) earnings during the second quarter of 2013 came in at €1.54 per
share (approx. $2.01) compared with €1.45 per share (approx.
$1.86) in the year-ago period. Earnings benefited from higher
Bayer recorded 1.9% (4.6% on an adjusted basis) growth in
revenues to reach €10.4 billion. The increase was primarily
driven by the HealthCare and the Crop Science segments of the
Segmental Performance During the Quarter
The three major segments - HealthCare, Crop Science and Material
Science - accounted for approximately 46.3%, 23.1% and 27.8%,
respectively, of total revenues during the second quarter of
2013. Revenues from the Crop Science and HealthCare segments
improved by 5.1% and 3.8% respectively, whereas revenues from the
Material Science segment declined 2.7% year over year.
The HealthCare segment recorded revenues of €4.8 billion in the
reported quarter. Both sub-segments, Consumer Health (adjusted
growth of 4.2%) and Pharmaceuticals (adjusted growth of 10%)
performed well in the quarter.
Sales of new products like Xarelto (anticoagulant), Eylea (eye
medicine) and Stivarga (oncology) boosted the Pharmaceuticals
segment. Growth in the Consumer Health subgroup, comprising
Bayer's over-the-counter drug business for human beings and
animals, was primarily driven by the impressive performance of
the Consumer Care division in the emerging markets.
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 €2.4 billion in the second quarter of
2013. The Crop Science segment exhibited solid growth
particularly in Latin America, Africa and the Middle East, along
with Asia/Pacific and Europe.
The Material Science segment, one of the world's largest polymer
manufacturers, posted sales of €2.9 billion in the reported
quarter. The segment suffered during the quarter, primarily due
to a challenging market condition. However, the segment's second
quarter sales levels were up on a sequential basis as the company
expected last quarter.
Apart from releasing its financial results, Bayer made some
adjustments to its guidance for 2013. Bayer expects 2013 sales to
be within €40 billion and €41 billion (previously: around €41),
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). However,
Bayer now expects the Pharmaceuticals segment to exhibit
high-single-digit sales growth (previously: mid-single-digit
sales growth) in 2013, primarily due to the segment's recent
Sales in the segment are now expected to exceed the previous
guidance of €11 billion. Bayer also expects its new products to
contribute €1.4 billion (up 40% from the previous view of €1.0
billion) to the segmental sales in 2013.
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Meanwhile, the company still expects its Consumer Health sales to
exhibit mid-single-digit sales growth to around €8 billion in
Bayer also maintained its 2013 guidance for the Crop Science
segment. Bayer expects the Crop Science segment to grow in the
high-single-digit percentage range to around €9 billion in 2013.
Meanwhile, based on the recent disappointing results, the company
now believes that Material Science segment revenues may not reach
the previous year sales figure of €11.5 billion. Previously the
company expected 2013 sales to surpass the previous year figure
and reach approximately €12 billion.
Earnings are however still expected to increase in the high
single-digit percentage year over year.
Bayer, a large cap pharma stock, presently carries a Zacks Rank
#3 (Hold). However, another large cap pharma stock,
Johnson & Johnson
), currently looks better positioned with a Zacks Rank #2 (Buy).
Other companies in the pharma space that are worth considering
Biogen Idec Inc.
Gilead Sciences Inc.
). Both carry a Zacks Rank #1 (Strong Buy).