Business Review

  • Sales improve by 27% to €7,814 million, mainly due to portfolio effects
  • EBIT before special items 49% higher at €1,095 million, primarily from sales growth

The Agricultural Solutions segment increased sales to third parties considerably by €1,658 million to €7,814 million in 2019. This was driven by the strongly positive contribution from the businesses and assets acquired from Bayer in August 2018.1 A slightly higher price level and currency effects also contributed to the positive year-on-year sales development. In a continuing difficult market environment, sales volumes in North America and Europe were lower than in the previous year.

1 Until August 2019, the sales contribution from the acquired businesses is still reported as a portfolio effect in our analysis of sales effects, as the acquisition of significant businesses and assets from Bayer was closed in August 2018. For the period thereafter, the sales contribution is included in the explanations of the volumes, price and currency effects described here.

(XLS:) XLS

Factors influencing sales – Agricultural Solutions

Volumes

(1%)

Prices

3%

Portfolio

24%

Currencies

1%

Sales

27%

(XLS:) XLS

Segment data – Agricultural Solutions (Million €)

 

 

2019

2018

+/–

a

Amortization of intangible assets and depreciation of property, plant and equipment (including impairments and reversals of impairments)

b

Additions to intangible assets and property, plant and equipment

Sales to third parties

 

7,814

6,156

27%

Intersegment transfers

 

197

58

240%

Sales including transfers

 

8,011

6,214

29%

Income from operations before depreciation, amortization and special items

 

1,809

1,128

60%

Income from operations before depreciation and amortization (EBITDA)

 

1,647

985

67%

EBITDA margin

%

21.1

16.0

–

Depreciation and amortizationa

 

719

394

82%

Income from operations (EBIT)

 

928

591

57%

Special items

 

(167)

(143)

(17%)

EBIT before special items

 

1,095

734

49%

Return on capital employed (ROCE)

%

5.3

5.1

–

Assets

 

16,530

16,992

(3%)

Investments including acquisitionsb

 

320

7,110

(95%)

Research and development expenses

 

879

679

29%

In Europe, we improved sales by €98 million to €2,120 million. This was largely attributable to portfolio effects from the acquired businesses. In addition, we recorded a slightly higher price level. Sales development was dampened by lower volumes, especially for herbicides and fungicides, and negative currency effects, particularly in Turkey.

We increased sales in North America by €942 million to €3,108 million. The sales increase was mainly the result of portfolio effects from the acquired businesses. In addition, we recorded positive currency effects and a higher price level. Sales volumes were significantly lower than in the previous year, particularly for herbicides and fungicides. This was attributable to distributor destocking and challenges relating to weather conditions and the trade conflicts, especially in the first half of 2019.

Sales in Asia rose by €140 million to €785 million. This was mainly due to portfolio effects from the acquired businesses. Higher volumes, especially for herbicides, and currency effects also contributed to sales growth.

In the region South America, Africa, Middle East, sales rose by €478 million to €1,801 million. This was primarily due to significantly higher volumes, particularly for fungicides and herbicides. Sales volumes rose significantly, particularly in Brazil. A higher price level and portfolio effects from the acquired businesses also contributed to the sales increase. Currency effects had an offsetting impact.

Agricultural Solutions – Sales by region

Location of customer

Agricultural Solutions – Sales by region (pie chart)

Income from operations (EBIT) before special items was €1,095 million, €361 million above the 2018 figure. The increase was largely attributable to considerably higher sales.

At €928 million, EBIT was €337 million higher than in the previous year. Special charges primarily arose from the integration of the acquired Bayer businesses. This was offset by special income from divestitures in accordance with the conditions imposed by the authorities in connection with the acquisition.

Outlook for 2020