FRANKFURT, May 11 (Reuters) – Drug and pesticide maker Bayer (BAYGn.DE) said 2023 results are likely to fall at the lower end of its target range, hurt by cost inflation and a drop in prices of glyphosate-based herbicides from last year’s highlights.
Bayer saw herbicide sales rise 44% in 2022 after Hurricane Ida damaged rival producers and Chinese suppliers failed to close the gap. Prices have dropped as competitors have re-entered the market this year.
“Overall, we expect target achievement to come in at the lower end of our expectations,” CEO Werner Baumann said in a statement Thursday, within weeks of completing a seven-year tenure dominated by legal troubles following Bayer’s acquisition of Monsanto.
He cited significantly lower expectations about the prices the company can command for glyphosate-based products.
Revenues from those products would likely fall by about $1.7 billion this year, Bayer said in presentation slides. Previously, it had predicted a drop of 900 million.
The tougher environment adds to the challenges facing CEO candidate Bill Anderson, the former Roche (ROG.S) executive, who will take over the top job next month.
Shares fell 6.7% to a four-month low as JP Morgan analysts said investors should cut earnings expectations.
Bayer, which has paid billions in lawsuits over its glyphosate weed killers, will replace its CEO early amid demands from some investors that the German industrial giant simplify its diversified structure and split it into separate groups.
First-quarter adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) fell 14.9% to 4.47 billion euros ($4.92 billion), which is lower than the average analyst estimate of 4. 63 billion euros according to a consensus on the company’s website.
The gap was largely due to lower-than-expected sales of its best-selling drug Xarelto, whose revenues fell 13.2% as major procurement in China weighed on price.
The group’s quarterly turnover fell by 2% to 14.4 billion euros.
Adjusted EBITDA in 2023 would be near the $12.5 billion lower limit of the previous target range, down from the $13.5 billion reported for 2022, the company said.
That reflected subdued sales expectations in the agriculture division, while reaffirming sales growth targets for pharmaceuticals and consumer health products.
Reporting by Ludwig Burger Edited by Miranda Murray