Bayer continues to face headwinds, and the company’s agricultural business is struggling. However, the company intends to meet its annual targets, says its management board halfway through the fiscal year. Meanwhile, cuts are being made to personnel costs.
The agrochemical and pharmaceutical company Bayer is making progress with its structural restructuring. “We have 3,200 fewer jobs in the group than at the beginning of the year,” said Bayer CEO Bill Anderson in Leverkusen. “And we have put together 900 teams to work on our most important tasks.” The number of jobs at Bayer fell to 96,600 worldwide by mid-year, between a quarter and a fifth of which are in Germany. The company has not disclosed the share of the job cuts already made in Germany.
The manager has been in charge of the traditional company for over a year, which is under pressure due to glyphosate lawsuits in the USA, expired drug patents and other developments. The share price is in the basement, and in the first half of the year sales fell by 2.1 percent to 24.9 billion euros. Without exchange rate effects, the increase was one percent.
Earnings before interest, taxes, depreciation and amortization, adjusted for special items, fell by 6.8 percent to 6.5 billion euros in the first half of the year, and even fell by 16.5 percent in the second quarter.
The bottom line is a loss of 34 million euros in the second quarter, after a loss of almost 1.9 billion a year ago. At that time, a write-off amounting to billions was necessary due to a sluggish glyphosate business. That was not the case in the past quarter, but the restructuring costs were quite high.
The business had its ups and downs: While business in the agricultural sector was difficult, new drugs provided a boost in the pharmaceutical sector – this offset the loss of sales of the blockbuster Xarelto, a blood-clotting inhibitor.
Management confirmed the previously given group forecast for the full year 2024. “We are well on the way to achieving our goals,” said the CEO.
More personal responsibility for employees
The American Anderson, who succeeded the hapless Werner Baumann as Bayer CEO, wants to get the company back on track with a radical restructuring of its structure. He believes that when he took office, the company was too hierarchically structured and that the work processes were partly inefficient.
There are up to twelve levels between him as CEO and the customer, he complained at the time, and then presented a new work structure in which employees should think more entrepreneurially and act more independently. They should have to answer to their superiors less and instead make their own decisions in order to speed up work processes in the company. This means that fewer managers are needed than superiors – these are the types of jobs that are being cut in particular, in the first half of the year there were around 2,500 of the total 3,200 jobs that were cut.
Fewer bosses and more doers
“In the old system, we had managers who sometimes managed three or five or seven people,” says Anderson, describing his most important project so far in his short tenure. “Now we usually have managers who manage 12, 15 or even 20 people.” Their management function is very limited, it is more about administration and career coaching.
The actual work, however, is now done by the other employees, who work together in changing teams and are close to the customer. “In the old system, we had marketing people and production people, all in their own silos,” says Anderson. “In the new system, these people are all together and they come together in teams around the customer.”
Focus on cost reduction
In addition to improving work processes, the new company structure is also about cutting costs for the heavily indebted group. In 2026, costs are expected to be reduced by two billion euros, mainly due to staff reductions, and this year they are expected to be reduced by 500 million. “We are on track for both goals,” says Anderson, adding that the restructuring is progressing faster than he had thought.
It is not yet clear how many more jobs will be cut, and there is no target figure. However, company boss Anderson makes it clear that the restructuring will proceed quickly.
Source: Stern
