Drop in demand impacts Bayer

By George Frey | April 30, 2009, Thursday |

Print Edition

PHARMACEUTICAL and chemical company Bayer AG said yesterday that its first-quarter net profit tumbled 44 percent as the global economic crisis cut sharply into demand.

The Leverkusen-based company said net profit for the January-March period fell to 425 million euros (US$561 million) from 762 million euros a year earlier.

Sales for the company fell 7.5 percent, dropping to 7.9 billion euros from 8.5 billion euros.

Bayer's crop science and pharmaceutical divisions grew, but a "slump in business at material science also left a distinct mark on sales and earnings of the Bayer group," Chief Executive Werner Wenning said.

The pharmaceutical division also makes plastics and adhesives chemicals.

Wenning said Bayer's overall goal is to limit the decline in earnings this year before interest, taxes, depreciation and amortization to 5 percent. However, that is becoming "increasingly demanding," he said.

Still, Wenning added that "the first signs of a modest recovery in demand are appearing."

Bayer said first-quarter sales in its health care segment rose 3 percent to 3.8 billion euros. Within the segment, the pharmaceutical business had a 4.8-percent increase in sales.

Flat health care sales

However, consumer health care sales were flat at 1.3 billion euros, Bayer said, with sales of products such as aspirin stagnating as consumers pulled back on purchases of even basic household goods.

Bayer's crop science division, whose products include pesticides, saw sales increase by more than 7 percent to 2.12 billion euros.

Herbicides and fungicides performed particularly well, with sales of both climbing more than 13 percent. Bayer said a hybrid canola seed also contributed strongly to sales.

In contrast, the material science segment's sales fell 35 percent to 1.6 billion euros from 2.5 billion euros.

Bayer noted that it had launched measures such as plant shutdowns, cut work time for employees, and other output cutbacks at the segment.

Manufacturing

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Drop in demand impacts Bayer

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