UpdateBayer speeds up restructuring as Q3 net profit falls 10.1%

27 October 2009 12:19  [Source: ICIS news]

(Releads, adds background and quotes throughout, and includes share price)

LONDON (ICIS news)--Bayer is “speeding up the implementation of all the restructuring measures already announced” for its MaterialScience business as it attempts to counter a fall in demand, the chairman of the German chemical, material and pharmaceutical company's board of management said on Tuesday.

Bayer would be moving forward with the closures announced in July, Werner Wenning said at a press conference following the release of the company’s third-quarter results.

“We plan to complete our current restructuring programmes by the end of this year,” Wenning said.

The plants being closed were those that would not remain competitive in the future because of their small size, such as the firm's 50,000 a tonne/year polyurethane plant in Japan, he added.

The closures were always part of the company’s strategy, but the economic crisis had accelerated the need for change, Wenning said.

“One of the reasons our guidance can remain unchanged is that MaterialScience took extensive action in response to the dramatic drop in demand,” Wenning said.

The company expects to post full-year sales for 2009 of between €31bn ($46bn) and €32bn, and estimated earnings before interest, tax, depreciation, amortisation and special items would decline year on year by just 5%.

Bayer announced on Tuesday that its third-quarter net profit fell 10.1% year on year to €249m ($372m), while sales for the quarter slipped 7.0% to €7.39bn and group earnings before interests and taxes (EBIT) dropped 5.6% to €646m.

Group earnings before interest, taxes, depreciation and amortisation (EBITDA) before special items were up 0.4% to €1.50bn.

“Healthcare and MaterialScience contributed to this positive performance,” Wenning said.

The CropScience division had a difficult third quarter, recording an EBIT loss of €59m, down from a profit in the same period last year of €36m.

Wenning said this was due to customers buying early on supply fears and a fall in sales in Europe and North America.

For the first nine months of the year, Bayer’s net profit slumped 25.2% to €1.21bn on sales of €23.30bn, down 6.8% from the same period last year.

Although the company had opted not to release a 2010 forecast until early next year, Wenning said he remained positive about the company’s future and that a further improvement would be seen in the next quarter.

“I don’t think we will see a double-dip recession,” he added.

Bayer’s share price was trading up 1.3% at €48.44 on the Xetra at 12:23 local time.

($1 = €0.67)

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By: Lucy Craymer
+44 20 8652 3214

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