Bayer Talking With Plastics Workers on Costs, CEO Says

Bayer AG (BAYN) has begun talks on cost cuts with workers at the MaterialScience unit in a bid to improve the plastics division’s profitability, Chief Executive Officer Marijn Dekkers said.

Bayer is looking at saving measures that will be in effect over the next three to four years, Dekkers said at a dinner with journalists last night at the company’s headquarters in Leverkusen, Germany. He declined to comment on whether job cuts are being discussed.

“We must continue to lower costs,” Dekkers, 55, said. He characterized the measures as “small adjustments” to improve margins in the unit, which makes materials for products from car parts to cosmetics, as Bayer waits for demand to increase in the next two to three years.

MaterialScience has been the laggard among Bayer’s three units, facing sinking prices, high raw materials costs and slowing market growth, especially in China. Analysts have long speculated the company will sell or spin off the division. He’s said he sees no pressing need for such a deal.

By contrast, Bayer’s pharmaceutical unit has had a successful run of new drugs, including blood thinner Xarelto and eye treatment Eylea, and new products introduced from 2011 to 2016 by the CropScience agriculture unit may add at least 4 billion euros ($5.3 billion) in revenue, Dekkers said.

The German company is “on the right path” as it pursues organic growth, research collaborations and small- and mid-sized acquisitions, the executive said. While Bayer looks at acquisition opportunities as they emerge, it doesn’t need to spend a lot on new medicines to strengthen its pipeline, he said.

“We are in a very good position now, where we’ve had very good products come out of our own research for organic growth,” Dekkers said.

Bayer has returned 21 percent including reinvested dividends this year, compared with a 13 percent return for Germany’s DAX Index.

To contact the reporter on this story: Naomi Kresge in Berlin at nkresge@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

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