GERMANY- Bayer, global farm chemicals and seeds producer, recently revealed that its downward revision of this year’s earnings forecast was primarily influenced by a despondent outlook in its Crop Science division.
Bayer published detailed results for the second quarter of 2023 after having already communicated key figures for the three months and lowering its outlook for full-year 2023 in a July 24 news release.
The revised guidance was mainly due to a significant further decline in sales of glyphosate-based products at the Crop Science Division.
The company announced a revised projection for its 2023 group earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted for exceptional circumstances.
The new range, between 11.3 billion euros (US$ 12.5 billion) and 11.8 billion euros (US$ 13.02 billion) on a currency-adjusted basis marks a decline from the 13.5 billion euros (US$ 14.9 billion) reported in 2022.
The adjusted EBITDA margin for 2023 sales in this agriculture business segment is now expected to be around 21%, a significant drop from the 25% projected just a few months earlier.
Furthermore, currency-adjusted sales figures for this division have shifted drastically, changing from an anticipated increase of about 1.5% to a decrease of about 5%.
Sales in the agricultural business (Crop Science) fell by 18.5 percent to 4.924 billion euros, (US$ 5429.72 billion) mainly driven by lower volumes and prices for glyphosate-based products.
According to Bayer’s press release, this effect particularly impacted business in North and Latin America as well as in Europe/Middle East/Africa and resulted in a 45.6 percent decrease in sales of herbicides.
Interestingly, excluding the glyphosate business, Crop Science sales were level with the previous year as higher prices were offset by lower volumes.
Sales at Corn Seed & Traits rose by 10.6 percent, largely thanks to higher prices in all regions as well as increased acreages in North America.
Additionally, business at fungicides was level with the prior-year quarter.
Conversely, sales at Soybean Seed & Traits were down 9.3 percent, mainly due to decreased acreages and a decline in license revenues in North America.
EBITDA before special items at Crop Science fell by 58.5 percent to 725 million euros, (US$799.46 million) primarily due to the decline in sales of glyphosate-based products. Higher prices in the rest of the business and cost savings only partially compensated for this effect. Earnings were also diminished by a mainly inflation-related increase in the cost of goods sold and a negative currency effect of 96 million euros (US$105.86 million).
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