Bayer sees muted growth as new CEO prepares to move in

* Higher drug development costs, weak agchem unit weigh

* New CEO to take charge in May

* Company forecasts only muted growth this year (Releads on outlook, adds analyst comment, shares)

By Ludwig Burger

LEVERKUSEN, Germany, Feb 25 (Reuters) - Germany's Bayer disappointed investors with its earnings outlook for 2016 when a new chief executive will steer the company through changes in its healthcare, seeds and crop chemicals markets.

Bayer (LSE: 0P6S.L - news) , inventor of aspirin and maker of Yasmin birth control pills, said it expected core earnings to increase only by a medium single-digit percentage this year.

Strategy chief Werner Baumann will take over from CEO Marijn Dekkers in May and will have to show that he can build on Bayer's successful launches of drugs such as anti-blindness treatment Eylea and stroke prevention pill Xarelto.

Dekkers, for his part, will succeed Michael Treschow as chairman of consumer goods giant Unilever (NYSE: UL - news) .

"The outlook is conservative in the context of the CEO handover," said Commerzbank (Xetra: CBK100 - news) analyst Daniel Wendorff.

"The intention was arguably not to burden the successor with too ambitious targets, but the outlook is below our estimates and below consensus," he added.

The shares fell 2.5 percent by 1030 GMT, the worst performance on blue-chip index DAX, poised to mark a 22-month low.

Some bankers expect Bayer to do more deals in its non-pharma markets, given Baumann's stated belief in a diversified healthcare strategy, similar to Johnson & Johnson (NYSE: JNJ - news) 's.

Challenges loom for 150-year-old Bayer. The planned combination of DuPont and Dow Chemical (Hanover: DCH1.HA - news) creates a more formidable rival for Bayer's pesticides and seeds unit.

Fourth-quarter profit before interest, taxes, depreciation and amortisation (EBITDA), also came in short of the market view as Germany's largest drugmaker spent more on research and development (R&D) and saw profit at the crop chemicals divisions decline.

EBITDA in the quarter rose 4 percent to 1.90 billion euros ($2.10 billion). That was below average market expectations of 2.03 billion euros.

Bayer also said adjusted EBITDA at its Covestro (EUREX: 1COF.EX - news) plastics subsidiary would likely decline this year.

The separately-listed business this week stopped short of forecasting earnings figures, instead flagging sales volume growth that may bring about higher profitability. Bayer plans to sell its Covestro (LSE: 0RBE.L - news) shares on the open market over the medium term. ($1 = 0.9065 euros)

(Reporting by Ludwig Burger; Editing by Maria Sheahan)