Bayer Shares Fall as Results, 2021 Guidance Show Toll of Roundup Litigation -- Update
By Joshua Stein
Shares in Bayer AG fell Thursday after it reported a steep
decline in fourth-quarter profit, dragged by litigation related to
its Roundup weedkiller that was also reflected in the company's
At 1416 GMT, Bayer shares were down 4.4% at EUR52.69.
The German pharmaceutical and chemical conglomerate said net
profit for the period fell by 78% to 308 million euros ($374.9
million) from EUR1.41 billion a year earlier.
For the full year, Bayer swung to a net loss of EUR10.50 billion
compared with a profit of EUR4.09 billion for 2019.
Earnings before interest and taxes for the quarter rose to
EUR1.52 billion from EUR389 million a year earlier. For 2020, the
company recorded a loss before interest and taxes of EUR16.17
billion compared with an EBIT of EUR4.16 billion in 2019.
Bayer said its earnings for the year were severely hurt by
litigation costs relating to its weedkiller, Roundup, which along
with other less prominent litigation action made up the majority of
the net special charges. The company recorded net special charges
of EUR23.26 billion for the year compared with EUR2.81 billion for
Bayer has faced lawsuits over Roundup since it purchased
Monsanto in June 2018, amid allegations that the weedkiller causes
cancer. Bayer has consistently denied the charges.
The company said its $2 billion proposal to pay farmers and
gardeners who attempt to blame it for illnesses in the future,
announced earlier in February, is subject to court approval.
Quarterly sales fell to EUR10.00 billion from EUR10.75 billion a
year earlier, slightly missing analysts' expectations of EUR10.01
billion, according to a consensus provided by Vara Research.
Net debt came in at EUR30.04 billion at the end of 2020, down
from EUR34.07 billion at the end of 2019, the company said.
Bayer proposed a dividend of EUR2.00 a share for 2020 compared
with EUR2.80 the previous year.
Warburg Research analyst Ulrich Huwald said Bayer's sales and
adjusted Ebitda for the fourth quarter and 2020 came in below
expectations and were disappointing, mainly due to a miss at the
company's crop-science segment.
"The Roundup litigation remains a burden for Bayer with an
unforeseeable outcome," Mr. Huwald said.
Citi analysts said the company's growing
research-and-development as well as pharma-related investments may
preoccupy the market, which could require a reset of margin
expectations for the pharma business.
Meanwhile, the company faces questions on its ability to attract
investors from an environmental, social and governance perspective,
while its pharma outlook may become uncertain when patents for its
Xarelto and Eylea drugs run out in the coming years, Citi said.
Looking ahead, Bayer expects sales between around EUR42 billion
and EUR43 billion for 2021, with Ebitda before special items of
EUR11.2 billion to EUR11.5 billion, both on a currency-adjusted
The company expects negative free cash flow of between EUR3
billion and EUR4 billion, which includes EUR8 billion that has been
set aside for Roundup-related litigation.
Write to Joshua Stein at email@example.com
(END) Dow Jones Newswires
February 25, 2021 09:42 ET (14:42 GMT)
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