Life sciences company Bayer has announced that its earnings are likely to fall further next year, due to a “weaker than anticipated” development in the agricultural market.
The company stated that it was expecting “big business” from the Latin America market as experienced previously, however due to weather challenges and disease pressure, both Argentina and Brazil experienced corn acreage decline.
Chief executive of Bayer Bill Anderson said: “When there is extreme pressure on farmers because of low commodity prices, they’re more apt to go with less differentiated, generic products.”
On announcing the third quarterly results for 2024, Anderson said that “similar dynamics” have been seen across the agriculture sector.
“We’re in the midst of a big agriculture downturn, and I think that’s very frustrating for people. We understand the investors sediment but we remain very optimistic that we’ve got a strong future,” Anderson said.
Sales across the sector decreased by 3.6%, and pressure has led to a plummet in shares within the German company, with shares down 11.6%.
More specifically, sales of glyphosate-based herbicides declined by 19.1% as purchasing patterns normalised and volumes decreased as a result.
Bayer forecast
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.”
Bayer is currently trying to accelerate cost savings, and has reduced about 5,500 positions across the company, with most roles impacted involving management.
However, Anderson said that there is a plan in place and that Bayer has 10 new “blockbuster” agricultural products which will start launching in 2027.
Bayer now expects earnings to be between €10.4 billion and €10.7 billion, down from a previously forecasted €10.7 to €11.3 billion.
Meanwhile sales of pharmaceuticals rose by 2.3% within Bayer to €4.510 billion. The division’s new products achieved significant gains, with growth rates of 83.2 for Bayer’s new drugs Nubeqa for prostate cancer.