Asset Sales, Cost Cuts Pose Challenge for New Bayer CFO
01 December 2018 - 2:55AM
Dow Jones News
By Nina Trentmann
Bayer AG's program of asset sales and cost-cutting is one of the
first big tasks for new finance chief Wolfgang Nickl as the drugs
and chemicals giant battles a decline in investor confidence
following its acquisition of Monsanto Co.
Leverkusen, Germany-based Bayer on Thursday announced it would
cut 12,000 jobs -- around 10% of its 118,200 strong global
workforce -- and dispose of its animal-health business, some
consumer brands and a 60% stake in chemical park operator Currenta.
Cost savings are forecast to amount to EUR2.6 billion ($3.0
billion) by 2022, Chief Executive Werner Baumann said during a call
with journalists.
Mr. Nickl -- who took on the role of Chief Financial Officer on
June 1 after a stint as CFO of ASML NV, a Dutch supplier of
machines for making computer chips -- will be involved with
executing the program and delivering synergies from the Monsanto
transaction, according to analysts.
Bayer hopes to generate around EUR1.0 billion in annual cost
savings through the integration of the U.S. pesticides maker, which
it agreed to buy in September 2016.
"This is a big challenge for the CFO," said Markus Mayer, an
analyst at Baader Bank AG. The tasks ahead for Mr. Nickl include
finding potential buyers for unwanted assets, reducing costs and
managing the integration of Monsanto, Mr. Mayer said.
Shares of Bayer have lost roughly a third of their value since
Aug. 10, when a San Francisco jury verdict found a Monsanto weed
killer responsible for a man's cancer. Bayer faced lawsuits from
9,300 plaintiffs at the end of the October, up from 8,700 at the
end of August, and is increasingly under pressure to justify the
benefits of the $63 billion transaction that was completed in early
June.
Some of the cut: announced job cuts will affect corporate and
support functions, business services and various country platforms,
a Bayer spokesman said. The company on Thursday said it will cut
5,500 to 6,000 jobs in this area.
While the divestment and restructuring initiative is spearheaded
by CEO Mr. Baumann, CFO Mr. Nickl will be key to its success, said
Daniel Wendorff, an analyst at Commerzbank AG.
Debt reduction should be a priority for Mr. Nickl as he reshapes
the 155-year old company, Mr. Wendorff added. Bayer has guided that
its debt pile will total EUR36 billion at the end of the year,
according to analysts at Jefferies International Ltd.
Bayer needs to pay off debt so that it can tap the capital
markets to finance the acquisition of smaller and medium-size
companies to boost its pharmaceuticals business, Mr. Wendorff
said.
Mr. Wendorff said such transactions could be worth between
EUR500 million and EUR5 billion.
Write to Nina Trentmann at Nina.Trentmann@wsj.com
(END) Dow Jones Newswires
November 30, 2018 10:40 ET (15:40 GMT)
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