By Ludwig Burger
FRANKFURT (Reuters) – Germany’s Bayer has warned that its 2019 earnings target had become harder to reach, becoming the latest agricultural supplies company to be affected by flooded U.S. farms and trade disputes.
The company said it was still aiming for an increase in 2019 adjusted core earnings or EBITDA to about 12.2 billion euros ($13.6 billion), excluding the effect of currency swings and the planned sale of assets such as its animal health unit.
“This outlook is becoming increasingly ambitious in view of the challenging environment for the Crop Science business,” the company, which last year acquired Monsanto for $63 billion, added in a statement on Tuesday.
Sales at the Crop Science unit jumped by almost 60% to 4.8 billion euros in the quarter, thanks to the addition of Monsanto in June 2018, but a like-for-like comparison of the combined agriculture business showed a 9.9% sales decline, also adjusted for currency swings.
“Flooding and heavy rains in the midwestern United States and drought in large parts of Europe and in Canada had a negative effect. Ongoing trade disputes also weighed on business,” it said.
Adjusted EBITDA rose by about a quarter to 2.9 billion euros, bolstered by new prescriptions of stroke prevention drug Xarelto and eye treatment Eylea, broadly in line with market expectations.
But the number of lawsuits over Bayer’s glyphosate-based weedkillers, which it acquired as part of the Monsanto takeover, continued to swell.
It said 18,400 plaintiffs were seeking damages over an alleged cancer-causing effect of weedkillers Roundup or RangerPro, up from 13,400 in April.
Bayer has seen its market value slashed by more than 30 billion euros since August last year, when a California jury in the first such lawsuit found that Monsanto should have warned of the alleged cancer risks.
Bayer, which says regulators and extensive research have found glyphosate to be safe, is banking on U.S. appeals courts to reverse or lessen the initial court rulings that have so far awarded tens of millions of dollars to each plaintiff.
(Reporting by Ludwig Burger; Editing by Tassilo Hummel and David Holmes)