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April 24, 2008, 6:53 a.m. EDT

Bayer raises euro/dollar average exchange rate estimate for 2008

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By Julia Mengewein

FRANKFURT (MarketWatch) -- German pharmaceutical and chemicals company Bayer AG (BAY.XE) changed its forecast for the U.S.-dollar exchange rate against the euro, on which it bases its 2008 outlook, factoring in a weaker dollar, Bayer spokesman Christian Hartel told Dow Jones Newswires Thursday.

Bayer now bases its 2008 goals on an estimated rate of $1.51 per euro, Hartel said. In its 2007 annual report earlier this year, Bayer said it based its 2008 planning on an exchange rate of $1.45 to the euro, compared to an average rate of $1.37 in 2007.

At 1030 GMT, the euro traded at a rate of $1.5760.

In its quarterly report released earlier Thursday, Bayer said that "currency effects" negatively impacted first-quarter sales by 4.8%.

In a research note, UniCredit analyst Andreas Heine said that Bayer's new exchange rate estimate would increase the negative impact on Bayer's annual sales to an estimated EUR1.35 billion from the EUR1.3 billion it would have been at the $1.45 estimate.

"It's a good sign that (Bayer's) outlook wasn't changed, as the headwind from the U.S.-dollar is significant," Heine said in his note.

Companies that report in euros and generate sales in currencies weaker than the euro will post lower absolute sales if converting back the amount into euros.

Bayer isn't the only company to feel the impact of a strong euro. Wednesday, German pharmaceutical and chemicals company Merck KGaA (MRK.XE) said that 12% of first-quarter sales of its Liquid Crystals operations were lost through the conversion back into euros.

Merck KGaA's produces its liquid crystals, which are used for displays of LCD televisions, notebooks, PC monitors and other digital displays, only at its headquarters' site in Darmstadt, Germany, but generates sales in U.S. dollars, the Japanese yen or the South-Korean won.

German chemicals company BASF SE (BAS.XE) earlier Thursday also said it increased its euro/dollar average exchange rate estimate for 2008 to $1.50 from $1.45.

Company Web site: http://www.bayer.com

-Contact: 201-938-5400

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