Bayer shares slip on dividend cut to tackle debt burden
Reuters
Published Feb 20, 2024 09:11
FRANKFURT (Reuters) - Bayer AG (ETR:BAYGN)'s shares slid in volatile trading on Tuesday after the drugmaker said it would slash its dividend over the next three years to reduce its debt.
Bayer said late on Monday it would propose a dividend of 0.11 euro ($0.12) for 2023, part of a three-year policy to pay out the legal minimum. That compares with 2.40 euros a year earlier, and expectations of a dividend of 1.92 euros, according to a consensus published on its website.
Analysts at Jefferies said the move "highlights the extent of the challenges (both operational and financial) facing the business" and that "further major strategic actions are required to restore the balance sheet" at Bayer.
The stock was down 0.9% at 0824 GMT after gaining as much as 1% earlier in the session.
Barclays (LON:BARC) analyst Emily Field said the move indicated that Bayer's management was receptive to investor concerns about its stressed balance sheet, adding that investors were seeking clarity on more structural measures to be announced at Bayer's capital markets day scheduled for March 5.
"One of our top priorities is reducing debt and increasing flexibility," Bayer Chief Executive Bill Anderson said. "Our amended dividend policy, which considered investor input and was not taken lightly, will help us do so."
Anderson has had a tumultuous start since taking the helm in June last year, as a wave of U.S. litigation about an alleged cancer-causing effect of Bayer's main weedkiller shows no sign of abating, even as regulators have declared it safe to use.
Bayer's pharmaceuticals division suffered a major setback last year in its bid to develop a next-generation anti-blood-clotting drug and the business outlook for its agriculture division has clouded.
Bayer had net debt of almost 39 billion euros ($42 billion) at the end of September, up 7.9% from a year earlier, and about 3.6 times the adjusted EBITDA expected for this year.
It has warned that it would not generate cash flow after investments in 2023, as it struggles to cut liabilities stemming from the $63 billion takeover of Monsanto (NYSE:MON) in 2018.
In January, Bayer announced management job cuts and in November it said it was weighing options to break apart the maker of prescription drugs, consumer health products, crop chemicals and seeds, in a bid to revive a battered share price.
Bayer's previous policy was to pay out 30% to 40% of adjusted earnings per share to shareholders.
Get The App
Last year, it paid out 2.36 billion euros in dividends for the 2022 business year.
Analysts at brokerage Baader estimated payouts over the next three years of 300 million euros, far below what would have been a combined 6 billion under the abandoned dividend policy.
($1 = 0.9284 euros)
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.