Investors put pressure on Bayer’s CEO Bill Anderson ahead of Q4 2024 results

As Bayer prepares to unveil its fourth-quarter earnings this Wednesday, CEO Bill Anderson finds himself under increasing scrutiny from investors eager for progress in the company’s turnaround efforts, according to a Reuters report. Amid a backdrop of managerial job cuts, expedited decision-making, and reduced bureaucracy, Anderson has temporarily shelved plans to segment Bayer’s diverse operations. However, shareholders remain skeptical about the pace and effectiveness of these reforms.

Since assuming leadership in mid-2023, Anderson has grappled with costly U.S. litigation concerning allegations that Bayer’s herbicide glyphosate is carcinogenic. Compounding these challenges, a promising blood thinner failed in clinical trials last year, significantly impacting Bayer’s pharmaceutical development.

The company, a major player in pharmaceuticals and agricultural chemicals, has also been affected by downturns in global agricultural markets, which are crucial to the profitability of Bayer’s Crop Science unit. This has led to predictions of continued earnings declines into 2025.

Ingo Speich, head of sustainability and corporate governance at Deka, a Bayer shareholder, expressed a common sentiment among investors: “We want to see successes that will actually support the share price. By the end of the year, Anderson will have been chief executive for almost three years. If a CEO cannot make an impact over such a period of time, he will not be the right one for the job.”

Portfolio manager Markus Manns of Union Investment echoed these concerns, acknowledging some positive steps by Anderson but emphasizing the need for more substantial results. The upcoming earnings report is considered one of Anderson’s final opportunities to steer the company in a new direction.

The broader market has shown some positive signs, with competitors like Corteva and BASF experiencing gains in the fourth quarter. However, Bayer’s specific challenges, such as delays in U.S. approval for a new generation of soy seeds paired with the Dicamba herbicide, are expected to adversely affect earnings.

Analysts predict a 25% decline in fourth-quarter earnings from the previous year, with 2025’s adjusted operating income expected to decrease further. Bayer’s acquisition of Monsanto in 2018, a $63 billion deal made by Anderson’s predecessor, continues to burden the company with debt, although a slight reduction is forecasted for the end of 2024.

Despite these hurdles, Anderson remains optimistic, citing strong launches of new drugs in the pharmaceutical division, although the bestselling blood-thinner Xarelto faces challenges due to expiring patents. Bayer’s CEO maintains that the company is on course for a “bright future,” striving to mitigate litigation risks and enhance operational efficiency.