Bayer announces 2021 numbers; Crop Science stands out

The Bayer Group had a successful year in 2021. “We delivered substantial growth, strengthened our innovation pipeline and advanced towards our sustainability goals. All this shows that Bayer is on the right path” said Werner Baumann, chairman of the board of directors, this Tuesday (1/3), during the company's financial news conference. “We not only met our updated Group forecast, but actually exceeded it. What is particularly encouraging is that all three divisions grew dynamically in 2021 and, in addition, all outperformed their respective markets.”

All divisions successfully launched innovations last year, with Baumann naming kidney disease drug Kerendia, soybean seeds Intacta 2 Xtend and skin care product Bepanthen Derma as examples. The company invested a record amount in research and development and continued to strengthen its innovation capacity, making numerous acquisitions, participating in other companies and establishing partnerships, he explained. The company's goal is to take advantage of the enormous "Bio Revolution" opportunities offered by the cutting-edge technologies emerging in this digital era, Baumann continued. “We are harnessing the potential of gene editing in the areas of healthcare and agriculture. In medicine, we are researching targeted editing of individual genes responsible for diseases such as Parkinson's disease. And in agriculture, we can give crops the characteristics they need to better withstand extreme weather conditions.”

Baumann also emphasized Bayer's progress in its transformation to become a carbon neutral company. He said Bayer reduced its direct and indirect greenhouse gas emissions by 11,5% in 2021 and is on track to be carbon neutral by 2030. “Last year we grew our business and at the same time reduced emissions. This means we decouple growth and CO2 emissions. So we’re on the right track here too!” A contributing factor was that Bayer concluded agreements in 2021 covering around 600.000 megawatt-hours of green electricity, thus increasing its share of the electricity mix to approximately a quarter. Additionally, Bayer has set an internal CO2 price of 100 euros per metric ton to be taken into account in investment decisions and to accelerate its decarbonization efforts.

Crop Science achieves record sales and increases profits

In the agricultural business (Crop Science), Bayer increased sales by 11,1% to 20,207 billion euros. The division significantly increased sales in all regions, especially in Latin America and Asia/Pacific.

In "Corn Seed & Traits", sales grew 9,2% thanks to increased market share in North America and Latin America, as well as higher prices across the country. world.

Bayer increased sales by double-digit percentages in Herbicides (15,4%), Fungicides (13,8%) and "Soya Seed & Traits" (14,9%) (soy seeds and treatments, in free translation) on a currency and portfolio adjusted basis.

The main factors were price increases for glyphosate-based products in Herbicides and higher volumes of Fox Xpro in Latin America in Fungicides. The soybean seed and treatment segment benefited from higher volumes and prices, particularly in North America and Latin America.

EBITDA before special items at Crop Science increased by 3,6% to €4,698 billion, resulting in a margin of 23,2%. The growth in earnings was primarily driven by higher prices and volumes, as well as contributions from ongoing efficiency programs. On the other hand, profits were diminished by a largely inflation-driven increase in the cost of goods sold, as well as negative currency effects of 387 million euros.

Bayer sees encouraging steps in relation to glyphosate litigation in the United States. The US Supreme Court showed interest in the Hardeman case by inviting the Attorney General, representing the US government, to present a brief on whether this case should be accepted. Additionally, the company has won two consecutive jury trials in product liability cases in California. The company continues to execute its five-point plan and is prepared for any outcome at the Supreme Court.

Increase in group sales and earnings per share

Bayer Group sales increased by 8,9% to €44,081 billion in 2021, after adjustments for currency and portfolio effects (Fx & portfolio adj.). EBITDA before special items fell 2,5% to 11,179 billion euros. The Group was able to largely offset an increase in the cost of goods sold – partly related to inflation – as well as significant currency headwinds. The EBITDA margin before special items was 25,4%. EBIT totaled €3,353 billion (2020: minus €16,169 billion) after net special charges of €3,942 billion (2020: €23,264 billion) which resulted mainly from the allocation to provisions related to the glyphosate litigation. Other special charges were primarily attributable to established restructuring programs, which were offset by reversals of impairment losses primarily attributable to the Crop Science Division. Net profit was €1 billion (2020: net loss €10,495 billion), while earnings per share from continuing operations increased by 1,9% to €6,51.

Free cash flow increased by 5,4% to 1,415 billion euros in 2021, despite higher litigation-related payouts. “This once again highlights our operational strength,” said CFO Wolfgang Nickl. Net financial debt increased by 10,3% year-on-year to €33,137 billion in 2021. Cash inflows from operating activities were offset by dividend outflows and the acquisition of the American biopharmaceutical company Vividion Therapeutics, Inc., as well as payments of settlement in the United States and negative exchange rate effects.

The Management and Supervisory Board of Bayer AG will propose to the Ordinary General Meeting on April 29, 2022 that the dividend remains unchanged at 2,00 euros per share for the 2021 financial year. The company thus maintains its dividend distribution policy of 30 to 40% of core earnings per share. With 982,42 million shares entitled to the dividend, the total dividend payment would be 1,965 billion euros, as in the previous year.

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