FRANKFURT, Germany (AP) – Chemical and drug company Bayer AG said that net profit rose 8.4 percent to €684 million ($1.0 billion) in the first quarter, thanks to rising demand from farmers for chemicals and seeds and from the auto and construction industries for high-tech materials.
Buoyed by the figures, the company raised its earnings outlook for the year.
It also said it was setting aside €194 million ($285 million) for a settlement program aimed at resolving lawsuits from U.S. farmers in Arkansas and other states who said they suffered losses when Bayer’s genetically modified rice was found in the rice supply.
The company, which is based in Leverkusen, Germany, said its businesses in high-tech materials and farm chemicals did better compared with the same quarter a year ago, when the economy was hampered by the financial crisis.
Sales rose 13.2 percent to €9.4 billion, and the company raised its forecast for both sales and earnings. It now expected to have sales of €36 to €37 billion this year, up from the previous €35 to €36 billion estimate, while earnings before financial items and one-time expenses should exceed €7.5 billion, where the previous estimate said the figure would grow “toward” €7.5 billion.
Stronger demand from the construction and automotive industries boosted sales of the company’s materials science division, which grew 21 percent to €2.7 billion. The division’s products include high-performance polycarbonate plastics, polyurethane foam materials, coatings and adhesives.
Earnings were sapped by €442 million in one-time charges to pay for restructuring measures in its farm and health care businesses. That figure also includes the money set aside to settle litigation over genetically modified rice in the United States.
CEO Marijn Dekkers said the step should let the company put the issue substantially behind it. “We hope this subject is now dealt with to a large extent,” he said.
Bayer was sued after the U.S. Department of Agriculture said in 2006 that Bayer’s experimental Liberty Link rice had been found in the U.S. supply of long-grain rice.
The €pean Union blocked imports of any rice showing traces of genetically modified organisms, and farmers said they suffered economic losses that they blamed on Bayer. Last month, a jury in Arkansas awarded Riceland Foods Inc., a rice milling company, $142 million in compensatory and punitive damages against Bayer over lost business.
Though earnings per share of €1.45 beat analyst estimates of €1.37, the shares rose only modestly to traded up 0.16 percent at €57.70.
Date: April 28, 2011
Source: Associated Press