FRANKFURT (Reuters) – Bayer said the economic downturn and the need to preserve cash means it is taking a tougher stance in talks to settle claims its glyphosate-based weedkillers cause cancer, even as its earnings rose.
The logo of Bayer AG is pictured at the facade of the historic headquarters of the German pharmaceutical and chemical maker in Leverkusen, Germany, April 27, 2020. REUTERS/Wolfgang Rattay
The pandemic has significantly slowed the mediation process, the German drugs and pesticides company said in a statement on Monday.
“The company will consider a deal only if it is financially reasonable and puts in place a mechanism to resolve potential future claims efficiently,” Chief Executive Werner Baumann said.
“This applies now more than ever,” he added, citing a looming recession and considerable liquidity challenges as a result of the coronavirus pandemic.
The number of U.S. plaintiffs blaming its glyphosate-based weedkillers for their cancer reached 52,500, up from 48,600 in February, the company added.
Bayer denies claims that Roundup – or its active ingredient glyphosate – cause cancer, saying decades of independent studies have shown it to be safe for human use.
The company said first-quarter adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 10.2% to 4.39 billion euros ($4.76 billion), surpassing average analyst expectations of 4.17 billion, according to Refinitiv data.
Bayer, which is due to hold its annual shareholder meeting in a virtual format on Tuesday, warned that it was unable to assess the impact of the pandemic on results this year.
The first-quarter beat was driven by a 14% gain in earnings at the agriculture division from higher sales of crop chemicals and corn seeds. Earnings were further underpinned by a 19% increase in revenue from stroke prevention drug Xarelto.
Bayer also pointed to the stockpiling of drugs as consumers purchased over-the-counter products and patients sought additional prescriptions as a safety net as the coronavirus spread.
Operating cash flow, however, fell to an outflow of 189 million euros, down from an inflow of 1 billion a year earlier, as it brought forward the settlement of agriculture payables and receivables were paid later.
“Despite this good performance, we have a question mark regarding cash-flows,” said Bryan Garnier analyst Jean-Jacques Le Fur, also voicing concern about customers’ creditworthiness in the farming sector.
Bayer’s shares were up 3% at 61.36 euros by 0925 GMT, beating a 2% gain in the wider German market.
Additional reporting by Patricia Weiss; editing by Thomas Seythal, Emma Thomasson, Kirsten Donovan