FRANKFURT AM MAIN (AFP) – German chemical and pharmaceutical giant Bayer yesterday reported surging profits for 2019 after its buying of United States (US) seeds and pesticides maker Monsanto, but remained entangled in a massive wave of lawsuits over a flagship weedkiller.
Net profit at Bayer leaped 141.4 per cent year-on-year, to EUR4.1 billion, the group said in a statement, beating forecasts from analysts surveyed by Factset by around EUR200 million.
Over the year, “we achieved our financial targets despite coming up against a challenging market environment in the agricultural sector in particular,” chief executive Werner Baumann said.
Operating profit at the group’s crop science unit jumped 80 per cent as the Monsanto integration went through.
But sales were down slightly on 2018 when presented as if Monsanto had been part of the business since January 1 that year.
Most of the fall in the agricultural division was down to the soybean business in North America, where the group said falling acreage of the crop, competition, adverse weather and trade conflicts weighed on revenues.
Meanwhile the Leverkusen-based group said it had been served with around 48,600 lawsuits over Monsanto weedkiller glyphosate, a vital ingredient in widely-used products like Roundup.
Plaintiffs argue that glyphosate caused their cancers, but Bayer insists the chemical is safe and is “vigorously” appealing first-instance court decisions against it last year.
It added that it “continues to constructively engage in the confidential court-ordered mediation proceedings” that could lead to a settlement.
Bayer did not report setting any cash aside in provisions to cover potential court-ordered payouts or a settlement in the glyphosate cases, which according to Baader bank analyst Markus Mayer could be in the range of USD15-20 billion.
Elsewhere in the business, operating profit grew at the pharmaceuticals division “driven by higher volumes and a decrease in the cost of goods sold”.
And profit was flat at its over-the-counter medicines unit despite rising sales.
Looking ahead to 2020, Bayer said it expected to increase revenue from 2019’s EUR43.5 billion by “about three to four per cent” to between EUR44 billion and EUR45 billion, adjusting for currency and portfolio effects. Meanwhile earnings per share should grow to between EUR7 and EUR7.20, also in adjusted terms, up from 6.40 last year.
“The forecast does not yet include an estimate of the potential impact of the coronavirus outbreak,” Bayer said.