Rumors have been circulating for months about a possible spin-off of Bayer’s crop sciences division. CEO Bill Anderson confirmed last week during an earnings call that Bayer AG is considering such a split.
“Beyond maintaining three divisions, the main options would be a separation of either consumer health or crop science. Those remain under evaluation,” said Anderson. On the call, he ruled out splitting the company into three businesses.
Anderson expressed disappointment in the year’s performance as a whole. “Nearly 50 billion euros ($53.5 billion) in revenue but zero cash flow is simply not acceptable. Nor is the trajectory of our share price.”
Moving forward, Anderson plans to align Bayer operations with the company’s mission of “Health for all, hunger for none.” This will be done with a radical realignment shifting from a focus on internal processes to the needs of the customer.
“This isn’t penny pinching: It’s an entirely new way of operating, from static command and control to a system where everything is centered on the needs of the customer. By the end of 2024, Bayer will remove multiple layers of management and coordination,” expanded Anderson. That will include a “significant reduction in the workforce,” he said.
Advancing innovation is another priority for Bayer in the coming years. “We have products in the market with good momentum,” said Anderson. “We have Intacta 2 Xtend soybeans (in Brazil) and the Preceon smart corn system, which is expected to launch in 2024 (in the U.S.)”
Anderson ended the report with a focus on strengthening performance and the desire to create sustainable value for stakeholders moving forward. “It’s about delivering the best version of this company with the most speed, the least risk, and the best return. That is what we are focused on in the coming weeks and months.”
Both Bayer AG and Bayer CropScience Ltd stocks declined immediately following the news of the potential split but have rebounded slightly in the following days.
Bayer declined further comment on the earnings report and possible crop science division spin-off.
Bayer, Corteva, Syngenta report Q3 Losses
Bayer, Corteva, and Syngenta — three major players in seed and crop protection — all reported lower overall sales for their third quarters with higher sales in seeds and losses in crop protection.
Bayer AG Q3 2023 performance
“Quarter three crop sciences sales came in slightly better than expected with sales growing 1%,” said Rodrigo Santas, president of crop sciences division at Bayer. “This was a net effect of 9% sales growth in our core business (corn, soybeans, and fungicides), and 23% decline of glyphosate-based products.”
The decline in glyphosate-based herbicides was attributed to pricing decline, inflation, and higher-cost inventory weighing on earnings.
Corteva Q3 2023 performance
Corteva released their 2023 third quarter results on Nov. 8 and reported a $315 million loss. 2023 year-to-date net sales and organic sales decreased 1% versus prior year with gains in North America and EMEA (Europe, Middle East, and Africa) offset by declines in Latin America and Asia Pacific.
Corteva’s seed net sales grew 7% and organic sales increased 9%. “Our seed business is delivering exceptional performance in 2023 and is set up for continued growth with our pipeline of technology and new hybrids,” said Charles Magro, chief executive officer and director of Corteva.
Magro lauded the company’s leading position in soybeans with its Enlist platform. Corteva said in August Enlist E3 had become the top soybean technology seller to farmers, surpassing Bayer’s Roundup Xtend platform. Enlist seeds are resistant to 2,4-D choline, glyphosate, and glufosinate and Xtend seeds include resistance to glyphosate and dicamba.
Net sales of crop protection products for the year to date were down 10%, from nearly $6.3 billion to about $5.7 billion, the company said.
“Global ag fundamentals remain positive, with farmer income still above historical levels,” said Magro. “In this environment, we remain focused on levers within our control to continue to deliver meaningful earnings and margin improvement.”
Syngenta Q3 2023 performance
Syngenta also reported lower overall sales for the third quarter. Seed sales increased 3% in the first nine months to $3.3 billion, “driven by robust pricing,” the company said. Compared to the first nine months of 2022, crop protection sales diminished from $12.6 billion to $11.5 billion in 2023.
“In the first nine months of 2023, the industry-wide channel destocking continued as distributors and retailers further reduced inventories they built up in response to the supply chain disruptions of 2022. Overall farmer income and use of agricultural products, solutions, and services remain robust,” the company said in a press release. “However, high working capital costs for customers due to sustained higher interest rates prompted many channel partners and farmers to order closer to application. These factors weighed on the comparison with the same period last year, when the group achieved record sales and profits.”