By Ludwig Burger
FRANKFURT (Reuters) - Bayer (DE:BAYGn) took impairment charges of 9.25 billion euros ($10.79 billion) and said the costs of its settlement over claims its Roundup weedkiller causes cancer would be higher as the burden from its takeover of Monsanto (NYSE:MON) mounts.
The write-downs, driven by weaker demand from farmers due to low biofuel prices, and an increase of about $750 million in the costs of coming to terms with U.S. plaintiffs over Roundup, resulted in a loss before interest and tax of 9.4 billion euros (8.5 billion pounds) in the third quarter, it said on Monday.
Bayer was caught up in litigation over Roundup, based on the herbicide glyphosate, as a result of its 2018 takeover of Monsanto for about $63 billion, which made it the world's largest supplier of seeds and pesticides.
"The impact of the (coronavirus) pandemic is placing additional strain on our Crop Science Division. We are also facing negative currency effects,” Chief Financial Officer Wolfgang Nickl said, adding that a massive depreciation of the Brazilian real was weighing heavily on business in the world’s second-largest agricultural market.
The company on Sept. 30 predicted impairment charges in the mid to high-single-digit billion-euros range on agricultural assets and warned of a slight decline in 2021 core earnings per share, weighing on Bayer's shares.
Bayer struck an $11 billion outline agreement with U.S. plaintiffs' lawyers in June but a judge later took issue with a side arrangement on future cases that may yet be lodged, known as a class plan.
Addressing those concerns will prove about $750 million more costly, it said on 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 the negotiations to know that the new plan will come in at approximately 2 billion U.S. dollars, an increase over the original cost of 1.25 billion U.S. dollars," Bayer said in its statement.