Baycol hurts Bayer results

November 14, 2001 Posted: 0840 GMT

LONDON (CNN) -- Bayer plans to shed 1,300 jobs as it posted a third-quarter loss associated with the withdrawal of cholesterol lowering drug Baycol.

The company was forced to withdraw Baycol after the drug was linked to the deaths of 52 people.

Germany's third-biggest drug company expects the costs of Baycol's withdrawal and production problems for haemophilia drug Kogenate to slash operating profits by  1.4 billion this year.

"We are simply unable to absorb the withdrawal in August of cholesterol-lowering drug Lipobay/Baycol and the severe (economic) downturn  through the third quarter," said chief executive Manfred Schneider.

Bayer posted a third-quarter loss of 183 million ($161 million), or 0.25 a share. That compares with a profit of 534 million, or 0.73 a share, in the same period a year ago.

Third-quarter operating profit on continuing operations before exceptional costs, a figure closely watched by analysts, dropped 90.7 percent to 66 million. Sales on continuing operations fell 5.9 percent to 6.87 billion.

Analysts polled by Reuters forecast third-quarter operating profit in a range of 117 million to 462 million and sales of 6.9 billion.

Bayer (FBAY), also Europe's second-largest chemicals company, said it expected to make an operating profit in the fourth quarter despite the global economic slowdown.

"Additional sales of (anthrax drug) Cipro will not be enough to compensate for diminished earnings resulting from the Baycol withdrawal," Schneider said.

"We do not anticipate a turning point in our business in the fourth quarter, but we do expect to achieve a positive operating profit before exceptional items," he said.

Bayer's stock, which has fallen more than 40 percent from a high of 58.00 on January 2, slipped 0.7 percent to 34.65 in early Frankfurt trade on Wednesday.