Bayer Aktiengesellschaft Q1 Earnings Call Highlights

Key Points

• Bayer’s Q1 2026 results came in as expected, with group sales of about EUR 13.4 billion, core EPS of EUR 2.71, and EBITDA before special items of EUR 4.5 billion. Free cash flow was negative EUR 2.3 billion due largely to litigation-related payments.
• Crop Science was the main growth driver, with sales up nearly 7% year over year thanks in part to about EUR 450 million in soy licensing revenue. Excluding that boost, the core business still grew 1.4%, while Pharmaceuticals was flat and Consumer Health rose 5%.
• Litigation and cash outflows remain a major focus, with roughly EUR 2 billion paid in the quarter for PCB and glyphosate settlements and net financial debt rising to EUR 32.5 billion. Bayer said it is still on track to reaffirm its 2026 outlook, while continuing restructuring and legal containment efforts.

Bayer Aktiengesellschaft ETR: BAYN reported first-quarter 2026 results that management said were in line with expectations, as growth in Crop Science and Consumer Health offset flat performance in Pharmaceuticals and significant litigation-related cash outflows.

Chief Executive Officer Bill Anderson said Bayer posted group sales of about EUR 13.4 billion, up 4% on a currency- and portfolio-adjusted basis. Core earnings per share were EUR 2.71, also higher than the prior-year period. Free cash flow was negative EUR 2.3 billion, which Anderson said was consistent with the company’s outlook because “a significant portion” of litigation-related payments fell in the first quarter.

Chief Financial Officer Wolfgang Nickl, who said this was his final quarterly results presentation before handing over the role to Judith in June, said EBITDA before special items reached EUR 4.5 billion, up 9%, or about EUR 370 million, from the prior-year quarter. He said the increase was led by Crop Science.

Crop Science Leads Growth, Supported by Licensing Revenue

Anderson said Crop Science sales grew nearly 7% year over year, helped by roughly EUR 450 million in additional soy licensing resolution revenue that Bayer had previously communicated. Excluding that impact, he said the core business grew 1.4%, with strong corn growth offsetting expected declines in crop protection.

The Crop Science EBITDA margin was around 40%, with Anderson noting that the licensing resolution revenue helped, while higher-margin sales and operational efficiencies also contributed. Nickl said the licensing agreement involved two payments, one in the fourth quarter of last year and one in the first quarter of this year, and confirmed that the revenue was included in operating EBITDA.

In response to a question about the U.S. market for Plenexos, Anderson said Bayer hopes to bring the insecticide to U.S. farmers “very soon,” but tied the outlook to regulatory clarity and an expected U.S. Supreme Court ruling on federal preemption for pesticide labeling. He argued that without preemption, Bayer and other innovators would face uncertainty over whether federally approved labels carry weight.

Pharma Flat as Newer Medicines Offset Declines

Pharmaceuticals sales were roughly flat in the quarter. Anderson said continued momentum for Nubeqa and KERENDIA compensated for declines in Xarelto and Eylea. The Pharmaceuticals EBITDA margin was 29.2%.

Anderson highlighted KERENDIA’s growth in chronic kidney disease and type 2 diabetes, as well as heart failure, and said Bayer has presented data in chronic kidney disease and type 1 diabetes. He also said the company announced positive top-line data in non-diabetic patients, adding that, if approved in additional indications, KERENDIA could address a broader group of patients.

Bayer also discussed its agreement to acquire Perfuse Therapeutics, including a first-in-class development asset in glaucoma and diabetic retinopathy. Anderson said the deal complements Bayer’s ophthalmology footprint and expertise. Asked whether the transaction could signal more bolt-on acquisitions, Anderson said Bayer is interested in similar opportunities but will remain disciplined on price.

“We’re not willing to pay more than we believe something is worth,” Anderson said, adding that Bayer is interested in assets in areas where it has strong scientific understanding, while not ruling out new therapeutic areas.

Consumer Health Grows Despite Challenging Markets

Consumer Health sales grew 5%, with contributions from almost every category, Anderson said. Dermatology and Nutritionals posted double-digit growth, with Nutritionals benefiting from Bayer’s expanding e-commerce business. The division’s EBITDA margin was 22.6%, slightly below 2025.

Nickl said the market environment in Bayer’s two largest Consumer Health markets, the U.S. and China, remains challenging. He said U.S. market conditions weakened further in the first quarter, with expectations of an overall decline for the full year, but added that Bayer remained confident in delivering its full-year outlook.

Bayer Reiterates 2026 Outlook, Flags FX and Geopolitical Risks

Bayer reiterated its 2026 guidance at constant currencies. Nickl said the company is “on track” to deliver full-year guidance for each of its businesses, while continuing to monitor geopolitical developments and foreign exchange movements.

Nickl said Bayer experienced anticipated foreign exchange headwinds in the first quarter totaling about EUR 890 million on the top line and about EUR 320 million on the bottom line, mainly driven by the U.S. dollar. He said a point-in-time analysis using five-month forward rates as of April would imply about EUR 1 billion in net sales headwinds, about EUR 400 million in EBITDA before special items headwinds and roughly EUR 0.30 in core EPS headwinds.

On free cash flow, Nickl said the negative EUR 2.3 billion figure was EUR 800 million below the prior-year quarter, driven by approximately EUR 2 billion in payouts tied to previously announced settlement activities for PCB and glyphosate. In response to a question, he said about three-quarters of that amount went to plaintiff firms, while about one-quarter related to the class settlement went into a qualified settlement fund, which he described as similar to an escrow account.

Net financial debt increased to EUR 32.5 billion since year-end 2025 because of negative cash flow, though Nickl said it was down by about EUR 1.7 billion year over year.

Litigation, Restructuring and Strategy in Focus

Anderson said Bayer is in a “crucial phase” of its litigation containment efforts. He said the class settlement agreement announced with leading plaintiffs firms in February had passed several hurdles, with objections and opt-outs due by June 4 and a final approval hearing scheduled for July.

He also discussed the U.S. Supreme Court case involving federal preemption and pesticide labeling, saying Bayer’s arguments had been “well represented” and that the company would be ready for all outcomes. Asked whether Bayer could still significantly contain litigation this year if the court does not rule in its favor, Anderson said yes, citing the company’s multi-pronged strategy, including the class settlement and other legal and structural options.

On restructuring, Anderson said about 14,000 jobs had been reduced to date. He said the company had completed the “big structural phase” of its organizational changes, including reducing hierarchy to six to seven layers across the organization, but added that work to improve the organization would continue.

Asked about the 10-year anniversary of Bayer’s announcement to acquire Monsanto, Anderson said Bayer now has a Crop Science business combining seeds, crop protection and digital farming. He added that “the financial terms obviously didn’t include litigation” and said there were lessons from that standpoint.

Management said Bayer remains focused on executing its 2026 commitments. “We’re pleased with how our businesses started the year, and we’re in a good position to confirm our 2026 outlook,” Anderson said.

About Bayer Aktiengesellschaft ETR: BAYN

Bayer Aktiengesellschaft, together its subsidiaries, operates as a life science company worldwide. It operates through Pharmaceuticals, Consumer Health, and Crop Science segments. The Pharmaceuticals segment offers prescription products primarily for cardiology and women's health care; specialty therapeutics in the areas of oncology, hematology, and ophthalmology; and diagnostic imaging equipment and digital solutions, and contrast agents, as well as cell and gene therapy. The Consumer Health segment markets nonprescription over-the-counter medicines for self-medication and self-care; and solutions for nutritional supplements, allergy, cough and cold, dermatology, pain and cardiovascular risk prevention, and digestive health.

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