Bayer CropScience Crop Protection Sales 2017
Crop Protection Regional Sales
Reporting currency: €
Europe, Middle East & Africa
Q2 2017 sales declined 20.4% over Q2 2016, while H1 2017 declined 8.3%. EMEA declined 1.8% in Q2 and 0.6% in H1 2017 mainly due to sharp declines in cereal and other fungicides and seed treatments caused by dry hot weather conditions in western and southern Europe; these were nearly offset by higher insecticide sales as insect pest pressure mounted due to the warm conditions. Most companies had faced similar problems this season. Sales in eastern Europe helped reduce the decline in the EU-12.
North America drove growth with a 3.7% increase in Q2 and 6.3% in H1 2017. Sales were boosted by strong demand for herbicides and fungicides for spring cereal and canola planting in Canada. The demand for seed treatments in Canadian cereals and US soybeans also provided impetus to sales. However, sales of insecticides were affected negatively due to excessive wet weather, with cold spells early in the season. Especially in cotton and other crops in the southern US.
This situation is changing in Q3 as boll-worms and sucking insects have started multiplying rapidly with the rising temperatures. There are also many reports of boll-worms developing possible resistance to Bt-cotton from Monsanto and Dow AgroSciences with more than one generation causing repeat infestations. This has resulted in increased chemical sprays in cotton.
Latin America saw sales drop sharply by 144% in Q2 and by 91% in H1 2017. The problem was due to inventory problems in Brazil arising from unsold stocks in distributors’ warehouses, as Bayer had pushed sales in H2 2016. The two-fold impact of low insect and disease infestations in soybeans, coupled with the new IntactaRR™ varieties from Monsanto and Bt-corn hybrids from Dow, DuPont, Monsanto and others resulted in massive inventory of insecticides and fungicides in the corn-soybeans regions of Brazil.
As a result, Bayer took the hard decision of reversing sales and relieving the distributors of their stocks. Higher herbicide sales in Argentina did not offset the decline. Unlike the US companies which took early action to reduce the clutter, the European companies were forced into a corner with their delay.
Asia-Pacific saw no growth with a decline of 0.9% in Q2 but a small increase of 2.5% in H1 2017. Sales declined largely due to lack of advance sales of insecticides which normally occur towards the end of Q2 just before the monsoon planting. However the conditions have improved since the onset of rains with record planting of rice and cotton, which should take up the slack during Q3.
The lack of insecticide sales was offset by higher sales of herbicides, fungicides and seed treatments driving growth in Japan, China and Australia. The dry conditions and high generic competition had an impact in the region, no doubt, although Bayer are working on releasing newer products to compete with the local manufacturers and replace some older products as well. They are likely to divest some of their regional portfolio to finance the merger with Monsanto and also to try and satisfy Chinese and Indian anti-trust regulators as well as the farm lobbies which are very powerful.
The outlook for H2 2017 is positive with some growth expected as the maturing crops of corn, cotton, soybean, cereals and oilseeds attract insect and fungal infestations in North America and Europe. The main monsoon crop in Asia is also developing well enough to prompt farmers to spray against pests and diseases. Later on, the main south American corn, cotton and soybean crops will be planted with area growth expected over last year.
Q4 is also likely to see higher winter cereals and oilseed rape planted in Europe an other northern hemisphere countries, in all of which Bayer has a strong presence, although Brazil would continue to be a drag through to 2018.
Crop Protection Product Sales
Reporting currency: €
Herbicides declined 3.6% in Q2, but increased slightly by 2.4% over the H1 2017 period with strong demand in North America on conventional soybeans, canola and cereals, Argentina on cereals, Japan and China on rice, cereals and oilseeds and in Australia on key crops like cotton, pulses, sugar-cane and cereals.
Outlook for H2 2017 is slightly positive as higher sales of cereal and oilseed rape herbicides are expected in the northern hemisphere.
Fungicides declined sharply by 40.3% in Q2 and by 22% during the H1 2017 period. Sales were greatly impacted due to lack of sales in the two key markets of Brazil and Europe. Demand in North America and Asia-Pacific could not offset the decline in the two former markets. In Brazil the ASR infestation levels were very low and Bayer were forced to reverse sales in Brazil with huge operating losses as a consequence, while in Europe the dry weather caused concern as most winter crops – cereals and oilseed rape were affected with reduced soil moisture and consequent lack of sprays.
Outlook for H2 2017 remains negative for fungicides under the circumstances.
Insecticides performed no better with a decline of 15.2% in Q2 and a decline of 4.9% in H1 2017. Again Brazil was the major problem area along with Asia-Pacific countries which saw reduced sales. Europe on the other hand, saw higher insecticide sales as demand built up in several markets due to insect pest levels building up rapidly in the warm weather conditions. However, the outlook for H2 2017 is slightly better as pest infestation levels are already built up in North America and building up in Asia-Pacific.
Seed treatments declined in Q2 by 4.6% but grew relatively strongly by 5% in H1 2017 with high demand in North America for soybeans, and spring cereals, in Europe and again, in East Asia and Australia. The outlook remains favourable as the season progresses during H2 2017.with the onset of the main Latin American season and the anticipated increase in winter cereals and oilseeds throughout the northern hemisphere, where Bayer remain the leaders.