The Bayer AG logo is seen behind members of the board of directors during the company's annual general meeting in Bonn, Germany, May 25, 2018.
Christian Boxy | Bloomberg | Getty Images
Bayer said on Tuesday it would postpone plans to break up the diversified group to focus instead on improving operating performance, resolving lawsuits and repaying debt.
“Our answer is not now, and this should not be misconstrued as ‘never,'” CEO Bill Anderson said in a statement.
Over the next 24 to 36 months, the company said it will seek to strengthen its drug development pipeline, address litigation, reduce debt, continue job cuts and accelerate decision-making by managers.
She added that the cuts would reduce annual costs by two billion euros starting in 2026.
Anderson, who was appointed last year to turn around the company's fortunes, previously said he was considering options to spin off, spin off or sell the companies. Reuters reported last month that no such measure is currently on the table.
The CEO faces a deluge of problems, most of which stem from the 2018 $63 billion acquisition of Monsanto.
These issues include US lawsuits alleging harm caused by the weed-killer glyphosate, setbacks in the development of promising experimental medicine, weak agricultural markets, and investor pressure to spin off or sell companies.
The company expects 2024 earnings before interest, taxes, depreciation and amortization (EBITDA) to fall to between 10.7 billion and 11.3 billion euros on a currency-adjusted basis, down from 11.7 billion in 2023.
A consensus published on the company's website showed that analysts on average were expecting this year's earnings to be at the lower end of the target range, while last year's figure was better than expected.
There was little change in the shares after opening at 0800 GMT.
The CEO added that he is “considering every possible means to close” the US lawsuits alleging that glyphosate caused the plaintiffs' cancer. This wave of litigation is a major factor behind the company's two-thirds loss in value since the Monsanto acquisition.
Bayer will defend itself vigorously but will also look for solutions “outside the courtroom.” She said more measures would be coming but did not specify.
About 54,000 cases are still pending, after 113,000 claims were settled or found to be ineligible, according to its annual report.
Bayer has also been unable to eliminate personal injury or environmental damage claims associated with polychlorinated biphenyls, or PCBs, chemicals made by Monsanto that are no longer in use.
To shore up its finances, the German pharmaceutical company reduced its dividend, while maintaining what analysts estimate would be combined payments of between 6 and 7 billion euros over three years.
Bayer's net debt at the end of 2023 rose by 8.5% to 34.5 billion euros. This burden has led some analysts to conclude that a capital increase may become necessary. The company said it will seek to reduce net debt by 1-2 billion this year.
