Aventis Reports Profit Rose 64% in 2000;

Confirms Plans to Divest Agriculture Unit

Wall Street Journal 2mar01

PARIS -- Aventis SA reported its profit before exceptional items jumped 64% to 1.13 billion euros ($1.05 billion) in 2000, and confirmed plans to divest its beleaguered agriculture division.

The profit was in line with analysts' expectations of 1.1 billion euros. The Franco-German life sciences group posted a pro forma profit of 691 million euros in 1999.

Including exceptional items, the group had a net loss of 147 million euros in 2000, compared with a net loss of 1.37 billion euros a year earlier. Exceptional charges totaled 2.20 billion euros in 2000, including a 1.43 billion one-time charge related to the formation of Aventis. Exceptional gains weren't detailed.

Aventis said it realized a total of 430 million euros in synergies in 2000, above the 400 million euros expected by analysts. Of these, 250 million euros worth were generated by Aventis Pharma, 160 million euros worth by Aventis Agriculture, and 20 million euros were generated at corporate level.

The company said it sees 25% to 30% earnings-per-share growth in its core business in the next two years, and plans to have a total of 470 million euros in synergies in 2001, with no further merger-related costs expected this year.

Aventis confirmed its plan to divest its agriculture division, as it suggested in November 2000. Revenue at Aventis Agriculture, which includes Aventis CropScience and Animal Nutrition, was flat at 4.60 billion euros in 2000.

Aventis said it is "evaluating all value-enhancing options for Aventis CropScience, while constructive talks are underway with potential new shareholders of Animal Nutrition."

Analysts are encouraged by the company's plans to divest the unit, but worry that flat sales growth doesn't bode well for divesting the unit at the present time.

The agrochemicals unit has been beleaguered by a scandal after StarLink, a genetically modified corn developed by the unit that was only approved for use in animal feed, was discovered in products for human consumption in 2000. StarLink contains an insecticide, and the U.S. Environmental Protection Agency approved its use only for animal feed, because of concerns that a StarLink protein called Cry9C may trigger allergic reactions. Aventis stopped producing the corn last fall. The ensuing scandal saw the resignation of the head of Aventis' U.S. crop science unit and the company agreeing to compensate farmers and grain elevators in 17 U.S. states.

The group said it is likely to finalize the sale of its 67% stake in German gas group Messer Griesheim to Allianz Capital Partners and Goldman Sachs Funds by the second quarter of this year.

Aventis's industrial activities contributed 1.68 billion euros to the group's revenue and, marginally, to its net income. The sale of a 50% stake in Wacker Chemie GmbH to the Wacker family, part of Aventis' wider industrial divestment program, will be completed in 2002.

Aventis said its debt totaled 13.13 billion euros at the end of 2000, up from 12.27 billion euros a year earlier, but down from 13.35 billion euros at the end of the first half of 2000. The company said it will have 4.1 billion euros in debt after the completion of its planned divestment of Aventis Agriculture and industrial activities.