(Bloomberg) -- Bayer AG cut its forecast for the year because the euro’s strength is curbing sales as it pushes to close its $66 billion purchase of Monsanto Co.
Sales will drop below last year’s 35 billion euros ($42 billion) while earnings are set to decline by a low-single-digit percentage, the Leverkusen, Germany-based company said in a statement on Thursday. Bayer had previously predicted that sales and profit would show little change without Monsanto and without adjusting for exchange rates.
Bayer Chief Executive Werner Baumann repeated that he aims to close the Monsanto acquisition, announced in mid-2016, by the end of this quarter. If the deal isn’t done by June 14, the contract can be canceled. One of the oldest drugmakers, the German company is remolding itself into the world’s biggest producer of seeds in the last of three mega-deals that are reshaping the global farming industry.
The company, which still needs to win U.S. antitrust approval, is in “good and constructive discussions” with officials at the Justice Department, Baumann said in an interview with Bloomberg Television. Any additional divestments to appease regulators will probably be minor compared to the size of the overall transaction, he said.
Bayer shares rose 0.4 percent to 100 euros at 9:25 a.m. in German trading, giving the company a market value of 85.8 billion euros. The two other big players were created when DuPont Co. merged with Dow Chemical Co. last year and China National Chemical Corp. acquired Syngenta AG. To push through the Monsanto acquisition, Bayer agreed to sell pieces of its agriculture business to BASF SE for about 7.6 billion euros.
Bayer’s own agriculture business showed signs of recovery in the first quarter, the company said, with sales growing in three out of four of the major regions where it operates. Earnings before interest, taxes, depreciation, amortization and some special items declined by 6.5 percent to 1.04 billion euros at the unit.
The broader picture was mixed. Bayer’s crop science, animal health and consumer health sales all fell short of investor expectations, Jefferies LLC analysts wrote in a note to clients on Thursday. The pharmaceutical unit met revenue expectations as a whole, though cancer drug Nexavar and multiple sclerosis medicine Betaseron struggled in the U.S. due to competition from other drugs, the analysts said.
Bayer repeated its previous forecast that this year’s core earnings per share will remain at about the same level as in last year.
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