By Bayer, one of the leading pharmaceutical companies, is set to announce its second quarter results on Tuesday. Here are the key points to keep an eye on:
Sales Forecast
In its preliminary figures released on July 24, Bayer projected second-quarter sales to reach around 11 billion euros ($12.11 billion). However, a FactSet consensus suggests that sales might be slightly lower at EUR11.60 billion, compared to EUR12.82 billion in the previous year.
EBITDA Before Special Items Forecast
Bayer’s preliminary results indicate a decrease in EBITDA before special items for the quarter, estimated to be around EUR2.5 billion. This is a drop from EUR3.35 billion recorded in the prior year. The FactSet consensus aligns with Bayer’s forecast, estimating it at EUR2.46 billion.
What to Keep an Eye On
Crop Science
Lower glyphosate prices and unfavorable weather conditions were among the main factors that contributed to Bayer lowering its group guidance on July 24. Although the company didn’t provide forecasts at the divisional level, it would be surprising if Bayer didn’t adjust its guidance for the agricultural division. Jefferies analysts express this viewpoint in a note. Warnings from peers and companies participating in the same supply chain, such as BASF, Croda, and Lanxess, have highlighted the challenge of de-stocking in the Crop Science business.
Pharma
Considering that it had already become apparent during first-quarter results that margins were difficult to bridge, Jefferies analysts suggest that Bayer could adjust its guidance for the pharmaceutical division. According to FactSet estimates, pharmaceutical sales are expected to have slightly declined in the second quarter to EUR4.70 billion from EUR4.82 billion the previous year.
Bayer Lowers Full-Year Guidance
Bayer recently announced a downward adjustment in its full-year guidance, causing analysts to scrutinize the implications. In a note, UBS analysts point out that the market will now focus on whether this adjustment has effectively eliminated all potential risks. The company now anticipates a free cash flow of approximately minus EUR0.5 billion. Surprisingly, investors seem to be giving more weight to this development rather than the downward adjustment in Ebitda forecasts. While the CEO will be hosting a call, analysts suggest that we may not receive any significant strategic commentary until early next year.
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