Struggling German conglomerate Bayer has reported €4bn in net losses as it announced plans for further savings and cut its forecasts for the full year.
The pharmaceuticals and crop sciences group warned of a “muted outlook” for 2024 and said developments in the agricultural market had been weaker than anticipated, especially in Latin America.
The Leverkusen-based group, which continues to suffer from the fallout from its $63bn takeover of US crop sciences company Monsanto that was agreed in 2016, said on Tuesday that it expected earnings before interest, taxes, depreciation and amortisation of between €10.4bn and €10.7bn for the full year — down from a previous forecast of between €10.7bn and €11.3bn.
Its shares fell 12 per cent in morning trading on the news.
As part of its quarterly results on Tuesday, Bayer said large impairment charges at its agricultural business were the main drivers of the €4.2bn reported loss. Sales in its agricultural business fell 3.6 per cent to about €4bn.
Group sales were almost €10bn, a slight increase on the same period last year, with the company citing good performance in pharmaceuticals and consumer health due partly to growth in demand for drugs to treat cancer and chronic kidney disease.
But chief financial officer Wolfgang Nickl warned: “Overall, we expect a muted outlook on [the] top and bottom line next year with likely declining earnings. We plan to accelerate our cost and efficiency measures to partly compensate, and remain laser-focused on cash conversion.”
The acquisition of Monsanto was billed as a springboard to turn Bayer — a 161-year-old German corporate giant — into a powerhouse in the global food industry, supplying farmers with everything from seeds to pesticides. But the deal instead saddled Bayer with vast levels of debt and left it exposed to an expensive US legal fight over the weedkiller Roundup.
Although the group had an important win in a US appeals court in August over the labelling of the allegedly carcinogenic herbicide, the agricultural business has continued to be a headache for the wider group.
The company’s Texan chief executive Bill Anderson in March described Bayer, which has long faced pressure from investors to break itself up, as “badly broken”. However, he has resisted calls to split it up, instead slashing dividends to try to cut debt and launching a far-reaching internal reorganisation.
Nickl said on Tuesday that Bayer was “tackling challenges head on” and making progress on its strategic priorities of innovation, US litigation, cash and deleveraging, as well as implementing a new operating model aimed at cutting middle managers and empowering the company’s scientists and sales experts.
