The reason for this was declining profits, especially in the pharmaceutical and agricultural business, as the company announced in Leverkusen. The outgoing Bayer CEO Werner Baumann confirmed the targets for the year, but named the significantly reduced market price expectations for glyphosate-based products as a possible risk. “Overall, we expect to achieve our target in the lower corridor of our forecast,” he said.
Adjusted operating profit (EBITDA) fell in the first three months by 14.9 percent to 4.471 billion euros and thus more significantly than the market expected, while sales fell by 1.1 percent on a comparable basis to 14.398 billion euros. The operating margin was 31.1 percent – 4.8 points less than a year ago. Analysts surveyed by Vara Research had expected sales of just under EUR 14.59 billion and adjusted EBIT of EUR 4.63 billion on average.
The consolidated result fell by a third to 2.178 billion euros. Here special expenses of 431 million euros had an impact, mainly due to an impairment due to significantly reduced market price expectations for the weed killer glyphosate.
Bayer shares weak – Expert: ‘Pharmaceutical division disappointed’
A disappointing pharmaceutical business at Bayer and more cautious annual targets weighed on shares in the pharmaceutical and agrochemical company on Thursday. In XETRA trading, Bayer shares temporarily lost 7.46 percent to EUR 53.94. At the current level, the paper costs a little less than a year ago.
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Analyst Gunther Zechmann from Bernstein Research complained that despite the price pressure on the weed killer glyphosate, the somewhat better than expected development in the agricultural business could not compensate for the weak margins in the pharmaceutical division. At the same time, he pointed out that profitability and sales in the pharmaceutical business had been disappointing, since business with the anticoagulant Xarelto had fallen short of expectations.
Similarly, Jefferies expert Charlie Bentley commented on the numbers. Like Zechmann, he primarily criticized the operating result of the pharmaceuticals division and emphasized that Bayer now only expects to achieve the lower end of its group target ranges for sales and adjusted operating result.
With a view to the slightly reduced annual targets for the agricultural division by the Bayer management, Bernstein analyst Zechmann wrote: “We still see the fundamentals for the agricultural sector as very favorable and would recommend the new targets in view of the easing headwind from glyphosate describe as a very conservative prognosis.”
Analyst Andreas Heine from the Stifel Europe investment company, on the other hand, assessed the figures as “in line with expectations” against the background of a challenging environment. The quarterly result fell short of that of the previous year, but this was mainly due to two effects: the correction of glyphosate prices and the decline in sales in the pharmaceutical business in China.
“However, the underlying trends in the agricultural division with double-digit growth adjusted for glyphosate and the strong sales development of the new pharmaceutical products show that Bayer is on the right track,” stated Heine.
FRANKFURT (Dow Jones) and (dpa-AFX Broker)
Image source: Bayer AG, Lukassek / Shutterstock.com, Gil C / Shutterstock, Bayer