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Introduction & Market Context
Bayer AG (OTC:BAYRY) presented its Q1 2025 financial results on May 13, 2025, showing flat sales performance while maintaining its full-year outlook despite ongoing challenges. The German pharmaceutical and agricultural giant reported stable overall sales of €13.7 billion, with its pharmaceutical division showing promising growth that helped offset weaknesses in its crop science business.
Trading at €112.36, Bayer’s stock remains significantly below its 52-week high of €152.80, reflecting investor concerns about ongoing litigation and restructuring efforts. The company continues to implement cost-cutting measures, including a reduction of approximately 2,000 full-time employees in Q1 alone.
Quarterly Performance Highlights
Bayer’s Q1 2025 performance showed resilience in a challenging environment, with sales holding steady at €13.7 billion (0% year-over-year). However, core earnings per share declined by 12% to €2.49, while EBITDA before special items fell 7% to €4.1 billion.
As shown in the following comprehensive financial overview:
Despite the earnings decline, the company improved its free cash flow position to €-1.5 billion, representing a significant improvement from the previous year. Net financial debt decreased by 9% to €34.3 billion, demonstrating the company’s commitment to deleveraging.
The company’s core EPS bridge reveals the impact of various factors on its earnings performance:
Divisional Performance Analysis
Bayer’s performance varied significantly across its three main divisions. The Pharmaceuticals division emerged as the strongest performer with 4.1% sales growth and a 29.5% EBITDA margin, driven by the success of new products.
The Pharmaceuticals division’s results show the strong contribution from newer products offsetting declines in mature offerings:
The division’s growth was primarily fueled by Nubeqa and Kerendia, which together grew by an impressive 80% to €0.7 billion, helping to offset the 31% decline in Xarelto sales. Eylea maintained its market leadership with 5% growth to €0.8 billion.
The Crop Science division faced more significant challenges, with sales declining 3.3% and an EBITDA margin of 33.7%:
The division’s performance was impacted by regulatory challenges, particularly the US dicamba label vacatur affecting soybean and cotton sales. Seeds & Traits sales fell 5% to €4.3 billion, while Glyphosate-based herbicides declined 10% to €0.6 billion.
Meanwhile, the Consumer Health division delivered modest growth with sales increasing 2.5% and an EBITDA margin of 22.8%:
The division saw growth across most categories, with Digestive Health leading at 13% growth, followed by Pain & Cardio at 7%. Only the Nutritionals category experienced a decline of 5%.
Strategic Priorities and Innovation Pipeline
Bayer outlined five strategic priorities: pharmaceutical growth and pipeline development, litigation management, cash generation and deleveraging, crop science profitability, and dynamic shared ownership.
The company’s pharmaceutical pipeline shows promising developments, with several products in late-stage development:
Particularly noteworthy is the continued strong performance of Nubeqa, which demonstrated significant uptake across all regions:
Similarly, Kerendia continues to show strong launch momentum:
These products represent critical growth drivers for Bayer as it navigates the loss of exclusivity for Xarelto, which saw a 31% sales decline in Q1.
Outlook and Forward Guidance
Despite the mixed Q1 results, Bayer confirmed its full-year outlook for 2025 at constant currencies:
The company expects net sales between €45.0 billion and €47.0 billion (-3% to +1%), EBITDA before special items between €9.5 billion and €10.0 billion (-6% to -1%), and core EPS between €4.50 and €5.00.
However, Bayer noted that foreign exchange rates remain a significant headwind, with an estimated negative impact of approximately €0.5 billion on net sales and €0.3 billion on EBITDA. The company is also monitoring the geopolitical environment, particularly potential tariff announcements, though it expects to manage these impacts within its guidance range.
The divisional outlook shows varied expectations across Bayer’s business units:
The Pharmaceuticals division is expected to see a slight sales decline of -4% to -1%, while Consumer Health is projected to grow 2% to 5%. Crop Science is expected to perform between -2% and +2% for the full year.
Bayer’s mixed Q1 2025 results highlight both the challenges and opportunities facing the company. While the core business maintains stability and pharmaceutical innovation shows promise, the company continues to navigate headwinds in its crop science division and ongoing restructuring efforts. Investors will be watching closely to see if Bayer’s strategic priorities translate into improved financial performance in the coming quarters.
Full presentation:
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