Spring Investor Conference Werner Wenning CFO and Member of the Board

Transcription

1 Spring Investor Conference 2002 Werner Wenning CFO and Member of the Board

2 Safe Harbour This presentation contains forward-looking statements based on current assumptions and forecasts made by Bayer Group management. Various known and unknown risks, uncertainties and other factors could lead to material 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 our public reports filed with the Frankfurt Stock Exchange and with the U.S. Securities and Exchange Commission (including our Form 20-F). The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments.

3 A Far-Reaching Transformation... Focus Portfolio management Outcome Optimization of business mix Capital allocation Strict capital discipline Organization Management holding structure Efficiency improvement Ideally prepared for next upswing Corporate culture Entrepreneurship, performance orientation... to significantly increase corporate value

4 A Far-Reaching Transformation... Focus Portfolio management Outcome Optimization of business mix Capital allocation Strict capital discipline Organization Management holding structure Efficiency improvement Ideally prepared for next upswing Corporate culture Entrepreneurship, performance orientation... to significantly increase corporate value

5 Strategic Priorities* Sales (cont.) 2001: EUR 28,938 million Health Care Find strategic partner + Aventis Behring + Vardenafil Co-promotion - Household insecticides - Generics (F, E, SA) 38% 10% CropScience Successfully manage ACS integration + ACS acquisition 13% 39% Polymers Expand global leadership - Rhein Chemie - PolymerLatex Chemicals Continue restructuring - Haarmann & Reimer * Animal Health business included in Health Care The acquisition of Aventis CropScience is subject to regulatory approval

6 Portfolio Optimization Continues EUR million Acquisitions/ Joint Ventures Divestitures 2001 Jan + Mikado 2001 May Erdölchemie Aug + Aventis CropScience 1) Dec Haarmann & Reimer 2) PolymerLatex 2) Rhein Chemie 2) Generics (F, SA, E) 2) 2002 Jan Real estate Organic pigments 2002 Feb + Aventis Behring 1) Mar Household insecticides 2) 1) subject to relevant approvals 2) pending

7 A Far-Reaching Transformation... Focus Portfolio management Outcome Optimization of business mix Capital allocation Strict capital discipline Organization Management holding structure Efficiency improvement Ideally prepared for next upswing Corporate culture Entrepreneurship, performance orientation... to significantly increase corporate value

8 Strict Capital Spending Discipline Enforced EUR million 1.8 2,703 2,632 2,647 2,617 2,516 1, ,811 2, Plan CapEx: Capital Expenditure CapEx/D&A-Ratio D&A: Depreciation & Amortization

9 A Far-Reaching Transformation... Focus Portfolio management Outcome Optimization of business mix Capital allocation Strict capital discipline Organization Management holding structure Efficiency improvement Ideally prepared for next upswing Corporate culture Entrepreneurship, performance orientation... to significantly increase corporate value

10 Building a Highly Competitive Business Platform Stronger focus on markets, core competencies and business performance Strengthen entrepreneurial approach, direct management and direct responsibility for earnings Group Management Board Corporate Center- Departments Reduce complexity of corporate organization and governance Achieve necessary flexibility for strategic partnerships and integration of acquisitions Bayer Health Care AG Bayer Crop Science AG Bayer Polymers AG Bayer Chemicals AG Exploit cross-business-group synergies in business area companies more efficiently Enhance visibility and competitive stance of service functions Bayer Business Services GmbH Bayer Technology Services GmbH Bayer Standort Dienste GmbH & Co. OHG

11 The New Bayer* Principle of new corporate structure Most effective possible support for businesses and sufficient flexibility for mastering strategic challenges Group Management Board Corporate Center- Departments Bayer Health Care AG Bayer Crop Science AG Bayer Polymers AG Bayer Chemicals AG Services Bayer Business Services GmbH Bayer Technology Services GmbH Bayer Standort Dienste GmbH & Co. OHG *Subject to stockholders approval

12 The New Group Management Board Werner Wenning Chairman Dr. Richard Pott Strategy, Human Resources and Labor Director Klaus Kühn Finance Dr. Udo Oels Technology and Environment Werner Spinner Marketing, Regions and Services Corporate Policy Corporate Coordination Communication Investor Relations Portfolio Management Allocation of resources Group HR policy HR Management and development Finance Planning and Controlling Tax and Legal Mergers & Acquisitions Technology Management Innovation Management Environmental and Safety Policy Technology Excellence Initiatives Business Excellence Initiatives Regions Business Services Information and Knowledge Management

13 The New Bayer Holding Structure Group Management Board Corporate Center-Departments Corporate Planning and Controlling Communications Investor Relations Finance Legal, Intellectual Properties, Insurances Taxes Int. HR Management Health, Safety and Environment Management Corporate Auditing

14 Bayer HealthCare AG Board of Management Chairman Dr. F. Morich Head of Animal Health Head of Pharma Administration Head of Biological Products Head of Diagnostics Head of Consumer Care Head of Strategy Global Executive Committee Animal Health Biological Products Consumer Care Diagnostics Pharma Administr. & Services Strategy Germany USA USA USA Germany Germany USA

15 Bayer CropScience AG Board of Management Chairman Dr. J. Wulff Business Operations Dr. E. Zirakparvar Technology Dr. B. Garthoff Administration W. Scherf Portfolio Management Research Development Industrial Operations Supply Chain Europe France NAFTA USA Cono Sur Brazil North-East Asia Japan International Germany Environmental Science France BioScience France Planning, Contr. & Coordination Accounting Inform. Technology Business Processes Procurement Communications Legal & Patents Human Resources

16 Bayer Polymers AG Board of Management Chairman Dr. H. Noerenberg Innovation, Information, Services Operations Head of Europe Head of America Head of Asia Global Executive Committee Innovation Product units Europe America Asia Germany USA Hong Kong Services Technology

17 Bayer Chemicals AG Board of Management Chairman Dr. U. Koemm Technology, R & D, Services Business Units, Regions H.C.Starck Research & Development Units Units Units Technology Planning, Contr., Reporting Business Services Units Units Regions

18 The New Bayer* Principle of new corporate structure Most effective possible support for businesses and sufficient flexibility for mastering strategic challenges Group Management Board Corporate Center- Departments Bayer Health Care AG Bayer Crop Science AG Bayer Polymers AG Bayer Chemicals AG Services Bayer Business Services GmbH Bayer Technology Services GmbH Bayer Standort Dienste GmbH & Co. OHG *Subject to stockholders approval

19 A Far-Reaching Transformation... Focus Portfolio management Outcome Optimization of business mix Capital allocation Strict capital discipline Organization Management holding structure Efficiency improvement Ideally prepared for next upswing Corporate culture Entrepreneurship, performance orientation... to significantly increase corporate value

20 Productivity, Employees and Personnel Expenses Sales per employee (EUR thousands) +47% Employees (thousands) Total Foreign -21% -17% Domestic -26% * 2001* Personnel expenses (% of sales) * Continuing operations

21 Efficiency Improvement Program Planned savings of EUR 1.8 bn by 2005 Number of projects: 9 Total one-time charges 640 Headcount reduction: 5, ,734 Identified Net Savings (after excep.) 605 EUR million Total

22 Working Capital Initiative Time Objective Reduction of working capital EUR 1 bn End 01 End 02 Improvement of working capital processes and organization Receivables Management Payables Management Inventory Management EUR bn Broadly based program initiated Wide range of actions identified

23 Strong Working Capital Performance EUR million %YoY 3,859 Net cash flow 1, , , , Gross cash flow , % Change in net working capital ,375 2,009 W. Cap. Improvement (prev. year) Q1 Q2 Q3 Q4 Year

24 A Far-Reaching Transformation... Focus Portfolio management Outcome Optimization of business mix Capital allocation Strict capital discipline Organization Management holding structure Efficiency improvement Ideally prepared for next upswing Corporate culture Entrepreneurship, performance orientation... to significantly increase corporate value

25 Components of 2001 Sales Trend EUR million Sales Discontinuing Continuing + Acquisitions/ Divestitures +Currencies +Prices Volumes Continuing % 30,971 2,356 28,615 30,275 1, , Acquisitions Lyondell CSM Flint Mikado + 46 Sybron Cytec + 83 Others Divestitures 124 Covexx 61 Biologicals (AH) 30 H-acid 18 Bayer Solar 15

26 Year 2001 Comparable Operating Income EUR million % OPI reported Segments Reconciliation * accounted as at equity since ,611 1,504 (262) 3,287 3,303 (239) Discontinuing operations H&R Fibers Erdölchemie (OPI + Sale) DyStar* OPI continuing Exceptional items (cont.) OPI underlying continuing operations 73 (37) 333 1,242 (613) ,064 (145) ,855 3,

27 Non-operating result EUR million Q YoY Non-operating result Income (expenses) from affiliated companies net Interest expense net Interestportionpension provisions Exchange gain net Miscellaneous net

28 Health Care Full Year 2001 EUR million FY 01 9, Q4 2, Q3 1H Q2 7, % 2,167 4, % 2, % 55.8% % 38.7% Q1 2, Sales % % % Op. Income (reported) Exceptionals (net) Op. Income (underlying)

29 Agriculture Full Year 2001 EUR million FY 01 3, Q Q3 1H Q2 2, % 787 2, % 1, % % % % Q Sales % % % Op. Income (reported) Exceptionals (net) Op. Income (underlying)

30 Polymers Full Year 2001 EUR million FY 01 Q4 10,788 2, Q3 1H Q2 8, % , % 39.6% 5, % % 27.6% 2, Q1 2, Sales % % % Op. Income (reported) Exceptionals (net) Op. Income (underlying)

31 Chemicals Full Year 2001* EUR million FY 01 Q4 1-9 Q3 1H Q2 Q1 3, , % 866 2, % 1,028 1,022 Sales % % % % % % % Op. Income (reported) Exceptionals (net) Op. Income (underlying) *completely restated (without H & R)

32 R & D and CapEx. Budgets for 2002 EUR million CapEx. R&D Polymers 37% Chemicals 16% 15% Central 6% 58% Health Care 7% 7% 25% Chemicals 13% 16% CropScience Health Care Polymers CropScience 2,335 (cont.) 2,440 (cont.) ( 8.5 % to 2001) ( 1.9 % to 2001) Animal Health included in CropScience

33 Outlook 2002 Health Care Higher operating earnings (pre-exceptionals) expected Agriculture Closing of ACS acquisition decisive Polymers & Chemicals First half expected to remain difficult Economic recovery expected during second half of 2002 Distinct improvement in net income targeted

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35 Spring Investor Conference 2002