Bayer AG said profit this year will probably be at the lower end of its forecast amid falling prices for glyphosate, the key ingredient in its controversial weedkiller Roundup.
The German company had anticipated core earnings per share for the year in the range of €7.20 to €7.40. It now expects to hit the lower end of its targets, Chief Executive Officer Werner Baumann said in a statement.
The quarterly results mark the end of a tumultuous seven-year tenure for Baumann, who steps down later this month. He spearheaded the $63 billion takeover of Monsanto within weeks of taking over as CEO, bolstering Bayer’s agriculture division but saddling it with an image problem and huge legal headaches in the US. The stock is down about 40% on his watch.
Investors are hoping that incoming CEO Bill Anderson can turn things around. The new CEO, who previously led Roche Holding AG’s pharma unit, “hopefully is the start of a new era for Bayer,” Andreas Heine, an analyst at Stifel, wrote in a note to clients.
The first quarter was expected to be a difficult one for Bayer due to the drop in glyphosate prices, which were booming a year ago. Core earnings dropped 16% to €2.95 per share, a little above the €2.75 analysts had anticipated.
Revenue fell to €14.4 billion, roughly in line with estimates. Sales of Bayer’s herbicides plunged by almost a quarter as both price and the amount of glyphosate sold dropped.
Payouts for lawsuits surrounding glyphosate, weedkiller dicamba and birth control device Essure weighed on free cash flow, which dropped to a negative 4.1 billion euros. Bayer spent 1.54 billion euros on settlements. It had already made provisions for the payouts.
(Updates with earnings from fifth paragraph)
