Bayer Reassures Investors on Monsanto, Vows to Back Roundup
Published Nov 13, 2018 06:53AM ET
Bayer Reassures Investors on Monsanto, Vows to Back Roundup
(Bloomberg) -- Bayer AG (DE:BAYGN) vowed to defend its embattled weedkiller Roundup, moving to reassure investors that its $63 billion acquisition of Monsanto (NYSE:MON) Co. will boost the company’s bottom line.
The shares rose as much as 2.7 percent in early Frankfurt trading after the company reported adjusted earnings before interest, taxes, depreciation and amortization of 2.2 billion euros ($2.47 billion), which beat analysts’ estimates.
Bayer repeated that profit and sales will grow this year, even as its consumer health and animal businesses struggle. Chief Executive Officer Werner Baumann defended Roundup’s key ingredient glyphosate after a judge last month upheld a jury’s verdict that it contributed to a dying groundskeeper’s cancer, saying its safety is backed by more than 800 scientific studies.
“We’ve decided to defend ourselves by every means available, because glyphosate is a fully safe and good product when properly used," Baumann said on a conference call with reporters.
The number of Roundup plaintiffs has increased to about 9,300, according to the Leverkusen, Germany-based company. Uncertainty over the liability has hurt the stock price.
Sales at Bayer’s crop science division increased 84 percent last quarter, boosted by the addition of Monsanto. The new lines of business picked up in the takeover performed much better than other parts of Bayer’s agriculture unit, Gunther Zechmann, an analyst at Sanford C. Bernstein & Co., wrote in a note to clients.
While Bayer expects to meet its full-year earnings forecasts overall, the consumer health and animal health units may fall short of their own targets, the company said. The singling out of those divisions doesn’t indicate anything about the company’s future plans for them, Baumann said.
(Updates with CEO comment in fourth paragraph.)
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Written By: Bloomberg
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