Bayer cuts earnings outlook, shares tumble

Bayer shares tumbled on Tuesday as it cut its full-year earnings guidance.

In an update for the third quarter, Bayer said the development of the agricultural market has been weaker than expected, especially in Latin America, while the crop protection business continues to face pricing pressure.

For the third quarter, group sales came in at just under €10bn, up 0.6% on a currency- and portfolio-adjusted basis. Meanwhile, EBITDA before special items fell 25.8% to €1.25bn.

In view of the weaker-than-anticipated development of the agricultural market, the company revised its guidance. Bayer now expects to generate EBITDA before special items of between €10.4bn and €10.7bn, down from a previous forecast of €10.7bn to €11.3bn.

For the crop science division, Bayer now expects a currency- and portfolio-adjusted sales decline of between 3% and 1%, having previously given a range of between -1% and +3%. It now expects an EBITDA margin before special items of between 18% and 20%, having previous forecast between 20% and 22%.

For the consumer health segment, Bayer expects currency- and portfolio-adjusted sales growth of between 1% and 3%, down from previous guidance of between 3% and 6%.

Bayer also said the pharmaceuticals arm is now expected to come in at the upper end of the upgraded guidance issued in the half-year financial report, which projected currency- and portfolio-adjusted sales growth of between zero and 3% percent and an EBITDA margin before special items of between 26% and 29%.

Chief financial officer Wolfgang Nickl said: "Overall, we expect a muted outlook on top and bottom line next year with likely declining earnings. We plan to accelerate our cost and efficiency measures to partly compensate and remain laser focused on cash conversion."

At 0930 GMT, the shares were down 11% at €21.70.