Management Report
4.1 Earnings; Asset and Financial Position
4.1 Earnings Performance of the Bayer Group
| Bayer Group Summary Income Statements | [Table 3.15] |
|---|
| | 2009 | 2010 | Change |
| | € million | € million | % |
| Sales | 31,168 | 35,088 | +12.6 |
| Cost of goods sold | 15,135 | 17,103 | +13.0 |
| Selling expenses | 7,923 | 8,803 | +11.1 |
| Research and development expenses | 2,746 | 3,053 | +11.2 |
| General administration expenses | 1,623 | 1,647 | +1.5 |
| Other operating income and expenses – net | (735) | (1,752) | . |
| EBIT [operating result] | 3,006 | 2,730 | -9.2 |
| Non-operating result | (1,136) | (1,009) | +11.2 |
| Income before income taxes | 1,870 | 1,721 | -8.0 |
| Income taxes | (511) | (411) | -19.6 |
| Income after taxes | 1,359 | 1,310 | -3.6 |
| of which attributable to non-controlling interest | 0 | 9 | . |
| of which attributable to Bayer AG stockholders (net income) | 1,359 | 1,301 | -4.3 |
Sales of the Bayer Group rose by 12.6% from the previous year to €35,088 million (2009: €31,168 million), thanks largely to the recovery in the MaterialScience business. Adjusted for currency and portfolio effects, sales grew by 8.0%.
The cost of goods sold advanced by 13.0% to €17,103 million. This was mainly due to a considerable increase at MaterialScience, which in turn resulted chiefly from the growth in volumes and higher average raw material prices for the year. The ratio of the cost of goods sold to total sales was 48.7% (2009: 48.6%). Selling expenses rose by 11.1% year on year to €8,803 million (2009: €7,923 million), and were thus equivalent to 25.1% (2009: 25.4%) of sales. HealthCare accounted for the greater part of the increase. We raised our research and development expenses in 2010 by a further 11.2% to €3,053 million (2009: €2,746 million). The ratio of R&D expenses to sales was 8.7% (2009: 8.8%). General administration expenses were just 1.5% higher at €1,647 million (2009: €1,623 million). The negative balance of other operating income and expenses, at €1,752 million, resulted mainly from special charges related to impairments, litigations and restructuring measures (see also Chapter 4.2
“Calculation of EBIT(DA) Before Special Items”).
EBIT for 2010 came in at €2,730 million (2009: €3,006 million).
The non-operating result improved by €127 million to minus €1,009 million (2009: minus €1,136 million). It included lower net interest expense of €499 million (2009: €548 million), interest cost of €372 million (2009: €436 million) for pension and other provisions, a €59 million (2009: €59 million) net loss from investments in affiliated companies and a €70 million (2009: €92 million) net exchange loss. The improvement in the net interest position was mainly due to the reduction in financial debt. The decrease in interest expense for pension and other provisions was mainly the result of higher returns on pension plan assets, which are offset against the interest cost for defined benefit plans.
Tax expense in 2010 amounted to €411 million (2009: €511 million). Income after taxes came in at €1,310 million (2009: €1,359 million). Income attributable to non-controlling interest amounted to €9 million (2009: €0 million). Bayer Group net income for 2010 was €1,301 million (2009: €1,359 million).