Bayer said it was targeting growth in adjusted core profit of 7% to 9.6% this year, driven by sales of agriculture products and pharmaceuticals, despite facing multiple legal cases in the US over cancer claims.
Bayer, which is fighting costly lawsuits over claims its glyphosate-based weedkillers cause cancer, laid out a goal for earnings for special items and currency swings to reach up to €12.6bn in 2019.
Bayer said that its forecast did not yet include any impact of the coronavirus outbreak. Amid the market-wide sell-off, Bayer shares fell 3.3% in Frankfurt. Bayer said the increase in the number of plaintiffs blaming the company’s glyphosate-based weedkillers for their cancer had slowed somewhat, reaching 48,600 as of February 6. In October 2019, the total had more than doubled to 42,700 within just three months.
Bayer said it was continuing talks to “explore whether a settlement could be reached on reasonable terms that would be structured in a way that would bring this entire series of litigations to a reasonable conclusion”. The company’s fourth-quarter adjusted earnings rose 26.4% to €2.48bn, as expected by analysts. Chairman Werner Wenning, who strongly supported chief e3xecutive Werner Baumann’s pursuit and acquisition of Monsanto, said he would step down, turning up the heat on CEO Baumann to resolve the legal problems that arose from Monsanto acquisition.
“The timing of the change in board leadership is surprising but appropriate,” said Janne Werning, head of environmental, social and governance at Union Investment, one of Bayer’s top shareholders.
Mr Wenning was tightly linked to the “current difficult situation, and independent oversight of Bayer’s further strategic development is needed now". Major investors -- including US billionaire Paul Singer’s Elliott Management -- pushed Bayer toward settlement talks with at least 42,700 plaintiffs who claim that Roundup causes cancer.
Bayer maintains there’s no link but agreed to postpone some further trials and give mediation a chance after losing three California cases that resulted in combined damages of $191m (€175.5m).
At least a half-dozen trials scheduled to start this month and next have been put on hold. Bayer is appealing the verdicts it lost.
With the chairman gone, “it’s probably going to add to investor expectations that management change is likely to accompany any potential resolution on litigation in the US rather than the reverse,” said Emmanuel Papadakis, an analyst at Barclays.