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Coronavirus and lawsuit hit pharmaceutical giant Bayer's second quarter

Jill Petzinger
·Germany Correspondent, Yahoo Finance UK
30 March 2020, Berlin: View of the logo of the chemical company Bayer AG on Müllerstraße. Photo: Jörg Carstensen/picture alliance via Getty Images
30 March 2020, Berlin: View of the logo of the chemical company Bayer AG on Müllerstraße. Photo: Jörg Carstensen/picture alliance via Getty Images

German pharmaceutical and chemicals giant Bayer (BAYN.DE) said on Tuesday that its performance in the second quarter had been solid despite the impact of COVID-19. However, the Leverkusen-based company had to allocate billions of dollars to cover the huge litigation against its subsidiary Monsanto in the US.

Bayer booked a net loss of just over €9.5bn ($11.17bn, £8.5bn) compared to a profit of €404m in the same period of the previous year. Group sales were down by 2.5% in the second quarter to just over €10bn after currency adjustments.

Bayer today announced a 5.6% rise in earnings before interest, taxes, depreciation and amortisation (EBITDA) to €2.8 billion thanks to growth in its agricultural business. Core earnings per share rose 5.3% from the same period last year to €1.59.

Bayer took over Monsanto for €58.5bn in 2018 — the largest-ever foreign takeover by a Germany company — but has since been mired in lawsuits in the US over its Roundup weedkiller, which many claim causes cancer.

On 24 June this year, Bayer agreed to pay over $10bn to settle around 125,000 lawsuits in the US linked to Roundup and its other glyphosate-containing products.

In terms of the impact of the coronavirus pandemic on its business in the second quarter, Bayer said its pharmaceuticals division was impacted by the cancellation or postponement of visits to the doctor due to lockdown restrictions and “as a result of which non-urgent treatments, in particular, were not carried out.”

In the consumer health division, retailers’ high inventory levels and consumer stockpiling led to a slight decline in business, while in its crop science division, uncertainties led to shifts in demand in some regions and product groups, with negative effects likely to be increasingly reflected in the second half of the year.