Bayer Raises Profit Outlook on Chemicals, Crops Rebound

Updated on
  • Finance Chief Johannes Dietsch plans to leave June next year
  • Ebitda seen rising by low teens percentage this year

Bayer CEO Baumann Sees Monsanto Deal Closure by Year End

Bayer AG raised its outlook for the year, citing a rebound in chemicals and crop products, as management works to sew up its $66 billion takeover of agriculture giant Monsanto Co.

Earnings before special items will likely rise by a percentage in the low teens and sales will grow to a record 51 billion euros ($55.6 billion) this year, the Leverkusen, Germany-based company said in a statement on Thursday. Covestro, the chemicals unit, is now able to raise prices, and demand for crop protection products has rebounded in North America, Bayer said.

Chief Executive Officer Werner Baumann aims to close the Monsanto transaction this year, even as a cascade of industry deals sparks intense regulatory scrutiny, and said discussions with U.S. regulators are proceeding on track. Bayer may put some of its seed businesses up for sale to assuage antitrust concerns, people familiar with the matter said last month.

Werner Baumann, chief executive officer at Bayer, talks to Bloomberg TV.

Source: Bloomberg

“We are working diligently through the questions, and also actually in Europe, where we still have to file in quarter two,” Baumann said in a Bloomberg television interview with Guy Johnson. Rivals such as China National Chemical Corp. and Syngenta AG won approval for their planned combination this month, which is “also a strong testimony to our perspective of closing by the end of the year,” he said.

Bayer shares rose 2.9 percent to 111.20 euros at 9:26 a.m. in Frankfurt trading. Earlier they gained as much as 3.4 percent, the biggest gain in three months.

Chief Financial Officer Johannes Dietsch will leave in June next year after having extended his planned stay to oversee the Monsanto transaction, Bayer said in a separate statement.

Buying Monsanto will allow Bayer to tap growing demand as farmers seek to boost productivity to feed an estimated 10 billion people globally by 2050. The deal gives Bayer more than 2,000 varieties of seeds for crops such as corn, soybeans, and wheat. Adding that portfolio to its own vegetable, rice, cotton, and oilseed offerings give Bayer a virtually unassailable position at the head of the market as demand rebounds.

Bayer’s earnings before interest, taxes, depreciation and amortization, and excluding some costs, climbed 15 percent to 3.89 billion euros in the first quarter. Besides crops and chemicals, the company also got a boost from prescription drugs. Profit at the division that makes the Xarelto blood thinner rose 19 percent in the quarter. Efforts to turn around the laggard consumer health unit also partly paid off, with brands like Coppertone sunscreen recovering in the U.S. and China.

Ebitda before special items will likely improve by a low-teens percentage this year, compared with a previous estimate of a mid-single-digit percentage, the company said.

(Updates with share price in fifth paragraph.)
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