Icon: enlarge
Distribution of glyphosate in France (archive image)
Photo: JEAN-FRANCOIS MONIER / AFP
The lawsuits over the alleged carcinogenic herbicide glyphosate are becoming more expensive for the chemical and pharmaceutical company Bayer than initially thought.
CEO Werner Baumann is now assuming that an important part of the settlement package will cost around two billion dollars instead of the originally expected 1.25 billion.
This involves dealing with possible future lawsuits because of the herbicide's alleged carcinogenic effect.
This part was on the brink after the responsible US district judge had expressed doubts about it.
Bayer revised the concept and expects the conclusion of a formal agreement with the plaintiff's attorneys in the next few weeks, as Baumann announced.
Baumann did not want to say in a conference call why the revised concept is more expensive and what changes it provides for.
The details are confidential.
However, the court's concerns were addressed in a "satisfactory manner".
The original concept included the establishment of an independent scientific committee.
This should decide whether and in what quantities the glyphosate-containing weed killer Roundup - which has been part of the Bayer product range since the takeover of Monsanto - causes cancer.
After the responsible judge Vince Chhabria expressed concerns about this proposal, Bayer withdrew its application for provisional approval in early July.
This should now be set again in the next few weeks.
Bayer reached an agreement with most of the plaintiffs in the legal dispute at the end of June and assumed at the time that up to $ 10.9 billion would be due for the settlement and possible future cases.
Dealing with future glyphosate lawsuits is a crucial part of the settlement, as the Leverkusen-based group must find a solution to reduce the risk of future lawsuits without taking Roundup off the market.
In the meantime, agreements have been reached for 88,500 of the 125,000 threatened lawsuits filed, said Baumann.
Bayer hopes to make significant progress over the next few months.
"Unprecedented global crisis"
While the pharmaceutical and agrochemical group is making progress on the process front, day-to-day business is suffering from the consequences of the corona pandemic.
"We are currently experiencing an unprecedented global crisis," said Baumann.
This is the area that is being felt most strongly in the agricultural business that Bayer had significantly expanded through the Monsanto takeover.
"Added to this are negative currency effects such as the massive devaluation of the Brazilian real, which is putting a significant strain on business in the world's second-largest agricultural market," admitted CFO Wolfgang Nickl.
In the third quarter, sales in the division from North America in particular fell significantly due to higher returns and lower license income for corn seeds, as the acreage was less than planned.
The charges in the agricultural business led to impairments of 9.25 billion euros.
They were thus at the upper end of the depreciation in the mid to upper single-digit billion euro range announced by Bayer at the end of September.
Overall, Bayer had to digest a loss of 2.74 billion euros in the third quarter - after a profit of 1.036 billion in the same period last year.
Already in the second quarter a minus of 9.5 billion euros hit due to provisions for the glyphosate comparison.
While the pharmaceuticals business recovered, the over-the-counter health products business saw a significant upturn, as the company's nutritional supplements were in particular demand during the pandemic.
Bayer reaffirmed the annual targets that had already been lowered in the summer.
The board does not want to announce details of the planned tightening of the austerity program until the beginning of 2021.
However, it is already clear that there will be further job cuts.
Icon: The mirror
dab / Reuters