The Bayer Group maintained its strong business performance across all three divisions in the third quarter. "Despite rising inflation and global supply chain problems, we were again able to boost sales and earnings," said Werner Baumann, Chairman of the Board of Management, when presenting the company's quarterly statement on Tuesday. Crop Science in particular continued its growth trajectory, and Pharmaceuticals and Consumer Health also saw sales rise against the prior-year quarter. Baumann confirmed the Group outlook for 2022. "We are right on track to achieve the full-year financial targets that we raised in August."
Bayer expects the cost increases triggered by high inflation to continue next year. In Germany, the company aims to be independent of Russian gas by the end of the year. As global supply chains remain very much under strain, procurement management and supply chain stability are top priorities for Bayer. In order to shore up supply chain stability and mitigate the impact of any supply bottlenecks, the company is working closely with suppliers and contract manufacturers and is continuing to build up inventories.
Third-quarter Group sales rose by 5.7 percent to 11.281 billion euros on a currency- and portfolio-adjusted basis (Fx & portfolio adj.). Sales benefited from positive currency effects of 940 million euros (Q3 2021: 67 million euros). EBITDA before special items increased by 17.3 percent to 2.451 billion euros. This figure included a negative currency effect of 78 million euros (Q3 2021: 44 million euros). EBIT came in at 1.199 billion euros (Q3 2021: 530 million euros) after net special charges of 153 million euros (Q3 2021: 694 million euros). Net income amounted to 546 million euros (Q3 2021: 85 million euros), and core earnings per share advanced by 7.6 percent to 1.13 euros.
Free cash flow declined by 11.1 percent to 1.738 billion euros. The company was able to reduce its net financial debt to 35.884 billion euros as of September 30, down 1.9 percent from June 30, 2022. Cash inflows from operating activities were partly offset by negative currency effects.
New products and Eylea™ drive growth at Pharmaceuticals
Sales of prescription medicines (Pharmaceuticals) increased by 2.9 percent (Fx & portfolio adj.) to 4.955 billion euros. Bayer continued its successful market launch of new products, especially Nubeqa™ and Kerendia™. Sales of the cancer drug Nubeqa™ nearly doubled thanks to significant gains in all regions. The division also received milestone payments via its cell and gene therapy (C>) and chemoproteomics platforms. Overall sales growth was held back by tender procedures in China, particularly for the cancer drug Nexavar™ and the oral anticoagulant Xarelto™, which saw their global sales fall by 54.0 percent and 8.1 percent (Fx & portfolio adj.), respectively. XareltoTM sales were also impacted by the expiration of its patent in Brazil. By contrast, sales of the ophthalmology drug Eylea™ rose by 4.3 percent (Fx & portfolio adj.). Business was up in all regions, with volumes mainly increasing in Europe and China. Sales of the long-term contraceptives in the Mirena™ product family grew particularly significantly, rising 20.5 percent (Fx & portfolio adj.) thanks to higher volumes and demand shifts in the United States. The division’s radiology business registered higher volumes in all regions, with sales of the Gadovist™ and Ultravist™ product lines climbing 16.6 percent and 22.1 percent (Fx & portfolio adj.), respectively.EBITDA before special items at Pharmaceuticals advanced by 15.2 percent to 1.573 billion euros. Earnings primarily benefited from the growth in sales, as well as income from the sale of non-core businesses. These positive effects more than offset ongoing investments in marketing new products as well as research and development expenses. The EBITDA margin before special items increased by 1.6 percentage points to 31.7 percent.
Consumer Health grows sales and earnings
Sales of self-care products (Consumer Health) advanced by 4.4 percent (Fx & portfolio adj.) to 1.548 billion euros, marking a continued strong growth trajectory across all regions against a very strong prior-year quarter. Sales in the Allergy & Cold category rose by 16.6 percent (Fx & portfolio adj.) due to continuously elevated cold incidence rates and the positive momentum behind the launch of the Astepro™ antihistamine nasal spray. The division also registered double-digit growth in the Dermatology category, with sales rising 14.3 percent (Fx & portfolio adj.), particularly driven by the new product Bepanthen™ Derma. After posting strong gains over the past two years, the Nutritionals category normalized at an elevated level with a decline of 7.9 percent (Fx & portfolio adj.).EBITDA before special items at Consumer Health climbed by 9.1 percent to 336 million euros. This was particularly due to increased sales, operational efficiencies as well as the division’s active price management. The EBITDA margin before special items declined by 1.2 percentage points to 21.7 percent as the division further invested in the launch of innovative products, especially Astepro™. The margin was also impacted by inflation-related cost increases.
About Bayer
Bayer is a global enterprise with core competencies in the life science fields of health care and nutrition. Its products and services are designed to help people and the planet thrive by supporting efforts to master the major challenges presented by a growing and aging global population. Bayer is committed to driving sustainable development and generating a positive impact with its businesses. At the same time, the Group aims to increase its earning power and create value through innovation and growth. The Bayer brand stands for trust, reliability and quality throughout the world. In fiscal 2021, the Group employed around 100,000 people and had sales of 44.1 billion euros. R&D expenses before special items amounted to 5.3 billion euros.