Thursday February 28, 11:04 AM
Bayer posts 'best ever' yearly results
LEVERKUSEN, Germany(AFP) - The German group Bayer (Xetra: 575200 - news) said on Thursday that 2007 was its best ever year as a major acquisition in its drugs business paid off and a boom in biofuels boosted the agro-chemicals division.
Net profit almost tripled to 4.7 billion euros (7.1 billion dollars) and operating profit before exceptional items, Bayer's benchmark for forecasts, rose by 21 percent to 6.8 billion euros, a statement said.
Sales gained 12 percent to 32.4 billion euros, while the company's profit margin reached 20.9 percent, meaning the maker of Aspirin attained its targets of a margin of at least 20.3 percent and sales of more than 32 billion euros.
In the fourth quarter of 2007 however, Bayer's net profit fell by 80 percent to 67 million euros, mainly because the same period in 2006 had benefitted from the effect of a German tax reform.
And operating profit before exceptional items, which measures the company's core activities, gained 13 percent to 1.4 billion euros in the quarter -- below a forecast by analysts by Thomson Financial News.
Sales by Bayer's pharmaceuticals division soared 37 percent to 10.3 billion euros, thanks in large part to Bayer's 17-billion-euro acquisition of rival Schering, which was included in Bayer's results from June 2006.
Schering products were the main growth-drivers, with 2007 sales of its oral contraceptives up 37 percent and exceeding one billion euros for the first time -- a feat matched also by Schering's Betaferon multiple sclerosis drug.
The strong performance of Schering products comes as Bayer's own pharmaceutical activities encounter difficulties.
In November Bayer withdrew its anti-bleeding treatment Trasylol due to safety concerns and earlier this month it stopped advanced tests for Nexavar for use against lung cancer -- prompting a sharp slide in its share price.
Bayer's agro-chemicals business provided solid results with Bayer's Cropscience division increasing sales by 5.6 percent to 5.8 billion euros.
The division profited from favourable conditions in world agricultural markets, particularly the higher prices for agricultural commodities, increased cultivation of crops for biofuels, and an improved market environment in Latin America, Bayer said.
The Material Science unit, which makes plastics and is being restructured, showed a 4.2 percent loss in core earnings to 1.6 billion euros.
On Tuesday, Bayer had already announced it would propose a 35 percent increase in its share dividend to 1.35 euros.
Looking ahead, Bayer said that the start to 2008 had been "strong" and that it expects sales growth this year of around five percent when adjusted for currency effects.
It also expects further improved operating profit before exceptional items and a higher operating margin, with a "gratifying earnings trend" in its healthcare and agro-chemicals businesses but difficult conditions for its material science unit.
"The strong start to the year confirms our estimations," Wenning said.
Lare morning Bayer shares were down 3.1 percent at 52.42 euros while the benchmark DAX 30 (Xetra: news) was down 0.9 percent at 6.936,49 points.
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