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Bayer Third-Quarter Earnings Rise on New Medicines

Bayer AG (BAYN)’s third-quarter earnings rose 7.7 percent on higher sales for the new blood thinner and eye treatment that are recharging its drug portfolio.

Earnings before interest, taxes, depreciation, amortization and special items rose to 1.98 billion euros ($2.7 billion) from 1.84 billion euros a year earlier, the Leverkusen, Germany-based company said in a statement today. That beat the 1.87 billion-euro average estimate of 11 analysts surveyed by Bloomberg.

New medicines including the blood thinner Xarelto and the eye drug Eylea have helped drive Bayer’s profit upward even as earnings from its MaterialScience plastics division lag. Bayer is in talks with workers to cut costs at the unit, which makes chemicals for everything from makeup to car parts, Chief Executive Officer Marijn Dekkers told reporters in September.

“People do want to own this for the pharma growth,” said Fabian Wenner, an analyst for Kepler Cheuvreux in Zurich. “Investors don’t really care about 2013 anymore.” Wenner rates the stock a hold.

The shares fell 1.1 percent to 91.54 euros in Frankfurt. Bayer returned 32 percent this year prior to today, including reinvested dividends, outpacing the 25 percent return for the Bloomberg Europe Pharmaceutical Index.

Third-quarter sales fell 0.2 percent to 9.6 billion euros, below the average analyst estimate of 9.8 billion.

Pharma Growth

Revenue will reach 40 billion euros this year, the company said, compared with a previous forecast of 40 billion euros to 41 billion euros. “We are maintaining our guidance, although it is increasingly ambitious,” Dekkers said in the statement.

Bayer has said the pharmaceuticals business it operates out of its HealthCare unit will drive future growth. Sales of pharmaceuticals climbed 3.1 percent to 2.82 billion euros, outpacing a 0.5 percent sales increase at the broader HealthCare unit. New drugs Xarelto, Eylea and cancer medicines Stivarga and Xofigo had combined sales of 407 million euros.

The company’s goal is to increase Ebitda before special items by a mid-single-digit percentage this year and for an increase of core earnings per share by a high-single-digit percentage.

Bayer boosted its forecast for its CropScience agriculture unit, saying Ebitda before special items will rise by at least 10 percent there. The company had previously forecast a high-single-digit percentage increase for the unit, which has flourished even as the plastics division flailed.

MaterialScience saw prices continue to drop and raw material costs rise in the quarter. The unit’s sales declined 3.1 percent to 2.9 billion euros, while Ebitda before special items rose 2.7 percent to 346 million euros, factoring in the sale of a coatings business for 17 million euros.

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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