Fourth-quarter earnings before interest, taxes, depreciation, amortization and special items increased 18 percent to 1.83 billion euros ($2.4 billion), the Leverkusen, Germany-based company said in a statement today. That met the 1.81 billion-euro average estimate of 12 analysts surveyed by Bloomberg.
Bayer signaled that it will continue to lean on its health and crop units for growth as prices drop for the industrial chemicals produced by its MaterialScience plastics division. The company issued a mid-term forecast today for 2015 that relies on five new pharmaceutical products to contribute more than 2.5 billion euros to sales.
“These targets aren’t unrealistically high,” Sebastian Frericks, a Frankfurt-based analyst for Bankhaus Metzler, said of the 2015 goals. He rates Bayer’s shares buy. “It’s possible they’ll be able to do even more. But it’s positive that they’ve made such binding statements.”
The shares rose 2.2 percent to 75.45 euros as of 2:23 p.m. in Frankfurt. Bayer has returned 40 percent including re- invested dividends in the past 12 months, compared with a 12 percent return from the DAX index.
Bayer is still interested in beefing up its health-care unit with over-the-counter or animal-health acquisitions, Chief Financial Officer Werner Baumann said in an interview. Bayer walked away from a $1.1 billion bid for vitamin and supplement maker Schiff Nutrition International Inc. after a higher bid from Reckitt Benckiser Group Plc. (RB/) It’s important to Bayer not to pay away more than half of the “synergies” of any potential deal, Baumann said.
“We are acquisitive, but we are selective in terms of the quality of the assets,” he said.
Also of interest would be a strategically supplementary product for its multiple sclerosis business, Baumann said. Bayer isn’t doing its own research in MS, and its best-selling drug last year, the injected MS medicine Betaseron, faces competition from Novartis AG (NOVN) pills. Biogen Idec Inc. (BIIB) is in talks with regulators on its own competing product.
“It would be extremely helpful to have another product in the bag,” Baumann said.
Bayer said marketing new drugs will be a priority this year. They include Xarelto, the blood thinner it sells with Johnson & Johnson (JNJ), and Stivarga, a cancer drug that won expanded approval this week for U.S. patients with a rare type of stomach tumor.
Sales rose 7.3 percent to 9.86 billion euros. Health-care revenue increased 7.1 percent to 4.92 billion euros, while crop sales rose 11 percent to 1.86 billion euros and plastics sales rose 6.4 percent to 2.76 billion euros.
Settlements and litigation expenses linked to the contraceptives Yaz and Yasmin cost 1.19 billion euros for the year. More than a third of the total, 455 million euros, was set aside in the fourth quarter to settle lawsuits over blood clot injuries alleged to be linked to the birth-control pills, Bayer said.
Sales of Yaz and Yasmin slipped 6.9 percent to 270 million euros in the fourth quarter, mostly due to competition from generics in western Europe, Bayer said. Sales of the new blood thinner Xarelto, meanwhile, more than quadrupled to 131 million euros in the quarter.
For 2013, group revenue will increase to about 41 billion euros, the company said. Analysts predicted sales of 41.5 billion euros, the average of 26 estimates.
Bayer predicted that health sales will rise toward 22 billion euros by 2015 from 18.6 billion euros last year. Meanwhile, crop revenue should grow toward 10 billion euros by 2015, Bayer said. The company didn’t provide a 2015 forecast for the MaterialScience plastics unit, saying only that sales volumes will expand faster than the economic growth rate.
Bayer said it’s planning “further efficiency measures” for MaterialScience that should add 1.5 percentage points to the adjusted Ebitda margin by 2015.
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