Bayer (BAYN, down 2.46%) reported a significant widening of its net loss for the fourth quarter, impacted by litigation expenses. The German agriculture and pharmaceutical conglomerate is working to resolve years-long legal disputes surrounding its Roundup herbicide.
The company's Chief Executive Officer, Bill Anderson, has committed to substantially containing litigation risks by the end of this year, aiming to regain investor trust.
Last month, Bayer proposed a national settlement plan in the United States, which includes payments of up to $7.25 billion over the next 20 years, with the majority of the amount to be paid early in 2026. This initiative seeks to end the uncertainty from litigation that has troubled the company for years.
Bayer stated on Wednesday that litigation costs drove its fourth-quarter net loss to 3.76 billion euros ($4.37 billion), compared to a net loss of 335 million euros in the same period last year. This result included 3.55 billion euros in special items, primarily related to litigation expenses.
The company also indicated that litigation payments this year will lead to a cash outflow of 1.5 to 2.5 billion euros, raising its year-end net debt to between 32 and 33 billion euros. Bayer had previously reduced its debt for two consecutive years, with net debt standing at 29.84 billion euros as of December 31, 2025.
While managing legal claims, Bayer is advancing the transformation of its agriculture and pharmaceutical businesses and continuing an organizational restructuring that has eliminated management layers and resulted in thousands of job cuts. The total workforce at the end of 2025 was approximately 88,100, a reduction of about 4,700 from the previous year.
Excluding special items, Bayer's quarterly earnings before interest, taxes, depreciation, and amortization (EBITDA) fell by 16% year-over-year to 1.97 billion euros. Declines were seen across all three main divisions: agriculture, pharmaceuticals, and consumer health.
Analysts surveyed by Vara Research had expected EBITDA of 1.92 billion euros.
The company stated that profitability in its agriculture division was affected by regulatory pressures, restructuring costs, and the absence of gains from the sale of non-core assets recorded in the prior year period. Bayer plans to improve profitability in this segment by streamlining operations, discontinuing dozens of products, and outsourcing the production of some ingredients.
In the pharmaceuticals division, the decline in adjusted profit reflected higher market entry costs following the recent launch of new drugs.
In recent quarters, Bayer's pharmaceutical business has been impacted by patent expirations for its anticoagulant Xarelto and eye drug Eylea. The company aims to offset this through rapid sales growth of its kidney disease drug Kerendia, prostate cancer drug Nubeqa, and menopause symptom drug Lynkuet.
Fourth-quarter sales decreased by 2.5% to 11.44 billion euros. Analysts had expected sales of 11.31 billion euros.
On a currency- and portfolio-adjusted basis, Bayer's sales increased by 2.9% year-over-year, with both the pharmaceutical and agriculture divisions achieving growth.
Outlook for 2026 (excluding currency effects): - Sales and earnings are expected to remain broadly stable. - Full-year sales are projected between 45 and 47 billion euros. - Full-year EBITDA before special items is forecast between 9.6 and 10.1 billion euros.