Germany's Bayer has reported a mixed set of results for the second quarter with fine chemicals offshoot Lanxess contributing to an unexpected 44 per cent hike in earnings before interest and tax (EBIT).
Bayer's retained chemicals divisions, material science and crop science businesses also helped lift EBIT to €660 million, but as expected healthcare saw declines in both sales and earnings.
Sales in the second quarter rose 4.5 per cent to €7.58 billion. Net income and earnings per share stayed level with the prior year's quarter at €128 million and €0.18, respectively.
Lanxess returned to the black in the second quarter, growing EBIT year on year by €67 million to €20 million. It also boosted sales by 9.7 per cent to €1.59 billion. Bayer said preparations for the spin-off of the company to Bayer's existing shareholders in early 2005 are proceeding on schedule.
Chemical intermediates put in a 6 per cent gain in revenues to €288 million, due particularly to increased sales of basic chemicals in North America and inorganic pigments in Europe.
But the healthcare business saw EBIT drop 44 per cent to €217 million on sales down 4 per cent at €2.1 billion. Earnings were hit by high launch costs for Levitra (vardenafil), its new drug for erectile dysfunction partnered with GlaxoSmithKline, and the absence of special gains recorded in the year-ago period relating to the spin-off of the household insecticides business.
Bayer expects its health care division to receive a substantial boost from the planned acquisition of Roche's consumer health business (subject to approval by the antitrust authorities), which should generate combined sales of €2.4 billion.
Levitra did not live up to expectations, chalking up sales of €40 million in the quarter. And the pharma division was also hit by continued generic competition to its top-selling Cipro (ciprofloxacin) antibiotic, which saw turnover plummet 54 per cent to €202 million in the quarter. Overall, pharma revenues fell by a fifth to €744 million, although biologics fared better with sales up 14 per cent to €296 million.
Bayer crop science's second quarter EBIT more than quadrupled to €159 million due to higher sales and further synergies from the integration of Aventis CropScience, which Bayer bought for €7.25 billion.
Meanwhile, materials science posted a 131 per cent increase in second quarter EBIT to €215 million due to an increase in sales, improved capacity utilisation and cost-containment projects, Bayer said.
Bayer expects EBIT before exceptional items in the second half of 2004 to increase significantly over the same period a year ago, despite the sharp rise in petrochemical raw material costs, said chief executive Werner Wenning in a statement.