14.1 Earnings Performance of the Bayer Group

Bayer Group Summary Income Statements

 

 

2014

 

2015

 

Change

 

 

€ million

 

€ million

 

%

2014 figures restated

1

EBIT = income after income taxes, plus income taxes, plus financial result

Net sales

 

41,339

 

46,324

 

12.1

Cost of goods sold

 

19,909

 

21,158

 

6.3

Selling expenses

 

10,669

 

12,367

 

15.9

Research and development expenses

 

3,537

 

4,281

 

21.0

General administration expenses

 

1,703

 

2,098

 

23.2

Other operating income (+) and expenses (−)

 

(126)

 

(170)

 

(34.9)

EBIT1

 

5,395

 

6,250

 

15.8

Financial result

 

(981)

 

(1,005)

 

(2.4)

Income before income taxes

 

4,414

 

5,245

 

18.8

Income taxes

 

(1,071)

 

(1,227)

 

(14.6)

Income after income taxes (total)

 

3,443

 

4,098

 

19.0

of which attributable to noncontrolling interest

 

17

 

(12)

 

of which attributable to Bayer AG stockholders (net income)

 

3,426

 

4,110

 

20.0

Sales of the Bayer Group rose to €46,324 million (+12.1%). The increase after adjusting for currency and portfolio effects was 2.7%.

The cost of goods sold increased by 6.3% to €21,158 million, mainly due to currency and portfolio effects that drove up costs. Lower raw material costs at Covestro had an opposing effect. The ratio of the cost of goods sold to total sales was 45.7% (2014: 48.2%). The selling expenses of €12,367 million (+15.9%) amounted to 26.7% of sales (2014: 25.8%). Research and development (R&D) expenses rose in 2015 by 21.0% to €4,281 million, the increase being attributable above all to higher R&D investment at Pharmaceuticals. The ratio of R&D expenses to sales was 9.2% (2014: 8.6%). General administration expenses climbed by 23.2% to €2,098 million. The ratio of general administration expenses to total sales therefore increased to 4.5% (2014: 4.1%). The increased other operating expenses of €170 million (2014: €126 million) resulted mainly from negative effects from derivatives to hedge planned sales that were partly offset by a special gain from damage and license payments in connection with the infringement by Dow AgroSciences of Bayer’s rights to the Liberty Link™ weed control system.

EBIT Income after income taxes, plus income taxes, plus financial result; EBIT is not defined in the International Financial Reporting Standards. climbed by 15.8% in 2015 to €6,250 million.

The financial result declined by 2.4% to minus €1,005 million. It comprised €455 million (2014: €356 million) in net interest expense, €287 million (2014: €322 million) in interest cost for pension and other provisions, and a €254 million (2014: €248 million) net exchange loss. The increase in net interest expense was primarily attributable to higher financing costs in connection with the acquired consumer care business of Merck & Co., Inc., United States.

Tax expense in 2015 increased to €1,227 million (2014: €1,071 million). Income after income taxes came in at €4,098 million. Income attributable to noncontrolling interest fell by €29 million to minus €12 million. Bayer Group net income for 2015 was €4,110 million (2014: €3,426 million).