Bayer, the German pharmaceutical and agricultural conglomerate, is set to announce its third quarter results on Wednesday. Here are the key details you need to know:
Sales Forecast
According to a Vara Research consensus, Bayer is expected to report sales of 10.44 billion euros ($11.19 billion) for the three months ending in September. This forecast is lower than the sales figure of EUR11.28 billion reported in the same period last year.
Earnings Forecasts
The consensus predicts a net profit of EUR33 million, significantly lower than the EUR546 million recorded in the third quarter of the previous year. Earnings before interest, taxes, depreciation, amortization, and special items (a crucial metric for analysts and investors) are expected to decrease to EUR1.73 billion from EUR2.45 billion. Additionally, core earnings per share, another important metric, are projected to contract from EUR1.13 to EUR0.73.
What to Watch
Corporate Structure
Bayer, a multinational conglomerate, stands out as one of the few organizations that still integrates both pharmaceutical and consumer-health assets within its operations. In contrast, others in the industry have chosen to separate these divisions to prioritize more financially rewarding prescription drugs, which carry higher scientific risks. Sanofi, a prominent French drug company, recently joined this trend by announcing plans to spin off its consumer-health business. Similarly, Johnson & Johnson, Pfizer, and GSK have pursued comparable strategies.
Shareholders such as Bluebell Capital Partners have actively advocated for Bayer’s division into three distinct businesses: crop science, pharmaceuticals, and consumer health. According to them, these divisions lack any meaningful synergy. Bill Anderson, appointed as Bayer’s Chief Executive in June, has not dismissed the possibility of altering the group’s structure if warranted.
Agricultural Business
Bayer has encountered ongoing challenges in its agricultural sector, primarily due to declining sales of glyphosate-based products like herbicides and weed-control solutions. These difficulties compelled the company to reduce its sales and earnings projections for 2023 earlier this year. Additionally, impairments amounting to EUR2.30 billion have been recorded.
UBS Predicts Investors to Watch Bayer’s Crop Science Business
UBS’s Colin White predicts that investors should keep an eye on the latest developments in Bayer’s crop science business. This analysis comes as glyphosate prices begin to stabilize and return to normal levels after a significant increase in the third quarter of last year.
According to White, sales within Bayer’s crop science division are expected to reach EUR4.32 billion, slightly lower than the previous year’s EUR4.69 billion. The forecast reflects a potential adjustment in the business landscape.
