Bayer Posts Loss as Charges Take Toll -- Earnings Review

By Cecilia Butini

Bayer AG posted a third-quarter loss on Tuesday as headwinds in its agricultural business and charges related to litigation affected earnings took their toll. Here's what you need to know.

EARNINGS: The company posted a loss of 2.74 billion euros ($3.19 billion), narrower than the previous quarter but a swing from a profit of EUR1.04 billion for the same quarter last year. Earnings were affected by special charges of EUR10.18 billion, including EUR9.3 billion in noncash impairment charges on assets in Bayer's agricultural business, and provisions related to potential future litigation on weedkiller Roundup.

SALES: Group sales for the quarter came to EUR8.51 billion compared with EUR9.83 billion for the same quarter in 2019. Sales declined especially in the agricultural segment, which fell 23% on a reported basis and 12% adjusted for currency effects.

WHAT WE WATCHED:

ROUNDUP LITIGATION: The company raised the expected cost of handling future lawsuits related to the weedkiller Roundup, which it acquired through its acquisition of Monsanto in 2018, to $2 billion from $1.25 billion.

CROP SCIENCE HEADWINDS: The segment was strongly affected by high product returns and weak sales particularly in North America. The EUR9.3 billion in impairment losses in the division were driven by reduced growth expectations in the agricultural industry especially in the Americas. Negative currency effects also played a role, Bayer said.

OUTLOOK: Bayer confirmed its 2020 outlook despite the difficulties in the quarter, with sales expected between EUR43 billion and EUR44 billion, and Ebitda before special items around EUR12.1 billion.

For 2021, Bayer expects sales at the 2020 level, but earnings should decline on-year. Under the current circumstances, the company won't be able to achieve its original annual growth targets, partly due to negative currency effects and to a decline in prices in China, it said.

Write to Cecilia Butini at [e-mail]

(END) Dow Jones Newswires

November 03, 2020 07:40 ET (12:40 GMT)

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