Bayer AG said February 28 it sees lower profit in 2023 as it contends with falling prices for agriculture products, including the controversial weedkiller Roundup. The shares slumped.

The German company forecast core earnings per share of as much as €7.40 ($7.84) in 2023, lower than the €7.94 in 2022, and below analysts’ estimates.

The crop science division, Bayer’s biggest growth motor last year, is set to slow as prices decline for glyphosate, the active ingredient in Roundup that it manufactures in Louisiana. Bayer benefited from surging glyphosate prices in the past couple of years after supply constraints at the Louisiana plant and competing producers in China.

Crop science sales will probably rise 3% this year on a currency-adjusted basis, down from the 16% growth recorded in 2022, Bayer said.

The stock fell as much as 4.7% February 28, in early Frankfurt trading.

The slowdown comes as Werner Baumann prepares to step down after seven tumultuous years as chief executive officer, a period that included the $63 billion takeover of Monsanto Co. In June, Bill Anderson, the former pharmaceutical head of Roche Holding AG, is set to take over as Bayer’s CEO.
The transition has revived speculation about a possible breakup of the German company, which has divisions devoted to agriculture, pharmaceuticals and consumer health. Baumann insists that Bayer’s current strategy is the right one.

Roundup Claims

While Bayer shares are up about 16% this year, the stock has lost about 40% since the takeover of Monsanto was completed in June 2018. Acquiring Roundup as part of the deal has embroiled Bayer in costly litigation over allegations the weedkiller causes cancer, a charge the company denies.

Bayer expects to pay €2 billion to €3 billion in settlement payments this year, it said February 28.
That outlay could prevent the company from reducing its debt burden, Sebastian Bray, an analyst at Berenberg, said by email.

Bayer’s pharma division will probably see another year of about 1% sales growth as blockbuster blood-thinner Xarelto faces new competition. The company is hoping to improve that picture with new cancer drug Nubeqa and kidney medicine Kerendia.

Bayer’s fastest growth will probably come from the consumer health unit, the smallest division, which could see sales rise by about 5%, it said. The consumer health business has benefited from surging demand for allergy and cold products.  

Bayer’s Q4 2022 profit of €1.35 a share beat the €1.20-average estimate.