Leverkusen, Germany, March 18 (Reuters): German drugs and chemicals group Bayer posted worse-than-expected 2003 losses on Thursday on a large fourth quarter charge for a revamp aimed at transforming its business, but forecast profit growth this year.

The firm’s shares sagged on investor disappointment.

Bayer, which is planning to float a new company comprising large parts of its chemicals and part of its polymer units, posted a full-year operating loss of €1.203 billion ($1.48 billion), worse than forecast and compared with an operating profit of €1.61 billion the year before.

Bayer, which invented Aspirin more than a century ago, said it believed its net loss of €1.36 billion was the highest in more than 140 years of company history.

But it said little new about its revamp plan, apart from naming the new company Lanxess, compounding the disappointment over the results. Bayer said its loss was largely due to a €1.9 billion impairment charge and valuation charge related to the revamp but analysts said the underlying business was also struggling.

“The result is lower than expected only partly due to the charges — the underlying business is also disappointing,” said WestLB analyst Andreas Theisen.

“Chemicals and polymers clearly struggled toward the end of the year,” he said, referring to the units from which the new company will be created.

Bayer said it would float Lanxess by early 2005 at the latest and had kept open the option of spinning it off to existing Bayer shareholders.

The company announced late last year that it planned a revamp to focus on healthcare, crop science and material science, which contains its remaining chemical and polymers businesses.

Bayer said it intended to increase both earnings before interest, tax, depreciation and amortisation and operating result before special items by more than 10 per cent this year, though sales for the group as a whole would decline slightly.

“The first two months of this year give us reason to be cautiously optimistic,” chief executive Werner Wenning said.

“The first figures for this year show an encouraging trend in operating result, despite the currency situation,” he said, adding this was true for the life science units but especially so for the businesses to be floated.

Sales for 2003 fell 3.6 per cent to €28.567 billion.

Wenning said Bayer had cut 9,300 jobs out of 14,000 planned reductions between 2002 and 2005, and predicted savings of €900 million this year.

He said the company was targeting EBITDA margins of 19 per cent by 2006, up from 12 per cent in 2003, but analysts said this was at the lower end of their estimates.