Bayer shares continue to be deeply in the red: Board of Directors focuses on operational streamlining.

Last Updated: 5. März 2024By

Things are going well for Bayer these days: The Werkself from Leverkusen is well on its way to breaking the record champions‘ winning streak and winning the current season of the German Football Bundesliga. With their victory in the „small derby“ against local rivals Cologne last weekend, Bayer Leverkusen was able to maintain its position at the top of the table, while the Munich team is in second place with a respectable 10-point lead.

Since the Monsanto takeover: Bayer loses three-quarters of its stock value But as brilliant as the successes on the field may be, the company is in deep water. The company is still struggling after its controversial takeover of US seed giant Monsanto. Because of its RoundUp fertilizer, which is based on glyphosate, the Leverkusen-based company has been engaged in thousands of expensive lawsuits in the US and elsewhere for years. The lawsuits always involve compensation for pain and suffering, as plaintiffs attribute their cancer to the fertilizer. They often succeed in US courts, and Bayer has to repeatedly set aside financial reserves to finance the legal disputes.

Since the takeover of Monsanto in 2016 for a whopping 60 billion euros, Bayer has lost a massive amount of value on the stock market. Only a quarter of the former market capitalization remains, and the stock has been in free fall for years and recently had to endure the heaviest single-day drop in its history: In just one trading day, the stock lost more than 20 percentage points.

Major setback in the pharmaceutical segment The background to this was a promising drug in the company’s pipeline that had to be scrapped in a relatively advanced stage of research. The results of the clinical trials were not satisfactory, and now there is a lack of an alternative cash cow in the portfolio – and that is all the more urgent as several lucrative patents are set to expire in the coming years.

Against this backdrop, the news that made the rounds at the beginning of the week should be interpreted: According to reports, Bayer has secured exclusive marketing rights in Europe for a new heart medication developed by a US biotechnology company that is on the verge of approval. The active ingredient is believed to have blockbuster potential – which Bayer could certainly use.

Capital Market Day in London: Anderson sets course for Bayer’s future The chemical giant held its eagerly anticipated Capital Market Day in London on Tuesday. There, CEO Bill Anderson not only presented the company’s financial results for the previous year, but also his future plans for the Bayer group. Spin-offs or the sale of individual divisions that investors have long been demanding are not planned for the time being. However, such a step is not explicitly ruled out for the future.

Instead, the individual business areas are to be put in order and the internal structure streamlined. In concrete terms, the company announced a comprehensive, but not yet quantified, job cuts a few weeks ago, with a focus on savings in middle management. This should not only reduce personnel costs but also streamline bureaucratic processes.

Bayer reports billions in losses: Business figures in line with reduced forecast The reorganization of the company’s operational business takes priority for Anderson over a structural overhaul, which could possibly be on the agenda in the second half of the decade but is not currently being discussed.

The latest business figures are bleak. After the Leverkusen-based company was able to generate a profit of over 4.1 billion euros in 2022, a hefty loss of almost 3 billion euros is expected for 2023. Group-wide sales fell by 1.2 percent to 47.6 billion euros. Operating profit was more than 13 percent below the previous year’s level at 11.7 billion euros. Overall, Bayer has met its self-imposed but already lowered forecast.

Frustrated investors: Dividend cut and stock in the cellar Investors are not only feeling the negative developments through the stock price, which has reached a 20-year low. The dividend is also being heavily cut: Only 0.11 euros per share are to be paid out. The payout was still at 2.40 euros per share for 2022.

For the current year, Bayer expects sales of between 47 and 49 billion euros, with EBITDA forecast to be between 10.7 and 11.3 billion euros. Investors responded to the figures and the management’s announcements with further declines: By the afternoon, the Bayer stock had fallen by more than 5 percentage points.