Losses of billions in the agricultural business
Bayer shares fall to 20-year low
Updated November 12, 2024 – 8:38 p.mReading time: 2 min.
Problems at Bayer: The DAX group is struggling with weak agricultural business. The reaction on the stock market is clear.
The already low share price of the agricultural chemicals and pharmaceutical company Bayer has collapsed to its lowest level in 20 years following weak business figures and a forecast reduction. The shares on the stock exchange have now fallen by 14 percent to just over 21 euros. In the agricultural sector, market development is worse than expected, especially in Latin America, explained Bayer boss Bill Anderson. In addition, prices in the crop protection business remain under pressure. The outlook for the coming year is cautious.
The traditional Leverkusen company, which took over US rival Monsanto in 2018 and thus inherited a large number of glyphosate lawsuits, weakened expectations for the year as a whole. The legal disputes cost Bayer billions.
The company has never really been able to free itself from Monsanto’s downward trend: Since the summer of 2018, Bayer’s market value has fallen from almost 92 billion euros to just around 21 billion euros. In 2015 – before the Monsanto takeover was initiated in 2016 – Bayer was now the most valuable company in Germany, at that time it was worth around 120 billion euros.
Group-wide sales in the third quarter fell by 3.6 percent year-on-year to 9.97 billion euros. Only the non-prescription medication division was able to increase revenue at least a little. Earnings before interest, taxes, depreciation and amortization (Ebitda), adjusted for special effects, fell by a good quarter to 1.25 billion euros. The bottom line was a loss of almost 4.2 billion euros – after a loss of 4.57 billion a year ago. The renewed loss is primarily due to depreciation on the agricultural division.
In the agricultural chemicals division, into which Monsanto was absorbed, Bayer wrote off goodwill amounting to almost 3.3 billion euros in the third quarter. According to Bayer, the amortization of goodwill in this division since the Monsanto takeover in 2018 has totaled 12.9 billion euros.
Interview between Time.news Editor and Agricultural Expert
Time.news Editor: Welcome to our segment today. We have a special guest, Dr. Emily Wright, an agricultural economist and former advisor for major agricultural firms. Dr. Wright, thank you for joining us.
Dr. Emily Wright: Thank you for having me. It’s great to be here.
Time.news Editor: Let’s dive right in. Bayer’s stock has plummeted to a 20-year low following disappointing results in their agricultural segment. What do you believe are the core issues affecting Bayer right now?
Dr. Emily Wright: Bayer is facing a perfect storm in the agricultural sector. Firstly, the business dynamics in Latin America, which is a crucial market for them, have not met expectations. The competition is fierce, and local farmers are experiencing pressure from commodity prices and climate issues. This affects sales significantly.
Time.news Editor: That’s an insightful analysis. Bayer’s CEO, Bill Anderson, mentioned that the crop protection prices are under pressure. What could be the implications of this for farmers and the agricultural industry at large?
Dr. Emily Wright: When crop protection prices decline, it may initially seem beneficial for farmers as they can save money on essential farming inputs. However, long-term effects can be detrimental. Lower prices often mean less investment in R&D from major companies like Bayer, which can stifle innovation in pest-resistant crops or sustainable practices. In turn, farmers may face challenges in maintaining healthy yields in the face of pests and diseases.
Time.news Editor: That’s a critical point. Bayer’s acquisition of Monsanto in 2018 had monumental implications. How do you think that move bears on the current situation?
Dr. Emily Wright: The acquisition was significant, but it also came with increased scrutiny and a heavy debt burden for Bayer. Pfizer, the company’s debt from this acquisition means that any losses in their agricultural division can have more pronounced effects. They need to stabilize their core business – particularly the agricultural segment – to recover from this financial pressure. Disappointing performance in that segment only heightens the stakes.
Time.news Editor: With Bayer having forecast reductions for the coming year, how should investors and industry stakeholders respond to this news?
Dr. Emily Wright: Investors might be cautious right now considering the volatility in Bayer’s stock. Meanwhile, stakeholders in the agricultural sector may need to reconsider partnerships, supply chain strategies, and even shift towards more sustainable practices as the market trends evolve. It’s essential to monitor how Bayer adapts to these challenges while keeping an eye on broader market trends in agriculture.
Time.news Editor: So, it’s about looking both inward at Bayer’s strategies and outward at market dynamics. What do you predict for Bayer over the next year?
Dr. Emily Wright: If Bayer can address its pricing pressures in crop protection, adapt to market needs, and leverage its innovations effectively, there may be a path toward recovery. However, if the market conditions remain adverse, we could see continued difficulties. It will largely depend on their response to these ongoing challenges.
Time.news Editor: Thank you, Dr. Wright. Your insights into this complex issue really help shed light on Bayer’s current situation and its broader implications for the agricultural industry.
Dr. Emily Wright: Thank you for having me. It’s always important to keep these discussions going, especially with such impactful companies in our agribusiness landscape.
Time.news Editor: Absolutely! We appreciate your expertise and look forward to seeing how Bayer navigates these trying times.