Bayer Stock Slips On Q3 Loss, Cautious Outlook

(RTTNews) - Shares of Bayer AG were losing around 11 percent in the morning trading on Germany's XETRA after the pharmaceutical and life sciences major reported Tuesday loss in its third quarter and weak adjusted EBITDA, amid nearly flat sales. The net loss, however, was narrower than last year, while EBIT loss widened.

Further, the company trimmed its fiscal 2024 adjusted EBITDA forecast for the group and for Crop Science unit, citing the weaker-than-anticipated development of the agricultural market, but maintained guidance for sales growth, and core earnings per share.

For 2025, Bayer is cautious on the agricultural market environment. Additional regulatory challenges and generic pricing pressures are set to put pressure on the crop protection business.

Chief Financial Officer Wolfgang Nickl said, "Overall, we expect a muted outlook on top and bottom line next year with likely declining earnings. We plan to accelerate our cost and efficiency measures to partly compensate and remain laser focused on cash conversion."

The company noted that the development of the agricultural market has been weaker than anticipated, especially in Latin America, and that it continues to face pricing pressure in the crop protection business.

For fiscal 2024, Bayer now expects to generate EBITDA before special items of between 10.4 and 10.7 billion euros. Previously, it was expected to be between 10.7 billion euros and 11.3 billion euros.

For Crop Science, Bayer now expects currency- and portfolio-adjusted sales to be down 1 percent to 3 percent, compared to the previous forecast of lower end of the range of between minus 1 and plus 3 percent. Adjusted EBITDA margin is now expected to be between 18 and 20 percent, compared to the previous forecast of lower end of the range of 20 percent to 22 percent.

For Consumer Health, the company now expects currency- and portfolio-adjusted sales growth of between 1 and 3 percent, compared to the previous forecast of between 3 percent and 6 percent.

Pharmaceuticals division now expects to report at the upper end of the previously projected currency- and portfolio-adjusted sales growth of between 0 and 3 percent and adjusted EBITDA margin of between 26 and 29 percent.

Bayer further said its Supervisory Board has extended the current contract of Nickl, Chief Financial Officer, until May 31, 2026. Nickl had initially planned to retire after the 2025 Annual Stockholders' Meeting.

In its third quarter, net loss narrowed to 4.183 billion euros from 4.569 billion euros last year. Loss per share was 4.26 euros compared to a loss of 4.66 euros in the prior year.

The latest quarterly results included net special charges of 4.088 billion euros that mainly related to non-cash impairment losses on intangible assets in the Crop Science Division, compared to prior year's charges of 4.303 billion euros.

Core earnings per share for the third quarter declined to 0.24 euros from 0.38 euros in the previous year.

Group EBIT came in at minus 3.822 billion euros, compared to minus 3.594 billion euros in the prior year. Adjusted EBIT fell 62.3 percent from last year to 267 million euros.

EBITDA before special items decreased 25.8 percent year-over-year to 1.251 billion euros. Adjusted EBITDA margin was 12.6 percent, down from 16.3 percent a year ago.

Group sales were 9.968 billion euros in the third quarter, down 3.6 percent from 10.342 billion euros last year. Sales edged up 0.6 percent on a currency- and portfolio-adjusted basis.

At constant currency, agricultural business sales in the Crop Science segment decreased 3.6 percent to 3.986 billion euros. Sales of glyphosate-based herbicides declined 19.1 percent.

In the Pharmaceuticals division, sales of prescription medicines grew 2.3 percent to 4.510 billion euros. The division's new products achieved significant gains, with growth rates of 83.2 percent for Nubeqa and 96.4 percent for Kerendia.

Sales of self-care products, in the Consumer Health division, increased 5.7 percent to 1.413 billion euros. Positive drivers included higher volumes in Europe/Middle East/Africa and Latin America.

On the XETRA, Bayer shares were trading at 21.81 euros, down 10.7 percent.

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