By Ludwig Burger

FRANKFURT (Reuters) – Pharma and pesticides group Bayer’s earnings guidance for this year fell short of investors’ expectations on Thursday, raising questions about the strength of the agriculture business it boosted with the $63 billion takeover of Monsanto.

Based on exchange rates at the end of 2020, Bayer said it expected 2021 adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of 10.5-10.8 billion euros ($12.8-$13.2 billion), down from 11.45 billion last year.

Its shares were down 3.5% at 53.17 euros by 1300 GMT, erasing gains over the three previous trading sessions, as analysts said the lower-than-expected guidance pointed to a weaker seeds and pesticides unit.

“Guidance may reflect more price pressure as Bayer competes with Coreteva’s new offering in soy,” said Credit Suisse’s Trung Huynh.

Bayer’s stock was battered last year by litigation worries, billions of euros in writedowns, and a bleaker profit outlook, in large part related to the 2018 Monsanto deal.

The German company also reported a bigger-than-expected fall in fourth-quarter adjusted EBITDA, dragged down by a weaker Brazilian real and U.S. dollar and competition in the North American agriculture market.

Quarterly EBITDA, adjusted for one-offs, fell 3.4% to 2.39 billion euros, below an average estimate of 2.45 billion euros in a poll of analysts on the company’s website.

Bayer’s drugs business was shored up by strong prescription growth in stroke prevention pill Xarelto, but the coronavirus pandemic also put women off seeking appointments for Bayer’s Mirena-branded birth control devices, it said.

Bayer added it remained “strongly committed” to a comprehensive settlement of claims in the United States that Roundup and other glyphosate-based herbicides cause cancer.

Bayer on Feb. 3 came to terms with plaintiffs’ lawyers in a $2 billion pledge to resolve future legal claims, as the products will remain on the market.

That would add $750 million to the total bill of an outline settlement agreed in June 2020, tallied at up to $11 billion at the time.

A judge still has to sign off on the deal and Bayer said on Thursday a key court hearing was scheduled for March 31 and the presiding judge would issue an assessment afterwards.

($1 = 0.8179 euros)

(Reporting by Ludwig Burger; Editing by Caroline Copley and Mark Potter)