Shares in German pharmaceutical and agrochemicals giant Bayer plunged on Thursday, October 1, after the company announced huge writedowns over a demand slump and a new savings plan partly to alleviate the impact of the coronavirus.
At 1055 GMT, shares were down 10% to 47.98 euros ($56.36) on Frankfurt’s DAX blue-chip index, having fallen as much as 12.7% in morning trading. Shares are down 34.5% in the year to date.
The slump came hours after the group said it would have to take an impairment charge in the “mid to high single-digit billion euros range” because of poorer than expected demand in its crop science division.
It would also accelerate a cost-cutting program that may lead to further job cuts, it said, without revealing how many posts would be affected.
The new measures “will help mitigate the impact of COVID-19 on our business,” the company’s chief executive Werner Baumann said.
The company expects to save 1.5 billion euros by 2024, on top of the 2.6 billion euros of annual savings it expects to make from 2022, Bayer said in a press release.
The Leverkusen-based company said its 2021 sales would come in near 2020 levels.
The company posted a net loss of 9.5 billion euros in the 2nd quarter after a settlement to end most lawsuits against its Roundup glyphosate weedkiller produced by Monsanto, the US agrochemical company it controversially acquired for 63 billion euros in 2018.
Since then, a California district judge has expressed major reservations about the settlement’s validity, forcing Bayer to back down on part of the agreement involving future cases.
“It was already quite clear that Monsanto’s growth prospects had deteriorated over the last two and a half years, although the extent of that decline is greater than expected,” said Sebastian Bray, an analyst at Berenberg Bank, according to Bloomberg News. – Rappler.com