(new: share price updated, details on lobbying in the USA, Deutsche Bank analyst, details on Eylea)

LEVERKUSEN (dpa-AFX) - Bayer is making progress with its corporate restructuring. More than 3,000 jobs have been cut since the beginning of the year. There is light and shade in day-to-day business. In the second quarter, the DAX-listed company once again felt the effects of a partly difficult agricultural business. In the pharmaceuticals division, new drugs provided a tailwind and thus compensated for lower revenues with the bestseller Xarelto. CEO Bill Anderson is now taking a slightly more cautious view of the agricultural business for 2024 and a slightly more confident view of the pharma division. He confirmed the Group's annual targets on Tuesday. Nevertheless, analysts were only partially convinced by the quarterly figures. The Bayer share price came under pressure.

Although the anticoagulant Xarelto remains the company's biggest sales driver in the Pharmaceuticals division, its revenues fell below the one billion euro mark in the second quarter due to growing competition from generics. Further strong growth in Nubeqa for prostate cancer and the kidney drug Kerendia for diabetics helped to compensate for this. In addition, a further indication could drive the growth of Kerendia: At the start of the week, Bayer presented positive study data for the treatment of a type of heart failure.

New drugs and the established eye medicine Eylea - Bayer's second-biggest pharmaceutical sales driver - should help to partially offset the pressure on Xarelto, which is likely to increase in the further course of the year, said CFO Wolfgang Nickl in a conference call with journalists. Bayer is currently introducing a higher dosage of Eylea. This should also convince new patients, as it needs to be injected into the eye less frequently. All in all, the pharma division is now expected to grow by 0 and 3 percent in 2024, instead of shrinking by up to 4 percent as previously expected.

For the Agriculture division, Nickl expects "to reach the lower end of the guidance for sales growth and margin in view of the headwind from market developments." The strong growth in the core business in the second half of the year is likely to be dampened by a significant decline in volumes of the weedkiller glyphosate. Profitability should also be helped by lower production costs and savings from the ongoing restructuring. When he took office just over a year ago, Bayer CEO Anderson emphasized that he wanted to focus more on customers and products.

From 2026, two billion euros are to be saved annually, 500 million of which in the current year. "We are on course to achieve both goals," said Anderson. The implementation of the new organizational model is progressing rapidly.

"We have 3,200 fewer jobs in the Group than at the beginning of the year. And we have put together 900 teams to work on our most important tasks." At the end of June, Bayer still employed a total of just under 96,600 people in full-time equivalents. The new approach primarily affects management positions.

Looking at the second quarter, Group sales rose by just under one percent year-on-year to EUR 11.14 billion. Excluding exchange rate effects, this represents an increase of a good 3 percent. However, earnings before interest, taxes, depreciation and amortization adjusted for special effects fell by 16.5 percent to 2.1 billion euros.

The decline resulted from a less profitable product mix. In addition, Bayer had to set aside less money for the short-term incentive system for employees a year ago - also due to a profit warning at the time. Overall, the pharmaceutical and agrochemical company exceeded analysts' expectations in the second quarter.

The bottom line is a loss of 34 million euros - after a loss of just under 1.9 billion a year ago. At that time, a sluggish glyphosate business also necessitated a write-down in the billions. This was not the case in the past quarter, but Bayer spent more on restructuring than a year ago.

For analyst Falko Friedrichs from Deutsche Bank, the results are better than expected at first glance, but at second glance he also sees shadows and not just light. Sales growth from own resources was meagre and the operating profit margin fell. The agricultural business in particular remains sluggish. Although the confirmation of the annual targets is positive, according to Friedrichs, the exchange rate development has gone in the wrong direction for Bayer. Slight reductions in the average estimates for 2024 are therefore still possible.

For the full year, Anderson is still targeting earnings before interest, taxes, depreciation and amortization (EBITDA) adjusted for special items of EUR 10.2 to 10.8 billion. On a constant currency basis, the target operating result is EUR 10.7 to 11.3 billion.

Bayer shares initially rose in the morning, but then turned negative. In the afternoon, they were among the biggest losers on the DAX, down 2.7 percent to 26.23 euros, which fell moderately. In the longer term, things look even gloomier for Bayer shareholders: a year ago, the shares had still cost more than EUR 50, 2028 before the first defeat in a US trial concerning the alleged cancer risks of weed killers containing glyphosate.

The issue is still not off the table, nor are the equally expensive US legal disputes surrounding the environmental toxin PCB, which has been banned for decades. Both are the legacy of the agrochemical company Monsanto, which was acquired in 2018. Nevertheless, there has recently been some progress and positive court rulings for the Leverkusen-based company on both issues.

Bayer has also been lobbying for legislative changes for some time. "We continue to focus on both national and state legislation and are committed to the early passage of a bill in Congress" to provide certainty for farmers, Anderson emphasized on Tuesday.

Under pressure from the multi-billion dollar legal disputes, Bayer cut its dividend at the beginning of the year. For three years, only the legally required minimum will be paid out. This should help to pay off the high debts. At the end of June, net debt fell by a good 7 percent year-on-year to just under 36.8 billion euros.

The free cash inflow of almost 1.3 billion euros also helped, following the outflow of funds a year ago. Free cash flow of 2 to 3 billion euros is still planned for the year as a whole./mis/ngu/he