Bayer profit boosted by eye drug, better plastics margins

German drugmaker Bayer saw underlying core earnings increase by one third in the second quarter, helped by a gain in prescriptions of new drugs such as eye drug Eylea and lower raw material costs at its plastics division.

Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) rose to €2.90 billion, above market expectations of €2.68 billion, while revenue gained 18 per cent to €12.09 billion, also beating the analyst consensus.

Bayer said plans for a separate listing of its MaterialScience unit were on track and that the division, which will be renamed Covestro, saw adjusted EBITDA rise by almost 90 per cent to €506 million on higher volumes and a steep decline in the costs of petrochemical raw materials.

Analysts had predicted just €420 million in adjusted EBITDA on average for the unit, which makes chemicals for rigid insulation foams and upholstery as well as transparent plastics.

The stock advanced 3.7 per cent, the biggest winner in Germany’s blue-chip index DAX, which edged 0.1 per cent higher.

"MaterialScience (saw) a very strong quarter, the raw material cost benefit remains large and drove a very strong margin of 15.9 per cent," said UBS analyst David Evans, also pointing to Eylea as the biggest positive surprise at the group's main healthcare division.

Sales of Eylea, used against a condition that is the leading cause of blindness in the elderly, jumped by more than half from a year earlier to €301 million in the quarter.

Bayer still expects 2015 adjusted EBITDA to grow by “a high-teens percentage”, including positive currency effects of about 5 per cent, which it had previously put at around 8 per cent.

Reuters