Investor Conference CallFY/Q4 2013 Results
February 28, 2014 / Marijn Dekkers, CEO
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.
• Q4/FY 2013 Investor Conference Call • Marijn Dekkers Page 2
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2013 – Continuous Growth
Dynamic development in the Life Sciences,
MaterialScience below expectations
Outstanding growth for pharma launch products (sales of €1.5bn)
Further strategic progress with planned bolt-on acquisitions
Guidance 2014: Further growth in sales and earnings
• Q4/FY 2013 Investor Conference Call • Marijn Dekkers
FY 2013 – All Targets Achieved Operationally
• Q4/FY 2013 Investor Conference Call • Marijn Dekkers Page 4
Sales ∆ Fx & portf. adjusted, EBITDA before special items
2013 Guidance Original
(@ ØQ4’12 FX)
2013Reported
∆ 2013 Reported vs. 2012
∆ 2013 Reported vs. 2012
(@ ØQ4’12 FX)
Sales +4-5% cpa. to~€41bn €40.2bn +5% cpa. +5% cpa.
adj. EBITDA
mid-single-digit% increase €8.4bn +1% +6%
core EPS high-single-digit % increase €5.61 +6% +12%
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EBITin € million
-10%
655729
Salesin € million% currency & portfolio adj.
+6%
9,8889,860
EBITDAadjusted**in € million
-3%
1,7691,826
Core EPSin €
+9%
1.101.01
*Prior-year figures restated**before special items
Q4’13Q4’12* Q4’13Q4’12* Q4’13Q4’12* Q4’13Q4’12*
Q4 2013 – Mixed Performance
• Q4/FY 2013 Investor Conference Call • Marijn Dekkers
Q4 2013 – Regional Performance: Growth Led by Emerging Economies
Page 6
Africa & Middle East
EasternEurope
Emerging Economies
EmergingEconomies¹
+8%
Others²+11%
USA+6%
Western Europe+5%
Q4 2013 Group Sales by Region
Group €9,888m; +7%
~1,400
+6%
~1,600
+15%
~400
-3%
~500
0%
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, Canada³ Emerging Asia = Asia w/o Japan, Australia, New Zealand
In € million, ∆% yoy Fx adjusted
40%
9%31%
20%
Emerging Asia³
LatinAmerica
• Q4/FY 2013 Investor Conference Call • Marijn Dekkers
Almost 98% of share capital tendered
Required regulatory approvals obtained
Compulsory acquisition and delisting intended
Closing expected in Q1’14
Enterprise value: ~€1.9bn
Significant synergies expected from full control over Xofigo
Significant synergies expected from complementary OTC business
Transaction agreement signed on February 26, 2014
Regulatory approval process prepared
Closing expected in H2 2014
Portfolio of well-known local consumer brands
Sales 2013*: €123m
Algeta ASA:Strengthening Oncology
Dihon Pharmaceutical Group:Chinese OTC brands
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Planned Bolt-on Acquisitions to Strengthen HealthCare Portfolio
• Q4/FY 2013 Investor Conference Call • Marijn Dekkers * Not audited
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Pharma – Incremental Investments in 2014 for a New Performance Level
0.4
1.5
~2.8
2012 2013 2014e
New product sales in € bn Launch product* sales target of ~€2.8bn
in 2014 (old aspiration 2015: >€2.5bn)
Launch phase to continue with >100 new launch events**
Continuous R&D investments in life-cycle management
R&D investments in new drug candidates
Increased marketing and sales investments in emerging markets
Incremental marketing and R&D investments of €0.5bn planned in 2014
* Xarelto, Eylea, Stivarga, Xofigo, Adempas** new indications and new countries• Q4/FY 2013 Investor Conference Call • Marijn Dekkers
Page 9
Pharma – Peak Sales Potential of NewProducts Raised to ≥€7.5bn*
*assuming approvals and launches as planned
Continued successful launch exe-cution and life cycle management
Successful launch and positive life cycle management
Unchanged
Unchanged
Unchanged
~€3.5bn
≥€1.5bn
≥€1bn
≥€1bn
≥€0.5bn
>€2bn
≥€1bn
Old New
• Q4/FY 2013 Investor Conference Call • Marijn Dekkers
FY 2014 Group Guidance –Further Sales and Earnings Growth
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2013 2014E*
Sales €40.2bn~5% to
~€41-42bn(neg. FX effect approx. -2%)
adj. EBITDA €8.4bnlow- to mid-single-digit % increase
(neg. FX effect approx. -5%)
core EPS €5.61mid-single-digit %
increase(neg. FX effect approx. -6%)
Sales ∆ Fx and portfolio adjusted, EBITDA before special items
*Assuming average Fx rates of Q4’13 (USD 1.36)Outlook depends on specific planning assumptions as detailed in the Annual Report• Q4/FY 2013 Investor Conference Call • Marijn Dekkers
FY 2014 –R&D and CapEx Budgets
Page 11
3%
MaterialScience~€0.2bn
HealthCare~€2.3nthereof Pharma ~€1.9bn
MaterialScience~€0.7bn
HealthCare~€0.7bn
Reconciliation~€0.1bn
65%26%
6%
Reconciliation~€0.2bn
CropScience~€0.9bn
CropScience~€0.6bn
CapEx (PPE) 2014e: ~€2.1bn (+20%)R&D 2014e: ~€3.5bn (+9%)
31%
28%
31%
10%
• Q4/FY 2013 Investor Conference Call • Marijn Dekkers
HealthCare Mid-single-digit % increase cpa.(FX -2%)
Slight increase (FX ca. -€250m)
PharmaHigh-single-digit % increase cpa.(FX -2%)Launch product sales: ~€2.8bn
Low- to mid-single-digit % increase (FX ca. -€150m)Adj. EBITDA margin: level with prior year (2016: ≥33%)
ConsumerHealth
Low- to mid-single-digit % increase cpa.(FX -3%)
Slightly below prior year (FX ca. -€100m)
CropScience Mid- to high-single-digit % increase cpa. (FX -3%)
Low-single-digit % increase (FX ca. -€150m)
MaterialScienceMid-single-digit % increase cpa.(FX -2%)
Q1’14 vs. Q1’13: increase cpa.
Increase (FX ca. -€50m)
Q1’14 vs. Q1’13: significant increase
FY 2014 –Guidance by Subgroup
Page 12*Assuming average Fx rates of Q4’13 (USD 1.36)
Sales ∆ Fx & portf. adjusted, EBITDA before special itemsOutlook depends on specific planning assumptions as detailed in the Annual Report
• Q4/FY 2013 Investor Conference Call • Marijn Dekkers
Sales Guidance* Adj. EBITDA Guidance*
Investor Conference CallFY/Q4 2013 Results
February 28, 2014 / Marijn Dekkers, CEO
Page 14
Appendix
• Q4/FY 2013 Investor Conference Call • Marijn Dekkers
Q4 2013 –HealthCare
Page 15*before special items
Sales Earnings1
Pharma+4% (+12%)
ConsumerHealth
-4% (+1%)36%
HealthCare €4,939m; +0% (+7%)
2,9751,964
Price+3%
Volume+5%
Fx-8%
Portfolio+1%
In € million, ∆% yoy, () = Fx & portf. adjusted
Q4‘12 Q4‘13 Q4‘12 Q4‘13
835 822
524 515
-2%
-2%
1,359 1,337 -2%
416 -3%
1,018 985 -3%
602
405
Adj.EBITDA*
Adj.EBIT*
580 -4%
• Q4/FY 2013 Investor Conference Call • Marijn Dekkers 1 Prior-year figures restated.
Sales Earnings1
Q4 2013 –CropScience
Page 16
Crop Protection+6% (+14%)
Environmental Science-11% (-5%)
Seeds+20% (+25%)
In € million, ∆% yoy, () = Fx & portf. adjusted
CropScience €1,951m; +5% (+13%)
Price+1%
Volume+12%
Fx-8%
Portfolio+1%
1,626
Q4‘12 Q4‘13 Q4‘12 Q4‘13
295319 +8%
168203 +21%
Adj.EBITDA*
Adj.EBIT*
154171
• Q4/FY 2013 Investor Conference Call • Marijn Dekkers *before special items
1 Prior-year figures restated.
Sales Earnings1
Q4 2013 –MaterialScience
Page 17**CAS: Coatings, Adhesives, Specialties *** IO: Industrial Operations
CAS**-8% (-1%)
In € million, ∆% yoy, () = Fx & portf. adjusted
*before special items
MaterialScience €2,691m; -3% (+2%)
Price-2%
Volume+4%
Fx-4%
Portfolio0%
1,472640
IO***-4% (-2%)
Q4‘12 Q4‘13 Q4‘12 Q4‘13
Adj.EBITDA*
Adj.EBIT*
264248 -6%
95 88 -7%
417
162
• Q4/FY 2013 Investor Conference Call • Marijn Dekkers 1 Prior-year figures restated.
Polyurethanes0% (+4%)
Polycarbonates-4% (-1%)
Q4 2013 –Cash Flow And Net Debt Development
Page 18
-€1.0bn
6.7
GCF oFCF
978
Invest-ments
776 804
∆y-o-y +35% >100%
NCF
1,580
+74% +4%Sep 30, 2013 Dec 31, 2013
7.7
Q4 2013 Cash Flow Net Debt DevelopmentCash Flow in € million, Net Debt in € billion
• Q4/FY 2013 Investor Conference Call • Marijn Dekkers
FY 2013 –HealthCare
• Q4/FY 2013 Investor Conference Call • Marijn Dekkers Page 19*before special items
2013 Sales Earnings1
Pharma+4% (+9%)
ConsumerHealth
-1% (+3%)36%
HealthCare €18,924m; +2% (+7%)
11,1887,736
Price+1%
Volume+6%
Fx-6%
Portfolio+1%
In € million, ∆% yoy, () = Fx & portf. adjusted
FY‘12 FY‘13 FY‘12 FY‘13
3,2323,490
1,887 1,844
+8%
-2%
5,1195,334 +4%
1,460 -3%
3,7873,973 +5%
2,327
1,421
Adj.EBITDA*
Adj.EBIT*
2,552 +10%
1 Prior-year figures restated.
FY 2013 –CropScience
• Q4/FY 2013 Investor Conference Call • Marijn Dekkers Page 20
Crop Protection+7% (+11%)
EnvironmentalScience
-4% (+1%)
*before special items
Seeds+1% (+1%)
2013 Sales Earnings1In € million, ∆% yoy, () = Fx & portf. adjusted
CropScience €8,819m; +5% (+9%)
Price+3%
Volume+7%
Fx-5%
Portfolio+1%
7,194
FY‘12 FY‘13 FY‘12 FY‘13
2,0252,248 +11%
1,543
1,801 +17%
Adj.EBITDA*
Adj.EBIT*
651974
1 Prior-year figures restated.
FY 2013 –MaterialScience
• Q4/FY 2013 Investor Conference Call • Marijn Dekkers Page 21
2013 Sales Earnings1In € million, ∆% yoy, () = Fx & portf. adjusted
MaterialScience €11,238m; -2% (0%)
Price0%
Volume+1%
Fx-2%
Portfolio0%
6,054
FY‘12 FY‘13 FY‘12 FY‘13
Adj.EBITDA*
Adj.EBIT*
1,263
1,072 -15%
613
429 -30%
Polycarbonates-6% (-5%)
CAS**-6% (-2%)
2,640
IO***-4% (-4%)
1,863
681
Polyurethanes+1% (+4%)
**CAS: Coatings, Adhesives, Specialties *** IO: Industrial Operations*before special items1 Prior-year figures restated.
FY 2013 –Cash Flow And Net Debt Development
Page 22
-€0.3bn 6.7
GCF oFCF
5,832
Invest-ments
2,157 3,014
∆y-o-y +28% +16%
NCF
5,171
+14% +12%Dec 31, 2012 Dec 31, 2013
7.0
FY 2013 Cash Flow Net Debt DevelopmentCash Flow in € million, Net Debt in € billion
• Q4/FY 2013 Investor Conference Call • Marijn Dekkers
FY 2013 –Regional Performance
• Q4/FY 2013 Investor Conference Call • Marijn Dekkers Page 23
Africa & Middle East
EasternEurope
Emerging Economies
EmergingEconomies¹
+7%
Others²+10%
USA+4%
Western Europe+2%
2013 Group Sales by Region
Group €40,157m; +5%
~5,100
+15%~5,800
+4%
~1,700
-1%~2,500
+7%
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, Canada³ Emerging Asia = Asia w/o Japan, Australia, New Zealand
In € million, ∆% yoy Fx adjusted
38%
10%31%
21%
Latin America
Emerging Asia³