Bayer To Cut 12,000 Jobs Worldwide

(RTTNews) - Bayer (BAYZF.PK, BAYRY.PK, BYR.L) plans to cut about 12,000 jobs worldwide by the end of 2021, under its restructuring programme. It plans to exit Animal Health business, the Consumer Health brands Coppertone and Dr. Scholl's, and sell its 60-percent interest in Currenta, a site services provider in Germany.

Bayer anticipates annual contributions of 2.6 billion euros from 2022 on as a result of its planned efficiency and structural measures, including the synergies expected from the acquisition of Monsanto. Core earnings per share are expected to increase by around 1 euro to 6.80 euros in 2019, with a target of around 10 euros in 2022.

The Bayer Group noted that it aims to strengthen its core life science businesses through a series of portfolio, efficiency and structural measures.

In a meeting on Thursday, the Supervisory Board of Bayer AG discussed the plans laid out by the Board of Management and unanimously expressed their support. "We have made very good progress with Bayer's strategic development in recent years. As we now proceed with these measures, we are laying the foundation to sustainably enhance Bayer's performance and profitability," said Werner Baumann, Chairman of the Board of Management of Bayer AG.

The company said it intends to exit the Animal Health business and is assessing available options. It intends to allocate the investment resources necessary to support Animal Health to Bayer's core businesses of Pharmaceuticals, Consumer Health and Crop Science.

The company noted that it has initiated measures to enable the Consumer Health division to catch up to market growth in the coming years and improve profitability. These measures include a planned exit from product categories that have more favorable development potential outside of Bayer. In addition to the previously announced divestment of prescription dermatology products, Bayer will review its strategic options in the coming months with a view to exiting the sun care (Coppertone) and foot care (Dr. Scholl's) product lines. The company intends to focus on driving profitable growth in its core Consumer Health categories.

In addition, Bayer said it is in discussions regarding the divestment of its 60-percent interest in German site services provider Currenta.

Bayer anticipates annual contributions of 2.6 billion euros from 2022 on as a result of its planned efficiency and structural measures, Including the synergies expected from the acquisition of Monsanto.. The measures will include a reduction of around 12,000 of 118,200 jobs worldwide, a significant number of them in Germany. Details will be worked out in the months ahead. The total one-time costs related to these measures are expected at a factor of 1.7 times the annual contributions. A portion of the freed-up funds are set to be used to strengthen innovation and competitiveness at the divisions.

The planned reduction of around 12,000 jobs worldwide by the end of 2021 is accounted for by the various measures: at Pharmaceuticals, approximately 900 jobs in R&D and around 350 positions in connection with the factor VIII facility in Wuppertal; roughly 1,100 jobs associated with the reorganization at Consumer Health; around 4,100 positions at Crop Science as the result of integrating the acquired agriculture business; and a further 5,500 to 6,000 jobs in the Corporate Functions, supporting functions, Business Services and country platforms.

"Through the end of 2022 alone, we aim to invest a total of around 35 billion euros in our company's future, with research and development (R&D) accounting for over two thirds of this figure and capital expenditures for just under one third," Baumann said.

The company expects core earnings per share of 6.80 euros in 2019, with a target of around 10 euros in 2022. It projects core earnings per share of 5.70 euros to 5.90 euros in 2018.

Bayer stated that its corporate strategy, financial targets and capital allocation priorities will be outlined at the Capital Markets Day in London on December 5.

In the hemophilia business, the Bayer has decided not to utilize the factor VIII facility it has built in Wuppertal, Germany, and to focus all recombinant factor VIII production in Berkeley, United States.

At the Consumer Health Division, measures will be initiated to catch up to market growth in the coming years and improve profitability. Beyond the planned portfolio measures, the organizational structure will be adapted to succeed in a rapidly changing market environment.

At the Consumer Health and Pharmaceuticals divisions, non-cash impairments and write-offs totaling approximately 3.3 billion euros are anticipated in the fourth quarter of 2018. At Consumer Health, these primarily concern brands acquired with the Merck & Co. and Dihon businesses as well as some of the goodwill recognized in the balance sheet (totaling some 2.7 billion euros). In the case of Pharmaceuticals, impairments and write-offs of around 0.6 billion euros are due especially to the decision regarding the factor VIII facility in Wuppertal.

At the Crop Science Division, the focus is on successfully integrating the acquired business. Bayer expects synergies to deliver annual contributions of 1.04 billion euros or $1.2 billion to EBITDA before special items as of 2022. This figure, which comprises 0.87 billion euros or $1 billion in cost synergies, is included in the contribution target.