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MarketScreener Homepage  >  Equities  >  Xetra  >  Bayer AG    BAYN   DE000BAY0017


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Bayer : Pact Leads to $11 Billion Loss

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08/05/2020 | 02:48am EDT

By Ruth Bender

BERLIN -- Bayer Tuesday said it swung to a net loss of EUR9.55 billion ($11.23 billion) in the second quarter on provisions for its multibillion-dollar settlement with plaintiffs alleging the company's Roundup herbicides cause cancer, as the German firm slightly lowered its outlook due to the coronavirus pandemic.

Bayer, whose share price has been weighed down for years by the Roundup legal battle, said it expects full-year sales and earnings before interest taxes, depreciation and amortization to come in slightly lower than initially forecast, after sales in its pharmaceuticals division were hit by the pandemic.

The chemicals-to-pharmaceuticals company now expects sales, adjusted for currency swings, disposals or acquisitions, to grow between 0% and 1% this year to between EUR43 billion and EUR44 billion, compared with a previously forecast rise of 3% to 4%. Ebitda is projected at around EUR12.1 billion compared with a previous target of EUR12.3 billion to EUR12.6 billion.

Sales in the second quarter dropped 6.2% to EUR10.05 billion from EUR10.71 billion as sales of pharmaceuticals, which make some 40% of group sales, fell as hospitals and doctors around the world postponed nonessential treatments amid lockdowns and a focus on Covid-19 patients.

At the consumer care division, which includes blockbuster brands such as aspirin, sales fell 16.7% in the quarter as consumers and retailers refrained from buying new products after they had built large stocks at the beginning of the pandemic during the first quarter.

Sales in the crop science division rose 0.3%, helped by higher sales in Latin America, Asia and North America.

The net loss, which also includes provisions for other pending litigation, comes as the company is still struggling to find a solution to fully put to rest the Roundup legal battle that has haunted the company ever since it inherited the first lawsuits with its takeover of U.S. agricultural giant Monsanto in 2018.

The settlement deal Bayer announced in late June hit a snag last month when the company had to scrap a $1.25 billion proposal for resolving future lawsuits over the weedkillers that continue to be sold.

To prevent lawsuits in future, Bayer came up with a novel type of class action that depended on the creation of a panel of scientists that Bayer wanted to definitively decide on whether Roundup and its active ingredient, glyphosate, are carcinogens.

But the U.S. judge in charge of approving the solution said he was skeptical that such a panel could fairly replace judges and juries in the case. Bayer and plaintiffs' lawyers last month said they would work on refining the idea and bring it back to the judge.

Bayer Tuesday said it remains committed to finding a viable solution to resolve potential future lawsuits.

Deals valued at up to $9.6 billion that Bayer reached with lawyers representing tens of thousands of plaintiffs remain intact. The recent sale of its animal health division will help pay for the settlements and Bayer also issued bonds with a total volume of EUR6 billion at the beginning of July to increase its financial flexibility.

Bayer has continuously argued that Roundup and its active ingredient glyphosate are safe and appealed three jury verdicts that had sided with plaintiffs.

Bayer also lost an appeal in the first case to go to trial linking its Roundup weedkiller to cancer, though the California court considerably reduced the amount of damages awarded. Bayer said Tuesday it is considering whether it will appeal to the Supreme Court of California.

Write to Ruth Bender at Ruth.Bender@wsj.com


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Sales 2020 43 305 M 50 381 M 50 381 M
Net income 2020 -2 690 M -3 130 M -3 130 M
Net Debt 2020 32 651 M 37 986 M 37 986 M
P/E ratio 2020 -15,9x
Yield 2020 5,31%
Capitalization 52 530 M 61 032 M 61 113 M
EV / Sales 2020 1,97x
EV / Sales 2021 1,89x
Nbr of Employees 101 168
Free-Float 100,0%
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Average target price 78,72 €
Last Close Price 53,47 €
Spread / Highest target 106%
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Werner Baumann Chairman-Management Board
Norbert Winkeljohann Chairman-Supervisory Board
Wolfgang U. Nickl Chief Financial Officer
Bijoy Sagar Chief Information Technology Officer
Paul Achleitner Member-Supervisory Board
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