In this week's C&EN (article by Alex Scott):
Bayer is restructuring Crop Science, its agrochemical and seed business, in a bid to “ensure the division’s global competitiveness” in the face of competition from low-cost Chinese generic products, Bayer says in a press release.
Measures the firm will take include closing a site in Frankfurt, Germany, by the end of 2028 that produces active ingredients and formulations for herbicides. An undisclosed number of the 500 plant workers at the site will move to locations in Dormagen and Knapsack, Germany, or Bayer’s other pesticide formulation sites, the company says. Bayer will relocate R&D staff at the Frankfurt site to Monheim am Rhein, Germany, where the firm already conducts R&D on insecticides and fungicides.
Additionally, Bayer says that by 2028 it will “streamline” its pesticide plant in Dormagen by discontinuing the production of generic active ingredients that are available elsewhere at significantly lower prices. The changes will result in the loss of about 200 of the 1,200 jobs at the site.
The planned restructure is a response to low-cost competition, especially from China, where the spot price of pesticide active ingredients has dropped by more than 20% in recent years, Bayer says.
Following a presentation by Bayer board members, BNP Paribas stock analyst Laurent Fevre asked whether pressure on profits in Bayer’s crop protection business could get worse. Crop Science president Rodrigo Santos’s response was that he does not expect the problem to go away anytime soon. “We do see competitive pricing pressure for the next quarters, as we have a significant build-up of capacity in China,” he said.
Sales in Bayer Crop Science’s division fell 3.3% in the first quarter of the year to $8.2 billion; pretax profits were down 10.2% to $2.6 billion.
I suppose I cannot be surprised by this, but it's got to be tough for Bayer. Best wishes to those affected, and to us all.