Germany – Pharmaceutical and agrochemical giant Bayer has confirmed its 2023 financial outlook despite a decline in third-quarter figures compared to the previous year. CEO Bill Anderson stressed that the results were in line with expectations for Q3, traditionally a weaker period, and underscored the company’s commitment to achieving its updated 2023 guidance.
Financial Highlights:
- Stable Performance: Bayer reported group sales of €10.342 billion for Q3, maintaining stability year-on-year on a currency-adjusted basis.
- Earnings Decline: EBITDA before special items decreased by 31.3% to €1.685 billion, mainly attributed to a downturn in the Crop Science Division.
- Strategic Focus: Anderson highlighted a need for a strong fourth quarter, emphasizing the company’s mission of “Health for all, hunger for none,” and a renewed commitment to innovation.
Divisional Insights:
- Crop Science:
- Sales Level: The agricultural business saw sales remain level at €4.365 billion, with a slight 0.6% increase on a currency-adjusted basis.
- Challenges in Glyphosate: EBITDA before special items declined to -€24 million, primarily due to lower prices for glyphosate-based products.
- Strategic Review: Bayer is exploring structural options, including a potential separation of Consumer Health or Crop Science.
- Pharmaceuticals:
- Stable Sales: Sales of prescription medicines were €4.538 billion, showing a marginal decrease of 0.3% on a currency-adjusted basis.
- New Product Growth: New products experienced significant growth, offsetting declines in China and the UK.
- Investments Impact Earnings: EBITDA before special items fell by 8.6% to €1.438 billion, impacted by investments in new technologies and projects.
- Consumer Health:
- Sales Growth: Sales of self-care products increased by 1.7% to €1.410 billion on a currency-adjusted basis.
- Currency Impact: EBITDA before special items decreased by 6.8% to €313 million, influenced by negative currency effects.
Strategic Restructuring:
- Mission-Focused Redesign: Anderson outlined plans to remove multiple layers of management by the end of 2024, allowing teams greater autonomy and mission-centric focus.
- Structural Options: Bayer is evaluating structural options, considering a potential separation of Consumer Health or Crop Science.
- New Compensation System: A revamped Board of Management compensation system, aligning with long-term share price development, is proposed.
Outlook and Future Direction:
- 2024 Guidance: Bayer anticipates a soft growth outlook and acknowledges ongoing profitability challenges.
- Investment and Innovation: Despite current challenges, Bayer remains committed to strategic shifts, focusing on core mission areas and driving sustainable growth.
- March 2024 Update: Detailed information on structural options and guidance for 2024 will be shared in March 2024 during the Capital Markets Day. (GT)
