Bayer posts smaller than expected drop in adjusted profit, shares jump

By Ludwig Burger

FRANKFURT (Reuters) -Bayer on Tuesday posted a smaller decline in first-quarter adjusted earnings than investors had feared as strong prescription numbers for new drugs offset a drop in its seed businesses, boosting its shares.

CEO Bill Anderson is under pressure from investors to deliver on restructuring efforts and to reverse what is projected to be the third consecutive annual drop in operating income in 2025.

The debt-burdened group, which is grappling with costly U.S. product liability litigation over weed killer Roundup, said quarterly earnings before interest, tax, depreciation and amortisation (EBITDA), adjusted for one-off items, fell 7.4% to 4.09 billion euros ($4.54 billion), beating a consensus of 3.75 billion euros posted on the company's website.

Shares jumped 11% to a seven-month high, with Deutsche Bank analysts saying the results were encouraging although some uncertainty and high legal risks remain.

Revenue from new prostate cancer drug Nubeqa and kidney treatment Kerendia rose 80% to a combined 680 million euros. But a delay in U.S. approval for new soy and cotton seeds led to a revenue drop of 16% in those businesses to a combined 754 million euros.

Bayer said it had cut 2,000 full-time positions in the first quarter, on top of 7,000 jobs slashed last year.

The German group, which is also cutting managerial jobs and red tape, has secured shareholder approval to raise fresh equity if needed for legal settlements, but reiterated on Tuesday that such a move was not on the cards.

It confirmed its currency-adjusted earnings outlook for 2025. This year's special items, however, would be at the upper end of the previous outlook range, or about minus 1.5 billion euros ($1.67 billion), given higher legal risks and severance pay for staff, it added.

Bayer increased its legal provisions after an unfavourable verdict by a Pennsylvania appeals court last week over disputed claims that Roundup causes cancer. It still plans to petition the U.S. Supreme Court to sharply limit claims that could run into the billions of dollars.

For its pharmaceuticals division, it projected the currency-adjusted profit margin to come in at the upper end of its previous target range.

Based on trade tariffs announced so far, Bayer said it expects "to manage the impact", even though there would be direct effects on pharmaceutical flows between the United States and China.

There is also a risk of tariffs on drugs made by Bayer in Europe and shipped to the U.S., but the CEO said the group is currently not revisiting its global manufacturing network.

($1 = 0.9003 euros)

(Reporting by Ludwig Burger; Editing by Himani Sarkar, Kirsten Donovan)