Bayer reported a decline of 37% in earnings per share on Tuesday, which sent its stock down 12%. CEO Bill Anderson urged investors to be patient as the company executes on a performance-boosting strategy outlined in March.
Bayer’s shares fell 12% Tuesday morning after its third quarter earnings report revealed what executives referred to as “some headwinds and crosswinds” that significantly impacted results. The German pharma reported a decline of 37% in earnings per share, EBITDA decline of 26% and a drop in free cash flow from €1.6 billion ($1.7 billion) for the same period last year to €1 billion ($1.06 billion) now.
Bayer did announce that its pharma unit is still growing thanks to new launches for prostate cancer drug Nubeqa and chronic kidney disease therapy Kerendia. Anderson called that “amazing,” and something the company couldn’t have predicted a year ago. The win comes at a good time for Bayer, as blockbuster blood thinner Xarelto faces pressure from more generics.
Still, shares of the company slid to $5.63 as the markets opened Tuesday, compared to $6.45 at the previous close.
“We’ve made a lot of gains in terms of the future, but I understand that the current numbers aren’t that pretty because of the Xarelto loss,” CEO Bill Anderson said on the earnings call.
He acknowledged the frustration investors are feeling but asked for patience as Bayer moves forward with a strategy outlined in March to adopt a dynamic shared ownership model and thereby boost performance. That multi-year plan includes a supervisory board refresh, an operating model overhaul, guidance adjustment and a change to management compensation, among other ideas.
“We’re basically seven to eight months into a two-to-three-year plan,” Anderson said. “So we’re not done.”
A Tough Year to Come
This quarter, executives cited currency headwinds, regulatory hurdles and generic pricing pressures, particularly affecting the crop science division, as the drivers behind the drop in earnings. Some of that was offset by the performances of the pharmaceuticals and consumer health divisions.
Executives warned that 2025 could be a tough one. “Overall, we expect a muted outlook on top and bottom line next year with likely declining earnings,” said CFO Wolfgang Nickl on a media call early Tuesday morning. “We plan to accelerate our cost and efficiency measures to partly compensate and remain laser focused on cash conversion.”
Nickl did not preview what efficiency measures Bayer could adopt, only saying that discussions are ongoing. He promised to provide “some level of transparency” for next year, with an update on 2025 guidance coming when Bayer reports full year earnings.
Pressed by reporters, Nickl said that Bayer has already cut jobs to accelerate cost savings, especially across management positions. He did not commit to further layoffs, only saying that they are examining the entire business.
Anderson said that the company has seen “a good run of positive readouts in pharma, and great momentum on our launch assets,” which reflects the strategy set out in March.
While sales are likely to decline in crop science, Bayer expects to meet the top end of full year sales guidance for the pharmaceuticals division. The company reaffirmed that guidance in the second quarter, with expectations of net sales growth between 0% and 3%. Bayer recorded $18.1 billion in sales for 2023.
