Bayer AG's third-quarter earnings rose 12 percent as sales of farm products and high-tech materials boosted revenue at the pharmaceutical and chemical company, helping balance out slower growth at its drug division.
Bayer on Thursday reported net earnings of euro280 million ($386 million) for the July-September period _ up from euro249 million a year earlier. Total revenue rose 16 percent to euro8.58 billion from euro7.39 billion.
The crop science segment saw revenue increase by 18 percent to euro1.34 billion and the MaterialScience unit, which produces high-tech materials such as polycarbonates and polyurethanes, reported a 31 percent increase to euro2.67 billion.
Bayer said revenue at its core HealthCare division rose 8.5 percent to euro4.27 billion.
The pharmaceutical business expanded strongly in emerging markets, but Bayer reported "negative consequences" from health care reform efforts in various countries and said business was down sharply in North America as sales of Yaz oral contraceptives suffered from competition from generic drugs.
However, Bayer said it saw a strong increase in sales of the birth control implant Mirena, while Aspirin Cardio, a drug to prevent heart attacks, and the erectile dysfunction drug Levitra also performed well.
Third-quarter earnings were hit by charges totaling euro436 million stemming from litigation in the U.S. _ up from a set-aside of euro191 million a year earlier.
Bayer said its crop science division accounted for most of the charges, with euro386 million set aside mostly to deal with a planned settlement program for litigation concerning genetically modified rice.
A further euro50 million was set aside to deal with "anticipated defense costs" in connection with the contraceptives Yaz and Yasmin, the company said.
Still, Bayer said its tax expenses in the third quarter shrank to euro4 million from euro135 million a year earlier due to the regional distribution of its earnings.
The company confirmed its full-year forecast for core earnings per share to improve by more than 15 percent and for currency- and portfolio-adjusted sales growth of more than 5 percent.
Bayer's third-quarter pretax earnings, excluding special items, came in a little above analysts' expectations at nearly euro1.66 billion _ a 10.5 percent increase from a year earlier.
The quarterly results "indicate a recovery at CropScience and solid growth at MaterialScience, which supports the positive share price trend," said Andreas Heine, an analyst at UniCredit. On the health care front, upcoming news on products in the pipeline also should help the stock, he added.
The set-aside for litigation "is a negative disappointment, but a one-time issue," he said.
Bayer shares were up 0.6 percent at euro55.21 in morning Frankfurt trading.
The company's net earnings for the first nine months were up 24 percent to euro1.5 billion from euro1.21 billion. Revenue rose 12 percent, climbing to euro26.08 billion from euro23.3 billion.