Bayer, the German maker of Aspirin, said litigation costs connected with its Yasmin oral contraceptive hit its bottom line in the second quarter but it remained confident for the full year.
Bayer said in a statement its net profit declined 34 percent to 494 million euros ($606 million) in the period from April to June.
Nevertheless, the decline was primarily due to 500 million euros in provisions set aside for settling litigation in connection with the oral contraceptive Yasmin, which could increase of the risk of blood clots.
Underlying profits, stripping out such one-off items, were higher and earnings before interest, tax, depreciation and amortisation (EBITDA) rose 6.7 percent to 2.17 billion euros on a 10-percent rise in sales to 10.18 billion euros, Bayer said.
Sales in the healthcare division, which covers both pharmaceuticals and consumer health, rose by 10 percent to 4.63 billion euros, with growth coming primarily in North America and emerging markets such as China.
Bayer said its agro-chemicals or crop science business saw sales rise 17.1 percent to 2.28 billion euros, while sales in the material science division were up by 6.5 percent at 2.96 billion euros.
On the basis of its performance in the second quarter and first half of 2012, Bayer decided to raise its full-year profit forecast, said chief executive Marijn Dekkers.
"Following the good business performance in the first half of 2012, especially at the crop science and healthcare divisions, we are also confident for the second half of the year," Dekkers said.
Sales were projected to rise by 4.0-5.0 percent to 39-40 billion euros, topping the original forecast for an increase of 3.0 percent.
Underlying profit, instead of improving only slightly, was now expected to show a "high-single-digit percentage" increase, or a rise of between five and nine percent, Bayer predicted.
Investors appeared to take heart from the news, with Bayer shares among the top gainers on the Frankfurt stock exchange on Tuesday, rising 1.42 percent to 62.02 euros in a flat market.