BAYER MATERIALSCIENCE
Earnings down slightly in 2006 / Start-up costs for China and plant outages / Higher volumes
Earnings of Bayer MaterialScience (BMS, Leverkusen / Germany; www.bayerbms.com) sagged in last year´s fourth quarter, and full year profitability declined against 2005. Quarterly EBITDA before special items fell 24% against the 2005 quarter to EUR 307m, as sales rose 3.4% to EUR 2.5 bn. Speaking at the annual results press conference, Bayer group chairman Werner Wenning said start-up costs for new Chinese plants and temporary production outages (see Plasteurope.com Web of 06.12.2006) pressured profitability and eradicated some of the benefits of higher sales volumes and successes in passing on increased raw materials costs.
For the full year, polymers EBITDA before special items receded by nearly 5% against 2005 to EUR 1.68m, despite a 7.6% sales increase to EUR 10.2 bn. The full-year EBITDA margin shrank to 16.5% from more than 18% a year earlier. Outlining earnings targets up to 2009, Wenning said BMS is expected to generate an EBITDA margin of around 18% "in good years." This contrasts with an expected return of 27% for Healthcare and 25% for CropScience.
Despite weakness last year, Wenning insisted that polymers will continue to have a place within the Bayer group. He said management is convinced that BMS will be able to earn more than its cost of capital, even in downcycles. The company has a worldwide network of production sites and a new gas-phase polycarbonate technology in China "that no one else has."
Some EUR 250m has been set aside for research and development spending in the sub-group in 2007, as part of an overall R&D budget of EUR 2.8 bn that Wenning termed the largest ever for a German chemicals-pharmaceutical group. The sale of cellulosics producer Wolff Walsrode to Dow is expected to close in the second quarter, at a price "in line with our expectations." The sale of PU machinery producer Hennecke (see Plasteurope.com Web of 02.03.2007) is "in progress."
e-Service:
Bayer annual report and "Investor News" on 2006 as PDF document (2,758 KB)
Bayer "Investor News" on 2006 as PDF document (78 KB)
For the full year, polymers EBITDA before special items receded by nearly 5% against 2005 to EUR 1.68m, despite a 7.6% sales increase to EUR 10.2 bn. The full-year EBITDA margin shrank to 16.5% from more than 18% a year earlier. Outlining earnings targets up to 2009, Wenning said BMS is expected to generate an EBITDA margin of around 18% "in good years." This contrasts with an expected return of 27% for Healthcare and 25% for CropScience.
Despite weakness last year, Wenning insisted that polymers will continue to have a place within the Bayer group. He said management is convinced that BMS will be able to earn more than its cost of capital, even in downcycles. The company has a worldwide network of production sites and a new gas-phase polycarbonate technology in China "that no one else has."
Some EUR 250m has been set aside for research and development spending in the sub-group in 2007, as part of an overall R&D budget of EUR 2.8 bn that Wenning termed the largest ever for a German chemicals-pharmaceutical group. The sale of cellulosics producer Wolff Walsrode to Dow is expected to close in the second quarter, at a price "in line with our expectations." The sale of PU machinery producer Hennecke (see Plasteurope.com Web of 02.03.2007) is "in progress."
e-Service:
Bayer annual report and "Investor News" on 2006 as PDF document (2,758 KB)
Bayer "Investor News" on 2006 as PDF document (78 KB)
19.03.2007 Plasteurope.com [207703]
Published on 19.03.2007
German version of this article...