By Neetha Mahadevan
FRANKFURT--Germany's Bayer AG (BAYN.XE) on Thursday raised its
full-year sales forecast despite a decline in first-quarter net
profit that was largely due to higher research-and-development
expenses and integration costs.
Net profit for the quarter ended March 31 fell 8.4% on the year
to 1.30 billion euros ($1.45 billion), compared with EUR1.42
billion a year earlier, slightly missing analyst expectations of
EUR1.36 billion. Earnings were held back by special charges of
EUR244 million for the consolidation of the recently acquired
over-the-counter business of Merck & Co. (MRK) and additional
efficiency measures. Positive currency effects buoyed earnings by
about EUR50 million
Earnings before interest, taxes, depreciation and amortization
before special items--a figure watched closely by analysts--rose
9.6% to EUR3 billion from EUR2.74 billion a year earlier. Sales
jumped 15% to EUR12.12 billion from EUR10.56 billion. Sales
increased 2.7% after stripping off currency and portfolio
effects.
For the full year, the German pharmaceutical company now expects
sales of EUR48 billion to EUR49 billion compared with its
previously forecast EUR46 billion, helped by favorable
foreign-exchange conditions. Ebitda before special items is
predicted to increase by a high-teen percentage compared with its
previous forecast of a low- to mid-teen-percentage increase.
Bayer Chief Executive Marijn Dekkers has been steering the
company to refocus on its core health-care and agricultural
businesses, while preparing to shed its high-tech plastics business
through a flotation by mid-2016 at the latest.
Since taking the helm five years ago, Mr. Dekkers has presided
over the launch of five new blockbuster drugs and beefed up the
group's over-the-counter drug business with the $14.2 billion
acquisition last year of U.S.-based Merck & Co.'s consumer-care
division.
In the first three months, the combined sales its key
drugs--anticoagulant Xarelto, eye medicine Eylea, cancer drugs
Stivarga and Xofigo, and pulmonary hypertension drug
Adempas--jumped 50% to EUR898 million, while the products acquired
from Merck added EUR495 million to the health-care business.
However, earnings at its crop-science business suffered due to weak
market conditions in North and South America. The Leverkusen-based
company said the MaterialScience unit posted earnings growth of 16%
in the first quarter due to low raw-material costs, but sales
declined amid fall in selling prices.
Bayer is on track to spin off the $10 billion MaterialScience
business, either directly to shareholders or through an initial
public offering, the company said.
Mr. Dekkers has said the company would decide on the best route
in the second half of 2015, but has suggested he would prefer an
IPO in order to generate cash to pay down Bayer's EUR20 billion in
debt. The division's financial chief recently told The Wall Street
Journal that a spinoff will bring down the unit's costs by
providing it more flexibility, mitigating the need to push through
major investments once it is independent.
Write to Neetha Mahadevan at neetha.mahadevan@wsj.com
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