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Bayer posts YOY rise in Q2 earnings, lowers FY outlook on Monsanto takeover

Bayer AG said second-quarter earnings rose and lowered its outlook for 2018 to reflect the acquisition of the world's top seed maker, Monsanto Co.

The German agrochemical and pharmaceutical company reported second-quarter core net income from continuing operations of €1.41 billion, or €1.54 per share, up from €1.35 billion, or €1.52 per share, a year earlier.

The S&P Global Market Intelligence consensus normalized EPS estimate for the second quarter was €1.55.

During the quarter, net income from both continuing and discontinued operations amounted to €799 million, down from €1.22 billion in the year-ago period.

Net sales for the second quarter totaled €9.48 billion, up 8.8% on a yearly basis from €8.71 billion.

The company booked research and development expenses of €1.26 billion, an increase from €1.10 billion in the second quarter of 2017.

Bayer's pharmaceuticals segment raked in total net sales of €4.23 billion during the second quarter, down from €4.32 billion a year earlier. The consumer health division also saw a year-over-year decline in sales to €1.41 billion from €1.55 billion.

Meanwhile, the crop science division's second-quarter total net sales rose year over year to €3.02 billion from €2.17 billion. The animal health business recorded sales of €456 million, up from €451 million in the second quarter of 2017.

For the second half, Bayer reported core net income from continuing operations of €3.39 billion, up from €3.36 billion a year earlier. Core EPS from continuing operations declined year over year to €3.77 from €3.80.

Bayer revised its outlook for full year 2018 to take into account the Monsanto acquisition, which closed June 7. The company now anticipates core EPS to decline by a high-single-digit percentage, or between €5.70 and €5.90. Previously, the company said it expects core EPS to be steady to year-ago levels.

The S&P Global Market Intelligence consensus normalized EPS estimate for 2018 is €6.08.

Bayer, whose newly acquired Monsanto unit is facing thousands of lawsuits related to its top-selling herbicide, said it expects sales of more than €39 billion in 2018, with more than €5 billion attributable to the acquired business. Previously, the company said it expects full-year sales of below €35 billion.