Bayer Group's Q4 net profit soars 58.2%; MaterialScience business sales down 20.3%

04-Mar-09

Bayer MaterialScience, Bayer Group's hi-tech materials business, suffered a blow unlike the Group's other businesses (HealthCare and CropScience), as a result of the deepening global economic crisis impacting nearly all its product groups and regional markets. The fourth quarter sales for the materials business dipped 20.3% YOY to EUR 2055 mln. Volumes for the period fell by almost 30% YOY, and capacity utilization was also substantially lower. The EBITDA before special items dived a massive 85.3% YOY to EUR 54 mln. On the contrary, the Bayer Group, as a whole, posted a 58.2% YOY upswing in Q4 net profit to US$106 mln. Other businesses including HealthCare and CropScience gained in the quarter despite the downturn. For full year 2008, sales of Bayer MaterialScience dropped 6.7% to EUR 9,738 mln. For FY 2008, sales in the Systems segment within MaterialScience business fell by 3.6% from the previous year with declines both for foam raw materials (Polyurethanes), and in the Coatings, Adhesives, Specialties business. Also, sales in the Materials segment declined by 14.2% and the business with polycarbonates fell by 10.1% after adjusting for currency and portfolio effects, the Thermoplastic Polyurethanes business unit saw sales recede by an adjusted 2.4%. FY 2008 Earnings for the year were diminished due to rise in prices for petrochemical raw materials and energies. The relative easing of prices on the raw material markets of importance to MaterialScience did not yet bring significant relief in the fourth quarter. Over the year as a whole, savings from the ongoing restructuring program and further countermeasures adopted only partially offset the negative effects of lower volumes and higher raw material costs. The company is expecting a tough period ahead in 2009 for the MaterialScience business and expecting a 5% decline in the Group EBITDA before special items. Werner Wenning, Management Board Chairman commented, "In the main sectors of importance for our MaterialScience business, however, we anticipate a very difficult year marked by a great deal of uncertainty," The start to the year at MaterialScience has been even weaker than anticipated, and the subgroup must expect a severe drop in sales and EBITDA before special items for 2009.