Bayer Profit Falls Sharply as Costs Bite

By Christopher Alessi 

LEVERKUSEN, Germany-- Bayer AG on Thursday posted a 51% drop in net profit for the fourth quarter of 2014, weighed down by higher research and development and selling costs.

The German pharmaceutical group said net profit for the three-month period ended Dec. 31 was EUR224 million ($254 million), compared with EUR455 million a year earlier, missing analysts' expectations. Analysts had predicted net profit to rise to EUR483 million, according to a poll by The Wall Street Journal.

Earnings before interest, taxes, depreciation and amortization before special items rose 4.4%, to EUR1.85 billion, a result of higher volumes in all business areas. Sales increased 12% to EUR11.04 billion, helped by a weaker euro and the consolidation of U.S.-based Merck & Co.'s over-the-counter business, which Bayer acquired for $14.2 billion last year.

At EUR42.24 billion, total sales for 2014 met Bayer's updated sales guidance of EUR42 billion. The company's five most recently launched drugs--Xarelto; eye treatment Eylea; cancer drugs Stivarga and Xofigo; and pulmonary hypertension drug Adempas--contributed EUR2.9 billion in sales for last year, slightly ahead of the company's forecasts.

Late Wednesday, the company said it would pay a dividend of EUR2.25 a share for 2014, compared with EUR2.10 in 2013.

Bayer said it expects approximate sales of EUR46 billion 2015, helped by favorable foreign-exchange conditions. It predicted its new drugs would contribute close to EUR4 billion in sales for this year.

Write to Christopher Alessi at [e-mail]

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