Leverkusen, Germany - Bayer Group posted a sales rise of 4.5 percent in the third quarter of 2007, to Euro 7793 million and earnings (EBITDA before special items) of Euro 1559 million, a 6.9 percent rise over the same period of 2006.
EBIT before special items was 23.9 percent higher at Euro 953 million, compared to Q3 of last year.
But in the Bayer MaterialScience subgroup, which covers the company's polyurethane raw materials and systems and polycarbonates businesses, sales in the third quarter rose only 1.1 percent, to Euro 2625 million. This increase was largely a result of price rises in nearly all regions, said BMS, with only a small rise in volumes, "mainly from sustained growth in demand in Asia and Latin America," said Bayer's Q3 results statement.
Sales in the Materials segment (Polycarbonates and Thermoplastic Polyurethanes -TPUs) rose to Euro 767 million, or by 5.8 percent, with slight increases in both volumes and selling prices. In Systems, BMS' third-quarter sales of Euro 1858 million, were 2.6 percent higher, mainly from selling price increases, said the company. Its Coatings, Adhesives, Sealants business and the Inorganic Basic Chemicals businesses contributed to this improvement, but BMS admits that sales of the Polyurethanes business unit were level year on year.
BMS' earnings (EBITDA before special items) rose by 10.5 percent in Q3, to Euro 421 million. "This was the first time in fiscal 2007 that Bayer MaterialScience showed a year-on-year improvement in underlying quarterly earnings," commented Bayer chairman Werner Wenning, adding that increase in raw material and energy costs had been offset, mainly through higher selling prices.
To sustain its earning power, Bayer MaterialScience has "initiated further cost-structure measures," designed to save Euro 300 million annually by the end of 2009.
This will result in an unspecified number of job cuts, and BMS will institute "further process and cost optimisation in the operation and maintenance of production facilities worldwide," Bayer said. Other cuts will be made in administration, marketing and distribution costs.
The group will incur special charges of Euro 150-200 million through 2009 to make these savings, and said the necessary headcount reduction "can be accomplished in a socially compatible way and through normal attrition."
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