(Updates with closing shares in fifth paragraph.)

July 28 (Bloomberg) -- Bayer AG’s second-quarter profit rose 41 percent as revenue growth at the company’s two chemical divisions offset declining sales of its top-selling multiple sclerosis and birth-control drugs.

Net income increased to 747 million euros ($1.07 billion) from 530 million euros a year earlier, the Leverkusen, Germany- based company said today in a statement. Core earnings per share, which exclude one-time items such as litigation costs, totaled 1.29 euros, matching the average estimate of 17 analysts surveyed by Bloomberg.

Bayer is relying on agricultural chemicals and plastic materials to drive growth, forecasting that sales gains at the prescription-pharmaceutical division won’t match expansion at rivals. Bayer’s goal to increase earnings at the plastics unit at a faster rate than sales this year has become “increasingly ambitious,” the company said today.

The plastic materials unit forecast is “the one weak point in this good set of numbers,” said Sebastian Frericks, a Frankfurt-based analyst for Bankhaus Metzler, in a telephone interview. Frericks recommends buying the shares. “Profit was respectable, marginally better than I expected.”

Bayer fell 68 cents, or 1.2 percent, to close at 56.85 euros in Frankfurt trading. The stock has returned 32 percent in the past year, including reinvested dividends, compared with a 21 percent return for the Bloomberg Europe Pharmaceutical Index.

Drug Sales

The Betaferon injection for treating multiple sclerosis, Bayer’s top-selling drug, is competing with Novartis AG’s new Gilenya pill, while the Yaz and Yasmin contraceptive pills lost patent protection in Europe this month. Betaferon sales dropped 9.6 percent in the quarter and the contraceptives declined 9 percent.

“We expect continued pressure on the two most important product franchises for pharma,” Daniel Wendorff, a Frankfurt- based analyst at Commerzbank AG with a “hold” recommendation on Bayer’s stock, said in a report to clients before the results were released.

Revenue rose 0.8 percent to 9.25 billion euros, missing the average estimate of 9.54 billion euros. Sales at Bayer’s HealthCare unit fell 2.3 percent to 4.2 billion euros. Revenue from the cancer drug Nexavar dropped 8.1 percent.

Stroke Treatment

Bayer is awaiting regulatory approval this year for Xarelto, a blood thinner, for use by patients with irregular heartbeats who face the risk of a stroke. Bayer estimates the medicine may generate more than 2 billion euros in annual sales once its wider use is approved.

Revenue at the MaterialScience plastic ingredient and resins unit rose 3.5 percent to 2.78 billion euros. Sales and Ebitda before items in the third quarter will likely be at their year-earlier level, Bayer said.

Sales at the CropScience pesticide and seed-treatment division increased 3.1 percent to 1.94 billion euros. The business “continues to trend positively,” and Ebitda before items may rise by more than 20 percent this year if the season progresses well in the second half, Bayer said.

Bayer reiterated an April 28 forecast that group revenue will rise within a range of 5 percent to 7 percent this year, while earnings before interest, taxes, depreciation and amortization and excluding special items will exceed 7.5 billion euros.

--Editors: Phil Serafino, Thomas Mulier

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