Bayer’s (BAYRY) earnings per share during the third quarter of fiscal 2010 came in at €0.95 (approx $1.22) compared to €0.78 (approx. $1.00) in the year-ago period. The company recorded a 16.1% growth in revenues to €8,581 million. Growth was witnessed across all divisions at Bayer.
The three major segments — Healthcare, Material Science and Crop Science — accounted for approximately 49.8%, 31.1% and 15.6%, respectively, of total revenues during the reported quarter. Revenues from the Material Science, Crop Science and the Healthcare segments improved by 30.8%, 17.6% and 8.5%, respectively. Foreign exchange positively impacted sales across all divisions at Bayer. The company recorded litigation charges of €436 million in the quarter.
The Healthcare segment recorded revenues of €4,271 million compared to €3,936 million in the comparable quarter of 2009. The improvement in this segment is a result of a 10.9% growth in Consumer Health and a 7.2% growth in revenues from Pharmaceuticals.
Products such as Mirena (foreign exchange adjusted 20.7% growth), Kogenate (foreign exchange adjusted 6.9% growth), Aspirin Cardio (foreign exchange adjusted 12.8% growth), and Levitra (foreign exchange adjusted 9.4% growth) displayed robust growth during the reported quarter. However, the Yaz franchise posted a disappointing performance in the US due to generic competition.
The Crop Science division performed impressively in the quarter with sales climbing 17.6% to €1,341 million during the quarter. The rebound at the segment was primarily attributable to improved market conditions which led to increased demand for the products at the segment. Growth was witnessed across both subgroups, Crop Protection (up 16.1% or foreign exchange adjusted 7.4%) and Environmental Science/BioScience (up 26.3% or foreign exchange adjusted 13.5%).
The rise in demand arose from unusually low inventory levels in the distribution channels coupled with the increased prices of raw materials used for agriculture.
Material Science continued its strong performance in 2010. Sales in the segment climbed 30.8% to €2,665 million due to improved sales of high-tech materials. The company noted that demand increased significantly in Bayer’s primary customer industries.
2010 Guidance
Bayer maintained its optimistic outlook for 2010. The company expects the global recovery to continue based on which the company is targeting to post more than 5% currency and portfolio-adjusted sales growth with EBITDA before special items exceeding €7 billion. Additionally, earnings are expected to improve by more than 15%.
BAYER A G -ADR (BAYRY): Free Stock Analysis Report
Zacks Investment Research
