1ST HALF: BAYER'S SALES UP 2%, ONGOING OPERATION'S EARNINGS UP 8%
Aug. 4, 2020
Source: Bayer news release
*Ensuring employee safety and maintaining supply chains remain top priorities
*Group sales decline by 2.5 percent (Fx & portfolio adj.) to 10.054 billion euros / EBITDA before special items up 5.6 percent to 2.883 billion euros
*Crop Science reports operational growth
*Sales and earnings at Pharmaceuticals down mainly due to volume-based procurement policy in China and COVID-19 / Sales at Consumer Health decline slightly (Fx & portfolio adj.) after strong demand in first quarter
*Net loss of 9.548 billion euros due to special items for litigations - agreements in major legacy Monsanto litigation
*Core earnings per share increase by 5.3 percent to 1.59 euros
*Free cash flow rises to 1.402 billion euros
*Outlook adjusted for COVID-19 impact
Leverkusen - The Bayer Group's businesses turned in a solid performance in the second quarter of 2020 despite the COVID-19 pandemic and the associated uncertainties. "Thanks to the growth in our agricultural business, we raised EBITDA before special items - and we did so in a challenging environment," said Werner Baumann, Chairman of the Board of Management, when the half-year financial report was released on Tuesday.
Sales in the Pharmaceuticals and Consumer Health divisions receded, however. "Our primary aim during the coronavirus pandemic remains the safety and wellbeing of our employees and the society in which we live and work," Baumann pointed out.
He said Bayer is also taking the necessary steps to safeguard the continuity of business operations in these challenging times and ensure reliable supplies of its products and services to hospitals, physicians, patients, consumers and farmers. Bayer has adjusted its forecast for the current fiscal year because of the pandemic.
The second quarter of 2020 was also marked by the litigations in the United States. The company announced on June 24, 2020, that it had reached agreements in the product liability litigation concerning Roundupô (active ingredient: glyphosate). The agreements contain no admission of liability or wrongdoing. The total costs to settle the approximately 125,000 filed and unfiled glyphosate claims and support a class settlement agreement to manage and resolve potential future Roundup litigation are currently expected to be up to 10.9 billion U.S. dollars.
On July 6, 2020, Judge Chhabria of the U.S. District Court for the Northern District of California, who must approve the class agreement, raised concerns about certain aspects of the proposed agreement. Thereupon, the parties decided to withdraw their motion in order to comprehensively address the court's questions. Bayer remains strongly committed to a resolution that simultaneously addresses the current litigation on reasonable terms and provides a viable solution to manage and resolve potential future litigation.
On July 20, 2020, the California Court of Appeal affirmed the judgment in favor of Dewayne Johnson, one of the three cases continuing through the appeals process, but reduced the total judgment from 78.5 million U.S. dollars to approximately 20.5 million U.S. dollars. The company will consider its legal options, including an appeal to the Supreme Court of California. Settlement agreements were also reached in the dicamba drift litigation and for most of the PCB (polychlorinated biphenyls) water litigation.
Discussions on potential settlements in connection with Essure, a medical device offering permanent birth control with a nonsurgical procedure, recently intensified and have made good progress in recent weeks. Bayer therefore established appropriate provisions in the second quarter. The Pharmaceuticals Division recorded special charges of 1.245 billion euros for litigations, primarily for Essure.
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