Bayer Presentation at the Cheuvreux German Corporate Conference 2012

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Presentation by Werner Baumann, CFO of Bayer AG, at the Cheuvreux German Corporate Conference on January 18, 2012 in Frankfurt

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Bayer Presentation at the Cheuvreux German Corporate Conference 2012

  1. 1. Building a World-ClassInnovation CompanyWerner Baumann, CFOCheuvreux German Corporate ConferenceJanuary 18, 2012
  2. 2. DisclaimerThis presentation may contain forward-looking statements based on currentassumptions and forecasts made by Bayer Group or subgroup management.Various known and unknown risks, uncertainties and other factors could lead tomaterial differences between the actual future results, financial situation,development or performance of the company and the estimates given here.These factors include those discussed in Bayer’s public reports which areavailable on the Bayer website at www.bayer.com.The company assumes no liability whatsoever to update these forward-lookingstatements or to conform them to future events or developments.Page 2 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  3. 3. Track Record of PerformanceEBITDA before special items and margin* (€ billion) Core earnings per share* (€) 6.8 6.9 7.1 6 6.5 5.6 5 4.17 4.19 3.80 3.64 4 19.3% 20.9% 21.1% 20.8% 20.2% 2.99 3 2 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 Net cash flow* (€ billion) Net financial debt*, ** (€ billion) 5.4 5.8 .17.5 18 4.3 14.2 3.9 3.6 14 12.2 9.7 10 7.9 6 2 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 * 2006 - 2008 from continuing operations ** year-end dataPage 3 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  4. 4. Strong Performance Continued in 2011Sales EBITDA Core EPS Net Cash flowEmerging Marketsin € million% portfolio & currency adj. pre-special items in € million in € in € million Significant Opportunity 27,337 6,072 26,076 5,412 3,832 3,908 3.86 3.24 9M´10 9M´11 9M´10 9M´11 9M´10 9M´11 9M´10 9M´11 +7% +12% +19% +2% Page 4 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  5. 5. At The Verge of a Business-TransformingNew Product Cycle in Pharma2011 Pharma Pipeline Progress Xarelto Eylea Alpharadin Regorafenib (VEGF Trap-Eye)Launched in US & EU Filed in EU and Japan Demonstrated Study met primary for wet AMD improvement in overall endpoint of improvingACS trial showed survival in patients with overall survival insignificant reduction in bone metastases in patients with metastaticmortality prostate cancer colorectal cancer >€2bn* ≥€1bn* ≥€1bn* ≥€1bn* 4 potential blockbuster compounds to be launched near-termPage 5 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012 * Peak sales estimates
  6. 6. Strong Growth Momentum in theEmerging Markets9M2011 Group sales breakdown; ∆% yoy Fx adjusted +11% 64% 36% +5% Developed markets Emerging markets1 ¹ Emerging markets: Latin America; Asia/Pacific w/o Japan, Australia, New Zealand; Africa and Middle East incl. Turkey; Eastern EuropePage 6 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  7. 7. More Innovation – Less Administration –Restructuring Program Fully on Target Contribution by Subgroup Savings Initiative  Savings and efficiency initiative atHolding & Admin. HealthCare HealthCare, CropScience and at corporate level ~12%  Annual cost savings of €800m starting 2013, reinvestment of ~50% ~34% ~54%  One-time-charges of approx. €1bn  Plans include reductions of 4,500 people  2,500 new hires in growth and innovation, particularly in emerging markets CropScience ► Status Q3: Measures with €320 million annualized savings already implementedPage 7 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  8. 8. Building Growth Momentum in HealthCarePage 8 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  9. 9. HealthCare –Leading Positions in Key Markets2010 sales in € million Pharma Sales Split by Segment 2010 €10,908m  Leading positions in key therapeutic categories Consumer Care 25% €3,371m 20%  Global #2 in OTC-pharmaceuticals 64% Medical Care 9% €1,514m  #1 in fluid injection systems, #4 in blood glucose meters 7% Animal Health €1,120m  Global #4 HealthCare €16,913mPage 9 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  10. 10. HealthCare –Major Progress Achieved  Key late-stage pipeline assets progressed Pipeline Progress as planned or better  Strong early- and mid-stage pipeline  Savings program on track Efficiency Improvement  Targeting approx. €430m p.a.  Pharma margin improved  Double-digit sales growth in 9M2011 Emerging Markets Growth  Expansion of marketing and sales organization  Strong growth of key brands Consumer Health  Consumer Care (OTC pharmaceuticals) gained share during 9M2011Page 10 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  11. 11. Xarelto –Novel Direct Factor Xa Inhibitor Large global program involving over 75,000 patients Met primary efficacy endpoints in 9 phase III studies:  RECORD 1-4, EINSTEIN DVT and EINSTEIN Extension; Rocket AF; MAGELLAN; ATLAS ACS-TIMI 51 Marketing & regulatory status:  Launched in >85 countries for VTE prevention following total knee / hip replacement surgery  Launched in the US after approval for stroke prevention in patients with atrial fibrillation (SPAF)  Launched in Europe after approval for SPAF and DVT treatment ATLAS ACS-TIMI 51 Phase III trial met primary efficacy endpoint and showed significant reduction in mortality (>30%); filed for secondary prevention of ACS in Europe and the US EINSTEIN-PE Phase III study ongoing – data expected early 2012 DVT: deep vein thrombosis; VTE: venous thromboembolism; ACS: acute coronary syndromePage 11 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  12. 12. VEGF Trap-Eye –Fusion Protein To Combat Eye Diseases In-licensed from Regeneron – Bayer has exclusive marketing rights ex-US Met primary efficacy endpoint in 4 phase III studies (VIEW I & II, Copernicus & Galileo) Submitted for marketing approval in more than 10 countries including EU and Japan for wet age related macular degeneration (AMD)1 Filing for central retinal vein occlusion planned for 2012 Additional studies in diabetic macular edema and myopic choroidal neovascularization ongoing Start of SIGHT-Study in China – Phase III for wet AMD 1 Regeneron Pharmaceuticals holds US rights – FDA approval November 2011Page 12 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  13. 13. Alpharadin – New Opportunity to TreatBone Metastases Alpha-pharmaceutical (based on 223Radium, delivering highly energetic, short ranging radiation) - in-licensed from Algeta Radium as natural bone seeker targeting bone metastases ALSYMPCA (phase III) in patients with bone metastases in prostate cancer (CRPC) stopped early - Alpharadin demonstrated 44% improvement in overall survival Filing targeted mid 2012 Fast track designation granted by FDA Tumor cells Newly formed bone Bone metastases Radium-223 deposition Radium-223: highly localized tumor cell killing CRPC: symptomatic hormone-refractory prostate cancerPage 13 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  14. 14. Regorafenib –New Treatment Option in Cancer Oral multi-kinase inhibitor of angiogenic, stromal and oncogenic receptor tyrosine kinases Currently studied in late-stage clinical trials in metastatic colorectal cancer (mCRC) and gastrointestinal stromal tumors (GIST) CORRECT phase III trial in mCRC* stopped early on success (Oct ‘11)  Study met its primary endpoint of significantly improving overall survival  Full data to be presented at the ASCO GI  Submission for marketing authorization in mCRC planned for 2012 Phase III program in GIST ongoing, expect results early 2012 FDA granted orphan drug (GIST) and Fast Track (GIST & mCRC) designation * for patients whose disease has progressed after approved standard therapiesPage 14 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  15. 15. Four Potential Blockbuster ProductsExpected to be Launched Near-term Project Indications Peak sales potential* Xarelto SPAF, other anticoagulation > €2bn wet AMD, DME, VEGF Trap-Eye ≥ €1bn CRVO, myopic CNV Bone metastases in Alpharadin cancers ≥ €1bn mCRC, GIST, Regorafenib other cancers ≥ €1bn * Subject to approval as expectedPage 15 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  16. 16. Consumer Care –Consistent Strong Performance Sales Consumer Care in € million; ∆% y-o-y Fx and portf. adjusted Highlights 3,371 3,020 3,080 +8%  Global #2 in OTC pharmaceuticals 2,634  Track record of performance 2,531 2,588 2,355  Some of the world’s most recognized brands  Acquired Roche OTC, Citracal, Sagmel and Topsun1,336  Significant organic as well as inorganic growth opportunities2004 2005 2006 2007 2008 2009 2010 9M2011Page 16 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  17. 17. Consumer Care – Strong Brands Sales in € million; ∆% y-o-y Fx adjusted Brand 9M2011 Sales y-o-y Growth 324* +10% 209 +8% 175 +8% 168 +6% 127 +4% 101 +3% * Only Aspirin CC sales, excluding Rx Aspirin CardioPage 17 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  18. 18. Executing new Strategic AgendaPage 18 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  19. 19. CropScience –A Leader in its MarketsHerbicides €1,944m €1,370m InsecticidesMarket position: 2 Market position: 1 20% 29%Env. Science €650m €1,570m FungicidesMarket position: 1 Market position: 3 23% 9%BioScience €687m 10% 9% €609m Seed TreatmentMarket position: 6 Market position: 2 Sales 2010: €6,830mPage 19 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  20. 20. CropScience –Major Progress Achieved  Developed and communicated new business strategy, Strategy execution underway Performance &  9M2011: 11% organic growth and 500bpts. higher margin Productivity  Savings projects on target for €265m contribution by 2012  Refocused R&D investments Innovation  R&D productivity remains on high level Emerging Markets  9M2011: 13% organic growthPage 20 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  21. 21. CropScience –Strategic Roadmap Rejuvenate the core Reinvent customer- Rebalance and Extend BioScience Crop Protection centricity along the refocus innovation footprint business entire value chain  Streamline portfolio  Better understand and  Raise overall R&D  Strengthen our position serve interconnected spend to more than in established crops  Optimize our supply needs of customers, €850 million by 2015 chain model and asset from farmers to  Develop leading footprint agronomists, raw  Increase BioScience positions in 3 of 4 broad R&D to be level with acre crops  Target savings of €265 material processors, AgChem spend million through 2012 food processors, retailers and consumers  Focus Crop Protection R&D on high-growth areasPage 21 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  22. 22. CropScience –Rebalance and Refocus Innovation R&D spending in € million Best-in-class R&D productivity >850  23 new agrochemical active ingredients 722 launched since 2000, generated sales of €2bn 664 in 2009  Launched >45 AgChem formulations and >170 seed varieties since 2010  Planning to launch 4 new molecules between 2012 and 2015  Refocus R&D: Increase BioScience R&D to be level with AgChem spend, focus CropPotection R&D on high growth areas 2005 2010 2015e AgChem BioSciencePage 22 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  23. 23. CropScience –Extend BioScience Footprint Strengthen our position Develop leading positions in in established crops 3 of 4 broad acre crops  Leverage cotton and oilseeds  Enter soybean seeds and traits market opportunities through regional  Invest in wheat to build leading breeding expansion and new traits and traits platform  Continue to grow our strong  Extend rice production considerably vegetables franchise FY Change Sales (in €m) 2010 % Fx adj.  Secure proprietary access to top Oilseeds 168 +33 germplasm and breeding excellence Cotton seeds 152 +54  Ensure fast and focused development of Vegetables 273 +10 distinctive traits, in collaboration or alone Rice 34 +36 Total BioScience 687 +27Page 23 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  24. 24. From Megatrends To BusinessPage 24 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  25. 25. MaterialScience –Leading Positions in All Segments Sales in € million Polyurethanes Sales Split by Segment 2010 €5,024m  #1-2; approx. 23-24% market share* Polycarbonates €2,791m 28%  #1; approx. 27% market share 49% Coatings, Adhesives, Specialties 5% €1,791m  #1; >40% market share** 18% Industrial Operations €548m €10,154m *depending on segmentPage 25 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012 ** arom. & aliph. isocyanates
  26. 26. MaterialScience –Major Progress Achieved  9M2011 – achieved 11% organic growth on Performance higher prices, earnings basically flat on higher raw material costs  Opened new world-scale TDI plant in China Productivity  Capacity expansion at China site  9M2011 plus 10% organic growth Emerging Markets  Global PC headquarter moved to ChinaPage 26 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  27. 27. Capitalize on Global Market Trends and Spur Future Growth Energy consumption Buildings are responsible for more than 40% of global energy use* Greenhouse-gas emissions 14% of greenhouse gases worldwide origin from the transportation sector, making it the third largest emission source** Noise About 30% of the EU population are exposed to road traffic noise in excess of 55 dB(A) during night time***Bayer polymers help to save energy, reduce CO2 emissions and avoid traffic noise *Source: UNEP, Sustainable Buildings and Climate Initiative **Source: World Resources Institute *** WHO recommends less than 30 dB(A); dB(A): A-weighted decibel quality Page 27 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  28. 28. China – Center of Gravity ofMaterialScience´s Customer Industries  The largest construction market in the world World’s largest PCS  The largest automotive market in the market world  The largest railway market in the world To become the world’s  The largest consumer electronics largest PUR market by market in the world 2015  World’s second largest economy with strong momentum A close second behind  World’s largest exporter the US for the world’s largest Coatings market PUR: polyurethane, PCS: polycarbonatePage 28 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  29. 29. MaterialScience – Expansion ofProduction Capacities in China Strengthening Leadership Through Further Local Production and Know-how  Second investment stage at PUR PCS CAS largest, fully integrated site in MDI PCS HDI Shanghai 350 kt in 2010 200 kt in 2010 30 kt in 2010  New investment of approx. €1bn in Shanghai until 2016 to +650 kt until 2016 +300 kt until 2016 +50 kt until 2016  Increase MDI capacity to TDI 1,000kt/year 250 kt in 2011  Increase PCS capacity to 500kt/year  Increase HDI capacity, new 50kt line planned  Expansion of local R&D activities MDI: methyl diphenylene diisocyanate, TDI: toluene diisocyanate HDI: hexamethylene diisocyanate, PCS: polycarbonatePage 29 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  30. 30. Building a World-Class Innovation Company2011 A Year of Significant Progress  Delivered growth and performance, 9M2011: adj. sales up 7%, adj. EBITDA up 12%, reported EPS +43%, Core EPS +19%  Group FY 2011 financial outlook1) projects 5-7% organic sales growth, adj. EBITDA > €7.5bn and core EPS growth of ~15%  Further strategic progress:  Innovation pipeline: 4 potential blockbuster compounds in pharma pipeline  Productivity: Group-wide restructuring plans with €320 million annualized savings already implemented  Emerging markets: 11% organic growth 1) Aspublished with Q3 statements on October 27, 2011; the company is not providing intra quarterly guidance updates Page 30 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  31. 31. AppendixPage 31 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  32. 32. 3rd Quarter 2011 –Successful Development Continued Q3‘11 ∆% Highlights of Financial Results € million € million Sales 8,670 +1 (+5)  All subgroups contributed to sales EBITDA growth - reported 1,731 +41  Continuing momentum in emerging - adjusted 1,805 +8 markets EBIT - reported 1,099 +95  Adj. EBITDA raised on lower costs - adjusted 1,174 +17 at HealthCare and higher volumes Net income 642 +125 at CropScience. MaterialScience lower due to higher raw material and Net cash flow 1,577 +1 energy costs Free operating cash flow 1,223 +5 EPS  Reported EBIT impacted by net - reported 0.78€ +123 special charges of €75m (prev. year - core 1.12€ +18 €436m) ( ) = Fx & portfolio adjustedPage 32 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  33. 33. Emerging Markets Show ContinuingStrong Momentum 3rd Quarter 2011 Group sales by region Emerging Economies +7% USA Emerging ~1,300 +12% +3% Economies¹ 20% 36% +10% ~1,150 19% 38% +7% +11% 33% 10% 450 ~430 Western Europe Others² +1% +4% Group €8,670m; +5% Emerging Latin Eastern Africa & Asia³ America Europe Middle East In € million, ∆% yoy Fx adjusted ¹ Emerging economies include: Latin America, Asia w/o Japan, Australia, New Zealand, Africa and Middle East incl. Turkey, Eastern Europe ² Others = Japan, Australia, New Zealand, Canada ³ Emerging Asia = Asia w/o Japan, Australia, New ZealandPage 33 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  34. 34. 3rd Quarter 2011 –Cash Flow And Net Debt Development Q3 2011 Cash Flow Net Debt Development In € million In € billion -0.4 GCF NCF Invest- oFCF cont. ments 7.4 7.0 1,327 1,577 354 1,223 ∆% y-o-y +50 +1 -10 +5 Q2´11 Q3´11Page 34 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  35. 35. HealthCare –Emerging Markets Driving Growth Q3’11 Sales Earnings in € million, ∆% yoy, () = Fx & portf. adjusted Adj. Adj. Pharma EBITDA EBIT Consumer Health 36% -3% (0%) 1,226 +9% 0% (+4%) 1,122 1,537 2,663 909 +16% 785 739 853 +15% 470 600 +28% 383 373 -3% 315 309 -2% HealthCare €4,200m; -2% (+2%) Q3‘10 Q3‘11 Q3‘10 Q3‘11 Price Volume Fx Portfolio 0.6% 1.0% -3.5% 0.2%Page 35 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  36. 36. CropScience –Strong Volume Growth At Crop Protection Q3’11 Sales Earnings in € million, ∆% yoy, () = Fx & portf. adjusted Adj. Adj. Crop Protection / EBITDA EBIT Environmental Science 36% BioScience -9% (-3%) +4% (+11%) 165 +47% 114 1,265 112 470 600 46 · -18 CropScience €1,379m; +3% (+9%) Q3‘10 Q3‘11 Q3‘10 Q3‘11 Price Volume Fx Portfolio -1.9% 11.3% -5.9% -0.7%Page 36 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  37. 37. MaterialScience –Sales Driven By Higher Selling Prices Q3’11 Sales Earnings in € million, ∆% yoy, () = Fx & portf. adjusted Adj. Adj. EBITDA EBIT Polycarbonates Polyurethanes +3% (+7%) 36% +4% (+7%) 408 749 1,371 348 -15% 259 196 -24% CAS* 475 0% (+3%) 173 IO** +21% (+24%) MaterialScience €2,768m; +4% (+7%) Q3‘10 Q3‘11 Q3‘10 Q3‘11 Price Volume Fx Portfolio *CAS: Coatings, Adhesives, Specialties 7.1% 0.3% -3.7% 0.2% ** IO: Industrial OperationsPage 37 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  38. 38. Reporting Events and AGM Date Event Publication Tuesday, Investor Conference Call 2011 Annual Report February 28, 2012 Meet Management, March 13-14, 2012 Investor Conference Leverkusen Thursday, 1st Quarter 2012 Results Investor Conference Call April 26, 2012 Stockholders’ Newsletter Friday, Annual General Meeting April 27, 2012 Tuesday, 2nd Quarter 2012 Results Investor Conference Call July 31, 2012 Stockholders’ Newsletter Tuesday, 3rd Quarter 2012 Results Investor Conference Call October 30, 2012 Stockholders’ NewsletterPage 38 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012
  39. 39. Investor Relations ContactsDr. Alexander RosarHead of Investor RelationsPhone: +49-214-30-81013E-mail: alexander.rosar@bayer.comDr. Jürgen Beunink Ute MenkePhone: +49-214-30-65742 Phone: +49-214-30-33021E-mail: juergen.beunink@bayer.com E-mail: ute.menke@bayer.comPeter Dahlhoff Judith NestmannPhone: +49-214-30-33022 Phone: +49-214-30-66836E-mail: peter.dahlhoff@bayer.com E-mail: judith.nestmann@bayer.comFabian Klingen Dr. Olaf WeberPhone: +49-214-30-35426 Phone: +49-214-30-33567E-mail: fabian.klingen@bayer.com E-mail: olaf.weber@bayer.comPage 39 • Bayer Investor Presentation • Cheuvreux German Corporate Conference • Werner Baumann • January 18, 2012

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