GERMANY- Drug and pesticide maker Bayer estimates that its 2023 results will likely come in at the lower end of its targeted range, jeopardized by cost inflation and a slump in prices of glyphosate-based weedkillers from last year’s highs, according to a report by Reuters.
Bayer saw herbicide sales jump 44% in 2022 after Hurricane Ida damaged rival producers and constrained Chinese suppliers failed to plug the gap. However, prices have been dropping as competitors return to the market this year.
“Overall, we expect target attainment to come in at the lower end of our guidance,” CEO Werner Baumann said within weeks of ending a seven-year tenure dominated by legal woes from Bayer’s takeover of Monsanto.
Baumann cited significantly reduced expectations about the prices the company can command for glyphosate-based products.
According to the company, revenues from these products will likely drop by about US$1.85 billion this year, even lower than the previously projected decline of approximately US$979 million.
The tough environment adds to the challenges the CEO-designate, Bill Anderson, will face as he takes over the top job next month.
Bayer’s shares dropped 6.7% to a four-month low as JP Morgan analysts said investors would have to cut their earnings forecasts.
Additionally, first-quarter adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) declined 14.9% to 4.47 billion euros (US$$4.92 billion).
The group revenues for the first quarter also slipped 2% to 14.4 billion euros (US$15.7 billion).
In 2023, the adjusted EBITDA is likely to be around 12.5 billion euros (US$13.6 billion), a decline from the 13.5 billion euros (US$14.7 billion) reported for 2022, according to Bayer.
Bayer ramps up investment in Ukraine
Meanwhile, Bayer has revealed an investment of overall 60 million euros (US$65.22 million) from 2023 onwards in its corn seed production facility in Pochuiky, Ukraine.
The investment adds to an earlier 200 million euro spending for seed production and multiple efforts to support Ukraine.
The investment included a plant inaugurated in 2018, operating with around 100 on-site employees and about 250 to 300 seasonal workers.
This current investment includes a new seed dryer, state-of-the-art agricultural field equipment, storage facilities, and the construction of two bomb shelters to ensure the safety of the Ukrainian colleagues who have been operating the facility and executing this investment project under grueling circumstances.
“We stand with Ukraine. That was the case before the war broke out – and it’s even more so since then. Bayer has been active in Ukraine for many years and is committed to the country, its people, and farming communities,” said Bayer’s Head of Public Affairs, Science and Sustainability Matthias Berninger.
Additionally, Bayer has been ramping up its efforts to support employees, customers, and the Ukrainian people since the beginning of the Russian invasion.
This support included the donation of more than 40,000 bags of corn and vegetable seeds and healthcare product donations to help more than 30,000 patients.