The economic and financial daily Handelsblatt has published a long article analyzing the fourth quarter results announced few days ago by the Bayer group. The author pinpoints 5 causes underlying the disappointing performances reported by the Leverkusen-based company:
The acquisition of Monsanto required more time than expected to be approved. Antitrust regulators were fairly slow and accurate, despite Bayer had sold €5.9bn-worth assets to BASF in order to accelerate the process.
Bayer faced €135m legal costs for 22,000 lawsuits concerning some of its drugs during Q4 2017. Moreover, Bayer discontinued the production of Adalat–for hypertension–due to quality issues.
The Consumer Health division declined 1.7% in 2017 (€5.9bn) vs 2016 , mainly due to the US market weakening, which caused poor results from the blockbuster Coppertone (sunscreen) and the Dr. Scholl-branded products, acquired from Merck in 2014.
The merger with Monsanto was slow and South America was experiencing economic hardship–both factors affected Bayer’s Crop Science arm, which was down 2.2% in revenues vs 2016.
The €51bn takeover forced Bayer’s management to adopt extraordinary measures aimed at offsetting the group’s debt and preserving bond rating. In the near future, the group’s managers will have to implement financial engineering measures which will not benefit Bayer’s growth strategy.