MON Monsanto Company (delisted)

Adds further info on divestments and Monsanto deal

By Nathan Allen

Bayer AG (BAYN.XE) said Wednesday that it was considering further divestments in an effort to ease the approval process for its pending takeover of Monsanto Co. (MON), as the German chemical producer reported sharply lower fourth-quarter earnings.

Chief Executive Werner Baumann said he expects the Monsanto acquisition to go through in the second quarter as it has received approval from more than half of the necessary competition authorities. However, he indicated that further divestments--beyond last year's sale of some crop-science businesses to BASF SE (BAS.XE)--may be necessary to clear final regulatory hurdles.

"We have now also committed to divest our entire vegetable seed business. Certain additional business activities of Bayer and Monsanto may also be sold or out-licensed," he said.

Mr. Baumann said the U.S. foreign investment authority CFIUS has already given its approval and a decision from the European Commission is expected on April 5.

Bayer's Chief Financial Officer Johannes Dietsch said the company is in good financial shape for upcoming financing activities, after it reduced its net financial debt by nearly 70% on year to EUR3.60 billion, thanks largely to the sale of its share in Covestro AG (1COV.XE).

Net profit for the quarter fell 67% to 148 million euros ($181.9 million) compared with EUR453 million a year earlier, while sales fell 2.6% on year to EUR8.60 billion, the company said.

A consensus forecast provided by FactSet had predicted net profit of EUR745 million and sales of EUR8.63 billion.

Bayer attributed the lower earnings to a EUR455 million tax hit from the U.S. fiscal reforms and ongoing difficulties with its Brazilian crop-science business.

Bayer said that its closely-watched underlying earnings before interest, taxes, depreciation and amortization fell slightly to EUR1.78 billion, from EUR1.81 billion in the year-earlier period.

All of Bayer's four business units reported lower sales in the fourth quarter and all except pharmaceuticals posted lower operating profit, the company said.

The company said its net profit for the full year rose nearly 62% to EUR7.34 billion.

For 2018, the company expects sales and earnings at the prior-year level, despite likely currency losses. The forecast includes expected supply interruptions due to plant maintenance, which will cause a EUR300 million hit to adjusted Ebitda, Bayer said.

Adjusted for currency and scope effects, Bayer said it expects sales to increase by a low-to mid-single-digit percentage.

Write to Nathan Allen at nathan.allen@dowjones.com.

Zeke Turner contributed to this article.

(END) Dow Jones Newswires

February 28, 2018 05:07 ET (10:07 GMT)

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