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Introduction & Market Context
Bayer AG (ETR:BAYGN) (ETR:BAYN) released its Q2 2025 financial results on August 6, showing resilience in a challenging environment and prompting an upgrade to its full-year outlook. The German pharmaceutical and agricultural giant reported stable core performance with significant foreign exchange headwinds, as the company continues to navigate ongoing litigation issues and restructuring efforts.
The company’s stock has been trading at €112.36 as of the most recent close, significantly below its 52-week high of €152.80, reflecting ongoing investor concerns about litigation risks and market challenges despite the improved outlook.
Quarterly Performance Highlights
Bayer (OTC:BAYRY) reported Q2 2025 sales of €10.7 billion, representing a 1% increase at constant portfolio and exchange rates (cpa) but a 4% decline in reported terms, with foreign exchange headwinds accounting for €0.6 billion. EBITDA before special items remained flat at €2.1 billion, while core earnings per share jumped 31% to €1.23, driven by better financial results and lower core taxes.
As shown in the following comprehensive financial overview:
Free cash flow declined dramatically by 90% to €0.1 billion, which the company attributed to higher incentive payouts and phasing of Crop customer payments. Net financial debt decreased by 9% to €33.3 billion, reflecting the company’s focus on deleveraging through focused capital allocation and favorable foreign exchange effects.
Divisional Performance
The Crop Science division posted sales of €4.8 billion in Q2, representing a 2% increase at constant exchange rates but a 4% decline in reported terms. EBITDA before special items increased significantly by 32%, with the division achieving a 14.5% EBITDA margin. This performance was primarily driven by strong results in corn seeds and traits, which offset challenges in crop protection products.
The following chart illustrates the Crop Science division’s performance:
In the Pharmaceuticals segment, sales reached €4.5 billion, up 1% at constant exchange rates but down 3% in reported terms. EBITDA before special items decreased by 17%, resulting in a 24.5% margin. The division continues to face headwinds from Xarelto’s loss of exclusivity, which saw a 27% sales decline, but this was offset by strong growth in launch products Nubeqa and Kerendia, which increased by 54%.
The Consumer Health division reported sales of €1.4 billion, flat at constant exchange rates and down 2% in reported terms. EBITDA before special items increased by 5%, achieving a 23.2% margin. The division faced challenging market conditions in the US and China, with mixed performance across product categories.
Strategic Initiatives
Bayer highlighted progress across its five strategic priorities, including pharmaceutical growth, litigation management, cash generation and deleveraging, crop science profitability, and organizational restructuring. The company has reduced its workforce by approximately 12,000 full-time equivalents since beginning its restructuring program.
The following slide details the company’s progress on its strategic priorities:
In the pharmaceutical segment, Bayer continues to scale the European launch of Beyonttra and secured important approvals for key products including Nubeqa, Kerendia, and Eylea 8mg. The company also reported first approvals for Lynkuet, demonstrating continued pipeline progress.
Product Performance
Nubeqa continues to show strong uptake globally, with sales increasing approximately 10% each quarter to reach approximately €550 million by Q2 2025. The drug has gained market share across all regions, as illustrated in the following chart:
Similarly, Kerendia is demonstrating continued launch momentum in chronic kidney disease and type 2 diabetes markets, with growing adoption in the US and expansion into new markets including China, India, and Mexico. The product also received FDA approval for heart failure with left ventricular ejection fraction ≥40%.
Eylea maintains its market leadership position, with the 8mg formulation gaining further momentum. The product showed 4% growth in Q2 2025, reaching sales of €0.9 billion, demonstrating strong customer and patient retention despite competitive pressures.
Innovation Pipeline
Bayer’s R&D pipeline remains robust across both pharmaceutical and crop science divisions. The pharmaceutical pipeline includes multiple candidates across various development stages, from early research to registration and launch phases.
The following comprehensive overview of the pharmaceutical pipeline illustrates the company’s innovation efforts:
Similarly, the crop science R&D pipeline shows continued investment in new technologies across seeds, traits, and crop protection products:
Forward-Looking Statements
Based on its first-half performance, Bayer has upgraded its outlook for 2025 at constant currencies, though it continues to expect significant foreign exchange headwinds. The company raised its pharmaceutical division guidance, now expecting 0% to 3% sales growth (up from -4% to -1% previously) and an EBITDA margin of 24% to 26% (up from 23% to 26%).
The upgraded group outlook is detailed in the following chart:
For the full year 2025, Bayer now expects:
- Net sales of €46.0 to €48.0 billion (-1% to +3%), up from previous guidance of €45.0 to €47.0 billion
- EBITDA before special items of €9.7 to €10.2 billion (-4% to +1%), improved from €9.5 to €10.0 billion
- Core EPS of €4.80 to €5.30, up from €4.50 to €5.00
- Free cash flow of €1.5 to €2.5 billion, unchanged
- Net financial debt of €31.0 to €32.0 billion, unchanged
However, the company expects significant foreign exchange headwinds to impact these figures, with estimated FX impacts of -2% to -4% on sales and -0.35 on core EPS.
Conclusion
Bayer’s Q2 2025 results demonstrate the company’s ability to navigate challenging market conditions while making progress on strategic priorities. The pharmaceutical division’s strong performance, particularly from growth products like Nubeqa and Kerendia, has enabled the company to upgrade its full-year outlook despite ongoing headwinds from Xarelto’s loss of exclusivity and foreign exchange impacts.
While the crop science division showed mixed results with strong performance in corn seeds offset by regulatory challenges, and consumer health remained flat amid challenging market conditions, the overall trajectory appears positive. The company continues to focus on deleveraging its balance sheet and advancing its innovation pipeline across divisions.
Investors will be watching closely to see if Bayer can maintain this momentum in the second half of 2025, particularly given the significant foreign exchange headwinds and ongoing litigation challenges that continue to weigh on the company’s valuation.
Full presentation:
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