Bayer anticipates improvement in 2026 after profit decline this year

FRANKFURT, Germany — Bayer on Wednesday raised the prospect of a return to earnings growth from 2026 after a decline this year, lifting its shares to a four-month high as its CEO somewhat allayed investor impatience with his turnaround efforts.

The German maker of drugs and farming pesticides said 2025 would be the most difficult in terms of financial performance, with net sales roughly in line with the prior year and a drop in earnings and free cash flow.

“The company expects improved performance from 2026 onwards,” it added.

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

Beyond 2026, Bayer said it was targeting an adjusted operating margin percentage in the “mid-twenties” at its Crop Science division by 2029, up from 19.4 percent last year.

“The 2025 guidance is not particularly encouraging, but the company’s longer-term outlook and plans to address key issues offer some hope for future improvement,” Deutsche Bank analysts said in a note.

The CEO is cutting managerial jobs, speeding up decision-making, and slashing red tape. Anderson reaffirmed on Wednesday he would hold off on any plans to break up Bayer’s diversified businesses for another one or two years.

The group, which is grappling with costly U.S. product liability litigation over its weedkiller Roundup, said on Wednesday it had slashed 7,000 jobs last year and cutbacks would continue.

Many of those liability cases allege that Roundup causes cancer, and Bayer has already settled a significant number of them for $10.9 billion. However, the company still faces approximately 57,000 unresolved cases, and its total exposure to litigation could exceed the $16 billion it has set aside.

For the fourth quarter of last year, Bayer reported a 22 percent fall in earnings before interest, taxes, depreciation and amortisation (EBITDA), adjusted for one-off items, to 2.35 billion euros ($2.50 billion), beating a company-provided consensus of 2.27 billion euros.

It forecast adjusted EBITDA of between 9.3 billion and 9.8 billion euros this year, based on end-2024 foreign exchange rates. That was down from 10.1 billion in 2024 and compares with a market consensus of 9.4 billion.

Reporting by Ludwig Burger; Additional reporting by Patricia Weiss, Editing by Miranda Murray and Jane Merriman, Kirsten Donovan