BMS working on cost-cutting measures

Germany-based chemical and pharmaceutical company Bayer’s MaterialScience division’s margins are under pressure, due to an overcapacity and high energy/raw material costs, CEO Marijn Dekkers said recently, according to a report by Bloomberg. Speaking at a dinner hosted in Leverkusen, Dekkers said, “we must continue to lower costs.”

The company is in talks with labour representatives, but the CEO did not specify if job cuts were part of the plan, stating only of measures that will be "small adjustments” and will take place over the next three to four years. Dekkers also said that in recent years, chemical companies have increased output capacity in anticipation of rising demand in emerging markets. However, some of these markets are slowing down, particularly China, and overcapacity is making it difficult to pass on higher costs to customers, he noted.

And though analysts have speculated the company will sell or spin off the division, Dekkers said he sees no pressing need for such a deal.

BMS cut its forecast in July. The unit’s second-quarter earnings before interest, taxes, depreciation, amortisation and special items, dropped 29% while sales fell 2.7%, the second consecutive quarter that the unit’s sales and earnings had fallen. By contrast, Bayer’s pharmaceutical unit has had a successful run while the crop science agriculture unit may add at least EUR4 billion in revenue, Dekkers said.


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