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Wednesday, 27 June, 2001, 09:14 GMT 10:14 UK
Bayer warns on 2001 profits
Bayer warns that full-2001 profits will be below expectations
Bayer is not expecting to scale back spending on research and development
German chemicals and pharmaceutical firm Bayer has warned that its 2001 profits will fall below expectations.

The company, which had earlier predicted an increase on last year's 3.3bn euro (2bn; $2.8bn) operating income, is now forecasting a 10% drop.

High raw-material prices, disappointing results in a biotech subsidiary, and the soft global economic outlook are all to blame, the company said.

But since a profits warning from Bayer had been anticipated for the last few days, markets reacted calmly.

After a slight drop at opening, Bayer's shares bounced back to trade unchanged on Wednesday morning.

The shares were supported by a modestly bullish statement from the firm, indicating that it did not plan to cut jobs, close plants or rein in spending on research and development.

Chemical woes

Bayer has been the focus of German market attention since rival BASF announced the closure of ten plants at the end of last week.

At the same time Merck, the world's third-largest drugmaker, announced that profits would be disappointing.

All chemicals and some pharmaceutical firms have been suffering the effect of oil prices, which have been unexpectedly high for the last couple of years.

Bayer hopes to earn 3bn euros this year
Battered, but still profitable

Bayer has also been hit by the weak performance of its haemophilia drug Kogenate.

Shipments of the drug were halted in January after a US 0Food and Drug Administration inspection found bacteria present in some of the manufacturing stages.

Bayer's polymers division, which is heavily dependent on the American market, has also been a weak performer.

The company said that US economic conditions had prevented it implementing planned polymer price rises.

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See also:

22 Jun 01 | Business
Drug giant warns of lower profits
21 Jun 01 | Business
BASF shuts plants
21 Nov 00 | Business
Drugs - a high-risk business
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