Bayer shares rise after Q2 earnings beat, guidance raised despite litigation hit

Investing.com -- Bayer AG (ETR:BAYGN) shares rose on Friday after the German pharmaceutical and biotechnology company reported stronger-than-expected second-quarter earnings and raised its full-year guidance, despite booking €1.7 billion in additional litigation provisions.

Second-quarter EBITDA before special items reached about €2.1 billion, exceeding Jefferies’ forecast of €1.8 billion and the consensus estimate of €1.9 billion. 

Core EPS came in at €1.23, ahead of Jefferies’ €0.65 estimate and 62% above consensus. Compared with the same quarter last year, EBITDA declined 1%, while core EPS increased 31%.

The company lifted its full-year FX-adjusted EBITDA forecast to a range of €9.2 billion to €9.7 billion, compared with €9.1 billion previously. 

FX-adjusted core EPS guidance was raised to €4.45 to €4.95, up from €4.39. Revenue guidance remains unchanged at €44 billion to €46 billion.

The Crop Science division led the operational beat. EBITDA reached €700 million, 55% above Jefferies’ estimate and 33% higher than consensus. Sales in the segment rose 2.2% on a currency- and portfolio-adjusted basis, short of the 3% forecast.

Pharmaceuticals delivered 0.6% growth in adjusted sales, outperforming expectations of a 2% decline. 

EBITDA in the unit was €1.1 billion, slightly below Jefferies’ forecast of €1.172 billion and down 17% from the prior year.

Consumer Health underperformed on the top line, with sales growing 0.2% against a 3.5% estimate. EBITDA for the unit totaled €300 million, 6% below the estimate and 4% lower year over year.

Litigation provisions rose by €1.7 billion, including €1.2 billion related to glyphosate legal costs and €530 million for PCB claims. 

Bayer (OTC:BAYRY) reported 61,000 outstanding glyphosate cases. The total litigation charge amounts to approximately €1.70 per share.