Bayer to cut 1,800 jobs after 45% drop in profits

Bayer is to cut 1,800 jobs worldwide as part of 1.5bn euro (£1bn) cost-cutting programme announced yesterday after it unveiled a 45 per cent fall in second-quarter profits.

Bayer is to cut 1,800 jobs worldwide as part of 1.5bn euro (£1bn) cost-cutting programme announced yesterday after it unveiled a 45 per cent fall in second-quarter profits.

The news, which comes a day after the pharmaceuticals and chemical giant was forced to withdraw its key anti-cholesterol drug, prompted speculation that the German group will be forced to split its chemicals and pharmaceuticals arms and look for a merger partner.

"Their life expectancy has clearly got shorter.... Just because they invented Aspirin doesn't give them the right to live forever," said Barrie James, head of Pharma Strategy Consulting. "It is increasingly difficult in a complex world to run a multi-divisional business. Now is not the time for conglomerates."

Bayer plans to close 15 plants in its polymers division, with the loss of 1,800 jobs or one-fifth of the workforce, as part of a restructuring plan designed save 1.5bn euros a year by 2005. The group, which employs around 2,700 people in the UK, has not said where the redundancies will be.

Like other large chemicals groups, Bayer has suffered from falling demand from car and electronics industries for its chemicals and plastics products as growth has slowed around the world, while rising oil prices have hit margins. Its second-quarter operating profits fell 44.8 per cent to 508m euros, despite a 5.6 per cent rise in sales.

The group also repeated its warning on Wednesday that the recall of its anti-cholesterol drug Baycol, known as Lipobay outside the US, would impact on full-year profits. Baycol, which was withdrawn following reports of 31 deaths in the US, was expected to make up one-fifth of Bayer's profits this year.

"Bayer is now forced further into the situation where they have to look for a merger. The bright spot of Bayer, the pharma part, has now failed," Nordinvest fund manager, Boris Boehm, said.

Bayer shares fell 1 per cent to 36.98 euros yesterday, taking the fall to 18 per cent in the past two days.

The company's UK base is in Newbury, Berkshire. It also has operations at Stoke Poges, Bridgend, Bromsgrove, Bury St Edmunds, Enfield, Malvern, Marlow, Halstead, Sudbury and Branston, Staffordshire.