Bayer cuts 2024 profit expectations, European stock prices hit their biggest intraday drop in a year

German pharmaceutical and agricultural chemical giant Bayer AG has lowered its profit forecast for this year in its latest earnings report, citing sustained low prices for agricultural products, including the controversial herbicide Roundup, and indicating that overall agricultural product profits may decline next year. Sales prospects for Bayer's agriculture and consumer health business sectors have declined, while the pharmaceutical business sector's sales outlook may reach the upper end of the performance guidance target. In a performance statement released on Tuesday, the company stated that EBITDA profits before special items for this year may reach between 10.4 billion euros and 10.7 billion euros. This latest range is lower than the previous range of up to 11.3 billion euros (Bayer's EBITDA profit forecast range was previously between 10.7 billion euros and 11.3 billion euros). The negative sentiment resulting from the subdued performance expectations caused Bayer's stock price to drop by 11% in early trading in European stock markets, marking the largest intraday decline in the past year, with Bayer's stock falling by 33% so far this year. Bayer CEO Bill Anderson is leading the German conglomerate through multiple crises and aims to regain investor trust. After joining Bayer last year, the Texan has staked his tenure on the premise that the best way to revitalize the company's fortunes is to significantly improve its three core business sectors - focusing on agriculture, pharmaceuticals, and consumer health - rather than completely divesting them. As for overall performance in the third quarter, Bayer's Q3 total sales were around 9.968 billion euros, a slight increase of 0.6% year-on-year; Q3 EBITDA profit before special items was approximately 1.251 billion euros, down 25.8% year-on-year; Bayer's EBITDA profit in the third quarter fell short of analyst average expectations of around 1.33 billion euros. Highlights: Pharmaceutical business sector performs well The German conglomerate expects its agricultural product division's overall sales to decline by 3% this year, while the consumer health business sector's growth rate is expected to be lower than previously forecasted. Additionally, due to strong sales performance of Bayer's new drugs Nubeqa (an anti-cancer drug) and kidney disease treatment drug Kerendia, the pharmaceutical business sector of Bayer may see its sales growth rate at the upper end of the performance guidance range of 3%. Nubeqa is one of the few strong growth points in Bayer's earnings report. Nubeqa is a androgen receptor inhibitor mainly used to treat non-metastatic castration-resistant prostate cancer. Its mechanism of action involves blocking the androgen receptor to inhibit the growth of prostate cancer cells. According to Bayer's financial report for the first half of 2024, Nubeqa's sales reached 663 million euros, with a staggering year-on-year increase of 78.4%. In the third quarter, Nubeqa's sales increased by 80% year-on-year, with overall sales surpassing 1 billion euros by the end of the third quarter. Under Anderson's leadership, Bayer has implemented comprehensive cost-cutting measures, including laying off over 5,400 employees so far this year. Bayer expects further job cuts in the coming months to reduce bureaucracy, speed up decision-making, and streamline the organization. Bayer reiterates in its earnings report its full-year performance guidance targets for sales growth adjusted for exchange rates and portfolio changes, core earnings per share adjusted for exchange rates, and free cash flow.