BERLIN: German chemicals giant Bayer said on Monday (July 24) it would take a €2.5 billion (RM12.67 billion) writedown on the potentially carcinogenic herbicide glyphosate.
It warned that the writedown would push it into a €2 billion 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,” 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 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 European Union.
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, with sales dropping by 14% to €12.8 billion.
Bayer will release its detailed results for the second quarter on Aug 8.
For the entire year, Bayer now anticipates sales to decline to between €48.5 billion and €49.5 billion on a currency-adjusted basis.
Previously it had expected modest sales growth to between €51 billion and €52 billion from €50.7 billion in 2022 sales.
It now sees operating profit falling to between €11.3 billion and €11.8 billion in 2023. This is down from its previous forecast of €12.5 billion to €13 billion, and the €13.5 billion in operating profit posted last year. – AFP