Bayer Aktiengesellschaft (BAYN) Earnings Call Transcript

Good afternoon and good morning, everyone. And welcome to our conference call to discuss Bayer's Second Quarter 2026 Results. Bill will begin by sharing his perspective on the key achievements of the past few weeks and our path forward. And we are delighted today to have Judith with us for our first quarterly earnings call. She will offer her initial perspectives and provides further insights into business performance and the outlook. [Operator Instructions] And our 3 divisional presidents will join Bill and Judith then to address your questions. Before we get started, I would also like to encourage you to join our Crop Science field event on September 2 in Iowa. If you have any questions regarding registration or logistics, please reach out to our Investor Relations team. As always, please note the cautionary language in our safe harbor statement. And with that, over to you, Bill.

Thanks, Jost, and hi, everyone. And by the way, I think most of you know this is Jost's last time leading the call before he runs off to lead the radiology business. So we'll try to make it a good one. But the past 90 days have been really important for Bayer. And operationally, we're on track for the year. We've made decisive progress on our long-term strategic priorities, and we're going to cover both of those things today. So let's start with the performance in the first half of '26. Across the group, our businesses are delivering what we committed. Sales are at EUR 24 billion, growing 3% on a currency and portfolio adjusted basis, which we'll refer to throughout the call today. Core EPS is at EUR 3.66, which is also up 3% from our last year at this time. Our free cash flow in the first half is at negative EUR 2.7 billion. This compares with negative EUR 1.4 billion last year at this point, and it's due to the litigation-related payouts that we've previously communicated. So on to our businesses. Crop Science delivered sales growth of 5.5%. This was driven by strong momentum in seeds and traits, including the additional licensing revenue we posted in the first quarter. EBITDA margin expanded to 31%, a considerable improvement over last year, reflecting higher margin sales, the licensing revenue I just mentioned and disciplined execution. In Pharma, we demonstrated continued resilience, Sales remained flat with Nubeqa and Kerendia combining to grow 66%, overcoming significant and expected declines in Xarelto. Eylea is down 27%, driven by pressures from biosimilars and with the 8 mg business now representing half of our Eylea's sales. Beyonttra continues to progress well, and our base business is growing, in part due to strong volume growth in radiology. Our EBITDA margin is at 26%. This puts us in line with expectations as we continue to invest in future growth in the second half of the year. Finally, Consumer Health posted growth of 3.5% with contributions from all but 1 category and particularly strong growth in nutritionals and dermatology. EBITDA margin is trailing prior year, but on track to meet our outlook. Overall, we're pleased with our trajectory. Despite an uncertain environment, we're pacing well to meet our targets, and we'll continue executing our plan. Team Bayer has what it takes to deliver. Now I'll touch on our strategic priorities, including some recent highlights. In Pharma, we've received priority review for asundexian in both the U.S. and China, and we're preparing for a planned launch in the end of '26 or beginning of '27. Further, we closed the acquisition of perfuse Therapeutics, which we announced last quarter. This is a novel development medicine in glaucoma and diabetic retinopathy. Crop Science continues to execute its 5-year framework, and our efforts here are beginning to deliver tangible results as seen in the expansion of our margins. We're also optimizing our business setup. Last month, we consolidated our U.S. glyphosate business into Ruvion, a distinct entity that will be nimbler and better positioned in a commodity-driven market. Further, we continue to build our innovative portfolio. For instance, we announced a license agreement for broad commercialization of hybrid wheat, one of the world's most important staple crops. Across the company, we continue to push for productivity gains with our operating model. Teams working on launches in Pharma, driving profitability gains in Crop Science and those making investment decisions in consumer health have much more ownership over their work. We think our lean entrepreneurial operating model positions us well to capitalize on the opportunities of artificial intelligence. And we're investing in AI in both enterprise systems and tools for our people so that each person at Bayer can extend their productivity, making the greatest impact at the fastest pace and lowest cost. Finally, litigation. The last 90 days have been decisive in the company's years-long efforts to contain the litigation uncertainty. On June 25, in mon versus Darnell, the U.S. Supreme Court announced a landmark ruling for the cause of regulatory clarity for American agriculture and for the company. The decision was in no way ideological with the majority of justices nominated by both Republicans and Democrats siding with the company. Further, the opinion was unequivocal. The Environmental Protection Agency is the authority when it comes to regulating crop protection products. Claims grounded in states failure to warn theories are preempted and should be dismissed. Lower courts have already started acting on the Supreme Court's ruling. What does this decision mean for the company's multipronged strategy? The proposed class settlement between Monsanto and leading plaintiffs firms is moving ahead and we remain convinced it is the best path to resolution, including for plaintiffs, whose primary legal theory was deemed without merit by the nation's highest court. We're in a stronger position following the court's ruling. The final approval hearing in the state court in Missouri is now scheduled for August 19, with a final decision expected later this year. During the interim, the company will participate in the class process, including briefing the court regarding objections and assessing the quality and quantity of opt-outs. On PCBs, as previously communicated, we aim to enforce the indemnity agreements Monsanto had in place, and there's a case moving forward now in federal court. Overall, our containment strategy is in a strong place with some important milestones ahead. We remain focused on making the right decisions for the company, both in the moment and for the long term. Over the past 2.5 years, we've been laser focused on a clear set of priorities: rejuvenating the pharma pipeline, significantly contained in litigation, deleveraging, improving profitability at crop science and making Bayer leaner, more dynamic and more productive. We've progressed in each of these 5 areas, and each of them has demanded intense focus. And it's imperative that we maintain that focus. So we're concentrating on delivering our commitments and ensuring the best future for Bayer. So with that, I'll hand it over to Judith to walk you through the financials as well as her first impressions to the company. She's joined at a pivotal moment for Bayer and has been all in from day 1. Judith, over to you.

Thank you, Bill. And welcome to everyone on the call. It's a pleasure to be with you here today. I'm delighted to have joined Bayer at such an exciting time. The team has made significant progress on litigation and we remain firmly focused on containing the overhang. The goal remains that Bayer is increasingly valued for the strength of its businesses, innovation and its growth potential. Having spent my first month listening to customers, colleagues and investors, the following themes stand out. First, Bayer's innovation engine is a fundamental competitive advantage. Our leadership positions are built on decades of R&D investments, delivering breakthrough innovation that farmers, patients and consumers rely on. Our teams are committed to innovate for our mission. Second, we have attractive growth opportunities ahead of us, supported by powerful long-term trends. We have strong positions in large markets with growing and aging populations. Our new operating model has made us leaner and more customer focused. Third, our financial priorities are clear: to continue to strengthen the balance sheet, to improve productivity and cash generation and to create flexibility to invest for future growth in next-generation medicines, ag technologies and consumer health. While we've made good progress on the transformation, there's still important work ahead. I see a clear opportunity to build on the momentum with strong execution and financial discipline to deliver sustainable value. With that, let me turn to our financial results. Net sales increased by 3% to EUR 24.3 billion in the first 6 months. In Q2, sales increased by 2% to EUR 10.9 billion. EBITDA before special items rose 7% to EUR 6.6 billion in the first half, including an increase of 2% to EUR 2.1 billion in the second quarter. Foreign exchange effects were not a material headwind this quarter. Core earnings per share came in at EUR 3.66 for the first 6 months. This is consistent with the underlying business seasonality and our expectations for the year. If you look at Q2 specifically, core EPS of EUR 0.95 was 17% below prior year, given nonrecurring benefits in taxes and the reconciliation result in 2025. Both items show a more normalized pattern this year, in line with our expectations. Let's move on to free cash flow. This year, material litigation-related payouts amounting to EUR 2.5 billion in the first half drove the negative cash flow and explained the decline versus the prior year. For the second quarter, we saw higher incentive payouts compared to prior year. Finally, net financial debt remained rather stable with a slight increase to EUR 33.6 billion compared to the second quarter of 2025. Compared to the end of the first quarter this year, net financial debt increased by EUR 1.1 billion, driven by litigation payouts, the profuse acquisition for our Pharma business and foreign exchange. In recent weeks, we successfully completed 2 important financing transactions. The EUR 3 billion equity investment from Apollo marks an important strategic milestone. It strengthens our capital structure and provides additional flexibility for future financing needs. Upon closing, it will reduce our net financial debt in the second half of the year. We have since successfully placed USD 5 billion in bonds, further demonstrating our ability to access the capital markets. These achievements have been an important team effort, and I would like to sincerely thank all of our colleagues who contributed to this and importantly, to our first half results. Overall, our performance puts us well on track to deliver our full year guidance. Let's now take a closer look at the performance of our businesses. For Crop Science, disciplined execution of our 5-year framework drives growth and margin expansion. Year-to-date, we saw sustained momentum across the seed and traits portfolio and improved profitability while core crop protection continued to face pressure. Overall, the strong first half reinforces our confidence in delivering full year guidance, even as sales mix is expected to shift towards lower-margin products in the second half. In the second quarter, net sales grew 4% to EUR 4.9 billion, driven by strong seed and traits performance and improved glyphosate volumes and pricing. Soybean sales exceeded expectations with 17% growth for the quarter driven strong North America performance, including higher prices from the return of the dicamba label in the U.S. Soy growth reached nearly 70% year-to-date or 13% excluding licensing income. In the second half, we expect lower excess seed sales in the United States due to improved utilization rates. Additionally, our transition from Intacta Roundup Ready 2 Pro to Intacta 2 Xtend is expected to weigh on Brazil sales. Cotton also benefited from return of the dicamba label, driving both volumes and prices as expected for the quarter and contributing to 9% year-to-date growth. Other seeds and traits grew 21% for the quarter on solid canola expansion, growing 63% year-to-date. Following the strong Q1, corn declined by 3% in the second quarter. It includes the anticipated phasing impacts in North America, partly compensated by double-digit growth in EMEA and APAC. For the first half, the business grew 4% with strong growth across all regions despite reduced acres in the U.S. Core Crop Protection declined 2% in the second quarter driven by lower prices. The expected volume recovery was muted by dry weather, mainly in parts of Europe. The temporary reintroduction of Movento in France drove insecticide growth in the second quarter. Year-to-date, core Crop Protection declined 5% from ongoing generic pressure and portfolio pruning impact. We expect growth in the second half of the year, supported by higher volumes. However, continued regulatory and pricing headwinds are anticipated to weigh on performance. Glyphosate sales recovered this quarter with higher pricing and increased volumes contributing to a 13% increase. A price spike in the second quarter nearly offset volume decline from the first quarter, leaving glyphosate broadly flat over the first half of the year. On profitability, EBITDA before special items of approximately EUR 900 million came in 30% higher than prior year, resulting in a margin of 18.4% in the second quarter. In addition to higher seed and traits sales, the strong execution of our 5-year framework contributes through low-margin exits in core Crop Protection as well as COGS efficiencies. Furthermore, we benefited from insurance income and divestment gains. Year-to-date, EBITDA before special items margin of 31.4% is expected to moderate in the second half. This also includes a different distribution of licensing resolution income, which was realized in the first quarter this year compared to the fourth quarter last year as well as pricing pressure and the impact from the Middle East war. Our Pharmaceuticals business continues with solid delivery against its strategic priorities. This is clearly shown with strong growth of our new products and a solid base business contribution, which balanced the expected declines of Xarelto and Eylea. We are now at the inflection point of turning to growth going forward. While sales were in line with the prior year in the first 6 months, we expect to accelerate growth in the second half, putting us on track to achieve our full year outlook. For the second quarter, we achieved net sales of EUR 4.5 billion, representing 1% growth versus the prior year period. Our key growth drivers continued their strong momentum. Nubeqa grew by 64% in Q2 across regions, where Kerendia sales increased by 83%, mainly driven by the U.S. and China. With combined sales of more than EUR 2 billion for the half year, and based on the current dynamics, we are well positioned to meet the market expectations for the full year. On our new launches, performance of liquid and Beyonttra continues to be in line or even above our expectations, and we're continuing to drive launches in additional markets throughout 2026 and beyond. Xarelto and Eylea declined by 42% and 33% in Q2, respectively, driven by the expected effects of loss of exclusivity and biosimilar competition. While both declines were modestly above our guidance range, this was against a stronger prior year comparison. For the second half, we expect a softer comparison base. Importantly, Eylea 8-milligram continues to see strong uptake reaching around 55% of franchise sales in the second quarter and remaining on track for about 70% share by year-end. Our base business grew 4% in the second quarter with continued strength in radiology and women's health, more than offsetting volume-based procurement related impact on Aspirin Cardio and Stivarga in China as well as declines across other parts of our mature portfolio. For the first half, base business growth was 1%, and we foresee broadly stable performance going forward. EBITDA before special items was down by 4% to EUR 1.1 billion in Q2, resulting in a margin of 23.7%. The year-on-year decline was mainly driven by our decision to increase growth investments as well as pricing pressures partially compensated by higher volumes, a write-back for inventory and continued savings from efficiency programs. While our margin for the first half of the year was 26.4%, we will continue to invest into growth going forward and expect to end the year in line with our guidance. Turning to Consumer Health. We continue to focus on driving sustainable growth while navigating a volatile market environment, particularly in the United States, where consumer sentiment remains subdued. Against this backdrop, net sales increased by 1.5% in the second quarter and 3.5% in the first 6 months. With that, we remain well positioned to deliver within our full year guidance range. Growth was driven by all nonseasonal categories, highlighting the strength of our balanced portfolio, strong category positions and focused investments. E-commerce continue to be an important growth driver, reflecting our investments in digital capabilities and our ability to adapt to evolving consumer purchasing behaviors across channels. In nutritionals, brands such as Natural Elements and Elevate delivered strong online growth. These favorable sales dynamics helped offset the decline in allergy and cold reflecting softer seasonal demand as well as the pull forward of customer orders in the first quarter due to timing of seasonal orders in allergy in previously -- as previously highlighted. Turning to profitability. The EBITDA margin before special items was 22.1% in the second quarter and 22.3% in the first half of the year. Benefits from our new operating model and ongoing cost efficiencies continue to support profitability, while targeted investments in brands, innovation and digital capabilities are positioning the business for future growth. Foreign exchange headwinds impacted the first half year margin by about 50 basis points. Excluding these, profitability remained broadly in line with the prior year and within our full year guidance corridor. On to our outlook for 2026. We reiterate our group outlook on sales, earnings and free cash flow at constant currencies for the full year 2026. Our outlook reflects a strong performance in the first half, but also the anticipated dynamics for the remainder of the year. In addition, we remain mindful of the dynamic external environment. Our net financial debt, we have reflected a minority equity investment by Apollo, with closing expected in the second half of this year. With that, we now anticipate net financial debt in the range of EUR 29 billion to EUR 30 billion, down from previously guided EUR 32 billion to EUR 33 billion. Overall, we currently see a balanced risk and opportunity profile for our full year outlook, which continues to include our latest assessments on several external factors and geopolitics. Looking ahead, we continue to closely follow several key topics that remain fluid. For Crop Science, we continue to monitor geopolitical and weather-related developments, including potential El Nino impact. Whether volatility could affect planting and yields in some regions, and our technology-based seed and Crop Protection solutions are helping growers to manage these challenges. For our Pharma business, we do not expect tariffs to materially affect our outlook this year. At the same time, we remain focused on developments in global drug pricing, particularly around MFN policies, and continue to evaluate the potential implications for our pricing and launch strategies. For Consumer Health, key variables in the second half of the year remain the trajectory of the consumer sentiment in the U.S. and other key markets, the performance of seasonal categories and developments in the macroeconomic environment. Finally, on foreign exchange rates, in line with our practice, we have updated the foreign exchange estimate based on June month-end spot rates. Compared to constant currencies, this leads to a slightly lower headwind and to net sales and to core earnings per share compared to the last estimate. And with that, over to you, Jost, for the Q&A.

Thank you very much, Judith. Thank you very much, Bill. [Operator Instructions] First question today comes from Richard Vosser from JPMorgan. He's followed by Sachin Jain from Bank of America.

A couple of questions, please. First question on pharma. Just we're -- obviously, you pointed to the Beyonttra launch being relatively strong. We've seen the cardio transform trial failing for a potential competitor there. So just what's your thoughts on the changing environment for Beyonttra? How do you see potential going forward in terms of maybe peak sales? And should we anticipate Beyonttra sales being disclosed in Q3 this year? And then one question on crop. Maybe just one question on soy. If you could give us a little bit more color on the dynamics going forward into the Latin America season but also how your market share has developed with the return of dicamba, and how we should think about potential further market share gains in coming seasons, maybe with Iconic?

Richard, and thanks for the question on Beyonttra. So we're extremely pleased with the uptake. Obviously, the competitive environment is something that we're closely monitoring. We believe that the stabilizers as a group has proven clinical efficacy. And this is the standard that people have to go against and we have clearly the strongest data set in that class with over 90% stabilization. Can we expect to report out Beyonttra in the third quarter? So I hope so. Certainly, I expect to report out Bandra sometime in the second half of this year. Over to Rodrigo.

Thank you, Stefan, and thank you, Richard, for the question. And it's an important one for soybean, both in Latin America and North America. So let me start with the Latin America because it's an important one. Before I go to the details here, I just want to highlight this is very in line with our 5-year framework. If you go back on the May 13 last year and you take the slide of soybean, what is happening right now is very in line with the plans that we have for the soybean. And what is that? So Latin America first, and I'll invest a little bit on time here to share a little bit. Latin America, we are making a technology transition there. We have Intacta, as said by Judith, for the last many years. But Intacta is coming for -- to -- off patent in the coming years. So for that reason, we launched, in [indiscernible], at the same time that our competitor launched their first technology. And we are growing dramatically the new technology to the market, but it's expected as we planted that you're going to see a decline on the penetration of Intacta. We had Intacta over 85% penetration in Brazil, and of course, naturally, right now, you have less varieties being launched because of the patent expiration in the coming years. So we do expect, and that's the impact on sales that we predicted the lower penetration of Intacta. But at the same time, and that's very important, Intacta 2 Extend, we launched it, and we are growing again double digit again. We are coming to 40% penetration while our competitor is low digit still. So 40% penetration with Intacta 2 Extend over 50 million acres with that new technology. and this is just the preparing for the launch of Intacta 5+ that will come in the next years. And this is also very aligned to the North America. When we plan for the soybean, we plan '27 and '28 as being transition years because of just mentioning Latin America as well for North America. North America, it's great to have the label back and to be able to grow the soybean in North America in the first 6 months by 13%, excluding the the licensing agreement. What is even more important is the prepare for the launch of Iconic, as you mentioned. And this is coming -- in the coming years for soybeans. So soybean overall, we are in a transition period technology transition in Latin America, the preparation of the launch of Iconic. But if you think about the next 5 years, we are planning to grow soybean, especially in North America, but also with the new launches in Latin America. So thank you for the question because it allows me to go a little bit deeper on the soybean dynamics. Again, very aligned to what we shared before on the 5-year plan that we have.

Great. Following from Sachin, we have Charles Pitman King from Barclays in the line, but Sachin, your first.

Sachin Jain James from Bank of America. And firstly, I'd just like to refer what Bill said, yes, thanks help to me what in a volatile period. best of luck in your new role. So my questions, big picture for Bill. You comment on the wires of your open mind to group structure. So wondering if you could provide a bit more color on your latest thought process and what could trigger a formal strategic review? Secondly, you referenced August 19. Could you just clarify whether you expect to communicate where your opt-in is at relative to threshold? And I'm assuming you have a high-level view already. I wonder if you could share any color. And then I wonder, as if I could just squeeze in a third. So Asyndexion for Stephan. In fact, just think about regarding the launch trajectory of this in terms of physician excitement, hospital formularies. And then I wonder if you could comment on pricing given that you most likely have to price this now premovecine-AF data and Judith referenced MFN thoughts in our introductory comments.

Yes. Thanks, Sachin. Yes, regarding the question about the kind of group strategy and group structure, I think we've got a group here, the Board of Management, 5 of the 6 of us are here today. And we think about this a lot because key question for us is what's the most effective way to pursue our mission and also to secure the future of the company, which, as you know, was no trivial matter over the last few years with some of the challenges we faced. And so we're thinking about this all the time. I mean, we're definitely in a better position now than we've been at any point in the last few years to make strategic choices, but we still have these 5 key priorities. And if you think about them, we have the Pharma continuing to make progress and invest there. We've done a good job rebuilding the late-stage pipeline, but we got more work to do on the mid-stage pipeline. in Crop Science, we've begun the work of improving profitability, but we've got more to deliver there, and that's a 5-year horizon that we have to cover. And so that needs continued focus. We've also got these things like the debt that we've demonstrated the ability to pay it down, but the balance sheet isn't yet where we want it to be. We're making progress, but again, more work to do there. On litigation is a topic, again, good progress, but we got to close the door. And finally, this question of bureaucracy. I mean I think certainly, 3 years ago, we believe that bureaucracy was a significant even additional burden on Bayer compared to some of our peer companies. I think what we've done now with the progress we've made, the radical change in our operating model, we actually have an asset here, but we've got momentum. We're getting basically better every quarter and we don't want to break that up right at the moment. So we -- I would say we've been very disciplined on these 5 topics, and we remain very disciplined on that. As a leadership group, we have our heads up and we're thinking about what other options are there, what opportunities are there, and we're always thinking about that. But from where we look right now, we think our best option today is to basically keep driving home on these 5 topics so that we believe basically, improvements and continued improvements on these 5 areas will make our future better whatever we decide to do structurally in the future, whether we're staying together as one Bayer or whether we do something different with the division. In any case, a better balance sheet, having clarity on litigation, more efficient, high-performing operating model, stronger Pharma division, stronger Crop Science division, these are all kind of no regret moves. And so we believe, at least right now, we want to stay focused on that and keep moving forward. And I think we'll know when we see an opportunity, we'll talk about that, and we'll make sure you're the first to know, Sachin. So -- but meanwhile, we're going to keep our heads down and keep focused. Regarding August 19, that's the scheduled date for the fairness hearing. It's a -- yes, it's an interesting time because obviously, it's not a normal thing that happens in a class proceeding that you have a Supreme Court ruling that happens. Obviously, this one is very much to our favor. So as I said, we're evaluating kind of the quantity and quality of outstanding claims or the people who opted out. As you can imagine, if people want to come back in, just like there was a process to opt out that involves paperwork and all that sort of thing, to reverse that also requires paperwork and that can be a bit cumbersome. So we're working on all that. I wouldn't expect that we're going to share anything about it until -- yes, basically, until it's over, until we've got a final number, we've had the fairness hearing. And so we'll, yes, we'll update folks when there's something concrete to update on, but as it stands, we're pleased with how that's going, and we keep moving forward. Stefan, do you want to talk about asundexian?

Yes. Sure. Sachin, thanks for the question. And I think we all share the excitement around the strong data set on asundexian. We're getting ready to get this into the marketplace in the fourth quarter. let me reiterate, this is a product that we believe is going to establish a new standard of care in the treatment of secondary prevention of secondary strokes. In terms of the trajectory, given that this is a truly new game in town. On the 1 hand, we need to educate physicians. On the other hand, I do expect that physicians are going to broadly welcome and are going to start prescribing, especially in the acute setting in the beginning as we launch. So we're getting ready for that. Of course, the limiting factor, as usual is access. So that's the only thing that's going to probably slow things a little bit down. But I would hope that we see a slightly improved access versus normal cardiovascular launches as we've seen them like with Kerendia, for example. On the pricing topic, we're pricing on the back of very, very strong clinical evidence, which gives strong value for our product. I think many people were surprised by the strong showing both on efficacy, but also on this immaculate safety that adds no additional bleeding versus given antiplatelet therapy. So we will be starting to price in the U.S. and in China, and Europe will come next. So MFN considerations are more for sometime next year. In the meantime, let me be very clear, we're making the point today already with reimbursement entities across those geographies that are being looked into as a comparator for MFN that we will need to have comparable pricing. And if that is not the case, that will or that may create delays in access. So that's going to be an interesting battle to fight. But I think we're very clear on this. It's not going to be a push over in those markets where we would follow the U.S. launch sometime in 2027.

Excellent. After we hear a chance from Barclays, we have Matthew Weston from UBS Centerline. But Charles, you go first.

Two questions from me. Firstly, on crop. Just thinking about -- in terms of the glyphosate mix. Could you provide any details around the price and volume growth breakdown for your glyphosate and non-glyphosate-based herbicides? Just thinking about the FY '26 volumes. You noted in the earlier remarks, the global launch remains stable, implying a 2H volume increase. Just what is it that gives you this confidence? And how does the separation of glyphosate into Rugen support this target? And then maybe a question on guidance for Judith. Noting that your guidance has been restated despite 2Q representing another strong EBITDA beat versus consensus expectations driven by the better-than-expected Crop Science delivery, how can we interpret this? Are you resting that you think the global uncertainty has worsened? If you could also touch on whether or not you're considering El Nino as a tail or a headwind in this? And maybe just more broadly, what your typical guidance philosophy looks like?

Let's see Rodrigo, could you here the sound was a little rough, but could you hear that all right?

Yes, I think so, Bill. And Charles, I'll answer here because the sound here, but if I don't reach your point here, please let me know. But on the glyphosate question that you made, so let me go a little bit of the dynamics that we had, right? So Q1 started a little bit soft on glyphosate. Then we had a price increase globally on glyphosate, and we had a recovery that was mentioned by Judith on Q2. But glyphosate is a very dynamic business, right? We were -- some weeks ago, we were on 0 tariff for the U.S. import of China. We just recently had a resolution now that you had another tariff more importing from China to do U.S. And this is one of the key elements of how we are managing glyphosate. Different from our core proprotection or our seeds and traits, this is a commodity mark that you really need to manage very agile. Pricing dynamics and adjustments that you need to do is almost like in a monthly basis. And this is one of the core concept that we designed when we put the glyphosate team to operate as a unit here to really make that business as agile as possible. Bringing this to the business for this year, this -- what we have today on the first 6 months and the next 6 months gives us confidence that we're going to be on the guidance that we have for glyphosate. We're going to be monitoring right now, of course, the dynamic of global pricing. I mentioned about the tariffs in the U.S., but also we're going to see that in the global dynamics. But I feel that we have an opportunity and of course, clearly, if you have a tariff in the U.S. brings an opportunity for our business in U.S., and we're going to be capturing that with this model that I just mentioned. But this is a little bit what we have for the year. And overall, you asked me about the sales. Again, overall glyphosate business represents 10% of our total sales, just to give you a little bit of a range here that we have. But that should be helping us to deliver what we have planned for the full year. With that, Judith, back to you.

Yes. Thank you, Rodrigo, and thank you, Charles, for the question. There was indeed about a EUR 200 million beat on Crop Science in the first half. And Rodrigo has just gone through again, and I did in my prepared remarks on what are some of the standout topics here. We also see though in the second half the -- well, first of all, the seasonality such as the first half is much bigger and so bigger opportunity there, too. And the second half in Crop Science, we see a mix change. So higher crop protection with a lower margin than the seed business. And indeed, we planned in for potential to see if there's any -- there's -- it's not without risk, let's just put it that way versus the full year. And so that's why we are confident of confirming. If you ask me about the philosophy of how I look at guidance, it is our best knowledge, needless to say, but it's also one where we are very committed to. And so you have our commitment that we will meet this guidance. Maybe one last topic, even though it's smaller. When I had mentioned, there were some positives in there that might not -- that will not repeat in the second half. They're smaller of nature, but we mentioned divestment, we mentioned some insurance. And that's what, maybe 20% of the EUR 200 million, much, much smaller. So I just want to give credit where credit belongs. It really has been an operational beat.

Super. Fantastic. So following Matt from UBS, we'll hear from James Quigley from Goldman Sachs. But Matt, go the next 1 and in, please go ahead.

Two questions for Judith, please. The first on the LAC transaction, is there any additional color you can give us so we can get our models right when we get the consolidation as to where we can land on a percent ownership, but more importantly, the profitability of LAC? And if you're not prepared to give us a number, can you help us out with relative to that 25% around for Pharma, I assume it's a meaningfully more profitable business with no R&D burden that some help would be great to get that minority in our model more accurate. And then the second question is more of a medium-term one, stronger cash generation, a number of moves to reinforce the balance sheet and a strong business outlook, I think, have been messages today. Investors have had an $0.11 dividend for the last 3 years, totally understandably as you rebuild the balance sheet through litigation. But when should investors think about a return to a more normalized dividend payout from Bayer? Is 2027 from '26 earnings too early? Or do we just have to wait and see?

Thank you for those questions. First on the [indiscernible] Apollo transaction, it's -- we're not going to give details on exactly. So I think we're going to have to think about with the Investor Relations team on how we help you model this. I mean, I guess, the way you have to think about it, on the 1 hand, we are selling equity. So that's an impact on on our EPS, on the other hand, offsetting -- partially offsetting is, of course, we have better access to debt at this stage. And clearly, Proofpoint was the EUR 5 billion that we were able to tap into right after the Apollo transaction. So we -- it's not very significant, but I hear your point. We're going to have to help you model this better. So stay tuned. On the dividend, indeed, we had -- given where the debt was, to pay minimum dividend over the last 3 years, I think, was the thing to do. We will -- the right next time to come back to you on this question will be our total year results in February as we will work through our medium-term plan, we will get -- have a better view, and that's the time that you should expect a communication around this.

And Judith, I wonder if you want to mention in the first part because you mentioned about selling equity, but it will show up -- you said it will show up in EPS, but it will show up as the cost of the dividend, right, as opposed to a change in the share base or the...

Yes, exactly. It's a minority interest impact. Absolutely.

So it will show up on the P&L more as a -- yes, like a cost of capital as opposed to like a diluting the share base.

Yes, exactly.

I'm sure we can provide the some what the future estimated EPS impact is or something?