By Ludwig Burger
FRANKFURT (Reuters) -Drug and pesticide maker Bayer (OTC:BAYRY) said its 2023 results would likely come in at the lower end of its targeted range, hurt by cost inflation and a slump in prices of glyphosate-based weedkillers from last year's highs.
Bayer saw herbicide sales jump 44% in 2022 after Hurricane Ida damaged rival producers and constrained Chinese suppliers failed to plug the gap. Prices have been dropping as competitors have returned to the market this year.
"Overall, we expect target attainment to come in at the lower end of our guidance," CEO Werner Baumann, said in a statement on Thursday, within weeks of wrapping up a seven-year tenure that was dominated by legal woes from Bayer's takeover of Monsanto (NYSE:MON).
He cited significantly reduced expectations about prices the company can command for glyphosate-based products.
Revenues from those products would likely drop by about 1.7 billion euros this year, Bayer said in presentation slides. It had previously projected a decline of 900 million.
The tougher environment adds to challenges faced by CEO-designate Bill Anderson, the former Roche executive who will take over the top job next month.
The shares dropped 6.7% to a four-month low as JP Morgan analysts said investors would have to cut their earnings forecasts.
Bayer, which has paid billions for litigation over its glyphosate weedkillers, will replace its CEO early amid demands from some investors that the German industrial giant simplify its diversified structure and split into separate groups.
First-quarter adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA), declined 14.9% to 4.47 billion euros ($4.92 billion), falling short of the average analyst estimate of 4.63 billion euros in a consensus posted on the company's website.
The gap was largely due to lower-than-expected sales of its best-selling drug Xarelto, which saw revenues fall 13.2% as large purchasing tenders in China weighed on the price.
Quarterly group revenues slipped 2% to 14.4 billion euros.
Adjusted EBITDA in 2023 would be near the lower bound of 12.5 billion euros of its previous target range, a decline from the 13.5 billion euros reported for 2022, the company said.
That reflected dampened sales expectations at its agriculture unit, while its sales growth targets for pharmaceuticals and consumer health products were reaffirmed.