Weak Q3, downgrades to keep Bayer CropScience stock under pressure

Given the focus on volume growth and price cuts margin pressures may remain

A weak operating performance in the December quarter led to earnings downgrades for Bayer CropScience. While revenue growth at 7.5 per cent over the year-ago quarter was better than the Street’s estimate, it was the miss on the margins and profit front that led to the downgrades.

The pressure on profitability is reflected in the 542-basis point contraction in the gross margin. This is the fourth consecutive quarter of YoY gross margin decline. The dip is due to the lower share of higher-margin corn seed sales, higher share of industrial business, and downward price revision in a few brands. The price