(RTTNews) – Bayer (BAYZF.PK, BAYRY.PK, BYR.L) plans to cut more than 1.5 billion euros of annual costs as of 2024. The company may cut jobs and plans to exit non-strategic businesses or brands, as the coronavirus pandemic impacts its businesses. It expects to take a non-cash impairment charges on agricultural business, due to low commodity prices.
The new cost-savings program comes on top of annual savings of 2.6 billion euros as of 2022, which were announced in November 2018.
According to the company, the new cost-savings measures are currently in the early stages of development. The company will discuss with the relevant internal bodies, including employee representatives, and announce its final decision once it finalized.
The company plans to leave its dividend policy unchanged. But it expects payouts in coming years to be at the lower end of 30 percent – 40 percent of core earnings per share, rather than at the upper end in previous years.
Bayer confirmed its adjusted outlook for 2020 and expects 2021 sales at about 2020 levels despite significant headwinds from the COVID-19 pandemic, especially in the agricultural market.
The company anticipates core earnings per share in 2021 to be slightly below 2020 levels at constant exchange rates.
The company predicts growth and cash flow generation for 2021 to be lower than planned, noting that it can only be partially compensated by further savings measures.
The company anticipates the effects of pandemic will be deeper than expected on the Crop Science business. The agricultural sector is characterized by reduced growth expectations due to low commodity prices for major crops, intense competition in soy, and reduced biofuel consumption.
Bayer expects to take non-cash impairment charges in the mid to high-single-digit billion-euros range on assets in the agricultural business.
The Pharmaceuticals business is anticipated to return to growth in 2021.
The Consumer Health business has shown strong business performance and expects to outpace peer growth in the coming years. The division will complement its organic growth with smaller bolt-on acquisitions and in-licensing opportunities in high-potential segments over the coming years.
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