by €300 Million (Q2 2021: -€153 Million). Free Cash Flow Remains Stable Year-over-Year at €1.140 Billion. Net Financial Debt Rises to €36.575 Billion as of June 30, 2022, a 5.9% Increase from March 31, 2022.

Market Environment of Crop Science Division Shows Significant Improvement

Thanks to a significantly improved market environment, Bayer’s agricultural business (Crop Science Division) achieved a 17.2% increase in sales (after adjustment for currency and portfolio), reaching 6.461 billion euros. The division saw double-digit growth rates in Latin America, Europe, the Middle East, and Africa, while its businesses in North America and the Asia-Pacific region also expanded. Herbicide sales experienced the strongest growth at 51.3% (after adjustment for currency and portfolio), particularly driven by high glyphosate prices in Latin America, North America, as well as Europe, the Middle East, and Africa, which boosted revenue. Sales of corn seeds and traits grew by 9.5% (after adjustment for currency and portfolio), mainly due to price increases in North America, Europe, the Middle East, Africa, and Latin America. Sales volumes increased across all regions except North America. Fungicide sales rose by 4.3% (after adjustment for currency and portfolio), with growth recorded in all regions except North America, where sales volumes declined due to adverse weather conditions.

Crop Science Division's EBITDA before special items increased by 71.8% to 1.749 billion euros. The profit growth was mainly driven by a significant improvement in performance and contributions from ongoing efficiency programs. At the same time, currency fluctuations had a positive impact of 215 million euros (Q2 2021: negative 111 million euros). In contrast, profitability declined, primarily due to higher costs caused by high inflation, especially the increase in cost of goods sold. The EBITDA margin before special items rose by 6.8% to 27.1%.

Successful Launch of Prescription Drug Division Products

Prescription drug business (Prescription Drug Division) sales increased by 2.1% (after adjustment for currency and portfolio), reaching 4.818 billion euros. The division's new products (especially Nubeqa)^®Hecsenda^®) Continued market success, cancer drug Nubeqa^®Sales have doubled compared to the same period last year. Ophthalmic drug Eylea^®Sales increased by 11.7% (adjusted for exchange rates and portfolio effects), with business growth achieved in all regions. This was partly driven by Eylea.^®The performance of pre-filled syringes has helped Bayer gain more market share in Europe. The division's cardiac treatment drug, Bayxin Tong.^®And Bayer Aspirin for secondary prevention of heart disease^®Sales of enteric-coated tablets grew significantly. Driven by performance in China, sales of these two products increased by 11.2% (after adjustment for currency and portfolio) and 18.9% (after adjustment for currency and portfolio), respectively. The cancer drug Stivarga^®Sales growth was even stronger, reaching 27.6% (after adjustment for currency and portfolio), mainly driven by sales increases in China and the United States.

EBITDA before special items of the Prescription Medicines Division increased by 4.9% to EUR 1.478 billion. Sales growth largely offset higher raw material costs and increased market investment for new products. The division also generated revenue from the sale of non-core businesses. Currency effects had a positive impact of EUR 41 million (Q2 2021: negative EUR 26 million). The EBITDA margin before special items was 30.7%.

Consumer Health Division Achieves Sales Growth Across All Regions

Bayer's self-care products (Consumer Health division) saw sales growth of 6.8% (after adjustment for currency and portfolio effects), reaching €1.496 billion, with broad-based growth across all regions and nearly all categories. Sales in the allergy and cold category grew by 16.9% (after adjustment for currency and portfolio effects), primarily driven by persistently high incidences of colds in Europe and North America. In June, the Consumer Health division began selling Astepro™, which transitioned from prescription to over-the-counter status. As the first and only steroid-free antihistamine nasal spray in the U.S. OTC market, Astepro™ is a differentiated and fast-acting product. The gastrointestinal health category also achieved double-digit sales growth (after adjustment for currency and portfolio effects), while significant growth was reported in the dermatological care, pain relief, and cardiovascular categories.

EBITDA before special items of the Consumer Health division increased by 18.7% to 330 million euros. The profit growth was driven by strong sales growth and the division's ongoing cost and price management in an environment of accelerating inflation. At the same time, currency effects had a positive impact of 49 million euros (Q2 2021: negative 20 million euros). EBITDA margin before special items rose by 0.5 percentage points to 22.1%.

2022Year Outlook Raised

With the positive business development in the first half of 2022, Bayer remains optimistic about the second half of the year. Bayer has raised its forecasts for the Crop Science Division and Consumer Health Division, thereby upgrading the full-year outlook for the entire group.

After exchange rate adjustment (i.e., based on2021Annual Average Monthly Exchange Rate)Following this, Bayer now expects sales for 2022 to reach between €47 billion and €48 billion (previously: approximately €46 billion). After adjustment for currency and portfolio effects, this corresponds to growth of 8% (previously: approximately 5%). Bayer’s current goal is an EBITDA margin before special items of approximately 26% to 27% after currency adjustments (previously: approximately 26%). Based on the aforementioned sales figures, this corresponds to EBITDA before special items of approximately €12.5 billion after currency adjustments (previously: approximately €12 billion). Core earnings per share are now expected to be approximately €7.30 after currency adjustments (previously: approximately €7.00). Free cash flow is currently expected to be approximately €2.5 billion after currency adjustments (previously: approximately €2.0 billion to €2.5 billion). Furthermore, Bayer continues to expect net financial debt at year-end to be approximately €33 billion to €34 billion after currency adjustments. As with the overall forecast, this figure does not take into account the divestiture of the Environmental Science business as stipulated in the contract.

Bayer alsoAs of2022Year6Month30Closing exchange rate of the dayThe forecast is as follows, with differences from the aforementioned targets adjusted for exchange rates: Bayer now expects to generate sales of between 50 billion and 51 billion euros (previously: approximately 47 billion euros). Based on the above sales figures, Bayer’s EBITDA before special items is now set at 13 billion euros (previously: approximately 12 billion euros). Core earnings per share are now expected to reach approximately 7.70 euros (previously: approximately 7.10 euros). Additionally, Bayer now anticipates a net financial debt of approximately 34 billion to 35 billion euros by the end of the year (previously: approximately 33 billion to 34 billion euros).

Sustainable Development: Accessibility of Innovative Seeds and Cultivation Solutions

Bayer continues to make good progress in sustainability. Bayer is supporting the "Zero Hunger Pledge," which will include helping smallholder farmers gain access to innovative seeds, sustainable agricultural practices, and farming solutions, thereby providing them with new income-generating opportunities.

Bayer has also made significant progress in an important ESG rating: MSCI ESG Research recently updated its ESG Controversies report and lifted the red flag related to the "environmental impact of genetically modified crops" and the associated allegations of violations of the UN Global Compact Principles. This marks another key milestone in the improvement of Bayer’s ESG rating.

For more information, please visit:www.bayer.com。