REGN - Bayer's Q4 sales grow on back of crop products pharma declines; FY23 EPS to see impact

Bayer's ( OTCPK:BAYRY ) ( OTCPK:BAYZF ) Q4 earnings and sales were driven by Crop Science and Consumer Health but Pharmaceuticals saw a decline.

Meanwhile, the company noted that it expects FY 2023 earnings to be below previous year due to inflation and price factors.

Q4 core EPS grew +7.1 Y/Y on reported basis to €1.35.

Group sales grew +7.9% Y/Y (or +4.1% on a currency and portfolio-adjusted basis, or Fx & portfolio adj.) to ~€12B.

Full year 2022 sales increased +15.1% Y/Y (+8.7% on Fx & portfolio adj.) to ~€50.74B.

Werner Baumann, chairman of the board of management said, "2022 was a very successful year for Bayer despite the challenging environment. We were able to deliver, even during these difficult times, and met the upgraded financial targets we set in August."

Sales from Crop Science business in Q4 increased +18.7.% Y/Y (+11.4% on Fx & portfolio adj.) to ~€5.57B.

For full year 2022 sales from Crop Science grew +24.6% Y/Y (+15.6% on Fx & portfolio adj.) to ~€25.17B.

Bayer said full year 2022 growth was strongest at Herbicides, which saw sales rise in Latin and North America and in Europe/Middle East/Africa mainly due to higher prices, as supply for glyphosate-based products was tight.

Meanwhile, sales at Corn Seed & Traits rose as the division increased its market share. Price increases in all regions more than offset a decrease in acreages in North America and lower license revenues.

Q4 sales in Herbicides grew +26.6% Y/Y (+16.8% Y/Y on Fx & portfolio adj. basis) to ~€1.65B. Full year sales increased  +56.3% Y/Y (+43.9% Y/Y on Fx & portfolio adj. basis) to ~€8.33B.

Sales at Corn Seed & Traits in Q4 climbed +38% Y/Y (+23.6% on Fx & portfolio adj. basis) to €1.44B. For 2022 sales increased +18% Y/Y ( +8.8% on Fx & portfolio adj. basis) to €6.09B.

For Q4, sales from the Pharmaceuticals division declined -1.9% Y/Y (-2.8% on Fx & portfolio adj.) to ~€4.86B. Full year sales increased +4.9% Y/Y (+1.1% on Fx & portfolio adj.) to ~€19.25B.

Bayer noted that over half a billion euros in sales came from the division's new products: cancer drug Nubeqa and Kerendia for chronic kidney disease linked with type 2 diabetes. Strong growth was also seen for eye drug Eylea and in the radiology business, which includes the Gadovist and Ultravist.

However, this was partially offset by declines due to factors such as additional tender procedures in China, especially for blood clot prevention therapy Xarelto and cancer drug Nexavar. Xarelto sales were also impacted by price pressure in the U.K and the expiration of the patent in Brazil, the company added.

In Q4 Xarelto sales fell -3.4% Y/Y (-3.7% on Fx & portfolio adj.) to ~€1.12B. For 2022, sales declined -4.6% Y/Y (-5.8% on Fx & portfolio adj.) to ~€4.52B.

Sales of wet-AMD drug Eylea , developed with Regeneron ( REGN ), grew +6.6% Y/Y (+7.7% Fx & portfolio adj.) to €821M. For full year, sales increased +10.1% Y/Y (+9.2% Fx & portfolio adj.) to €3.21B.

Prostate cancer drug Nubeqa sales in Q4 grew +129% Y/Y (+116% Fx & portfolio adj.) to €158M.

Gadovist product family sales fell in Q4 -5.4% Y/Y (-5.1% Fx & portfolio adj.) to €106M. However, sales grew in full year 2022, +12.2% Y/Y (+9.0% Fx & portfolio adj.) to €469M.

Birth control product Mirena /Kyleena/Jaydess sales increased +6% Y/Y (but fell -1.9% Fx & portfolio adj.) to €299M.

Sales from Consumer Health segment grew +8.5% Y/Y (+5.8% Fx & portfolio adj.) to ~€1.52B. For 2022, sales grew +14.9% Y/Y (+8.4% Fx & portfolio adj.) to ~€6.08B.

Dividend : The company said it is proposing a dividend of 2.40 euros per share, a 20% increase compared to the previous year.

Outlook :

Bayer said as regards to earnings in 2023, growth-driven margin contributions and positive effects from ongoing efficiency programs will not be enough to offset the expected decline in prices and high inflation-driven cost increases, which are expected to continue.

"Following two consecutive years of high single-digit percentage growth rates, we expect our business to remain at a high level and grow by two to three percent in 2023 on a currency- and portfolio-adjusted basis," said Baumann

On a currency-adjusted basis, Bayer expects sales between €51B and €52B in 2023.

The company expects core EPS of €7.20 to €7.40 (Fx adj.) and free cash flow of about €3B (Fx adj.).

Bayer expects s EBITDA before special items of €12.5B to €13B on a (Fx adj.).

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