) earnings during the third quarter of 2013 came in at €1.27 per
share (approx. $1.68) compared with €1.17 per share (approx.
$1.46) in the year-ago period.
Bayer's third-quarter revenues of €9.6 billion remained almost
flat year over year. Revenues from the Crop Science and
HealthCare segments improved by 4.3% and 0.5% respectively,
whereas sales at the Material Science segment declined 3.1% year
Segmental Performance During the Quarter
The three major segments - HealthCare, Crop Science and Material
Science - accounted for approximately 49.2%, 17.8% and 30% of
total revenues, respectively, during the third quarter of 2013.
The HealthCare segment recorded revenues of €4.7 billion in the
reported quarter. Revenues from both the Pharmaceuticals segment
(adjusted growth of 10.6%) and the Consumer Health segment
(adjusted increase of 2.9%) increased in the reported quarter.
Sales of new products like Xarelto (anticoagulant), Eylea (eye
drug), Xofigo (oncology) and Stivarga (oncology) boosted the
Pharmaceuticals segment. On the other hand, Bayer's Consumer
Health subgroup sales were hampered by the disappointing
performance of the Diabetes Care business, although the Medical
Care and Animal Health sub-groups performed favourably.
The Crop Science division, which is engaged in developing and
marketing chemical crop protection products (insecticides,
herbicides, and fungicides), seeds and integrated plant
biotechnology solutions for agricultural and non-agricultural
uses, recorded sales of €1.7 billion in the third quarter of
2013. The segment exhibited solid growth particularly in Latin
America, Africa and the Middle East, along with Asia/Pacific.
The Material Science segment, one of the world's largest polymer
manufacturers, posted sales of €2.9 billion in the reported
quarter. Challenging market condition impacted the segment's
Apart from releasing its financial results, Bayer made some
adjustments to its guidance for 2013. Bayer now expects 2013
sales to come around €40 billion (old guidance: €40−€41 billion),
an increase of 4−5% from the 2012 figure.
Revenues from the HealthCare segment are still expected to come
around €19 billion (mid-single-digit percentage growth). Bayer
still expects the Pharmaceuticals segment to exhibit
high-single-digit sales growth in 2013, primarily due to the
segment's recent encouraging performance. Sales in the segment
are expected to exceed €11 billion. Bayer also expects its new
products (Xarelto, Eylea, Stivarga and Xofigo) contribute more
than €1.4 billion to the segmental sales in 2013.
Meanwhile, the company still expects its Consumer Health sales to
exhibit mid-single-digit sales growth, reaching the figure to
around €8 billion in 2013.
Bayer expects the Crop Science segment to outperform the market.
Segmental sales are expected to grow in the high-single-digit
percentage range to around €9 billion in 2013. Based on the
disappointing results, the company now believes that the Material
Science segment revenues will be in line with the previous year
sales of €11.5 billion.
We are encouraged by the performance of the newly launched
products at Bayer during the third quarter of 2013. The company
also made significant progress with its pipeline.
Bayer, a large cap pharma stock, presently carries a Zacks Rank
#2 (Buy). Other large cap pharma stocks such as
Johnson & Johnson
) also carry comparable rank.
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