Bayer increases sales and earnings in the second quarter

This was attributable primarily to the business trends at MaterialScience and Consumer Health, as well as to positive currency effects. The operating result (EBIT) before special items advanced by 14.4 % to EUR 1,260 million. After special items, the operating result (EBIT) fell by 1.6 % to EUR 1,005 million. Net income came in level year on year at EUR 525 million. R&D expenses rose by 12.7 % to EUR 747 million.

MaterialScience posted sales of EUR 2,689 million in the second quarter of 2010. The subgroup thus improved sales by 46.9 % against the prior-year quarter, which was impacted by the global financial and economic crisis. Volumes rose significantly in all product groups and regions. MaterialScience also expanded sales by a substantial 21.3 % compared to the first quarter of 2010.

Business with raw materials for foams (Polyurethanes) improved by a currency-adjusted 37.1 % year on year thanks to a marked expansion of volumes. Furthermore, selling prices increased in Asia/Pacific and Europe, enabling the subgroup to more than offset price declines in North and Latin America. Growth in the Polycarbonates business was even stronger, with sales of these high-performance plastics climbing by a currency-adjusted 59.4 %. Here MaterialScience managed to raise selling prices substantially overall, as well as significantly grow volumes in all regions. Business with raw materials for coatings, adhesives and specialities also trended successfully, with sales up by a currency-adjusted 37.3 %.

The subgroup more than tripled its year-on-year earnings in the second quarter thanks to the improved business situation. EBITDA before special items advanced to EUR 371 million. This success was based on the substantial expansion of volumes and the associated clear improvement in capacity utilisation, as well as on higher selling prices and efficiency improvements. By contrast, earnings of MaterialScience were diminished by higher purchase prices on the raw material markets as a result of the global economic recovery.

For the full year 2010, Bayer anticipates a further recovery in the global economy, although the pace of growth is expected to slow as the year progresses. The company continues to target currency- and portfolio-adjusted sales growth of more than 5 %. Bayer also still aims to increase EBITDA before special items to more than EUR 7 billion.

MaterialScience remains optimistic for the second half and expects business to continue trending positively. From today's viewpoint, the subgroup now considers as conservative the previous targets of increasing full-year sales by approximately 20 % and more than doubling EBITDA before special items. MaterialScience expects to exceed these forecasts. In the third quarter, the subgroup anticipates that sales and EBITDA before special items will be in line with those of the previous quarter.

Bayer now expects R&D expenses for the full year to come in at a record level of some EUR 3.1 billion. Previously the company had planned to raise research and development spending in 2010 to approximately EUR 2.9 billion, compared to EUR 2,746 million in the previous year.