Bayer announces 2.5-bn-euro writedown over herbicide glyphosate

BERLIN: German chemicals giant Bayer said Monday it would take a huge 2.5-billion-euro ($2.8 billion) writedown on the potentially carcinogenic herbicide glyphosate.

It warned that the writedown would push it into a 2.0-billion-euro net loss for the second quarter, and lowered its annual outlook.

In a statement ahead of its formal results statement to be released next month, Bayer said the past few months had seen further price declines and destocking, especially for glyphosate-based products, plus adverse weather conditions.

“Based on the anticipated market development, in particular with respect to the glyphosate business, Bayer also expects to record a goodwill impairment of approximately 2.5 billion euros,” it said.

A goodwill impairment is a reduction in what the company values its assets at and it impacts on the company’s current earnings.

“This will result in negative Group net income of approximately 2 billion euros for the second quarter of 2023,” it said.

The European Food Safety Authority said earlier this month it had not found “any critical areas of concern” preventing the controversial and widely used herbicide glyphosate from being reauthorised for use in the EU.

Environmental groups lashed out at the announcement, saying there was scientific evidence that glyphosate may cause cancer, poison aquatic life and can be fatal to key pollinators like bees.

The substance has been deemed a “probable” carcinogen by the International Agency for Research on Cancer.

Bayer also said it expects second quarter operating earnings to drop by a quarter to 2.5 billion euros, with sales dropping by 14 percent to 12.8 billion.

Bayer will release its detailed results for the second quarter on August 8.

For the entire year, Bayer now anticipates sales to decline to between 48.5 billion and 49.5 billion euros on a currency-adjusted basis.

Previously it had expected modest sales growth to between 51 billion to 52 billion euros from 50.7 billion in 2022 sales.

It now sees operating profits falling to between 11.3 billion and 11.8 billion euros in 2023. This is down from its previous forecast of 12.5 billion to 13.0 billion euros, and the 13.5 billion euros in operating profits posted last year.