http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c =StoryFT&cid=1028185582322&p=1012571727088 Bayer to cut further jobs at CropScience By David Firn in London and Bettina Wassener in Frankfurt Published: August 7 2002 13:17 | Last Updated: August 7 2002 13:17 Bayer, the troubled German chemicals and pharmaceuticals conglomerate, may make more job cuts than expected at CropScience, the agrochemicals unit it is buying from Aventis and Schering. Bayer, whose shares were down 4.5 per cent at €21.85 on Wednesday, was not immediately available for comment on the report, which appeared in Wirtschaftswoche, the German news magazine. "Because of the new restructuring it will likewise still come to job cuts," Werner Wenning, who took over as chief executive in May, told Wirtschaftswoche. News of the additional cuts comes as analysts at Credit Suisse First Boston, one of the banks that advised Bayer, sharply cut its earnings forecast for this year and 2003. The new cuts in agrochemicals, are in addition to the 4,000 job losses already announced. Bayer declined to say how many more jobs would be cut. The Crop science acquisition will take Bayer from sixth to second place in the $33bn global agrochemicals market. But second-quarter operating profits at Bayer's agrochemicals division were 24 per cent below analysts' forecasts. Business at the group has fallen in all its units and Bayer faces up to 2,000 lawsuits over Baycol, the cholesterol-lowering drug linked to 100 deaths. The withdrawal of Baycol is not the only problem faced by the drugs division, which has steadily slipped from being among the world's leaders to 18 in sales terms. Manufacturing problems have hit sales of Kogenate, another key product, and the launch of a new impotence pill has been delayed by regulators who want more safety data. Bayer also faces a sharp downturn in its polymers chemicals businesses. Credit Suisse First Boston downgraded its 2002 earnings forecast by 37 per cent to €0.63-a share, before gains on the sale of Haarmann & Reimer, Bayer's flavours unit . The downgrade follows weaker-than-expected second-quarter results from Bayer, which were released last week. "Investors have suffered from a steady stream of gloomy news on Bayer over the last 18 months," the analysts said. "However, in view of the likely short-term challenges in the agrochemicals market and the lack of new product flow in Healthcare, we struggle to see an inflection point in earnings yet." Bayer has steadfastly resisted investor pressure to break itself up into more focused units. However, after the Baycol withdrawal the company split its healthcare, chemicals, polymers and agrochemicals operations into separate legal entities, a move that could herald strategic reorganisation. The group is also cutting costs in an effort to make annual savings of €2bn ($1.9bn) by 2005. Bayer's second-quarter results showed the extent of the pressure the company is under. Operating profit on continuing operations before exceptionals fell 40 per cent to €318m, against expectations for slight increases, while sales declined 6.7 per cent to €7.27bn. Although Bayer expects full-year net income to exceed last year's level, this will be mainly on the back of disposals, rather than organic growth. While other chemical companies have reported signs of an upturn in demand Bayer said it did not expect a sustained improvement in the second half for polymers and chemicals, and that profitability at the key healthcare division remains "very unsatisfactory". Bayer is the latest blue-chip German company to mull additional job cuts. The announcement further cloud the German government's prospects for success in the federal elections on September 22, in which persistently high unemployment is a key theme.