Policy Transformation Underway Says Bayer AG (ADR)(OTCMKTS:BAYRY)

Bayer AG (ADR) (OTCMKTS:BAYRY) reported a strong FY2014, both strategically and operationally. It made new records for EBITDA and sales. Dr.Marijn Dekkers, the Management Board Chairman said that the strong growth in life science business resulted in record sales. The group sales came at EUR 42,239 million and EBIT surged by 11.6% to EUR 5,506 million in FY2014.

Plastics business

Bayer AG informed its shareholders that it will wait until July 2015 to decide on its plastics business. It will consider whether it wants to spin it off or nit. The slow-growing segment has adversely affected the earnings in FY2014. The listing of material science division by mid-2016 is on track. The legal and economic separation of the unit will be completed by August. The profit and sales growth at the division were the slowest of company’s three businesses in 2014. It was due to decline in prices of plastics that are used in cars and Smartphone.

The plans

Bayer AG announced in 2014 that it intends to list the material science unit separately on the exchange as its main focus in on the health-care and crop-science segments, where sales are being improved by launch of new products such as cancer drugs Xofigo and Stivarga, and the blood thinner Xarelto. Bayer forecasted the profit in FY2015 to grow by a low percent. The weaker growth in health-care division will continue to impact earnings.

Exports Boost

Bayer AG (ADR) (OTCMKTS:BAYRY) forecast FY2015 revenue to be 46 billion euros. It is in line with analysts’ guidance, as depreciation of euro and sales of new products boost exports. The earnings excluding some items are expected to rise at a low-to-mid-teen percentage in FY2015. It includes a positive currency impact of 2%. The earnings in 4Q2014 surged 4.4% to 1.85 billion euros, lower than 1.96 billion-euro estimate of analysts. The revenue in the health care division surged 13% to 5.6 billion euros.

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