BERLIN (Reuters) -Agricultural and healthcare company Bayer (OTC:BAYRY) predicted that operating earnings would likely fall in 2023 as a result of rising expenses and a decrease in the price increase for its glyphosate-based weedkillers from the previous year.
The gloomy outlook comes after a new chief executive was chosen to take over in June, prompting speculation the company might be getting ready to break up and causing a 1% decline in the stock in premarket trade.
Earnings before interest, taxes, depreciation, and amortisation (EBITDA), adjusted for special items and excluding the impact of currency fluctuations, are expected to be between 12.5 billion euros and 13 billion euros ($13.23 billion and $13.78 billion) this year, according to a statement released by Bayer on Tuesday.
That would be a decrease from the $13.5 billion reported for 2022, which, according to a consensus displayed on the company’s website, was up 20.9% from a year earlier and marginally higher than analysts’ average expectations.
CEO Werner Baumann, who will step down at the end of May, claimed the company is active in the proper sectors of the market.
He declared that “human requirements for nutrition and health are fundamental.”
This month, Bayer announced that it would appoint Bill Anderson, the former head of Roche’s pharmaceutical division, as its new CEO. This decision came in response to investor demands that Bayer should divide into distinct groups and streamline its complex organisational structure.
Herbicide sales increased by 44% in 2022 at Bayer, which acquired glyphosate products as part of its 2018 acquisition of Monsanto (NYSE:MON), after Hurricane Ida harmed competitor producers and constrained Chinese suppliers were unable to fill the gap.
The company expects lower costs for some of its well-known pharmaceutical goods as well as for agricultural herbicides in 2023, according to Bayer, who also predicted high inflation to drive cost increases.
According to a spokesperson, reduced prices would affect established medications like the group’s top-selling drug for treating strokes, Xarelto.
The loss of patent protection in Brazil, price reductions in Britain, and competitive Chinese buying tenders caused a 4.6% decrease in revenue for that drug last year.
Along with the eye medication Eylea, Bayer’s Xarelto will eventually lose its patent protection.
Investors hoping for a turnaround in the pharmaceutical industry will have to wait until 2025 for crucial trial results on Bayer’s most promising drug currently in development, asundexian, a new anti-clotting medication.
($1 Equals 0.9437 euros)
