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Johnson & Johnson
Bayer AG (BAYN) increased its revenue and earnings forecasts for this year, citing rising sales of crop chemicals and drugs and favorable exchange rates.
Earnings before interest, tax, depreciation, amortization and special items rose 6.7 percent to 2.17 billion euros ($2.66 billion) from 2.04 billion euros a year earlier, the Leverkusen, Germany-based company said in a statement today. That beat the average estimate of 2.08 billion euros compiled by Bloomberg from 14 analysts.
Bayer is counting on its health and crop chemicals units to drive growth after saying sales and profit from plastics will be unchanged this year. The results beat expectations despite high one-time charges, Peter Spengler, a Frankfurt-based analyst for DZ Bank AG, wrote in a report.
“The numbers look very strong,” said Sebastian Frericks, an analyst at Bankhaus Metzler in Frankfurt, adding that the health-care unit in particular performed better than expected.
Bayer rose 1.4 percent to 62.03 euros at 9:05 a.m. in Frankfurt trading. The stock has returned 28 percent this year through yesterday, including reinvested dividends, compared with 15 percent for the Bloomberg Europe Pharmaceuticals Index.
Sales rose 10 percent to 10.2 billion euros, beating an average analyst estimate of 9.75 billion euros compiled by Bloomberg. Core earnings rose to 1.47 euros a share, compared with an average estimate of 1.37 euros.
Bayer said sales will increase about 4 percent to 5 percent this year to 39 billion euros to 40 billion euros, excluding currency and portfolio changes. The company previously forecast a sales increase of about 3 percent.
Core earnings per share will rise about 10 percent and Ebitda before special items will increase by a high single-digit percentage, Bayer said. The company previously predicted a slight improvement for both.
Florent Cespedes of Exane BNP Paribas predicted in a July 25 report that Bayer would raise its forecast because of the strength of the crop chemicals unit. Analyst estimates already reflect such an increase, he said. Bayer said April 26 it might adjust its forecast for crop chemicals because it expected market conditions to remain good this year.
Agricultural sales including insecticides, herbicides and seeds grew 17 percent to 2.28 billion euros, helped by high prices for agricultural commodities. Bayer increased its forecast for the unit, saying revenue will rise by about 10 percent, adjusted for currency fluctuations and portfolio changes. Ebitda before special items will rise by about 20 percent, the company said.
Sales from health care, the largest of Bayer’s three main divisions, will rise between 3 percent and 4 percent after currency and portfolio adjustments, Bayer said. Ebitda before special items for the unit will rise by a mid- to high-single- digit percentage, more than the slight improvement Bayer had previously forecast. Second-quarter sales at the health unit increased 10 percent to 4.63 billion euros.
Bayer had 762 million euros of one-time costs, including 496 million euros to settle lawsuits over blood clot injuries in connection with the contraceptives Yasmin and Yaz.
Sales of Xarelto, the blood thinner Bayer markets together with Johnson & Johnson (JNJ), reached 68 million euros in the second quarter. The partners introduced the drug to U.S. irregular heartbeat patients in the fourth quarter last year. Bayer estimates the medicine’s annual sales will grow to more than 2 billion euros a year.
Xarelto’s second-quarter sales are in line with expectations, Bankhaus Metzler’s Frericks said by telephone today. He said he estimates the medicine will have sales of about 300 million euros this year.
Revenue at Bayer’s plastics division, which makes materials used in cars, electronics and other products, rose 6.5 percent to 2.96 billion euros.
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