Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Struggling German conglomerate Bayer is “badly broken” and currently unable to split up, chief executive Bill Anderson said on Tuesday.
Investors had long pushed Bayer to break itself into three separate groups, but Anderson said the expected loss of its exclusivity on key drugs, high debt, costly Roundup weedkiller litigation and the group’s internal red tape had prevented it from doing so.
He said that the company’s “four challenges greatly limit our ability to choose our destiny: whether that be as a three-division company or in smaller parts”.
Anderson vowed to overcome the company’s four issues over the next 24 to 36 months, aiming to axe €2bn in annual costs by 2026 by cutting internal bureaucracy. The company last month slashed its dividend by 95 per cent, preserving more than €2bn in cash per year. On Tuesday, it also disclosed that bonus payments to staff were cut by €1.4bn last year after key performance targets were missed.
A former Roche manager who joined the German group last year, Anderson said he acknowledged the appeal of a “pure play structure” of pharma, crop science and over-the-counter consumer drugs. However, he said the company needed to fix its other issues first. “Our answer is ‘not now’ — and this shouldn’t be misunderstood as ‘never’,” he said in a statement.
In 2023, annual sales dropped 6.1 per cent in 2023 to €47.6bn. Earnings before interest, tax, depreciation and amortisation were down 13 per cent to €11.7bn.
Bayer is still reeling from the fallout of its ill-fated $63bn takeover of US seeds-maker Monsanto in 2016 which saddled the company with billions in debt and exposed it to costly litigation over Roundup.
Shares, which have fallen 51 per cent over the past year, declined 1.2 per cent on Tuesday morning.
Bayer warned that earnings before interest, tax, depreciation and amortisation would slide further in 2024 as it faced fresh competition for some of its best-selling drugs and lower prices for agriculture products.
After a 13 per cent drop in ebitda to €11.7bn last year Bayer is bracing itself for another drop of up to 9 per cent.
