Bayer Pact Leads to $11 Billion Loss -- WSJ
August 05 2020 - 03:02AM
Dow Jones News
By Ruth Bender
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 5, 2020).
BERLIN -- Bayer Tuesday said it swung to a net loss of EUR9.55
billion ($11.23 billion) in the second quarter on provisions for
its multibillion-dollar settlement with plaintiffs alleging the
company's Roundup herbicides cause cancer, as the German firm
slightly lowered its outlook due to the coronavirus pandemic.
Bayer, whose share price has been weighed down for years by the
Roundup legal battle, said it expects full-year sales and earnings
before interest taxes, depreciation and amortization to come in
slightly lower than initially forecast, after sales in its
pharmaceuticals division were hit by the pandemic.
The chemicals-to-pharmaceuticals company now expects sales,
adjusted for currency swings, disposals or acquisitions, to grow
between 0% and 1% this year to between EUR43 billion and EUR44
billion, compared with a previously forecast rise of 3% to 4%.
Ebitda is projected at around EUR12.1 billion compared with a
previous target of EUR12.3 billion to EUR12.6 billion.
Sales in the second quarter dropped 6.2% to EUR10.05 billion
from EUR10.71 billion as sales of pharmaceuticals, which make some
40% of group sales, fell as hospitals and doctors around the world
postponed nonessential treatments amid lockdowns and a focus on
Covid-19 patients.
At the consumer care division, which includes blockbuster brands
such as aspirin, sales fell 16.7% in the quarter as consumers and
retailers refrained from buying new products after they had built
large stocks at the beginning of the pandemic during the first
quarter.
Sales in the crop science division rose 0.3%, helped by higher
sales in Latin America, Asia and North America.
The net loss, which also includes provisions for other pending
litigation, comes as the company is still struggling to find a
solution to fully put to rest the Roundup legal battle that has
haunted the company ever since it inherited the first lawsuits with
its takeover of U.S. agricultural giant Monsanto in 2018.
The settlement deal Bayer announced in late June hit a snag last
month when the company had to scrap a $1.25 billion proposal for
resolving future lawsuits over the weedkillers that continue to be
sold.
To prevent lawsuits in future, Bayer came up with a novel type
of class action that depended on the creation of a panel of
scientists that Bayer wanted to definitively decide on whether
Roundup and its active ingredient, glyphosate, are carcinogens.
But the U.S. judge in charge of approving the solution said he
was skeptical that such a panel could fairly replace judges and
juries in the case. Bayer and plaintiffs' lawyers last month said
they would work on refining the idea and bring it back to the
judge.
Bayer Tuesday said it remains committed to finding a viable
solution to resolve potential future lawsuits.
Deals valued at up to $9.6 billion that Bayer reached with
lawyers representing tens of thousands of plaintiffs remain intact.
The recent sale of its animal health division will help pay for the
settlements and Bayer also issued bonds with a total volume of EUR6
billion at the beginning of July to increase its financial
flexibility.
Bayer has continuously argued that Roundup and its active
ingredient glyphosate are safe and appealed three jury verdicts
that had sided with plaintiffs.
Bayer also lost an appeal in the first case to go to trial
linking its Roundup weedkiller to cancer, though the California
court considerably reduced the amount of damages awarded. Bayer
said Tuesday it is considering whether it will appeal to the
Supreme Court of California.
Write to Ruth Bender at Ruth.Bender@wsj.com
(END) Dow Jones Newswires
August 05, 2020 02:47 ET (06:47 GMT)
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