Bayer Posts Modest Growth in Third Quarter

on Oct 30, 2012

On 30 October Bayer (FRA:BAYN), Germany’s largest drug maker, posted a 2.2 percent increase in quarterly underlying earnings as prescription drugs sales offset the weakness in its plastics business.

**Third Quarter Results**
Bayer posted third-quarter net income of €528 million (£425 million) down from €624 million (£502 million) in the same period last year. On the other hand the company’s earnings per share rose by 7.1 percent to €1.20 (£96.57 pence) from €1.12 (£90.08 pence) in the same quarter a year-ago. Earnings before interest, taxes, depreciation and amortization (EBITDA) was estimated at €1.85 billion (£1.49 billion).

Sales for the pharmaceutical company gained 11.5 percent to €9.67 billion (£7.78 billion) from 8.67 billion (£6.98 billion) in 2011.
According to board chairman Dr Marijn Dekkers, the company managed to boost its life sciences business in the third quarter via acquisitions and has achieved notable progress in its innovation pipeline. The decline in profits was a result of €205 million (£165 million) in provisions set aside for settling litigation in connection with the oral contraceptive Yasmin, which could increase the risk of blood clots, Bayer explained. The company is prepared to set aside an additional €134 million (£108 million) for restructuring.

“We confirm the sales and earnings forecast for 2012 that we raised in July. Bayer continues to anticipate a currency- and portfolio-adjusted sales increase of between 4 and 5 percent for the full year 2012, which would result in Group sales of about €39 to €40 billion (£31.4-32.2 billion).” commented Dr Dekker. “We’re on a successful path and underline our outlook for the whole of 2012,”

**Bayer Set to Buy Schiff Nutrition**
The German drugmaker has agreed to acquire New York-listed Schiff Nutrition (NYSE:SHF) for $1.2 billion (£748 million) in cash to expand its fast-growing vitamins and nutritional supplements business. Shareholders will receive $34 a share, a 46.8 percent above the stock’s closing price on 26 October of $23.16.

!m[](/uploads/story/668/thumbs/pic1_inline.png)According to Bloomberg, with its most recent acquisition of the Salt Lake City, Utah-based business, Bayer will strengthen its consumer-health unit in the US. Schiff Nutrition announced earlier this month that its sales this year would increase by 43 percent to 46 percent after it buys Airborne, the cold remedy.
“This transaction represents an excellent strategic fit for our health-care business,” said Mr Dekker as quoted by Bloomberg. “The Schiff business significantly enhances our presence and position in the U.S., which accounts for more over-the-counter and nutritional products sales than any other country in the world.”The pharmaceutical giant is committed to using its “strategic bolt-on acquisitions” to boost the growth it generates from its existing products.
Last week Bayer announced it has called off the sale of its blood glucose meters business for now as the company couldn’t find a buyer willing to pay the asking price. Based on estimates by the Financial Times Deutschland, the unit is valued at around €1-2 billion (£624 million – 1.25 billion) and has achieved annual sales of about €1 billion (£624 million). Bayer wanted to sell the unit because it offers few synergies with its other healthcare activities.


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