56% drop in profits for Bayer

FRANKFURT, Germany -- German chemical and drug company Bayer said Wednesday that second-quarter net profit fell 56 percent and added that it couldn't depend on a stronger economy to boost earnings the rest of the year.

The company also renewed a warning that its insurance might not be enough to cover lawsuits over a withdrawn anti-cholesterol drug and a discontinued cold-medicine ingredient.

Net profit in the April-June period fell to euro128 million ($145 million) from euro293 million in the same quarter of 2002. The latter figure was inflated by a euro269 million gain from selling the Agfa- Gevaert photography unit.

"For the time being, we cannot expect any stimulus for our business through an improvement in the economy," chief executive Werner Wenning said in a statement. "So we will drive forward our thorough internal restructuring with even greater vigor in order to sustainably improve our earnings power."

The second-quarter result fell short of the expectations of analysts surveyed by Dow Jones Newswires, which ranged from euro185 million ($209 million) to euro298 million.

The earnings report depressed Bayer shares, which were down 6.5 percent at euro19.90 ($22.67) on the Frankfurt exchange.

Bayer said the euro's strength hurt sales figures at key divisions such as health care, polymers and chemicals. A stronger currency reduces the value of foreign earnings when European companies translate them into euros.

Overall sales fell by 3.3 percent to euro7.26 billion ($8.20 billion). But the company said sales denominated in local currencies rose 7.3 percent.

Cost cutting was chiefly responsible for an increase in earnings before interest and taxes at Bayer's polymers division to euro69 million ($78 million) from euro2 million a year ago, the company said.

Earnings before interest and taxes fell at its chemicals division to euro2 million ($2.28 million) from euro32 million with sales down 27 percent -- largely due to the sale of a subsidiary.

Copyright C 2003 Deseret News Publishing Co.
Provided by ProQuest Information and Learning Company. All rights Reserved.