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Bayer posts rise in core net income in Q4, issues guidance for 2018

Bayer AG said its 2017 fourth-quarter core net income from continued operations rose year over year and set its outlook for 2018.

The German life science company's core EPS from continuing operations over October-December 2017 came in at €1.41, up 28.2% from €1.10 in the year-ago period.

The S&P Capital IQ consensus normalized EPS estimate for the fourth quarter is €1.17.

Core net income from continuing operations was €1.23 billion, up from €935 million in the year-ago period.

However, fourth-quarter net income including discontinued operations came in at €148 million, down 67.3% from €453 million in the year-ago period. This included a negative impact of €455 million due to the U.S. tax reform.

The company booked net sales of €8.60 billion for the three-month period, down 2.6% year over year from €8.82 billion.

Full-year results

For the full year 2017, core EPS from continuing operations was €6.74, up 1% from €6.67 in 2016.

The S&P Capital IQ consensus normalized EPS estimate for 2017 is €6.46.

Net income from continuing operations was €5.88 billion, up from €5.55 billion in 2016, while net income including discontinued operations totaled €7.34 billion, up 61.9% year over year from €4.53 billion.

Total sales for the year came in at €35.02 billion, up from €34.94 billion in 2016. This was driven the company's pharmaceutical sales, which grew 4.3% year over year on an adjusted basis to €16.85 billion.

Bayer's key products Xarelto, Eylea, Stivarga, Xofigo and Adempas booked combined sales of €6.20 billion, up from €5.41 billion in 2016.

The company's 2017 consumer health sales fell 1.7% year over year on an adjusted basis to €5.86 billion due to weak business development in the U.S.

Sales in the company's agriculture business also fell 2.2% year over year on an adjusted basis to €9.58 billion. This was due to volumes being held back in the Brazilian crop protection business caused by high inventories in the market.

Outlook for 2018

For 2018, Bayer expects sales of around €35 billion, and EBITDA before special items and core EPS to be steady to year-ago levels.

Bayer's outlook for 2018 takes into account temporary supply interruptions due to remediation measures in production. The company expects the impact of the interruptions to be about €300 million.

Bayer expects to close the deal to acquire Monsanto Co. — valued at more than $60 billion — in the second quarter of 2018, which is anticipated to lead to "significant increase in sales and EBITDA before special items," the German company said in its earnings release.

The European Commission is likely set to announce its decision on whether to allow Bayer to buy the U.S. seeds giant in the first part of 2018.