Bayer profits plunge as Monsanto buyout bites

FRANKFURT AM MAIN: Investors offered a tepid response to German chemicals and pharmaceuticals giant Bayer as it reported higher revenues but lower profits for the second quarter in its first financial statement since its mammoth takeover of US-based Monsanto.

Between April and June – including the weeks between finalising the Monsanto purchase on 7 June and the end of that month – the group booked net profits of 799 million euros ( US$ 926 million).

That figure was 34.7 per cent lower than a year before.

But revenues increased, from 8.7 billion to 9.5 billion.

“We are very optimistic for the future of the business, and see it as a game changer in the industry,” Bayer chief executive Werner Baumann told investors in a conference call.

Bayer’s US$ 63-billion buyout of Monsanto – the biggest ever foreign takeover by a German company – aimed at creating an agrichemical giant offering specialised seeds, including for genetically modified crops, compatible pesticides and data services for farmers.

The group’s crop science unit is set to overtake pharmaceuticals as its biggest sales generator, although prescription medicines command a higher profit margin.

By around 3.15pm in Frankfurt (1315 GMT), Bayer shares had recouped some of their earlier losses, trading down 1.6 per cent at 71.48 euros, against a DAX index of blue- chip German shares down 0.8 per cent.

Bayer also released unaudited data to show how its crop science unit would have fared in its new shape – including Monsanto but ruling out businesses worth 5.9 billion euros sold to BASF to appease competition authorities ahead of the merger. — AFP