Bayer falls as 3rd-qtr revenues disappoint

Germany’s Bayer (BAYN: DE) saw its shares fall as much as 3.5% to 110.85 euros this morning, after the company released its third-quarter 2017 financial results, which showed that sales were dragged down by its consumer health business.

Group sales for the quarter declined 2.8% to 8,025 million euros ($9.48 billion), which missed Vara Research’s consensus forecast of 8.39 billion euros. Adjusted for currency and portfolio effects, sales advanced 1.2%. Earnings before interest, tax, depreciation and amortization (EBITDA) before special items improved by 4.1% to 2,204 million euros, slightly higher than the average forecast by analysts of 2.12 billion euros. Negative currency effects diminished earnings by around EUR 100 million. EBIT came to 1,388 million euros, matching the prior-year period. This figure reflected net special charges of 249 million euros (Q3 2016: 125 million euros), consisting primarily of expenses in connection with the agreed $66 billion acquisition of US seed company Monsanto, provisions for legal risks, and efficiency improvement programs..

Net income came to 3,881 million euros, versus 1,187 million euros. This figure includes a gain of 2.8 billion resulting from the deconsolidation of Covestro and the presentation of the Covestro Group as an associate for the first time. Earnings per share (total) increased to 4.45 euros versus 1.43 euros. Core EPS from continuing operations fell by 3.9% to 1.47 euros.

Group outlook for 2017 confirmed

For the Bayer Group, the company is still planning sales of 35 billion euros to 36 billion euros for full year 2017. As before, this corresponds to a low-single-digit percentage increase on a currency- and portfolio-adjusted basis. Bayer continues to expect EBITDA before special items to come in slightly above the level of the previous year

For Pharmaceuticals, Bayer now expects sales of around 17 billion euros (previously: more than 17 billion euros). Bayer continues to expect a high-single-digit percentage increase in EBITDA before special items and an improvement in the EBITDA margin before special items.

"Last quarter we took some important strategic steps," said Werner Baumann, chairman of the board of management, when he presented the interim report. Bayer has made very good progress toward its goal of achieving full separation from Covestro in the medium term, he noted.