UpdateBayer Q1 earnings plunge, warns of weak full-year profits

29 April 2009 08:12  [Source: ICIS news]

(adds details of earnings at other business divisions and outlook)

BayerSINGAPORE (ICIS news)--German specialty chemical maker Bayer has reported a 44.2% plunge in its first quarter net profit to €425m ($561m) due to the “unprecedented” poor performance of its MaterialScience business, the company’s chairman said on Wednesday.

Bayer chairman Werner Wenning warned of weaker full-year 2009 earnings from a year ago, with sales projected to fall slightly to €32bn. In 2008, sales stood at €32.92bn.

The company said its goal of limiting the decline of its 2009 EBITDA to just 5% was becoming “increasingly demanding” this year unless its plastics business could see a “tangible recovery”.

 “The MaterialScience subgroup experienced a steep fall in volumes, with pressure on prices increasing at the same time. Nearly all product groups at MaterialScience were impacted by this trend in all regional markets," said Wenning.

Bayer said sales at this division posted a “severe drop” of 34.9% to €1.64bn on “considerably weaker demand in the relevant customer industries”.

Group earnings before interest, tax (EBIT) and special items also fell 32.1% year-on-year to €1.02bn. Earnings before interest, tax, depreciation, amortisation (EBIDA) and special items was also 22.4% down at €1.70bn.

Bayer’s health care and crop science businesses, meanwhile, managed to post moderate sales growth in the three months to March from levels in the same period in 2008.

Sales at its crop science segment grew 7.2% to €2.12bn due to higher selling prices coupled with an increase in volumes, while turnover at its health care segment rose 3% to €3.84bn.

"While our pharmaceuticals business saw pleasing growth overall, sales of consumer health were down because of inventory reductions and lower consumer spending," Wenning said.

 (€1 = $1.32)

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By: Bohan Loh
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