Bayer raises forecast in view of the ongoing boom in agricultural prices


Bayer AG has raised its earnings guidance for the year amid higher prices for agricultural seeds and chemicals, including the controversial weed killer Roundup.

The German company now expects core earnings per share of around €7.30, up from the previous target of €7, it said in a statement on Thursday. Sales are expected to reach up to 48 billion euros and thus also exceed the previous target.

Bayer’s crop science division is now a revenue engine, boosted by higher prices for everything from corn seed to the herbicide glyphosate. This improves the reputation of CEO Werner Baumann, who has repeatedly been reprimanded for his controversial takeover of Monsanto.

Profit and sales topped analysts’ estimates last quarter, but the future remains complicated for Bayer, which has long argued that its diversified business model — which includes everything from corn seed to cancer therapies to over-the-counter skin care products — makes sense.

The company faces a mountain of US lawsuits alleging Roundup can cause cancer, which Bayer denies. The US Supreme Court denied the company’s appeal on the matter last month, and Bayer faces tough court battles in the coming weeks.

Bayer inherited Roundup’s controversial acquisition of Monsanto. It has repeatedly told investors it should be able to settle the lawsuits for $16 billion or less. Investors will be scrutinizing the upcoming jury trials to ensure that number appears reasonable.

At the moment Bayer seems to have momentum on several fronts. While agricultural commodity prices have fallen from their April highs, they remain much higher than they have been in the past decade – and there are signs prices are “remaining high for longer,” Berenberg analyst Sebastian Bray said per E-mail.

Bloomberg. Bayer raises forecast in view of the ongoing boom in agricultural prices

Fry Electronics Team

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