(Bloomberg) -- Bayer AG reported encouraging sales for the quarter aided by strong demand for new cancer and kidney medicines.
Group revenue reached €11.1 billion ($12.2 billion) in the second quarter, the German company said in a statement Tuesday, ahead of the €10.9 billion average of analysts’ estimates. Bayer reiterated its 2024 earnings forecast.
Chief Executive Officer Bill Anderson is trying to win back the confidence of investors following years of crisis at the German conglomerate. The Texas native joined Bayer last spring and has bet his tenure on the premise that the best way to revive the company’s fortunes is to improve its three divisions — which are focused on pharmaceuticals, consumer health and agriculture — rather than split them apart.
Anderson has also cut jobs and made other changes intended to improve competitiveness in each of Bayer’s businesses. The company has 3,200 fewer jobs now than when the year began, he said in prepared remarks.
“Versus this time last year, we have about a 10% reduction in sort of the senior officer roles. That’s something like the top 300 people,” Anderson said in a call with journalists. “That will continue to reduce further.”
The downsizing will help Bayer achieve its target of cost savings of €500 million this year and €2 billion by 2026. The company is on track for both goals, Anderson said.
The shares gained as much as 1.4% in Frankfurt. They had fallen 48% in the last 12 months through Monday’s close and more than 70% since Bayer acquired Monsanto in 2018.
Bright Spots
Each of the divisions had bright spots in the second quarter. The crop science business posted sales of nearly €5 billion, slightly ahead of estimates, thanks in part to robust North American demand for glyphosate-based products like the controversial weedkiller Roundup.
Consumer health, Bayer’s smallest unit, performed roughly in line with expectations. It saw strong demand for digestive health products, offsetting weaker sales of allergy and cold medicines, the company said.
Bayer’s pharma division was the biggest surprise on the sales front, thanks to growing demand for its new drugs, Nubeqa for cancer and kidney medicine Kerendia. Meanwhile, older eye medicine Eylea topped estimates with higher sales. Bayer is facing new competition for that medicine along with its older blockbuster blood thinner, Xarelto.
Bayer raised its 2024 sales outlook for the pharma unit. It now expects revenue to stay flat or even grow slightly, better than the previous guidance that anticipated falling sales.
“As always with Bayer, it’s a mixed bag but given weak crop results from peers and strong pharma performance/upgrade, we think this will be taken relatively well,” Barclays analysts said in a note.
The company faces plenty of challenges ahead. Among other things, it’s grappling with litigation in the US for products like the herbicide Roundup, which it inherited with the $63 billion Monsanto takeover in 2018. Plaintiffs claim the product causes cancer, while Bayer insists it’s safe.
(Updates ith company comment, shares starting in fourth paragraph.)
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