Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) in the last three months of 2013 slipped to 1.77 billion euros, dampened by a weak Japanese yen and emerging-market currencies, the company said, missing the 1.91 billion euro average estimate in a Reuters poll.

"(The decline) was mainly due to substantial negative currency effects, as well as higher research and development expenditure," finance chief Werner Baumann said.

But Bayer, the inventor of Aspirin and maker of Yasmin birth-control pills, also boosted its estimate of the peak sales potential of its five most important new drugs to at least 7.5 billion euros, from more than 5.5 billion euros previously.

After initial losses, the company's shares were up 0.6 percent at 100.45 euros by 0919 GMT, among the top gainers in Germany's blue-chip DAX index <.GDAXI>.

Medicines such as anti-clotting drug Xarelto and eye treatment Eylea will do little to boost the bottom line this year because Bayer first needs to marshal a much larger sales force, but those two products alone are each expected to generate sales of more than $4 billion (2 billion pounds) as early as 2016, analyst estimates collected by Thomson Reuters Cortellis show.

As a result, the outlook for 2014 fell clearly short of market expectations.

"Bayer wants to continue investing in healthcare, in drug trials and market launches, and that could be why the margins outlook doesn't look quite so good. But the overall story remains solid," said Lilian Montero, a healthcare analyst at Swiss bank Julius Baer.

The German group said it expects 2014 adjusted EBITDA to grow by a low to mid-single-digit percentage and that full-year sales would be 41-42 billion euros.

Analysts on average had expected adjusted EBITDA growth of more than 10 percent and sales of 42.5 billion.

The group's Chief Executive Marijn Dekkers warned, however, that the prospect of a revenues boost from new drugs came at a price. "Further investments in marketing, distribution and life-cycle management will be required to exploit these opportunities," he said.

(Editing by Christoph Steitz and David Goodman)

By Ludwig Burger