Releasing its results for the three months to 30 June, the group said earnings before interest; tax and special items came in at 660 million euros (443 million euros) against estimates of 552m euros. Sales rose 4.5 per cent to 7.583 billion euros.

Chief Executive Officer Werner Wenning, 57, said the company expected to see profits rise by 10 per cent across 2004 as a whole.

The results back up a sector-wide recovery in the chemicals industry and come at a time when Bayer is continuing with the biggest revamp in its 141-year history.

Bayer, which invented aspirin in the 1890s, last month agreed to buy Roche Holding AG's non-prescription drug business for 2.38 billion euros to double sales of over-the-counter health treatments. The purchase added Rennie antacids to Bayer's Flintstones vitamins and Alka-Seltzer heartburn remedies.

The acquisition of Roche is seen by many as a shrewd piece of business. Critics however claim the integration of such magnitude may just be too big a problem for the company to tackle.

The company suffered a sharp fall in profit at the healthcare unit, which was hit by generic competition to its main drug, the antibiotic Cipro. Sales of Cipro fell 54 per cent to 202 million euros.