Bayer’s glyphosate sales drop, goals falter
Bayer, the agricultural and pharmaceutical group, has already announced after the first quarter of this year that its sales and profits will be at the lower end of its annual expectations. The group may have to write down large amounts, mainly due to the decline in glyphosate trading.
The weak agricultural business has negatively impacted Bayer’s full-year targets, and the group now expects sales to range between €48.5 and €49.5 billion, and an adjusted operating profit of between €11.3 and €11.8 billion in constant currencies for 2023, it announced.
Bayer, a German multinational pharmaceutical and chemical company, is experiencing a decline in sales.
The previous guidance was for sales to increase by 2-3% to 51-52 billion euros, and an operating profit margin of 12.5-13 billion euros (13.5 billion euros in the previous year).
But in May, Bayer admitted that it was only able to achieve the minimum of these goals, and the company attributed the reduction in expectations primarily to a sharp decline in sales of glyphosate products.
As a result, the group will have to write off €2.5 billion, mainly due to glyphosate trading activity. This is expected to result in an estimated loss of around €2 billion in the second quarter of the year.
The decline in prices of glyphosate-based weed control products also had a negative impact in the first quarter of the year. In addition, bad weather conditions and declining customer sales due to stock reductions also contributed to increased pressure.
Many analysts have recently predicted that Bayer will have to lower its targets. The company has also significantly reduced its earnings per share expectations and now expects “around zero euros” in cash flow, instead of three billion euros.
Based on preliminary figures, Bayer expects sales of around 11 billion euros (compared to 12.82 billion euros in the same period last year) and adjusted earnings of around 2.5 billion euros (compared to 3.35 billion euros) in the second quarter.
In 2022, Leverkusen-based Bayer Group benefited from a significant increase in pesticide prices and a 44% increase in sales due to a production shortage caused by Hurricane Ida and the inability of Chinese suppliers to meet demand due to the pandemic.
With the return of competitors to the market, prices fell sharply. Bayer’s shares reacted to this decline with a discount of about 3%, with the value of the shares falling to about 50 euros after the end of the trading day compared to 51.49 euros at the end of the ZETRA stock exchange trading.
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