Bayer said it was projecting 2023 earnings before interest, taxes, depreciation and amortisation, adjusted for one-offs, to be in a range of €11.3bil (US$12.5bil or RM57.1bil) and €11.8bil (RM59.7bil) on a currency-adjusted basis, down from €13.5bil (RM68.3bil) reported for 2022.— Reuters
BERLIN: Weak demand for glyphosate-based weed killers led Bayer to cut its full-year earnings outlook for the second time and announce a €2.5bil (US$2.8bil or RM12.8bil) write-down on glyphosate-related assets.
In an unscheduled statement on Monday, the German drugs and pesticides maker said it was projecting 2023 earnings before interest, taxes, depreciation and amortisation (Ebitda), adjusted for one-offs, to be in a range of €11.3bil (US$12.5bil or RM57.1bil) and €11.8bil (RM59.7bil) on a currency-adjusted basis, down from €13.5bil (RM68.3bil) reported for 2022.
That was lower than a previous 2023 outlook of €12.5bil (RM63.2bil), or slightly higher.
Free cash flow would come in at zero, down from a previous prediction of €3bil (RM15.12bil), the company said.
“Based on the anticipated market development, in particular with respect to the glyphosate business, Bayer also expects to record a goodwill impairment of approximately €2.5bil (RM12.6bil),” it said.
That would result in a second quarter net loss of €2bil (RM10.1bil).
Weak agriculture markets have also hit rivals, prompting analysts to also predict a profit warning at Bayer.
Crop protection company FMC this month cut its full-year guidance after wholesale distributors slashed orders to reduce inventory levels.
Industrial chemicals group BASF, which competes with Bayer in seeds and pesticides, this month cut its earnings guidance, though it did not provide details on its agriculture business.
Bayer had already warned in May that 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 sharply as competitors have returned to the market this year. — Reuters
