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(Sharecast News) - Shares in German pharmaceuticals and chemicals group Bayer surged on Tuesday after the company raised its full-year profit outlook following stronger third-quarter sales and earnings, driven by growth in its pharmaceuticals division.
The stock was up around 6.6% at 53.32 in Frankfurt afternoon trading after Bayer increased its forecast for full-year earnings before interest, tax, depreciation and amortisation (EBITDA) before special items to between 9.8bn and 10.3bn, from 9.6bn to 10.1bn previously.
The company also improved its free cash flow guidance by 1bn to a range of minus 1.5bn to minus 500m, while reducing its year-end net debt forecast to between 28bn and 29bn, from 29bn to 30bn.
Third-quarter revenues rose 4.1% to 10.05bn, or 1.9% after adjusting for currency and portfolio effects, while EBITDA before special items increased 6.9% to 1.62bn.
The pharmaceuticals division was the main driver of growth, with revenues increasing 8% to 4.68bn and EBITDA before special items jumping 23.6% to 1.29bn.
Sales of cancer treatment Nubeqa and kidney and heart disease drug Kerendia increased 58.3% and 64.9%, respectively, on a currency- and portfolio-adjusted basis, offsetting declines in older medicines affected by patent expirations.
Bayer raised its full-year pharmaceuticals EBITDA margin forecast to between 25% and 27%, from 23% to 25%, and now expects sales growth towards the upper end of the division's existing guidance range.
Chief executive Bill Anderson said: "We've reached a turning point in Pharma's growth trajectory and we're beginning to see the other side."
Performance was weaker elsewhere. Crop Science revenues increased 0.7% to 3.88bn on a reported basis but declined 2.4% after currency and portfolio adjustments, while adjusted EBITDA slumped 41.3% to 101m due to higher costs.
Consumer Health revenues rose 2.1% to 1.45bn, although adjusted EBITDA fell 4.4% to 347m as higher marketing expenditure weighed on profitability.
Chief financial officer Judith Hartmann said: "Our year-to-date performance is a proof point that our strategy is working, and it gives us the confidence to improve our targets for the year on adjusted EBITDA, cash and debt."
Overall, the company reported a net loss of 672m, reflecting impairment charges and litigation-related expenses, though narrowing from 963m a year earlier. Core earnings per share declined to 0.31 from 0.49, partly due to non-cash charges resulting from interest rate changes.