The shares of the German chemical and pharmaceutical group Bayer sunk 12.7% on the Frankfurt stock exchange. It happened after the company announced that it would assume an adverse impact of between 5,000 and 9,000 million euros. Since the value of its assets in the agribusiness deteriorated. Bayer also declared that it would introduce new cost-saving measures. These include headcount adjustments, lowering its earnings expectations for next year, as well as a slight drop in earnings per share.
Specifically, the German firm holdings have reached a minimum intraday price of 46.52 euros, compared to the 53.31 euros at which they finished the last day. They thus move at minimum prices not seen since March, when the coronavirus crashed Europe’s main stock exchanges.
Impact of the coronavirus
Bayer had previously announced a downward revision of its expectations for next year. This is a result of the impact of the pandemic on its activity. The agricultural segment has been affected mainly. The company anticipated that its sales would remain at levels similar to those of the current year. While its core earnings per share fell slightly below this year’s levels.
The multinational company warned that the pandemic’s direct and indirect effects would be more profound than expected in the agricultural business. It results from lower growth forecasts, low prices of raw materials, intense competition, and the drop in consumption of biofuels.
The situation is not likely to improve significantly in the short term, anticipated Bayer. The company expects to assume impairments in the value of assets in the agricultural business of between 5,000 and 9 billion euros.
The German company intends to partially offset the impact of these circumstances by implementing additional savings measures of more than 1,500 million euros per year by 2024 and the adjustment measures of 2,600 million for 2022, announced in November of 2018.
Bayer also plans to optimize its working capital and capital expenditures further.
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