As a result of cost inflation, a rebound in the euro, and weaker demand, the German conglomerate Bayer (ETR:BAYGN) anticipates its sales and profit to decline this year.
As declining prices at its division for crop science offset continued growth in pharma and consumer health, Bayer stated that it anticipates sales growth adjusted for foreign exchange and portfolio effects to rise by only 2%–3% to between €51 billion and €52 billion (€1 = $1.0585).
Basic underlying profits increased by 21% to €13.5 billion last year but are predicted to decline to about €13 billion this year. Core profits per share are anticipated to decline from €7.94 to €7.20–€7.40.
As is always the case with Bayer, those underlying figures are likely to be subject to significant swings from one-time events as the business negotiates a maze of cases pertaining to the adverse effects of its Roundup weedkiller as well as the ongoing reorganisation of its product line. In recent years, Baumann has come under intense criticism from shareholders as the Roundup litigation prevented the acquisition of Monsanto from providing the benefits it was supposed to.
Aside from litigation, Bayer’s three businesses performed exceptionally well last year, with crop sciences leading the way with a 47% increase in earnings before interest, taxes, depreciation, and amortisation to reach €6.87 billion. However, the fourth quarter’s EBITDA of €820 million, a significant slowdown from prior quarters, indicated that momentum was already waning.
Consumer health EBITDA was basically flat on the year at €313 million, while EBITDA before special items at the pharmaceutical industry dropped 4.8% from a year earlier in the fourth quarter to €4.86 billion.
A seat on the board’s sustainability council was made available to activist shareholder Jeff Ubben last week, but the board has so far declined to grant him a seat on the supervisory board, which would have given him more clout.
The poor outlook had a detrimental impact on Bayer’s stock. By 03:25 ET (08:25 GMT), it had fallen 4% to a four-week low in Frankfurt.