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Bayer’s (BAYRY - Analyst Report) earnings during the fourth quarter of 2012 came in at €1.00 per share (approx $1.30) compared with €0.97 (approx. 72 cents) per share in the year-ago period. Earnings benefited from higher revenues.

Bayer recorded 7.3% (5.5% on an adjusted basis) growth in revenues to €9.9 billion. Growth was witnessed across all the major divisions at Bayer, but the increase was primarily driven by the Crop Science segment.

The company reported earnings of €5.35 per share (approx $6.88) for full year 2012 compared with €4.83 (approx. $6.72) per share in the year-ago period. Bayer recorded 8.8% (5.3% on an adjusted basis) growth in revenues to €39.8 billion in the year 2012.

Segmental Performance During the Quarter

The three major segments – Healthcare, Crop Science and Material Science – accounted for approximately 49.9%, 18.8% and 28%, respectively, of total revenues during the fourth quarter of 2012. Revenues from the Crop Science, Healthcare and the Material Science segments improved by 9.1%, 5.1% and 4.8%, respectively.

The Healthcare segment recorded revenues of €4.9 billion in the reported quarter. Both sub-segments, Consumer Health (adjusted growth of 5.4%) and Pharmaceuticals (adjusted growth of 4.8%) performed well in the quarter.

Sales growth in North America and emerging economies like China 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.

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 €1.9 billion in the fourth quarter of 2012. Sales in this segment benefited from higher volumes. The Crop Science segment exhibited solid growth in all the regions, particularly in Latin America.

The Material Science segment, one of the world’s largest polymer manufacturers, posted impressive sales of €2.8 billion in the reported quarter. Volume growth and price increase was primarily responsible for the impressive performance of the segment during the reported quarter.


Apart from releasing its financial results, Bayer provided its guidance for 2013. Earnings are expected to increase in the high single-digit percentage year over year. Bayer expects 2013 Group sales to be around €41 billion.

The Healthcare segment of the company is expected to successfully commercialize new pharmaceutical products. The new products are expected to contribute around €1 billion in 2013 and around €2.5 billion in 2015. Revenues from the Healthcare segment are expected to increase to €19 billion (mid single-digit growth) and reach €22 billion by 2015.

Both Consumer Health and Pharmaceuticals sales are expected to exhibit mid-single-digit sales growth in 2013. The company expects Consumer Health to generate around €8 billion in 2013 and around €9 billion in 2015, whereas Pharmaceuticals sales are expected to be around €11 billion in 2013 and €13 billion in 2015.

Crop Science segment sales are also expected to rise in 2013. The company expects the segment’s sub-groups to grow in the high-single-digit percentage range to around €9 billion in 2013. The segment’s sales in 2015 are expected to be around €10 billion.

Material Science segment revenues are expected to increase marginally over 2012 levels. Bayer’s operating expenses in 2013 are also expected to increase.

Bayer recently received encouraging news from the US Food and Drug Administration (FDA) when the latter cleared Stivarga (regorafenib) for an additional indication. Stivarga was previously approved in the US for treating patients suffering from metastatic colorectal cancer (mCRC).

The drug is now also approved for the treatment of patients suffering from locally advanced, unresectable or metastatic gastrointestinal stromal tumor (GIST), previously treated with Novartis’ (NVS - Analyst Report) Gleevec (imatinib mesylate) and Pfizer Inc.’s (PFE - Analyst Report) Sutent (sunitinib malate).

Bayer, a larger-cap pharma stock, currently carries a Zacks Rank #2 (Buy). Another large cap pharma stock Eli Lilly and Company (LLY - Analyst Report) also carries a comparable rank.

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