Bayer lowers its goals

The agricultural and pharmaceutical company Bayer has already stated that after the first quarter, sales and profitability would only be in the lower half of the year estimate. The glyphosate industry will likely force the corporation to write out billions of dollars.

Prior to this, the business anticipated a two to three percent currency-adjusted growth in revenues to 51 to 52 billion euros and an adjusted operating profit of 12.5 to 13 (2013: 13.5) billion euros.

But Bayer had previously acknowledged in May that only the bottom end of these goals remained attainable. Bayer largely blamed a further “massive” drop in sales of glyphosate-based products for the predicted fall. Because of the glyphosate business, the Group will likely have to write down revenues by EUR 2.5 billion. This will probably lead to a combined loss of almost two billion euros in the second quarter.

In the first quarter of the year, the decrease in pricing for glyphosate-based weed control products had already had a detrimental effect. Poor weather conditions and fewer sales as a result of client destocking have added to the burden. Recently, a lot of analysts had already predicted that Bayer would have to reduce its ambitions. Additionally, the corporation has dramatically reduced its expected earnings per share and now anticipates free cash flow to be “around zero euros” as opposed to three billion euros.

According to preliminary data, Bayer anticipates underlying earnings of approximately 2.5 billion euros (3.35 billion euros) and sales in the second quarter of roughly eleven billion euros (previous-year period: 12.82 billion euros).

After competitors encountered production bottlenecks as a result of Hurricane Ida and Chinese suppliers were unable to close the gap due to the pandemic, the Leverkusen-based company still benefited in 2022 from significantly higher prices and a 44 percent increase in sales in the herbicides business.

However, costs drastically decreased when rivals entered the market again. The limitation of goals resulted in discounts of almost 3% for Bayer shares, which originally traded at roughly 50 euros after trading hours and 51.49 euros at the normal Xetra closure.

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