Bayer boosts forecast after strong third quarter

bayerFRANKFURT: German chemicals and pharmaceuticals giant Bayer on Wednesday said it had slightly increased its forecast for the whole year, driven by strong sales of prescription drugs.

Results released by the firm showed it had increased profits by 18.8 percent to 1.2 billion euros ($1.3 billion) between July and September compared with the same period the previous year, on sales of 11.3 billion euros.

Analysts surveyed by Factset had predicted profits of 1.08 billion euros.

Based on its performance, Bayer said it would target a “high single-digit percentage increase in adjusted profits per share” for the whole year rather than the “mid-to-high” increase it had in its sights previously.

Growth was driven by the Leverkusen-based firm’s prescription drugs division, which boosted its underlying profit 16.5 percent to 1.1 billion euros on stronger sales.

“Above all it was our new products that booked strong growth,” chief executive Werner Baumann told journalists by phone on Wednesday.

Anticoagulant Xarelto saw the biggest growth, followed by eye medication Eylea, cancer drugs Xofigo and Stivarga, and Adempas, a treatment for pulmonary hypertension — between them accounting for over a third of the unit’s 4.2 billion in sales.

The over-the-counter medications division, which produces household names including Bayer’s 119-year-old Aspirin painkiller and Alka-Seltzer antacids, saw profits fall.

Mega merger ahead

Bayer’s closely watched agrochemicals unit was able to increase profits by almost 8.0 percent on slightly weaker sales than in the third quarter of 2015.

Revenues in the division were hit by “weak market conditions, especially in Latin America”, CEO Baumann told journalists, pointing also to falling demand for insecticides.

But the firm was able to boost sales of both seeds and fungicides globally, he continued.

Bayer’s agriculture activities are in the spotlight as it prepares for a 58.8-billion-euro takeover of US maker of genetically modified seeds and pesticides Monsanto, the biggest ever acquisition by a German company.

“Both businesses fit perfectly together and complement one another wonderfully,” Baumann said.

In its communications since the deal was announced in September, Bayer has emphasised small overlaps between the two firms’ business with an eye to upcoming probes from competition authorities in the US and EU.

Environmental activists and politicians, especially in Europe, have warned that the merger is a “marriage made in hell” that will give the combined firm too much power over farmers and the food chain.

Monsanto shareholders still have to approve the Bayer tie-up, with the US company’s annual general meeting scheduled for January, if the deal is to go ahead as planned by the end of 2017.

Bayer had a “solid” third quarter, analyst Alistair Campbell of Berenberg bank wrote, but warned that “it is not a strong result across the board”, with the weak performance of the non-prescription drugs division a particular concern.

In Frankfurt trading, Bayer shares fell 2.6 percent to trade at 89.16 euros just after 0930 GMT on Wednesday, against a 1.1-percent fall in the DAX index of leading German shares.