Bayer expects dynamic growth with higher profitability in the coming years and is accelerating its transformation

Bayer is setting its course for the future with a clear plan of action. The company is taking steps aimed at strengthening sales growth, profitability and free cash flow.

Speaking at the virtual Capital Markets Day on Wednesday, CEO Werner Baumann emphasized Bayer’s long-term growth perspectives: “Bayer is a leading life science company, uniquely positioned at the intersection of health and nutrition – with attractive prospects for growth, earnings and cash flow.”All three divisions are projected to contribute to the company’s success in the coming years, Baumann said. “At Crop Science we’re targeting above-market growth from 2022.”

Societal megatrends and the advancing biorevolution are increasing the dynamics of the markets in which Bayer operates. New opportunities are arising in agriculture. “New crop varieties that will decrease the plant’s need for fertilizer, crop protection or water will reduce the environmental impact of agriculture – while at the same time increasing yields,” he said.

In addition, new business models are being pioneered, with farmers paying for achieved results rather than individual products and being incentivized for sustainable practices, such as sequestering carbon into the soil. “We are in an excellent position to take advantage of the opportunities these dynamics present – for the benefit of the people who use our products and, through sustainable growth, for the benefit of our stockholders,” said Baumann.

Sustainability forms an integral part of Bayer’s business strategy, growth plans and incentive systems, Baumann stressed, citing as an example the company’s decision to become carbon-neutral by 2030.

Sales growth at Bayer is planned to regain momentum in 2021 and further accelerate in the years thereafter. By 2024, net sales are planned to reach 43 to 45 billion euros. The Crop Science Division is projected to grow at a currency- and portfolio-adjusted (Fx & portfolio adj.) rate of 3 to 5 percent annually from 2022 through 2024, and thus faster than the market.

“We have made strong progress in digital farming and with the regulatory approvals recently received for corn, soybeans and cotton. Both these aspects will help us accelerate growth going forward,” Baumann explained.These new approvals will enable an upgrading of soybean technology in the Americas with the launches of XtendFlex™ soybeans combined with the crop protection product XtendiMax™ in North America and Intacta2Xtend™ soybeans in Latin America.

In addition, strong growth is expected from the crop protection portfolio, with eight new formulations every year. Beyond 2021 numerous product introductions are planned, including several hundred new corn, soybean and vegetable varieties each year. The Crop Science pipeline contains groundbreaking innovations such as short-stature corn, soybeans that are tolerant to five different herbicides, and the industry’s first candidate for a new post-emergence total herbicide in 30 years.

Moreover, Crop Science has achieved a leading position with its FieldView™ digital farming platform. The system now has a penetration of 150 million acres and is continuing to grow rapidly.“Crop Science is the clear industry leader in innovation. More than any other company, we are pioneering digital transformation and sustainability in agriculture,” said Baumann.

The divisions show attractive mid-term earnings perspectives. Crop Science is planned to achieve an EBITDA margin before special items of between 27 and 29 percent by 2024 on the back of further efficiency improvements.