German chemicals giant Bayer said its first quarter net profit slumped by more than a third, as it booked a big charge amid a flood of lawsuits over its subsidiary Monsanto's Roundup weed killer. Hit by the legal entanglements and ongoing costs of integrating Monsanto, Bayer's first quarter earnings slumped 36 percent to 1.24 billion euros ($1.38 billion).
Bayer, which bought Monsanto for $63 billion in June last year, said it now faced lawsuits from 13,400 plaintiffs over the glyphosate weed killer in Roundup. It booked a charge of 51 million euros for "litigations and legal risks" in the first three months of 2019, up sharply from four million euros a year ago.
Of the looming Roundup lawsuits, Bayer stressed that it "continues to believe that it has meritorious defences and intends to defend itself vigorously in all of these lawsuits." Monsanto was ordered last month by a court to pay $80 million to an American retiree who blames his cancer on the weed killer.
The verdict was the second stinging defeat for the company in recent months, after it lost a case to a California school groundskeeper suffering from terminal non-Hodgkin's lymphoma. It was initially ordered to pay $289 million to the plaintiff in that case, before the damages were reduced to $78.5 million. Bayer is appealing both rulings.
A third trial is underway in Alameda County, while another four are scheduled in Missouri and Montana for 2019, Bayer said. Beyond the legal woes, the cost of acquiring Monsanto is still clearly seen on the balance sheets with 492 million euros being spent on "acquisition and integration costs" and a further 393 million euros on "restructuring".
In November, Bayer said it would slash 12,000 jobs in a restructuring drive after the takeover of Monsanto. Despite the heavy costs, Bayer says it is "aiming" for an increase in overall earnings before exceptional charges such as litigation costs for 2019 to "approximately 12.2 billion euros".
Last month Bayer's CEO Werner Baumann stuck to his guns, insisting the huge Monsanto takeover was a "good idea", despite the huge legal costs piling up over its Roundup weed killer. "The Monsanto acquisition was and is a good idea," Werner Baumann told newspaper Frankfurter Allgemeine Sonntagszeitung, when asked if he might have changed his mind about buying the US group.
Comments
Comments are closed.