15 March 2005 11:44 [Source: ICIS news]
LONDON (CNI)--German chemicals and life sciences group Bayer forecast on Tuesday a 20% rise in profits and a 5% increase in sales this year on continuing strong growth from its agrochemicals and specialty plastics businesses.
Bayer predicted that adjusted earnings before interest and tax (EBIT) from continuing operations would reach Euro2.54bn ($3.42bn) this year – up by a fifth on the Euro2.03bn achieved in 2004.
Sales this year were forecast to grow by more than 5% to over Euro25bn.
Bayer explained that its optimistic outlook for earnings and revenue growth this year was confirmed by "gratifying" business results in January and February this year.
Last year Bayer invested Euro2.1bn, accounting for more than 25% of total R&D spending by the German chemicals and pharmaceuticals industry. Bayer's R&D spending last year, however, was down 12% on 2003, largely due to reduced spending on pharmaceuticals and biological products.
Wenning confirmed that Bayer, including Lanxess and the blood plasma activities earmarked for divestment, made a major recovery last year with operating profits of Euro1.81bn after special charges of Euro436m. This compared with a Euro1.12bn loss in 2003 when special charges totalled Euro2.58bn. Sales rose 4.2% (9.1% after adjustments for currency effects and portfolio changes) to Euro29.76bn. Net income totalled Euro603m compared with a loss of Euro1.40bn in 2003.
He stressed that the radical restructuring which took place last year, described as the biggest in Bayer's 141-year history, has allowed the company to fully exploit the potential of its remaining businesses. "And we intend to prove this again in 2005."
Bayer said all sub groups contributed to its improvement in operating profit last year. Lanxess EBIT improved to Euro59m from a loss of Euro1.30bn in 2003 on sales over 7% ahead at Euro6.77bn.
Earnings before interest, tax, depreciation and amortisation (EBITDA) but before exceptional items soared by 44% to Euro447m. Net debt was cut to around Euro1.10bn, as planned.
In the fourth quarter, Lanxess made an operating loss of Euro17m, down from the Euro1.22bn deficit recorded in Q4 2003. Pre-exceptional EBITDA totalled Euro62m from a loss of Euro14m.
Lanxess, which plans to release further details of its 2004 performance on 26 April, enjoyed a 16% rise to Euro1.73bn in fourth quarter sales, partly due to higher revenues from its styrenic resins business.
Bayer CropScience reported an adjusted EBIT of Euro522m last year - up 23% on 2003. The improvement was attributed to business expansion and cost savings of about Euro320m through performance enhancing programmes. Sales rose 3% (8% when adjusted for currency and portfolio effects) to Euro5.90bn. Sales were up in all business units, particularly fungicides, which saw sales rise 13% in local currencies to Euro1.30bn.
The industrial businesses doubled EBIT before special items last year to Euro668m on sales up 15% (21%) to Euro8.6bn. Bayer said the significant improvement resulted mainly from an increase in demand for polycarbonate (PC) and polyurethane (PU). It added that rising demand helped the company progressively raise product prices to offset the approximately Euro440m rise in raw material costs. Performance enhancing programmes, however, contributed savings of almost Euro200m.
Bayer Healthcare adjusted EBIT rose 14% last year to more than Euro1.0bn despite a 4% decline to Euro8.50bn in sales due to expiration of US patents for lead drug Cipro. Adjusted for currency effects and portfolio changes, sales rose 1%.
The overall Bayer group recorded net special charges of Euro436m last year, down from almost Euro2.60bn in 2003, due mainly to impairment losses. Litigation over the anti-cholesterol drug Baycol/Lipobay and antitrust violations in its industrial businesses accounted for Euro159m of the special charges last year. Portfolio changes accounted for Euro171m and there was Euro106m of remaining special items comprising mainly an environmental provision and restructuring measures already planned at the beginning of 2004.
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|