Bayer Posts Loss as Charges Take Toll -- Earnings Review
03 November 2020 - 1:55PM
Dow Jones News
By Cecilia Butini
Bayer AG posted a third-quarter loss on Tuesday as headwinds in
its agricultural business and charges related to litigation
affected earnings took their toll. Here's what you need to
know.
EARNINGS: The company posted a loss of 2.74 billion euros ($3.19
billion), narrower than the previous quarter but a swing from a
profit of EUR1.04 billion for the same quarter last year. Earnings
were affected by special charges of EUR10.18 billion, including
EUR9.3 billion in noncash impairment charges on assets in Bayer's
agricultural business, and provisions related to potential future
litigation on weedkiller Roundup.
SALES: Group sales for the quarter came to EUR8.51 billion
compared with EUR9.83 billion for the same quarter in 2019. Sales
declined especially in the agricultural segment, which fell 23% on
a reported basis and 12% adjusted for currency effects.
WHAT WE WATCHED:
ROUNDUP LITIGATION: The company raised the expected cost of
handling future lawsuits related to the weedkiller Roundup, which
it acquired through its acquisition of Monsanto in 2018, to $2
billion from $1.25 billion.
CROP SCIENCE HEADWINDS: The segment was strongly affected by
high product returns and weak sales particularly in North America.
The EUR9.3 billion in impairment losses in the division were driven
by reduced growth expectations in the agricultural industry
especially in the Americas. Negative currency effects also played a
role, Bayer said.
OUTLOOK: Bayer confirmed its 2020 outlook despite the
difficulties in the quarter, with sales expected between EUR43
billion and EUR44 billion, and Ebitda before special items around
EUR12.1 billion.
For 2021, Bayer expects sales at the 2020 level, but earnings
should decline on-year. Under the current circumstances, the
company won't be able to achieve its original annual growth
targets, partly due to negative currency effects and to a decline
in prices in China, it said.
Write to Cecilia Butini at cecilia.butini@wsj.com
(END) Dow Jones Newswires
November 03, 2020 07:40 ET (12:40 GMT)
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