Bayer slashes outlook over weak glyphosate demand
By Ludwig Burger and Thomas Escritt
BERLIN (Reuters) -Weak demand for glyphosate-based weed killers led Bayer (OTC:BAYRY) to cut its full-year earnings outlook for the second time and announce a 2.5 billion euro ($2.8 billion) write-down on glyphosate-related assets.
In an unscheduled statement on Monday, the German drugs and pesticides maker said it was projecting 2023 earnings before interest, taxes, depreciation and amortisation (EBITDA), adjusted for one-offs, to be in a range of 11.3 billion euros ($12.5 billion) and 11.8 billion euros on a currency-adjusted basis, down from 13.5 billion euros reported for 2022.
That was lower than a previous 2023 outlook of 12.5 billion euros, or slightly higher.
Free cash flow would come in at zero, down from a previous prediction of 3 billion euros, the company said.
«Based on the anticipated market development, in particular with respect to the glyphosate business, Bayer also expects to record a goodwill impairment of approximately 2.5 billion euros,» it said.
That would result in a second-quarter net loss of 2 billion euros.
Weak agriculture markets have also hit rivals, prompting analysts to also predict a profit warning at Bayer. Crop protection company FMC (NYSE:FMC) this month cut its full-year guidance after wholesale distributors slashed orders to reduce inventory levels.Industrial chemicals group BASF, which competes with Bayer in seeds and pesticides, this month cut its earnings guidance, though it did not provide details on its agriculture business.
Bayer had already warned in May that its 2023 results would likely come in at the lower end of its targeted range, hurt by cost inflation and a slump in prices of glyphosate-based weedkillers from last year's highs.
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