Bayer says fourth-quarter profit fell 33 percent on settlement provisions

Monday, March 6th 2006, 11:48 am

By: News On 6

FRANKFURT, Germany (AP) _ German drugmaker Bayer AG said Monday its fourth-quarter profit fell 33 percent after it set aside 275 million euros ($330.5 million) to settle claims that it colluded on prices of rubber and plastic in the U.S.

The Leverkusen, Germany-based company earned 46 million euros ($55.3 million) in the quarter that ended Dec. 31, compared with 68 million euros a year earlier. Revenue rose 16 percent to 7.1 billion euros ($8.5 billion) from 6.11 billion euros.

The company warned in December that it was being examined for alleged collusion by U.S. regulators in its polymers division, which makes plastics and rubber products, and said its fourth-quarter profit narrowed because of the 275 million euros set aside.

Also weighing on the results was a 58.9 million euros ($70.8 million) fine by the European Union for antitrust violations at its rubber chemicals unit.

For the year, Bayer earned 1.6 billion euros ($1.9 billion), nearly doubling the 685 million euros it earned in 2004. Sales rose 17 percent to 27.38 billion euros ($32.9 billion) from 23.28 billion euros.

Chief Executive Werner Wenning said the company was aiming for a 5 percent rise in sales through 2006 to more than 28 billion euros ($33.6 billion), along with a slight increase in earnings. However, the company warned that earnings in its plastics unit would decline.

``Our strategic realignment toward innovation and growth has brought a sustained improvement in the Bayer group's earning power,'' Wenning said, adding that the company expects to save as much as 600 million euros ($721.2 million) through the next three years after it cut costs, put its chemical assets in a separate company and streamlined its drug unit.

Bayer's health care unit saw fourth-quarter sales rise 24 percent to 2.5 billion euros ($3 billion), while its plastics division saw an increase of 15.7 percent to 2.78 billion euros ($3.3 billion).

The company's crop science unit posted fourth-quarter sales of 1.38 billion euros ($1.6 billion), down 4.9 percent.

For the year, health-care sales rose 17 percent to 9.429 billion euros ($11.3 billion), lifted in part by the acquisition of Roche Holding AG's consumer care business. Bayer's best-selling product is the Ascensia line of diabetes treatments, which posted sales of 701 million euros ($842.6 million) last year, a 12 percent increase.

Sales of aspirin rose 4.8 percent to 630 million euros ($757.3 million) and those of the erectile dysfunction drug Levitra, a major competitor to Pfizer Inc.'s Viagra, rose 34.7 percent to 260 million euros ($312.5 million).

Sales of Trasylol, a drug used during cardiac surgery to stem bleeding, rose by 34.5 percent to 230 million euros ($276.5 million) in 2005.

Wenning said Bayer wants to widen its health-care unit and would consider making acquisitions to expand its over-the-counter drug lineup _ providing that targets fit Bayer's business plan.

Wenning made the remark at a news conference when asked whether Bayer would bid for Pfizer's over-the-counter division, if it were put up for sale. Pfizer said last month it might sell or spin off the unit.

Bayer's crop science division had a slight decline in sales of less than 1 percent to 5.89 billion euros ($7.07 billion) while its MaterialScience unit, which produces and sells plastics, reported growth of 24.4 percent to 10.69 billion euros ($12.8 billion) in 2005.