By Helena Smolak

Bayer shares jumped after the company reported better-than-expected sales and adjusted earnings for the first quarter, with cost-cutting and demand for kidney and cancer drugs boosting its pharmaceutical business.

The German pharmaceutical and agricultural company said Tuesday that it expects to be able to manage the impact of tariffs and doesn't see a need to revise its guidance. A strong pharma performance in the first quarter means that the division's full-year results are likely to hit the upper end of its full-year guidance, it said.

Shares rose as much as 11% in European morning trading, taking the stock's year-to-date gain to 37%. Shares are down 7.4% in the past 12 months.

Bayer is in the midst of a major restructuring while it works to address U.S. legal cases over weedkiller Roundup and to reduce debt. It cut 2,000 jobs last quarter as part of the effort for a total of 11,000 since July 2023--or 11% of its global staff at the time--, Chief Executive Bill Anderson said in a call with reporters.

Anderson said cost-cutting contributed to a rise in adjusted earnings at Bayer's pharma business in the first quarter. The company is now looking to overhaul its agricultural business, which it calls crop science, and on Monday outlined plans to shed hundreds of jobs across the unit's German footprint in the coming years to boost profitability.

Bayer's CEO is betting on strengthening the company's pharmaceutical pipeline to offset a weakened performance in its agricultural business during what he called a challenging but important year for the company.

"In a more certain environment, we likely would have adjusted our guidance for pharmaceuticals upward," Anderson said. "But given the uncertainty around tariffs, we feel it's prudent to reaffirm what we said in March and closely monitor developments."

The company said it now expects sales growth and profit margin at its pharma division to come in at the upper end of its previously forecast range. This calls for full-year sales to decline by 1% to 4% and an earnings before interest, taxes, depreciation, amortization and special items--its closely watched profitability metric--margin of 23% to 26% excluding currency movements.

Tariffs should have limited direct effects on the group's crop-science segment but could hit pharma-product flows between the U.S. and China with additional risk for its European footprint, Bayer Chief Financial Officer Wolfgang Nickl said.

Overall, the group's first-quarter adjusted Ebitda declined to 4.085 billion euros ($4.53 billion) from 4.41 billion euros in the year-earlier period, it said. The result topped analysts' estimates of 3.82 billion euros.

Sales fell 0.2% to 13.74 billion euros as higher revenue of its pharma and consumer-health businesses could not fully offset a drop in crop science. This beat a consensus forecast of 13.41 billion euros.

On an adjusted basis, sales at Bayer's pharma division rose 4.1% to 4.55 billion euros, driven by higher sales of its new prostate cancer drug Nubeqa and its kidney disease treatment Kerendia that offset lower revenue from blockbuster blood-thinning drug Xarelto following its patent expiry.

Crop-science sales fell 3.3% on an adjusted basis due to lower volumes for herbicides and fungicides and amid regulatory challenges.

Net profit was 1.30 billion euros, down from 2 billion euros the previous year and below analysts' forecasts of 1.485 billion euros, according to a Vara Research consensus.

The company backed its currency-adjusted 2025 guidance, including the financial impact of tariffs.

Write to Helena Smolak at helena.smolak@wsj.com

(END) Dow Jones Newswires

May 13, 2025 04:07 ET (08:07 GMT)

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