The company recorded double-digit percentage gains in the Europe/Middle East/Africa and Asia/Pacific regions, but saw sales fall in Latin and North America, mainly due to lower volumes.
The Bayer Group experienced a slow start to 2023 as expected. “Sales were on a par with the exceptionally strong prior-year quarter,” CEO Werner Baumann said on Thursday when presenting the Quarterly Statement for the first quarter. The normalization in the glyphosate business has accelerated, although this effect was largely offset by growth in the other parts of the Crop Science business, he explained. Group earnings were mainly weighed down by the glyphosate business and inflation, and were also impacted by R&D investment at Pharmaceuticals, which remained high.
In the agricultural business (Crop Science), sales declined by 1.1 percent (Fx & portfolio adj.) to 8.351 billion euros. Excluding the glyphosate business, Crop Science sales were up around 8 percent (Fx & portfolio adj.). The division recorded double-digit percentage gains in the Europe/Middle East/Africa and Asia/Pacific regions, but saw sales fall in Latin and North America, mainly due to lower volumes. Sales at Herbicides decreased by 24.3 percent (Fx & portfolio adj.) due to lower volumes and prices for glyphosate-based products. By contrast, Corn Seed & Traits saw sales rise by a substantial 15.8 percent (Fx & portfolio adj.), primarily driven by higher prices in the North America and Europe/Middle East/Africa regions. Sales at Insecticides rose by 12.6 percent (Fx & portfolio adj.), with significant price and volume increases in Europe/Middle East/Africa thanks to Movento™ and in Latin America due to Curbix™ more than offsetting lower volumes in North America. Sales were also up at Soybean Seed & Traits, which registered growth of 1.4 percent (Fx & portfolio adj.) that was mainly driven by higher volumes in Latin America. Sales at Fungicides came in at the prior-year level, with higher prices in all regions offsetting lower volumes in Latin and North America in particular.
EBITDA before special items at Crop Science decreased by 11.0 percent to 3.267 billion euros, mainly due to the fall in sales in Latin and North America. Earnings were also diminished by an increase in particular in the cost of goods sold, which was due to high inflation. There was a positive currency effect of 54 million euros (Q1 2022: 98 million euros). The EBITDA margin before special items declined by 4.3 percentage points to 39.1 percent.
Baumann confirmed the Group outlook for full-year 2023 based on the average monthly exchange rates from 2022. However, for the remainder of the year Bayer sees potential risks mainly arising from the significantly reduced market price expectations for glyphosate-based products, he said. “We continue to expect performance to improve in our other businesses in the second half of the year,” Baumann noted. “Overall, we expect target attainment to come in at the lower end of our guidance.”
