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Weedkiller windfall helps Bayer top profit forecasts
Frankfurt: Agriculture and pharmaceuticals company Bayer reported better-than-expected quarterly earnings as a temporary price boost for its glyphosate-based weedkillers made up for a decline in sales of its stroke prevention pill Xarelto.
The German company said in a statement on Tuesday that third-quarter adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 17.3% to 2.45 billion euros ($2.45 billion), above analysts' average estimate of 2.31 billion euros posted on the company's website.
Bayer, which acquired glyphosate products as part of its takeover of Monsanto, is benefiting from a roughly 2.5 times jump in average glyphosate prices since early 2021 after hurricane Ida damaged rival producers, Chief Executive Werner Baumann told journalists in a call.
But finance chief Wolfgang Nickl said prices had already begun to drop during the third quarter. "We expect them to normalize further in the fourth quarter," he added.
Bayer said its full-year outlook issued in August still stood, but added cost inflation would continue next year. Its shares fell 2.4%, erasing gains over the previous two trading sessions as analysts voiced concerns over the cost outlook.
Bayer has been hit by litigation costs over cancer claims by mostly individual users of glyphosate-based weedkillers, but demand for the products from farmers, the crop science unit's main customer group, has not been affected.
A recent string of five courtroom victories has encouraged Bayer to be stricter on legal settlements, which have cost it billions so far even after regulators declared the products safe.
The company said in August it was targeting 2022 adjusted EBITDA of about 13 billion euros, based on June 30 foreign exchange rates, up from 11.2 billion in 2021.
The crop science division saw adjusted EBITDA gain 33.5% to 629 million euros, beating a market consensus of 589 million euros, as a strong glyphosate business more than offset weaker corn and soy seed sales after U.S. farmers scaled back planting due to drought.
Bayer's best-selling drug Xarelto saw sales decline 6.2% to 1.11 billion euros in the quarter, slightly below market estimates, after competitive purchasing tenders in China weighed on prices and volumes there.
Read also: Bayer Mirena approved in Europe for extended duration of use in contraception
Ruchika Sharma joined Medical Dialogue as an Correspondent for the Business Section in 2019. She covers all the updates in the Pharmaceutical field, Policy, Insurance, Business Healthcare, Medical News, Health News, Pharma News, Healthcare and Investment. She has completed her B.Com from Delhi University and then pursued postgraduation in M.Com. She can be contacted at editorial@medicaldialogues.in Contact no. 011-43720751