Strong Euro, restructuring charges take Bayer into the red in third quarter
The German chemicals and pharmaceuticals giant Bayer has posted a net loss of Eur123 million, ($141 million) for the third quarter, citing one-off restructuring charges and poor sales by its chemicals and polymers divisions. This compares with a net profit of Eur656 million a year earlier. The company also blamed the strength of the Euro, saying this had depressed US earnings which are reported in Euros. Analysts were expecting a net loss of Eur68-166 million.
Sales were down 8.4% on the year previous to Eur6.83 billion as three of the company’s four main divisions all reported losses. Farm chemicals fell 14% while industrial chemicals (including leather chemicals) tumbled 24%. Polymers were down by 5%. The declines overshadowed the ‘pleasing’ performance recorded by the company’s core drug and health care business. This posted earnings before interest and taxes of Eur216 million, on an 11% rise in sales. Chief financial officer, Klaus Kühn, said earnings were harmed by Eur112 million in one-time charges from the company's earlier restructuring efforts.
The results follow Bayer’s earlier announcement that it is to spin off its non-farm chemicals operations, together with parts of the polymers business, by early 2005, allowing it to focus on its core pharmaceutical and specialised development businesses. As part of the preparation process, Bayer Chemicals will be merged with certain parts of the polymers division into a new company, provisionally named NewCo.
