Bayer: Good start to 2020
- CEO Werner Baumann at the Bayer AG Annual Stockholders’ Meeting stated, “We’re active in the right businesses”
The Bayer Group can look back on 2019 as a year of strategic and operational success. “We’ve worked hard and we’ve delivered,” said Werner Baumann, Chairman of the Board of Management, on Tuesday at the first virtual stockholders’ meeting held by a DAX company. Baumann addressed the company’s stockholders – who were originally due to meet in Bonn – via a livestream. “On the one hand it makes us a digital pioneer. But we will also miss the direct dialog with you,” he admitted to the stockholders, saying that the COVID-19 pandemic had made it impossible for him to address them in person. Baumann expressed Bayer's wish to remain a reliable partner, especially in such unusual times. “When it comes to your health and safety, there is no room for compromise.”
For Bayer’s more than 100,000 employees, the past two months have involved tremendous challenges, he said. Their health and safety is always at the top of the agenda, Baumann noted. “Whether it’s face masks, protective clothing, distancing rules, separating employees who work different shifts, or taking people’s temperatures as they enter the site: our policy is safety first – with no ifs and buts.” Baumann said he is personally very pleased that all these measures are proving effective and that as a result the company is currently able to keep its production operations well on track. He explained that because health and nutrition count among humanity’s basic needs, Bayer has been considered an essential business during the pandemic. “That’s why we’ve done everything in our power in recent weeks to live up to this responsibility,” Baumann said.
“Of course, we conduct our business with commercial success in mind. But we’re also an integral part of society.” For example, Bayer has donated large quantities of chloroquine to numerous countries, including China, Italy, the United States and Germany, he noted. So far there have been no robust results from clinical trials that would indicate a positive benefit-risk profile for chloroquine in the treatment of COVID-19. In addition, chloroquine is a prescription medicine that can cause damage to health when used incorrectly and therefore may only be taken under medical supervision. Should a benefit in the treatment of COVID-19 be scientifically proven, it could be used globally. “We would produce the medicine entirely for the public good and supply it to governments free of charge,” Baumann said.
“Supporting those most in need”
Bayer has provided testing devices that are being used to perform thousands of additional coronavirus tests in Germany every day, Baumann explained. In Berlin, the company has granted leave of absence to more than 140 staff so that they can volunteer in a test laboratory located at the headquarters of the Pharmaceuticals Division, he added. The company is also donating other medicines and self-care products, such as antibiotics or vitamin supplements, in numerous countries, Baumann noted. “That makes me very proud. Being there when it matters. Supporting those most in need. That’s how I’ve experienced this company for more than 30 years, and especially in these times,” he said. “I’d therefore like to sincerely thank all of our employees – also on behalf of my colleagues on the Board of Management and, I’m sure, on your behalf as stockholders – for their tremendous commitment.”
Baumann believes the coronavirus crisis vindicates Bayer's chosen focus. “We’re active in the right businesses,” he said. “After all, what could be more important than contributing to health and nutrition around the world?” The company is also on course to implement the extensive measures that the Board of Management initiated at the end of 2018 and has continued to pursue with vigor since the 2019 Annual Stockholders’ Meeting, Baumann said. “We also took to heart the disappointing voting results at last year’s Annual Stockholders’ Meeting. We engaged in close dialog with investors, took on board the criticisms expressed and worked to improve.”
Bayer achieved its financial targets in 2019 despite encountering a challenging market environment in the agriculture sector in particular, Baumann said. Sales increased by 3.5 percent to 43.5 billion euros on a currency- and portfolio-adjusted basis (Fx & portfolio adj.). On a reported basis, sales were up by 18.5 percent. EBITDA before special items advanced by 28.3 percent to 11.5 billion euros – a record high for Bayer. Core earnings per share from continuing operations rose by 14.3 percent to 6.40 euros.
Bayer was able to implement the announced portfolio measures earlier than anticipated – and also achieved attractive divestment proceeds. The company has divested its stake in the site services provider Currenta and has sold the Dr. Scholl’s™ and Coppertone™ brands. In addition, Bayer continues to expect the sale of its Animal Health business to Elanco to close in the middle of this year. Bayer is also making swifter progress than anticipated with its efficiency and structural measures, with the company targeting gross annual contributions of 2.6 billion euros starting in 2022. This figure includes the planned synergies from the integration in the agriculture business.
Furthermore, the company has set itself new sustainability targets. “We decided that Bayer will become a 100 percent carbon-neutral company by 2030,” Baumann said. “Our goals for 2030 are very ambitious – but even after that we will continue to work on sustainability issues and solutions to improve people’s lives. This basic approach is part of our vision at Bayer: ‘Health for all, hunger for none’ – this is the thinking that will shape our company and power it forward in the coming years.”
To enable stockholders to appropriately share in the company’s success in 2019, the Board of Management and Supervisory Board of Bayer AG have proposed to the Annual Stockholders’ Meeting that an unchanged dividend of 2.80 euros per share entitled to the dividend be paid. Bayer has also registered a good start to 2020, with sales in the first quarter rising by 6.0 percent (Fx & portfolio adj.) to 12.8 billion euros. EBITDA before special items increased by 10.2 percent to 4.4 billion euros.
Regarding the glyphosate litigation, Bayer continues to engage constructively in the mediation discussions. “We had made some progress in this – before the outbreak of COVID-19 overshadowed this topic as well and thus significantly slowed down progress in the negotiations,” said Baumann. Numerous meetings would have had to be canceled. "Our basic attitude has not changed: Regardless of the duration of the negotiations, we will continue to consider a solution only if it is financially reasonable and puts in place a mechanism to resolve potential future claims efficiently. Against the background of a looming recession and looking at, in part, considerable liquidity challenges, this applies more than ever.”