German agro-pharmaceutical giant Bayer AG is experiencing a lot of turbulence, and not only in the stock market. This is a “horror show for shareholders” and a scary scenario for a number of employees.

While Bayer managed to register a profit of around 4.2 billion euros in 2022, on Tuesday the company had to report a loss of 2.9 billion euros for 2023. After nine months in office, at the first conference of the annual press release of Bill Anderson as CEO of Bayer AG, numbers and plans were presented. Bigger plans than numbers that don’t look too good.

“Undertaker” Monsanto

The conference was held on Tuesday not at the company’s headquarters in Leverkusen, as usual, but in London, so that Anderson could meet directly with the big investors on Capital Markets Day to present his vision to them.

Bayer’s investors have been hit hard, with the share price falling since the multibillion-dollar takeover of Monsanto nine years ago – from a peak of more than 140 euros to less than 30 euros now. According to sources cited by the German press, this week Bayer AG will be excluded from the European index Stoxx Europe 50. And the dividend has been reduced from 2.40 euros last year to the legal minimum of eleven cents for the next three years, according to Tagesschau.de.

Investors have repeatedly called for the group to be broken up because individual units could be worth more than the group as a whole, but Anderson doesn’t see that as a solution in the foreseeable future. “In short, our answer to the question of structural change is “not now,” but it should not be misunderstood any more than ever.” Of course, we will remain open to everything.”

Partition is now mission impossible

Expert Mark Tungler from the German Securities Association (DSW) calls the fall in the firm’s stock market a “horror show for shareholders.” But he does not believe in the breakup of the company, which individual investors have repeatedly demanded: “The breakup of Bayer will not solve anything, and I will go even further: Bill Anderson cannot break up Bayer now.”

In Bayer’s pharmaceutical sector, there are no new drugs with potential for success. But a third division, Consumer Health, which deals in over-the-counter drugs such as classic aspirin, is profitable.

But Crop Science’s agriculture division is still fighting to recover billions in damages sought in US lawsuits over the glyphosate-based herbicide Roundup. A wave of US lawsuits over the effects of glyphosate use continues to hurt Bayer AG. Most recently, at the end of January, according to German media, a court in Pennsylvania awarded the plaintiff compensation in the amount of more than two billion euros. The jury ruled that glyphosate was the cause of the plaintiff’s cancer. The decision is not final, Bayer can appeal.

Still, the verdict is a warning sign for the final resolution of the 52,000 cases that are still open. Bayer had to create tens of billions of reserves for this. The fact that Anderson, like his predecessor Werner Baumann, constantly repeats that glyphosate is not carcinogenic has not yet impressed the US justice system.

Gentle restructuring

Anderson wants to launch a rigorous restructuring program called Dynamic Shared Ownership. It promises new teams, closer to customers, reduced internal bureaucracy and layers of hierarchy.

Simply put, this means that many Bayer employees will lose their jobs, especially in middle management. The exact numbers are not yet known, but experts expect a four-digit number.

For those who want to take severance pay quickly, Bayer wants to pay them up to 52.5 months of salary. In some cases, compensation can reach half a million euros.

Since layoffs for operational reasons are ruled out until the end of 2026, meaning the company relies only on voluntary layoffs, employees are wary of criticizing the announced measures.

Francesco Grioli, board member of the chemical union IG BCE and member of Bayer’s supervisory board, calls on the company to “get back on track”: “Bayer has not had forced redundancies for decades. Our common goal is to stay that way.”

Heike Hausfeld, Chairman of the General Works Council of Bayer AG, said before Bayer’s press conference: “We see the new operating model as an excellent opportunity to significantly improve our economic situation. However, the company is in a tense economic situation. The programs and measures that already exist are not enough, so it is with a heavy heart that we have agreed to further cuts.”

Headquartered in Leverkusen, Bayer Aktiengesellschaft (Bayer AG) is a publicly traded chemical and pharmaceutical company with a total workforce of approximately 101,000 employees (as of December 31, 2022). Between 2002 and 2005, in one of the biggest turnarounds in the company’s history, the original Pharmaceuticals, Plant Protection, Chemicals and Plastics divisions were spun off and reorganized as sub-groups.

The business is managed through three divisions: pharmaceuticals, consumer health and crop production. In 2022, the Bayer Group had a consolidated profit of €4.2 billion on sales of around €50.7 billion, with the agricultural division accounting for half of total sales. In 2022, the Bayer Group invested 6.16 billion euros in research and development. The name Bayer is also known for its subsidiary Bayer 04 Leverkusen, which is active in football. (Photo: Dreamstime.com)