Bayer takes more than $10 billion writedown, flags higher Roundup settlement bill

In this news, we discuss the Bayer takes more than $10 billion writedown, flags higher Roundup settlement bill.

FRANKFURT (Reuters) – Bayer BAYGn.DE took depreciation charges of 9.25 billion euros ($ 10.79 billion) and said the costs of its settlement over allegations that its Roundup weedkiller caused the cancer would be higher as the burden of its Monsanto buyout mounted.

The write-downs, driven by lower demand from farmers due to low biofuel prices, and an increase of about $ 750 million in costs associated with accepting U.S. plaintiffs on Roundup, resulted in a loss before interest and taxes of 9.4 billion in the third quarter, he said Monday.

Bayer was involved in litigation over Roundup, based on the herbicide glyphosate, following its takeover of Monsanto in 2018 for around $ 63 billion, making it the world’s largest supplier of seeds and pesticides.

“The impact of the (coronavirus) pandemic is putting additional pressure on our Crop Sciences Division. We are also facing negative currency effects, ”said CFO Wolfgang Nickl, adding that a massive depreciation of the Brazilian real was weighing heavily on the activities of the world’s second largest agricultural market.

On September 30, the company predicted depreciation charges in the mid-to-high range of billions of euros on farm assets and warned of a slight drop in basic earnings per share in 2021, weighing on shares of Bayer.

Bayer struck an $ 11 billion framework agreement with lawyers for the U.S. plaintiffs in June, but a judge then challenged a side deal on future cases that may still be filed, known as the class plan.

Addressing those concerns will cost around $ 750 million more, he said Monday.

“Bayer took an additional provision in the third quarter to cover the increased cost of a revised class plan, as it is far enough along in negotiations to know that the new plan will cost around US $ 2 billion, an increase from initial cost of US $ 1.25 billion, ”Bayer said in its statement.

(1 USD = 0.8573 euros)

Reporting by Ludwig Burger; edited by Thomas Seythal and Maria Sheahan

Original © Thomson Reuters

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