Bayer Posts Profit Plunge as Weedkiller Litigation Continues to Bite -- Earnings Review

By Joshua Stein

German pharmaceutical and chemical conglomerate Bayer AG reported fourth-quarter and full-year results on Thursday. Here's what you need to know:

SALES: Fourth-quarter sales fell to 10.00 billion euros ($12.17 billion), from EUR10.75 billion and slightly behind analysts' expectations of EUR10.01 billion, according to a consensus provided by Vara Research.

EBITDA BEFORE SPECIAL ITEMS: Earnings before interest, taxes, depreciation and amortization and before special items for the quarter fell to EUR2.39 billion, compared with EUR2.48 billion in the same quarter the previous year and analysts' expectations of EUR2.45 billion.

NET PROFIT: Bayer's quarterly net profit sunk to EUR308 million, compared with EUR1.41 billion a year earlier. In 2020, Bayer recorded a net loss of EUR10.50 billion, down from a net profit of EUR4.09 billion in 2019.

WHAT WE WATCHED:

-PHARMACEUTICALS: Analysts at Citi said Bayer's pharmaceutical pipeline update was disappointing after having voiced initial concerns about the outlook for the division in recent months. Bayer reported decreasing yearly sales for its Xofigo drug, for example, with a marked decline in the U.S. Full-year sales of its Xarelto drug went up by 12% on a currency and portfolio adjusted basis, driven by increasing volumes in China and strong growth in Europe.

-GLYPHOSATE LITIGATION: Bayer's earnings for the year were severely affected by litigation concerning the company's glyphosate-based weedkiller, Roundup, the company said. Net special charges, which were mainly made up by provisions for litigation to do with the weedkiller, increased to EUR23.26 billion from EUR2.81 billion in 2019. Bayer has earmarked EUR8 billion to settle additional litigation over Roundup in 2021.

-CROP SCIENCE BUSINESS: Bayer's crop science business didn't live up to expectations, according to Warburg Research analyst Ulrich Huwald. The division's worse-than-expected performance was the main driver for Bayer's sales and adjusted Ebitda missing the company's expectations, he said.

Bayer guided for moderate growth at the crop science segment in 2021, which Citi sees as conservative. Bayer said strong global demand for corn and soybean should drive growth, but that it could be held back by continuing pressure from the coronavirus pandemic.

Write to Joshua Stein at [e-mail]

(END) Dow Jones Newswires

February 25, 2021 10:32 ET (15:32 GMT)

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