Bayer Considers Further Divestments; 4Q Profit Fell -- Second Update
February 28 2018 - 5:22AM
Dow Jones News
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)
Copyright (c) 2018 Dow Jones & Company, Inc.
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