Bayer Cuts Earnings Outlook and Announces Write-Down on Glyphosate Assets
WHAT YOU SHOULD KNOW
- Bayer projects its 2023 earnings to be in the range of €11.3 billion to €11.8 billion, down from the previous outlook of €12.5 billion.
- The company expects a write-down of approximately €2.5 billion on glyphosate-related assets due to deterioration in demand for glyphosate-based weed killers.
- The reduced earnings outlook and cash flow challenges present early tests for new CEO Bill Anderson, who took over in June.
Bayer, the German drugs and pesticides maker, has downgraded its full-year earnings outlook due to a further decline in demand for glyphosate-based weed killers. The company announced a significant write-down of 2.5 billion euros ($2.8 billion) on glyphosate-related assets as a result of the challenging market conditions. The revised projections indicate that 2023 earnings before interest, taxes, depreciation, and amortization (EBITDA) will be in the range of 11.3 billion euros ($12.5 billion) to 11.8 billion euros, down from the reported 13.5 billion euros in 2022.
The weak demand for glyphosate products has been a major factor affecting Bayer’s financial performance. The company also revised its forecast for free cash flow, indicating that it will come in at zero instead of the previously predicted 3 billion euros. Additionally, Bayer expects to record a goodwill impairment of approximately 2.5 billion euros due to anticipated developments in the glyphosate business, leading to a net loss of 2 billion euros in the second quarter.
The challenges in the glyphosate market have added pressure on Bayer’s new CEO, Bill Anderson, who assumed the role in June. Analysts view this as a tough start for Anderson, and the company’s shares have been negatively impacted. The weak agriculture market has affected other competitors in the industry as well, with FMC and BASF also cutting their earnings guidance. Bayer’s previous CEO was replaced earlier due to demands from investors to simplify the company’s structure and split into separate groups amid litigations over glyphosate weedkillers.
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