Financial Data and Key Metrics Changes - Group sales increased slightly by 1% year-on-year in Q3 2024, with growth in Pharmaceuticals and Consumer Health offsetting a decline in Crop Science [15][18] - EBITDA before special items was €1.3 billion, a decrease of 26% or approximately €430 million compared to the prior year [15][16] - Core earnings per share were €0.24, down €0.14 from the previous year, primarily due to lower contributions from EBITDA [16] - Free cash flow for Q3 was €1.1 billion, compared to €1.6 billion in the same quarter last year, with year-to-date free cash flow at minus €200 million [16][17] - Net financial debt was reduced to €35 billion by the end of Q3, aided by positive cash contributions and foreign exchange tailwinds [17] Business Line Data and Key Metrics Changes Crop Science - Sales declined by 4% to approximately €4 billion in Q3, impacted by weather challenges and commodity price softness [18] - EBITDA before special items for Crop Science was €35 million, approximately €60 million above the prior year's quarter [18] Pharmaceuticals - Sales grew by 2% year-on-year to €4.5 billion, driven by strong performance from launch assets like Nubeqa and Kerendia [19] - Xarelto saw a 23% decline in quarterly sales, aligning with guidance of a double-digit sales decline [19] Consumer Health - Achieved 6% year-over-year sales growth in Q3, reaching €1.4 billion, with broad-based growth across categories [20] - Clean EBITDA margin improved to 25.5%, a 330 basis point increase year-over-year [20] Market Data and Key Metrics Changes - The agriculture market is expected to decline around 2% in 2024, with Crop Science facing significant challenges in Latin America [4][21] - Consumer Health is experiencing a slowdown in growth in key markets like the US and China, impacting overall performance [4][21] Company Strategy and Development Direction - The company is focused on operational efficiency and targeted price management to navigate market pressures [23] - There is a commitment to innovation, with plans for significant product launches in the coming years, particularly in Crop Science and Pharmaceuticals [9][35] - The new operating model aims to enhance speed, efficiency, and creativity within the organization [38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year targets for sales growth, core earnings per share, and free cash flow despite headwinds [5][23] - There are concerns about regulatory challenges and generic pricing pressures impacting Crop Science, with a cautious outlook for 2025 [6][21] - The company is committed to addressing litigation issues and maintaining focus on cash conversion and operational performance [11][40] Other Important Information - The company has scaled its new operating model to the majority of the organization, resulting in a reduction of 5,500 jobs, primarily in managerial positions [13] - The company is exploring various avenues to contain litigation risks, particularly related to glyphosate and PCBs [12] Q&A Session Summary Question: Dicamba registration and alternative offerings for farmers - Management discussed the potential impact of not having Dicamba re-registered and outlined plans to offer alternative chemistries to farmers [41][42] Question: Financial outlook for 2025 and operational savings - Management refrained from quantifying EBITDA decline for 2025 but emphasized ongoing efforts to accelerate operational savings [44][45] Question: Xarelto impact clarification - Management clarified that the Xarelto impact is expected to peak in 2026, considering the timeline of genericization [46] Question: Raw material and seed production cost reductions - Management confirmed expectations for lower raw material and seed production costs in 2025, alongside ongoing DSO savings initiatives [48][49]
Bayer(BAYRY) - 2024 Q3 - Earnings Call Transcript