Prices for glyphosate and similar products have fallen.
(Photo: dpa)
frankfurt Weakness in the agricultural business had a negative impact on Bayer’s annual targets. The agriculture and pharmaceuticals group announced late Monday that it expects currency-adjusted sales of 4.85 billion to 49.5 billion euros in 2023 and adjusted operating profit (Ebitda) of 1.13 billion to 11.8 billion euros.
Year-to-date, currency-adjusted sales rose between 2 and 3 percent to 5.1 to 52 billion euros, and adjusted operating result was 1.25 to 1.3 billion euros (previous year: 13.5 billion euros).
However, Bayer already admitted in May that only the lower end of these targets can be achieved.
Bayer attributed the lower forecast mainly to a further “substantial” decline in sales of glyphosate products.
As a result, the group had to write off 2.5 billion euros, mainly because of the glyphosate business. In the second quarter, this will result in a consolidated loss of around 2 billion euros.
Falling prices for weed control products containing glyphosate had already had a negative impact in the first quarter of this year. Adverse weather conditions and lower sales as customers reduced inventories also caused additional pressure.
>>read here, How Brussels is dealing with Bayer’s glyphosate problem.
Many analysts have recently argued that Bayer will have to cut its targets. The company also slashed its earnings per share forecast and now expects free cash flow to be “around zero euros” instead of around 3 billion euros. Based on preliminary figures, Bayer expects second-quarter sales of around 11 billion euros (prior year: 12.82 billion euros) and adjusted earnings of around 250 million euros (335 million euros). Other European and German chemical companies, such as BASF, have also recently cut their profit forecasts.
The herbicide is the best-selling crop protection product worldwide.
(Photo: AFP/Getty Images)
In 2022, the Leverkusen-based group will benefit from sharply higher prices and a 44 percent jump in sales at its herbicide business, after rivals hit production bottlenecks due to Hurricane Ida and Chinese suppliers were unable to close the gap due to the outbreak. However, when competitors returned to the market, prices fell sharply.
Bayer shares are trading at a roughly 3 percent discount to the target cap: the note was initially priced at around 50 euros after the close of trading, compared with 51.49 euros at the close of regular Xetra trading.
more: Why things are bad for the chemical industry—and how the industry will continue to evolve