The crop protection business is profitable for Bayer.
(Photo: IMAGO/Martin Wagner)
Frankfurt Thanks to a strong agricultural business, Bayer beat expectations in the third quarter and is on course for record profit for 2022. Sales increased between July and September by 5.7 percent to 11.28 billion euros. Adjusted profit before special items increased by 17.3 percent to 2.45 billion euros. Both were well above analyst forecasts.
The controversial weed killer glyphosate was once again responsible for this boost. The price of the pesticide had already tripled in the first half of the year. The reasons for this were delivery bottlenecks at important Chinese manufacturers and, at the same time, continued strong demand from agriculture.
This effect abated somewhat in the third quarter. However, Bayer’s herbicide business, which mainly includes glyphosate, grew by 45 percent compared to the same period last year. This plus masked the weaknesses in the seed business in North America: In the important market, sales fell because farmers planted less land and gave back seeds.
“We are well on the way to achieving our financial targets for the full year, which we raised in August,” said Bayer CEO Werner Baumann on Tuesday morning. In August, the group had raised its forecast for adjusted profit to around 12.5 billion euros. On average, analysts are expecting an even higher result.
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Bayer’s results were not well received on the stock exchange. The course fell in the morning by almost three percent to 52 euros. Investors remain cautious about the further development of the agricultural and pharmaceutical business.
Baumann assumes that the company will have to put up with significant cost increases as a result of high inflation in the coming year. In Germany, the company wants to be independent of Russian gas by the end of this year.
According to the company, the global supply chains remain very tense. That is why procurement management and the stability of the supply chains have top priority for Bayer. To this end, Bayer is increasing its inventories of precursors for agricultural chemicals and medicines.
Price pressure on medicines in China
In the third quarter, the Crop Science agricultural division posted an 8.4 percent increase in sales to EUR 4.69 billion and a 33.5 percent increase in earnings to EUR 629 million. However, the largest division remains the business with prescription drugs: the pharmaceuticals division increased sales by 2.9 percent to 4.96 billion euros.
The pharmaceuticals business is also showing a mixed picture: the newly launched drugs Nubeqa (against prostate cancer) and Kerendia (against chronic kidney disease) sold well, as did the eye medicine Eylea. Bayer lost sales of the established drug Nexavar and the anticoagulant Xarelto, mainly due to price pressure in China and the first patent expirations in Brazil.
In the end, the pharmaceuticals division was able to increase adjusted profits by 15.2 percent to 1.57 billion euros, to which income from the sale of peripheral businesses also contributed. In the area of over-the-counter health products (Consumer Health), Bayer benefited from the ongoing wave of colds. The turnover of this division rose by 4.4 percent to 1.55 billion euros, the profit increased by 9.1 percent to 336 million euros.
More: Bayer wants to increase pharmaceutical sales by 50 percent – and has one disease in its sights.