March 1, 2012

 

Bayer's seed revenues surge

 

 

Bayer's revenues in its seed division jumped, which it is still planning to improve through better research spending, even as expansion in its sprays operations slowed down.

 

The chemicals giant said that seeds unit, BioScience, raised takings by an underlying 24% to EUR157 million (US$211.46 million) in the October-to-December quarter, driven by "excellent performances" in North America and in the Latin America, Africa and Middle East region.

 

But revenues in the bigger agrichemicals business, Crop Protection, rose only 1.8% to EUR1.37 billion (US$1.85 billion).

 

The weaker sprays performance reflected in part the scrapping of some insecticides. However, sprays companies worldwide have found revenue growth tricky given competition from makers of generic alternatives, which has made price rises difficult to push through.

 

The divergence between the two unit's performances comes as Bayer is attempting to beef up in seed through raising research and investment spending to EUR400 million (US$538.76 million) by 2015, double the level in 2010, in a drive to "refocus" its agriculture operations, enabling them to "better respond to the future development of global markets".

 

"We have stepped up our BioScience activities," Marijn Dekkers, the Bayer chief executive, said.

 

The move comes amid increasing crossover in the industry between seed and agrichemical operations.

 

Genetic modification allows crops to fulfil some agrichemical functions, such as fighting off insects, or makes them invulnerable to glyphosate weedkillers, allowing farmers to spray off weeds without damaging the plants being cultivated.

 

Syngenta, the world's biggest agrichemicals group, has already scrapped the boundaries between its seed and sprays divisions in favour of operating around crop lines.

 

At Bayer, even within the sprays unit, seed treatments were the strongest line, showing growth of 21% in revenues.

 

Seed products Bayer has in the pipeline included cotton seed genetically modified for both insect and herbicide resistance, and a soybean seed set for release in 2015 which will be resistant to isoxaflutole-based weedkillers as well as the glyphosate sprays covered by current biotech products.

 

Weeds in some parts of the US have become invulnerable to glyphosate, earning them the tag "superweeds".

 

Bayer's total agriculture revenues rose by an underlying 2.8% to US$1.65 billion in the latest quarter, with earnings before interest, tax, depreciation and amortisation (ebitda) rising 1.1% to EUR273 million (US$367.7 million).