FRANKFURT: Buoyed by strong growth in its health care business, Bayer AG saw fourth-quarter earnings surge. A forecast on 15 March predicted that annual group sales would rise at least 5% as it benefits from the acquisition of rival Schering AG.
The drug and chemical maker earned $410 million (Rs41 crore) in the October-December period,beating the $81.73 million figure that analysts had predicted based on Dow Jones Newswires.
Sales during the fourth quarter rose 25% and the Bayer share price rose nearly 3.2% after the results were released.
Bayer Chief Executive Werner Wenning said the company was optimistic. He said, “Our sales and earnings performance in the first two months of this year gives us confidence,” adding that Bayer expects more than 10% increase in group sales, which will come to about 5% when adjusted for the rising euro.”
“We plan to increase underlying EBITDA by more than 10% and slightly improve our EBITDA margin,” he remarked while referring to earnings before interest, taxes, depreciation and amortization, a measure many companies and analysts use as a yardstick of performance.
The company has plans of spending $2.24 billion on capital expenditure and $3.69 billion on research and development.
Bayer’s health care unit led the way of the company’s 2006 performance, incorporating sales from Schering, which makes the multiple sclerosis treatment Betaferon and the oral contraceptive Yasmin.
The health care unit saw fourth-quarter sales rise 75% in the same period a year earlier and sales rose by 47%.
Wenning said sales of Yasmin rose 35.5% for the year while sales of the erectile dysfunction drug Levitra, a key competitor to Pfizer Inc.’s Viagra improved 21 %. Other drugs, including Betaferon and the cancer drug Nexavar, lifted results.
Their cancer drug Nexavar also turned in an encouraging performance, posting sales of US$171.4 million in the year of its introduction.