Bayer in the red nearly $5 billion on glyphosate (and interest rates)

Bayer announced that the third quarter for the company ended with a loss of 4.56 billion euros. This was mainly due to write-downs in the Crop Science division, responsible for the group’s agricultural products, due to glyphosate and increased interest rates.

Bayer begins to deal with a series of serious economic problems at least in part thanks to one of its best-known products, the glyphosate-based RoundUp. For the third quarter in a row, in fact, fig records red 4.56 billion which continues the negative trend from previous months. For the first 9 months of 2023, the company’s total loss is 4.2 billion.

Bayer said third-quarter earnings before interest, taxes, depreciation and amortization (EBITDA) fell 31% to 1.685 billion euros. This compares with the average analyst forecast of 1.725 billion euros.

But what exactly is the chemical and pharmaceutical multinational company’s losses on? This critical financial situation was mainly caused by depreciation of 4.3 billion per year Division of Crop Scienceresponsible for agricultural products.

On one side it is a dramatic decline in the use of its glyphosate product which, as we know, is at the center of a number of lawsuits in which individual consumers or those who have joined together in class actions are seeking billions in damages, on the other hand the impact of interest rates, which have increased significantly in the last year.

The message comes after new CEO, Bill Anderson, presented his first thoughts on the future of the company, which is trying to revive its fortunes. The third quarter results were indeed in line with expectations, given that this is traditionally the weakest quarter.

Anderson highlighted his disappointment at the 2023 results, with turnover of almost €50bn but zero cash flow, calling the situation “unacceptable”.

Despite this, however, he remains confident of a positive fourth quarter.

Following the presentation of this decidedly not rosy situation, Bayer’s shares suffered a slight decline. The company, already hit by lawsuits in the United States over the alleged carcinogenic effects of its Roundup weed killer, has faced the brunt of a 13% drop in shares this year.

The agricultural and pharmaceutical giant is now evaluating several strategic options to address current challenges and improve its profitability. For example, you can choose a separate division of the company. In particular, the prospect of the Consumer Health and Crop Science departments is being considered, along with other options.

Indeed, analysts said Bayer’s stock trades at a huge discount to its agriculture, pharmaceuticals and consumer health rivals, weighed down in part by the preference of clean companies by many financial investors.

We believe that the bad publicity that glyphosate receives every day around the world has played a role, a sign that we as consumers (and also with the support of associations) have a lot of power to change the strategies (and fortunes) of companies. .

With all this, Europe is preparing to renew the authorization to use glyphosate for another 10 years.

Also read: Pesticides in Europe: Environment Commission’s vote to reduce them is positive (glyphosate remains a problem)

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Source: Reuters

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