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Bayer beats predictions in third quarter results

Published on 28/11/06 at 04:35pm

German drug and chemicals company Bayer is forecasting full-year sales of around €30 billion for 2006, following better-than-predicted third quarter results.

The company said its earnings for the third quarter before interest, tax and special items (EBIT) rose to €798 million ($1.4 billion) from €653 million for the same quarter last year.

It puts the profit increase down to robust business at its healthcare unit and the acquisition of rival Schering last March.

This is the first full quarter that Schering has contributed to Bayer's results, contributing €80 million in the quarter.

A Reuter's poll of 15 analysts had an average forecast for Bayer's third quarter EBIT of €711 million.

Werner Wenning, chairman of Bayer's board of management, said: "We can already say that 2006 has been a landmark year for Bayer - a year of significant accomplishments from both a strategic and an operational point of view."

He added: "The successful acquisition of Schering, the biggest corporate takeover in our company's history, has provided an additional boost to our business."

Bayer's shares have risen 11% so far this year, underperforming a 16% rise in the DJ Stoxx European Chemicals index, partly because of worries over the integration of Schering.

Both Bayer and Schering have suffered a number of body blows over the past three or four years. Bayer was hit hard following the withdrawal of statin Baycol in 2001 over safety concerns, and suffered record losses of €1.2 billion in 2003 as it battled to restructure and cut overheads.

Schering's share price has suffered under an onslaught of generic competition and government investigations into its financial reporting and sales practices.

Following the merger, Bayer has now defined its global R&D structure. Research programmes will be consolidated into three major sites; Berlin and Wuppertal in Germany and Berkeley in California. A total of 800 jobs at the company's US sites will be axed by the overall reorganisation. It is not yet known how many - if any - jobs will be lost at its European bases.

However, Mr Wenner emphasised: "The third quarter has, once again, shown we are on the right track. We will place major emphasis in the coming year on driving forward the integration of Schering."

He concluded: "With a clearly focused, fast-growing pharmaceuticals business, we aim to further improve the operating performance of our healthcare business and the earning power of Bayer as a whole."

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