Bayer Shares Fluctuate Amid Dividend Cut to Reduce Debt

Bayer's shares experienced a decline on Tuesday before rebounding after the announcement of a dividend cut aimed at reducing the company's debt. This move is part of Bayer's efforts to revamp its operations following challenges stemming from its acquisition of Monsanto for $63 billion.

Financial Update

At 0911 GMT, Bayer shares showed a 0.2% increase, reaching EUR28.95, bouncing back from earlier losses. The stock had dropped by half compared to the previous year's value as of Monday's closing.

Restructuring Efforts

The decision to restructure operations and lower the shareholder payout was prompted by the debt burden incurred from the Monsanto deal in 2018. Additionally, legal issues linked to the weedkiller Roundup, such as consumer lawsuits, added to Bayer's challenges.

Future Plans

Contrary to previous speculation about a split, Bayer dismissed the idea of dividing its crop-sciences, pharma, and consumer-healthcare units in November. The company is currently focused on implementing a new operational model as part of its restructuring efforts. Chief Executive Bill Anderson emphasized that the goal is to enhance operational performance and agility through significant job reductions.

Upcoming Capital Markets Day

Bayer is set to hold a capital markets day next month where further details about its new operating model and restructuring plans will be discussed. This strategic approach aims to steer the company toward a more efficient and streamlined future.

Bayer to Change Dividend Policy Amid Financial Challenges

Bayer, a renowned company known for products such as aspirin, recently announced a shift in its dividend policy due to high levels of debt, soaring interest rates, and a demanding cash-flow situation.

Adjustments in Dividend Payouts

In an effort to address these financial obstacles, Bayer disclosed its plan to adjust the dividend payouts over the next three years. The company is proposing a significant reduction in dividends, with the 2023 payout expected to be 0.11 euros (equivalent to 12 U.S. cents) per share, down from EUR2.40 in 2022.

Investor Response and Strategic Direction

While industry analysts had anticipated a higher dividend for 2023, Bayer emphasized the importance of reducing debt and enhancing financial flexibility through this revised policy. CEO Anderson highlighted that this decision was not made lightly and aimed at aligning with investor feedback.

According to Jefferies analysts, the dividend cut will alleviate cash outflow by EUR2.3 billion annually. Despite being seen as a positive step, there is recognition of the substantial operational and financial hurdles that Bayer still needs to overcome. Further strategic measures are deemed necessary to reinforce the company's balance sheet.

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