In a meeting on Thursday, the Supervisory Board of Bayer AG discussed the plans laid out by the Board of Management and unanimously expressed their support. “We have made very good progress with Bayer’s strategic development in recent years. As we now proceed with these measures, we are laying the foundation to sustainably enhance Bayer’s performance and profitability,” said Werner Baumann, Chairman of the Board of Management of Bayer AG. “With these measures, we are positioning Bayer optimally for the future as a life science company.”
Focusing on core life science businesses
Bayer intends to advance the portfolio measures in 2019. The company intends to exit the Animal Health business and is assessing available options. Bayer intends to allocate the investment resources necessary to support Animal Health to Bayer’s core businesses of Pharmaceuticals, Consumer Health and Crop Science.
In addition to the previously announced divestment of prescription dermatology products, Bayer will review its strategic options in the coming months with a view to exiting the sun care (Coppertone) and foot care (Dr. Scholl’s) product lines.
Furthermore, Bayer is in discussions regarding the divestment of its 60-percent interest in German site services provider Currenta. Following the carve-out of Covestro, Bayer’s use of Currenta’s services no longer justifies this 60-percent stake.
12,000 jobs cut
Including the synergies expected from the acquisition of Monsanto, Bayer anticipates annual contributions of 2.6 billion euros from 2022 on as a result of its planned efficiency and structural measures. These measures will include a reduction of around 12,000 of 118,200 jobs worldwide, a significant number of them in Germany. Details will be worked out in the months ahead. The total one-time costs related to these measures are expected at a factor of 1.7 times the annual contributions. A portion of the freed-up funds are set to be used to strengthen innovation and competitiveness at the divisions. “Through the end of 2022 alone, we aim to invest a total of around 35 billion euros in our company’s future, with research and development (R&D) accounting for over two thirds of this figure and capital expenditures for just under one third,” Baumann said.
The reduction of around 12,000 jobs worldwide by the end of 2021 is accounted for by the various measures as follows: at Pharmaceuticals, approximately 900 jobs in R&D and around 350 positions in connection with the factor VIII facility in Wuppertal; roughly 1,100 jobs associated with the reorganization at Consumer Health; around 4,100 positions at Crop Science as the result of integrating the acquired agriculture business; and a further 5,500 to 6,000 jobs in the Corporate Functions, supporting functions, Business Services and country platforms.
At the Crop Science Division, the focus is on successfully integrating the acquired business. As previously communicated, Bayer expects synergies to deliver annual contributions of 1.04 billion euros (1.2 billion U.S. dollars) to EBITDA before special items as of 2022. This figure, which comprises 0.87 billion euros (1 billion U.S. dollars) in cost synergies, is included in the contribution target outlined above.
“These changes are necessary and lay the foundation for Bayer to enhance its performance and agility. With these measures, we aim to take full advantage of the growth potential for our businesses,” said Baumann. “We are aware of the gravity of these decisions for our employees. As in the past, we will implement the planned measures in a fair and responsible way.”