Bayer Holds Splitting Into Separate Units For Three Years, Focus Shifts On Tackling Challenges

Bayer AG BAYRY BAYZF will hold off on plans to break the group, the new CEO Bill Anderson said.

On the question of the company’s structure and a possible break-up of the group, “our answer is ‘not now’ – and this shouldn’t be misunderstood as ‘never,'” said Anderson. “Of course, we will keep an open mind,” he added. Given the company’s very limited room to maneuver, “our priority is on tackling our challenges, boosting performance, and creating strategic flexibility.”

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In November 2023, “In terms of structural options, beyond maintaining three divisions, a separation of either Consumer Health or Crop Science remains under evaluation.” the CEO said. 

“We have also taken some options out of consideration. For example, we considered simultaneously splitting the company into three businesses. We’re ruling that option out. A three-way split would require a two-step process.” 

For the next 24 to 36 months, Bayer will focus on its pharmaceuticals pipeline, addressing litigation, reducing debt, and implementing its radical new operating model, Dynamic Shared Ownership, to improve performance.

The cutbacks will reduce annual costs by €2 billion from 2026, the CEO noted.

Bayer’s agricultural business (Crop Science) fiscal year 2023 sales fell by 3.7% to €23.27 billion, primarily attributable to lower prices for glyphosate-based products.

Prescription medicines (Pharmaceuticals) were level year on year at €18.081 billion.

Sales of self-care products (Consumer Health) increased by 6.3% to €6.03 billion against a strong prior year.

Guidance: Bayer guided fiscal year 2024 sales of €47 billion to €49 billion, with adjusted EBITDA of €10.7 billion to €11.3 billion. 

It forecasts core earnings per share of €5.10 to €5.50.

The company forecasts a free cash flow of €2 billion to €3 billion, and net financial debt as of year-end 2024 is expected to amount to €32.5 billion to €33.5 billion.

Price Action: BAYRY stock traded lower by 0.13% at $7.66 on the last check Tuesday.

Photo via Wikimedia Commons