The pharmaceutical and agrochemical company Bayer recorded a 16.5 percent decline in adjusted EBITDA to 2.11 billion euros in the second quarter, which, however, exceeded market expectations of 2.08 billion euros. Revenue increased by 0.9 percent to 11.1 billion euros, contrary to analysts' estimates, who had expected a decline to 10.9 billion euros. Adjusted for currency effects, Bayer recorded growth of 3.1 percent.
The CEO, Bill Anderson, confirmed the company's annual forecast. For 2024, Bayer expects an adjusted EBITDA of approximately 10.7 to 11.3 billion euros and sales that could rise by up to 3 percent or decrease by 1 percent, adjusted for currency effects. The adjusted earnings per share are still expected to be between 5.10 and 5.50 euros.
In the agricultural sector, Bayer expects revenue growth and an EBITDA margin in the lower range of the forecasted bandwidths of minus 1 to plus 3 percent and 20 to 22 percent, respectively. In the pharmaceutical sector, however, better revenue growth of 0 to 3 percent is expected, instead of a previously anticipated decline of up to 4 percent.
The revenue in the second quarter increased by just under one percent year-on-year to 11.14 billion euros, while the adjusted earnings before interest, taxes, depreciation, and amortization decreased by 16.5 percent to 2.1 billion euros. This decline is due to a less profitable product mix.
The company recorded ups and downs in daily business. While the pharmaceutical division benefited from new medications, the agricultural business suffered from a challenging market environment. Especially the blood thinner Xarelto, Bayer's biggest revenue driver in the pharmaceutical segment, faced increasing competition from generics.
Bill Anderson emphasized the importance of new drugs such as Nubeqa for prostate cancer and Kerendia for diabetics, which are expected to help stabilize revenues. Additionally, a higher dosage of the eye medication Eylea was introduced to attract new patients.
Bayer plans to save two billion euros annually from 2026, with 500 million to be achieved already in the current year. By the end of June, Bayer employed approximately 96,600 people in full-time positions, 3,200 fewer than at the beginning of the year.
For analysts, the results are mixed. While the adjusted operating result exceeded market expectations, concerns about the sluggish agriculture business remain. The confirmation of the annual targets was positively received, but exchange rate effects continue to cause concern.
Bayer continues to face legal challenges in the USA, particularly related to the controversial herbicide glyphosate and the environmental toxin PCB. Despite progress in some areas, these issues remain a burden for the company.
The Bayer shares initially reacted positively, but then turned negative and closed with a loss of 6.05 percent at 25.32 euros.
