April 26 (Bloomberg) -- Bayer AG said it’s “increasingly confident” about its outlook for the year after reporting sales and profit that beat analysts’ estimates, helped by a strong first quarter at the crop chemicals unit.
Earnings before interest, tax, depreciation, amortization and special items rose 9.4 percent to 2.44 billion euros ($3.23 billion) in the quarter, the Leverkusen, Germany-based drug and chemical company said in a statement. That beat the average analyst estimate of 2.24 billion euros compiled by Bloomberg.
Like Syngenta AG and Monsanto Co., Bayer benefited as warm weather in the U.S. prompted farmers to place orders earlier than usual. The company is counting on the crop chemicals and health units to drive growth after saying sales and profit at its plastics division will be unchanged this year. Bayer repeated its forecast for sales to rise about 3 percent this year, excluding currency and portfolio changes.
“Management shied away from upgrading its full-year guidance, although is likely to do so at the half-year stage,” Karl Heinz Koch, an analyst at Helvea SA in Zurich, wrote in a note to clients.
Bayer rose 1.5 percent to 54 euros in Frankfurt trading. The stock has gained 9.3 percent this year including reinvested dividends, compared with a 3.7 percent rise in the Bloomberg Europe Pharmaceutical Index of 18 companies.
Growth in China
Sales last quarter rose 6.8 percent to 10.1 billion euros, beating the average analyst estimate of 9.7 billion euros compiled by Bloomberg. Core earnings reached 1.68 euros a share, compared with an average forecast of 1.48 euros.
“We are increasingly confident for the rest of the year,” Chief Executive Officer Marijn Dekkers said in the statement.
Revenue will climb roughly 3 percent this year to about 37 billion euros and core earnings per share will “slightly improve,” the company said. Sales from health care, the largest of the company’s three main divisions, will rise in the low- to mid-single-digit percentage range. That unit increased first-quarter sales by 4.2 percent to 4.3 billion euros as growth in China more than offset declining revenue in Europe.
Bayer and partner Johnson & Johnson began selling the blood thinner Xarelto to irregular heartbeat patients in the fourth quarter. Bayer estimates the medicine’s sales will eventually exceed 2 billion euros a year.
Crop science sales jumped 16 percent to 2.6 billion euros. Bayer is improving its competitiveness on seed bundling, or package deals for farmers, said Fabian Wenner, an analyst at Kepler Capital Markets in Zurich.
Revenue at the agricultural chemicals unit will likely rise faster than the market this year, Bayer repeated. Sales and earnings will rise in mid-single-digit percentages, the company said, adding that the forecast may be adjusted at the next quarterly results after the strong start to the year.
Bayer’s plastics division had the slowest sales growth, showing an increase of 3.8 percent to 2.8 billion euros as high raw material costs crimped growth.
To contact the editor responsible for this story: Phil Serafino at firstname.lastname@example.org