Bayer Group Reports First-Quarter 2024 Results in Line with Expectations

Group sales reached 13.765 billion euros (a decrease of 0.6% after adjustment for exchange rates and portfolio effects), with currency fluctuations having an adverse impact of 525 million euros.

EBITDA before special items fell by 1.3% to 4.412 billion euros

Sales and earnings of the Crop Science Division and Consumer Health Division declined.

Sales and earnings of the prescription drug division grow

Core earnings per share were €2.82 (negative 4.4%)

Net income of 2 billion euros

Free cash flow reached -26.26 billion euros

The Group's outlook adjusted for exchange rates has been confirmed.

Leverkusen, May 14, 2024 ——Bayer AG's Performance in the First Quarter of This Year Met ExpectationsOn Tuesday this week, Chief Executive Officer Bill Anderson stated during the release of the company’s first-quarter financial report: "Sales in the first quarter were slightly lower compared to the same period last year. The Pharmaceuticals Division achieved sales growth and profitability, while the Crop Science Division performed well despite challenging market conditions. The Consumer Health Division had a slower start but is expected to gradually regain growth momentum throughout the year." He reiterated Bayer’s 2024 outlook at constant exchange rates. Anderson also discussed the company's strategic priorities. Anderson remarked, "To get Bayer back on track, I identified four key areas for the group to focus on in March. Two months later, we have made progress in each of these areas." These four areas are growth and innovation, litigation issues in the United States, cash and deleveraging, and the new DSO (Dynamic Shared Ownership) operating model. Regarding the implementation of DSO, the CEO of Bayer explained, "We are consolidating responsibilities and building teams to have a greater impact while reducing layers. Our measure of impact will be more comprehensive—not just about achieving headcount or cost-saving targets, but whether we can drive innovation, promote business growth, and improve the quality of life for our broad customer base."

In the first quarter of 2024, the group's sales reached 13.765 billion euros. After adjustments for currency and portfolio effects, the sales were slightly lower than the previous year’s figures (adjusted decline of 0.6%). Currency fluctuations had a negative impact of 525 million euros (First Quarter 2023: positive currency impact of 102 million euros). EBITDA before special items decreased by 1.3% to 4.412 billion euros. After deducting net special charges of 207 million euros (First Quarter 2023: 431 million euros), EBIT grew by 4.0% to 3.092 billion euros. The special charges are mainly related to costs associated with ongoing restructuring measures and affected all divisions and corporate functions. Net income declined by 8.2% to 2 billion euros, and core earnings per share fell by 4.4% to 2.82 euros.

Free cash flow was negative €26.26 billion (Q1 2023: negative €41.02 billion), primarily due to improvements in operating cash flow. As of March 31, 2024, net financial debt reached €374.88 billion, an increase of 8.7% from the end of 2023, mainly due to seasonal factors causing cash outflows from operating activities.

In the Face of a Challenging Market Environment, Crop Science Division Achieves Industry-Leading Sales Performance

In a challenging market environment, Bayer's agricultural business (Crop Science Division) outperformed its industry competitors. Sales declined by 3.0% (after adjustment for currency and portfolio), reaching EUR 7.907 billion, primarily due to decreased sales of non-glyphosate herbicides and fungicides in the Europe/Middle East/Africa region. Glyphosate products experienced significant market-driven price drops across all regions; although sales volumes rebounded strongly, they did not fully offset the impact of the price declines. Sales in the two strategic businesses of herbicides and fungicides fell by 13.3% and 8.5%, respectively (after adjustment for currency and portfolio). Sales in the soybean seeds and traits business remained flat compared to the same period last year (after adjustment for currency and portfolio). Sales in the corn seeds and traits business increased by 2.0% (after adjustment for currency and portfolio), driven by price increases across all regions. Additionally, insecticide sales grew by 2.3% (after adjustment for currency and portfolio), supported by higher sales volumes in the Europe/Middle East/Africa and North America regions.

Crop Science Division's EBITDA margin before special items decreased by 12.8% to EUR 2.849 billion, mainly due to the decline in glyphosate product prices. Additionally, currency fluctuations had a negative impact of EUR 92 million (Q1 2023: currency fluctuations had a positive impact of EUR 54 million).

The growth of the prescription drug business is mainly attributed to new products.

Sales of prescription drugs (Prescription Drug Division) increased by 3.9% (after adjustment for currency and portfolio effects), reaching 4.358 billion euros. The division's new oncology drug, Nubeqa,^®And Kerendia, a drug used to treat chronic kidney disease associated with type 2 diabetes^®Sales increased by about two-thirds (after adjustment for exchange rates and portfolio changes). Additionally, due to increased volume and price hikes, the ophthalmic drug Eylea^®Sales increased by 3.4% (after adjustment for currency and portfolio). The imaging diagnostics business also achieved growth, particularly in the CT contrast injector product line and Ultravist.^®The product series achieved approximately 10% growth (adjusted for exchange rates and portfolio changes). Despite the impact of generic drug competition, the oral anticoagulant Xarelto...^®Sales also grew by 1.7% (after adjustment for currency and portfolio), in line with expectations. By comparison, the unfavorable factors for this division included the impact of China's tender procurement on Bayxin Tong.^®Sales Decline. Globally, the sales of cardiovascular drugs decreased by 23.0% (adjusted for currency and portfolio).

Prescription Medicines EBITDA before special items increased by 8.0% to EUR 1.194 billion. Increased investment in cell and gene therapies as well as chemical proteomics research and development was offset by reduced spending on late-stage clinical development projects. The division also successfully reduced costs associated with its sales activities. Currency effects had a negative impact of EUR 127 million (Q1 2023: currency effects had a negative impact of EUR 6 million).

The Consumer Health Division balanced demand changes overall through pricing.

Sales of self-care products (Consumer Health division) decreased by 1.8% (after adjustment for currency and portfolio), reaching €1.432 billion. The division performed strongly in the previous quarter due to improved supply conditions and replenished inventories, but customer demand declined this quarter. Additionally, U.S. retailers optimized inventory levels across the industry. However, strategic pricing largely offset the decline in volume. Due to a relatively mild cold season and a warm winter, sales in the allergy and cold category fell by 16.8% (after adjustment for currency and portfolio). Sales in the nutrition category remained flat compared to last year (after adjustment for currency and portfolio). In contrast, sales in the digestive health category grew by 9.0% (after adjustment for currency and portfolio) due to improved supply conditions. Products like Iberogast™ and Rennie™ drove growth for the division in Europe. Sales in the dermatology category also increased, with revenue rising by 7.3% (after adjustment for currency and portfolio), mainly driven by Bepanthen™ Derma products and strong demand for regional brands in the Chinese market.

EBITDA before special items of the Consumer Health division decreased by 12.7% to 331 million euros, primarily due to a negative currency impact of 46 million euros (Q1 2023: negative currency impact of 4 million euros). Thanks to ongoing cost and price management, the division was largely able to offset the negative effects of declining volumes, inflation-driven cost increases, and higher marketing investments for innovative products. The division also achieved higher gains through the divestment of small, non-strategic brands.

Confirm the outlook adjusted for exchange rates

Bayer has confirmed its full-year outlook for 2024 adjusted for currency effects (i.e., based on the monthly average exchange rates in 2023). However, the expected negative impact from exchange rate movements has increased based on the closing rates as of March 31, 2024. For instance, if the closing rates as of December 31, 2023, were applied, the forecast for EBITDA before special items would decrease from €10.4 billion to €11.0 billion to €10.2 billion to €10.8 billion.

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Forward-Looking Statements

This press release includes forward-looking statements by the management of Bayer AG based on current assumptions and forecasts. Various known and unknown risks, uncertainties, and other factors could cause the company's actual operational results, financial condition, development, or performance to differ materially from the estimates made in these forward-looking statements. These factors are disclosed in Bayer’s reports available on the company’s website at www.bayer.com. The company does not have any obligation to update these forward-looking statements or align them with future events or developments.