LEVERKUSEN (dpa-AFX) – Good business with soy and corn seeds as well as the ongoing savings program have helped Bayer to a surprisingly strong start to the year. In addition, operating profit in the pharmaceutical business fell less than analysts expected. New medications continue to sell very well here, and sales slumps after patent expirations, such as with the anticoagulant Xarelto, are offset. The current business figures were well received on the stock market.
Shortly after the start of trading, the Bayer share price rose by a good four percent to 38.59 euros. After a price rally to almost 50 euros, the shares came under pressure and have since consolidated in a range of around 36 to around 42 euros. Despite the price setback from the annual high, the shares still cost around 40 percent more than before the rally began in November. These had triggered strong study data on the anticoagulant Asundexian. There was also progress in the US legal disputes surrounding the weed killer glyphosate and the environmental chemical PCB, which has been banned for decades.
In the last first quarter, Bayer increased its earnings before interest, taxes, depreciation and amortization (Ebitda), adjusted for special effects, by 9 percent year-on-year to 4.45 billion euros – analysts had significantly less on their list. The bottom line profit was 2.76 billion euros, more than twice as high as a year ago.
In view of this strong development in operating profit, market expectations of Bayer are now likely to increase somewhat, explained industry expert Richard Vosser from JPMorgan in an initial reaction. The Leverkusen-based group also benefited from the agreement on a license agreement in the Crop Science agricultural division in a legal dispute with its competitor Corteva, but this was already known.
In the pharmaceutical business, the operating result fell, but Bayer is currently investing more money in the distribution of the still new drugs Lynkuet – for menopausal symptoms – Nubeqa and Kerendia.
Meanwhile, revenues from the growth engines Nubeqa against prostate cancer and from Kerendia continued to rise sharply. Kerendia is used to treat chronic kidney disease (CKD) associated with type 2 diabetes (T2D) and heart failure. Nubeqa was even the top-selling drug in the quarter. Unsurprisingly, sales of the anticoagulant Xarelto collapsed, and sales of the eye drug Eylea also fell significantly due to competition from generics.
All in all, group sales fell slightly to 13.4 billion euros at the start of the year, but this was due to negative effects from currency translations. Excluding these, there is an increase in revenue of a good 4 percent.
The DAX-listed group confirmed its annual outlook for the development of sales and operating profit adjusted for exchange rate effects. Sales of 45 to 47 billion euros and an operating result (adjusted Ebitda) of 9.6 to 10.1 billion euros are still planned here.
Bayer is now more confident about the nominal development than before. Accordingly, sales should reach 44.5 to 46.5 billion euros and operating profit 9.4 to 9.9 billion euros. That’s 500 million euros in revenue and 300 million euros more in profit than previously expected. “This is just a snapshot,” said CFO Wolfgang Nickl, according to the statement. “We expect further volatility in exchange rate developments for the remainder of the year.”
There was no significant news regarding the glyphosate litigation. Bayer is currently trying to largely get the issue off the table with a multi-billion dollar collective settlement announced in February. The plaintiffs have until the beginning of June to decide; the final approval hearing will take place in July. In addition, Bayer continued to rely on a landmark decision by the US Supreme Court that could remove the basis for glyphosate lawsuits. A hearing took place before the US Supreme Court at the end of April. The judges could make a decision by the end of June – the outcome is unclear.
However, higher payments already announced to settle PCB and glyphosate cases led to an outflow of free financial resources of 2.3 billion euros in the first quarter. Bayer continues to forecast free cash flow of minus 2.5 to minus 1.5 billion euros for 2026. This includes payouts for legal disputes of around 5 billion euros./mis/lew/zb
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