Bayer’s Q2 income falls on Covestro deconsolidation; negative FX

05 September 2018 08:02 Source:ICIS News

SINGAPORE (ICIS)--Bayer’s second-quarter net income fell nearly 35% as a result of absence of earnings contributions from Covestro following its deconsolidation and negative foreign exchange (FX) effects, the German chemical major said on Wednesday.

Bayer cross (Source: Bayer)

Bayer financial results
Q2 2018 Q2 2017 Change
Sales €9.5bn €8.7bn 8.8%
EBIT* €1.35bn €1.46bn -7.7%
Net income €799m €1.22bn -34.7%
*Earnings before interest and taxes (operating profit)

The company’s Crop Sciences division, catering the agrochemicals industry, posted strong gains after the acquisition of US’ major Monsanto, concluded in the second quarter.

Bayer’s agrochemicals division financial results
Q2 2018 Q2 2017 Change
Sales €3.01bn €2.16bn 39.2%
EBIT* €154m €117m 31.6%

Bayer did not mention on Wednesday the US court case which in August ordered Monsanto to pay damages to a man who claimed his cancer was caused by the company's weed killer products, including Roundup.

Monsanto’s new owner's shares fell sharply as a result, although they have recovered to some extent in past weeks.

While the company did not mention the US ruling, which it plans to appeal, in its forward-looking statement it said in its outlook that costs of the merger may be higher than expected.

“Actual results [in the future] could differ materially from those projected or forecast in the forward-looking statements. The factors that could cause actual results to differ materially include the following: the risk that the parties [Bayer, Monsanto] may be unable to achieve expected synergies and operating efficiencies in the merger within the expected timeframes (or at all) and to successfully integrate the operations of Monsanto into those of Bayer,” it said.

“Such integration may be more difficult, time-consuming or costly than expected; revenues following the transaction may be lower than expected; operating costs, customer loss and business disruption (including difficulties in maintaining relationships with employees, customers, clients or suppliers) may be greater or more significant than expected following the transaction; the retention of certain key employees at Monsanto."

Picture source: Bayer

By Jonathan Lopez