Annual profits

Bayer aims for a return to annual profit growth

Diversified German group Bayer is aiming for a return to growth in its adjusted core earnings this year, as higher profits in its agricultural division would likely be tempered by investments in new genetic processing technologies.

Earnings before interest, tax, depreciation and amortization (EBITDA) before special items is expected to reach €12 billion in 2022, once adjusted for currency fluctuations, up 7% from €11.18 billion in last year, the company said.

Bayer said its fourth-quarter adjusted EBITDA was flat at 2.4 billion euros, in line with the average analyst forecast.

This resulted in a decline of 2.5% for the full year due to rising costs, negative currency effects and drug development expenses.

The maker of drugs and agricultural supplies said it is targeting profit growth in its plant science division due to higher prices, market share gains as well as efficiency measures that offset inflationary cost pressures .

Bayer is catching up with its closest rival Corteva in the US seed market, offering a soybean variety that is resistant to more weedkillers.

The company warned that its outlook assumes a stable geopolitical environment in Eastern Europe, now challenged by Russia’s invasion of Ukraine.

“Bayer will closely monitor and mitigate these risks where possible,” he added.

On a media call, Chief Executive Werner Baumann said the company’s focus on health and nutrition meant it would work hard to give Ukrainian and Russian civilians continued access to its products.

In Russia, which accounts for around 2% of group sales, money transfers have so far been unaffected by Western sanctions on banks but chief financial officer Wolfgang Nickl called the situation ‘super volatile’ .

In Ukraine, where Bayer makes well under 1% of its turnover, staff have received cash as part of a series of support measures, CEO Baumann added.

The company has built what it describes as one of the industry’s leading cell and gene therapy platforms, bolstering its prospects for long-term drug development but requiring substantial expense.

A successful clinical trial prompted the drugmaker last month to raise its maximum sales estimate for prostate cancer drug Nubeqa to more than 3 billion euros.