Excellent quarter for the Bayer group that raises some 2021 targets. The German pharmaceutical company has recorded a significant increase in sales and profits, and Werner Baumann, chairman of the board of directors, could not be more satisfied with the results. “We have had strong operational performance, with all divisions showing strong growth momentum,” he said today during the presentation of the company data for the third quarter of 2021.
Group sales increased by 14.3% to 9.8 billion euros. The foreign exchange effect was positive for 67 million. EBITDA before special items increased by 16.4% to 2.1 billion, including a negative currency effect of 44 million. EBIT stood at 530 million, an improvement on last year when it was negative for 9.4 billion, after extraordinary charges of 694 million, less than last year (10.9 billion) and mainly related to restructuring measures in all three divisions of the group.
Net profit was a positive € 85 million from -2.7 billion in 2020, while core earnings per share increased by 29.6% to € 1.05, thanks to the development of the agricultural division (Crop Science). Free cash flow also rose 58% to 1.95 billion, while net financial debt fell 1.1% to 34 billion.
In particular, the Crop Science division recorded sales up 25.8% to 3.85 billion and an ebitda of 471 million against -34 million last year. Results due, in particular, to the substantial growth in prices and volumes of the business, strengthened by the 92.6% increase in sales in the Corn Seed & Traits segment, whose earnings were driven by the North American market. As for the pharmaceutical division, it benefited above all from the 19% increase in sales of the ophthalmological drug Eylea. In addition, Consumer Health business increased across all areas and product categories, posting sales up 10.9% to 1.35 billion.
The strong company performance prompted Bayer to revise the 2021 guidance published in August upwards. The company continues to expect revenue of approximately $ 44 billion, which corresponds to currency and portfolio adjusted growth of approximately 7% (up from 6% previously). The currency-adjusted EBITDA margin forecast remains unchanged at around 26%. While core earnings per share should now settle in the 6.5-6.7 euro range net of currency effects (against the previous 6.4-6.6 euro). Furthermore, free cash flow is expected to be between -0.5 billion and -1.5 billion (against the previous range between -2 billion and -3 billion). Finally, Bayer expects net financial debt of approximately 35.5 billion net of currency effects against the previous 36 billion.
Following the publication of the results, Citi confirmed the neutral rating and the 51 euro target price on Bayer, appreciating the revision of the 2021 guidance, which implies a further increase in earnings per share of around 1-2% compared to present value, and quarterly profit, “the first stage of recovery in the group’s equity history”.
However, Citi believes it is necessary to reassure investors that the fears over the dispute over glyphosate – the total non-selective herbicide accused of having carcinogenic effects on the body – have been largely overcome and could even be lower than expected, even at the light of the five-point plan implemented by Bayer both to resolve pending cases and to limit future disputes relating to complaints of the Roundup brand, whose products contain glyphosate. The final decision of the US Supreme Court on the negative effects of the herbicide is expected shortly and, if so, a ruling is expected by 2022. Meanwhile, the excellent quarterly is making Bayer appreciate the stock. Frankfurt stock exchange of 2.40% to 51.2088 euros.

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