The German industrial chemicals giant has said that its Agricultural Solutions unit should be ready by 2027 for an initial public offering that could see BASF sell a minority stake in the maker of pesticides and seeds.

Hybrid wheat

“We aim to further increase our share of revenue from seeds. We are at close to 22 per cent and we want to move more towards 25 per cent,” Livio Tedeschi, the division’s president, told Reuters.

Among new products underpinning that ambition, BASF is working on hybrid wheat, an approach that has for years been pursued by the industry to boost wheat yields, and new soy variants that resist pests such as soil roundworms.

Tedeschi said this was a high strategic priority and it could be supported by collaboration deals and small acquisitions.

Increasing Asia market share

A particular geographic focus across products including crop chemicals and digital services was Asia, he added.

“When measured by market share, we are under-represented in Asia. We want to increase our market share,” said Tedeschi.

BASF’s agriculture business, among the four largest industry players alongside Syngenta, Bayer and Corteva, posted global 2024 sales of 9.8 billion euros (C$15.4 billion), with Asia accounting for 11.6 per cent of that.

From North America, Europe and South America it derived 39.8 per cent, 24.6 per cent and 24 per cent of sales, respectively.

Parent BASF last week said it was facing high levels of uncertainty from U.S. tariffs and other countries’ reactions to them, but reaffirmed its earnings guidance for lack of clearer economic indicators.

Tedeschi added that BASF’s decision to separate the agriculture unit from the rest of the business gave the unit more autonomy and would allow it to sustain research and development spending at nine to 10 per cent of sales.

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The agriculture and pharma group said on Tuesday that weak farmers’ demand would likely translate into lower earnings next year. The warning sparked a 14.5 per cent drop in the German company’s shares, which continued a long streak of underperformance largely due to the 2018 takeover of Monsanto.

Anderson has started cutting managerial jobs, speeding up decision-making and slashing red tape to turn around the embattled industrial group, while putting on hold plans to break up its diversified businesses.

But top-20 shareholder Deka Investment said those moves have had little impact on recent results and the outlook.

“The restructuring programme has to have an effect on revenues or costs. Otherwise shareholders’ patience with management will be put to a hard test,” said Ingo Speich, Deka’s head of sustainability and corporate governance.

Some of Bayer’s troubles are tied to industry trends such as slumping farmer incomes that are also hitting rivals BASF and Corteva. But a delay in U.S. approval of a new generation of soy seeds was specific to Bayer and is likely to dent 2025 earnings, its quarterly report showed this week.

Markus Manns, a portfolio manager at mutual funds firm Union Investment, another Bayer shareholder, said Anderson’s cost-cutting was the right direction but more needed to be done.

“The next steps need to follow: the strengthening of the pharma pipeline and securing long-term and stable growth,” said Manns. He also criticised management for not projecting when the earnings decline would bottom out.

Bayer declined to comment.

Bayer’s warning that earnings would likely fall again next year contrasted with an earlier average analyst projection of a three per cent increase in 2025 adjusted earnings.

Bayer’s $63-billion (C$88.8 billion) purchase of U.S. seeds and pesticides maker Monsanto under Anderson’s predecessor was a long-term bet on robust growth in farming supplies that has misfired.

Debt and costly U.S. product-liability litigation over disputed claims that Monsanto weedkiller Roundup causes cancer are further burdens Anderson is struggling to shake off.

The CEO vowed on Tuesday the company would do more to contain litigation uncertainty and boost operational performance, on its way to a “bright future”.

He pointed to strong launches of the pharmaceutical unit’s new drugs, Nubeqa for prostate cancer and Kerendia for kidney disease, but bestselling blood-thinner Xarelto is in decline as it loses patent protection.

Analysts at brokerage BMO Capital Markets said in a note that even though the stock looked attractively valued as a multiple of earnings, no buy recommendation could be given with earnings still contracting.

Bayer’s shares trade at 3.9 times estimated forward earnings over the next 12 months, well below BASF at 11.5 and Corteva at 18.7 times, LSEG data shows. The ratio is used to gauge the relative value of stocks and is also a yardstick of profit growth expectations.

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“Our Crop Science and Consumer Health divisions expect a slow start to the year due to market dynamics, but we feel confident in our full-year targets and the direction of our businesses,” CEO Bill Anderson said in his speech for the April 26 annual general meeting, which was posted on the company’s website on Monday.

The CEO reiterated that 2024 earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for one-off items and currency swings, would decline between three and nine per cent and that free cash flow would reach 2-3 billion euros (C$2.9 billion to $4.7 billion) up from 1.3 billion (C$1.9 billion) last year.

Anderson will face investor question at the AGM over his decision in March to pause plans to break apart the German diversified group, which includes a large pharmaceuticals business, for up to three years. He has said he would instead focus on a management overhaul, debt reduction and fending off litigation.

Major Bayer shareholder Harris Associates has told Reuters it strongly supports the decision to suspend work on breaking up the group.

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