Bayer's Profit Misses Estimates on Decline in Crop Sciences

February 25, 2016 08:04 AM
money corn

Bayer AG, the German drugmaker that appointed a new chief executive officer yesterday, reported fourth-quarter profit that missed analysts’ estimates as earnings in the company’s agricultural division declined.

Earnings before interest, taxes, depreciation and amortization, and excluding some costs, climbed 4 percent to 1.9 billion euros ($2.1 billion), the Leverkusen, Germany-based company said in a statement on Thursday. That fell short of the 2.04 billion-euro average estimate of 12 analysts surveyed by Bloomberg. Shares of Bayer fell by the most in six weeks in Frankfurt trading.

Revenue from Xarelto, the best-selling blood thinner that’s fueled the 152-year-old company’s expansion for the past three years, grew 26 percent to 650 million euros. But the drug faces competition on multiple fronts. A medicine called Eliquis, sold jointly by Pfizer Inc. and Bristol-Myers Squibb Co., has gained market share, while German rival Boehringer Ingelheim GmbH’s blood thinner Pradaxa is also threatening Xarelto.

Shares of Bayer fell 4.8 percent, the most since Jan. 15, to 91.88 euros as of 9:14 a.m. local time. The stock has declined 20 percent this year amid a global rout in equities.

Bayer, known for inventing aspirin more than a century ago, is in the process of a transformation initiated by CEO Marijn Dekkers, who said yesterday he would leave at the end of April and hand off to Chief Strategy and Portfolio Officer Werner Baumann.

Earnings before special items dropped 9.5 percent in the crop science division during the quarter.

Growth Forecast

Bayer said it expects group sales to rise by a low-single-digit percentage and reach 47 billion euros this year, while Ebitda before special items will grow by a mid-single-digit percentage. For the crop science division, the company expects sales to be at prior-year levels, it said.

Dekkers has restructured Germany’s second-biggest company by market value to focus on its more lucrative life sciences businesses. He bolstered the consumer-health division by acquiring Merck & Co.’s over-the-counter medicines in 2014, gaining household name like Claritin for allergies. Bayer then sold a stake in its plastics unit, Covestro AG, through an initial public offering which raised 1.5 billion euros. Since Jan. 1, the company is organized under three divisions -- pharmaceuticals, consumer health and crop sciences -- increasing the pressure to develop new drugs.

Covestro said this week it expects revenue growth to accelerate this year on higher demand for its products. Bayer holds a 69 percent stake in the company.


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