Bayer expresses optimism with sales, sees improvement at Crop Science unit

Bayer AG raised its forecast for sales and earnings this year, citing an improvement at its crop- chemicals business.

Net income increased to 684 million euros ($1.02 billion) from 631 million euros a year earlier, the Leverkusen, Germany- based drug and chemical maker said today in a statement. Profit fell short of the 799.1 million-euro estimate of 13 analysts surveyed by Bloomberg.

A good start to the season and high prices for agricultural raw materials helped sales at Bayer’s CropScience division climb 16 percent, Chief Executive Officer Marijn Dekkers said in the statement. Bayer is relying on its chemical units to drive growth this year, forecasting that revenue gains at the drug division won’t match the market.

"The most exciting question is how dynamic the growth of the chemicals business will be and what effect the cost increases will have,” Ulrich Huwald, a Hamburg-based analyst for MM Warburg Investment Research, said in a telephone interview before the results were released. Huwald has a “buy” recommendation on Bayer’s shares.

Bayer forecast sales will rise 5 percent to 7 percent this year, above the 4 percent to 6 percent it previously estimated. Earnings before interest, taxes, depreciation and amortization before special items will exceed 7.5 billion euros, the company said, while core earnings per share are expected to improve by about 15 percent, up from a previous estimate of 10 percent.

Bayer has gained 4.1 percent this year in Frankfurt trading, lagging behind the 7.1 percent increase in Germany’s 30-member benchmark DAX Index.
Sales at Bayer’s HealthCare unit rose 7.7 percent to 4.17 billion euros. The company is awaiting regulatory approval for Xarelto, a blood thinner, for 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 chemical unit rose 21 percent to 2.69 billion euros. Sales at the CropScience division, which makes pesticides and other agricultural chemicals, increased to 2.26 billion euros.