Investor Conference. London, August 6, First Half 2003 Results

Transcription

1 Investor Conference London, August 6, 23 First Half 23 Results

2 Safe Harbor 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 2-F). The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments.

3 1H'3: Continued Progress in a Challenging Environment Strong local currency top line growth (+ 1% ) significantly improved (+ 4% ) Business momentum maintained in second quarter ( + 7 % in local currency / + 8%) Strong cash generation (gross cash flow + 56%) 2.2bn efficiency improvement program on track ( 347m contribution during 1H) Continued progress with Baycol settlement program (1,211 cases settled for $432m) Carve-out process continuing Outlook reconfirmed (double digit % growth in ) Committed to deliver solutions for strategic challenges Q2'3 Financial Highlights Q2'3 1H'3 7, ,612 1, items (net) (underlying) , DA 1, , Non-operating result (176) (348) Pre-tax income , After-tax income Net income Gross cash flow 1, , Net cash flow , Earnings/share ( )

4 Components of Q2 Trend Q2'2 Q2'3 7,54 + Acquisitions / Divestitures Aventis CropScience Haarmann & Reimer BCS disposals Household Insecticides -6 PolymerLatex -3 Organic Pigments -15 Others Currencies + Prices + Volumes (795) , bn Efficiency Improvement Program on Target contribution resulting from performance programs Services Chemicals Polymers CropScience HealthCare Q1'3 Q2'3 2H'3 Expectation FY'3 Expectation 2

5 15, Headcount Reduction Program on Track Number of employees Group Continuing FY'1 13,1* 126,2* Q2'2 Q3'2 127,8 124,2 123,5-3,6 FY'2 122,6 122,6 Q1'3 118,6 Q2'3 117,5 117,5 * including 13,2 from ACS ** including 1,5 from household insecticides - 4,** - 1,1 8,7-1,5 household insecticides 7,2 Q2 Items Q2 / 23 Q2 / 22 Charge Gain Net Charge Gain Net Net HealthCare (26) (24) CropScience (53) 4 (49) (49) Polymers (5) 31 (19) (126) (126) 17 Chemicals (11) (11) (12) (12) 1 Reconciliation (12) 13 1 (1) Continuing (14) (174) 89 (84) 11 Discontinuing Total (14) (174) 89 (84) 11 3

6 Key Figures for Business Areas HealthCare Q2'3 1H'3 Strong position in main parts of the business DA 2, , , CropScience Q2'3 1H'3 A new market leader is taking shape DA 1, , Polymers Q2'3 1H'3 A global market leader DA 2, , Chemicals Q2'3 1H'3 Strong positions in specialty applications DA , HealthCare Quarterly Performance 2,279 2,333 2,18 2,24 4,312 Strong local currency growth -4.9% -21.% -12.5% -6.2% -9.4 % Successful launch of new products Consolidation of turnaround in Biologicals continues to deliver % % % items (net) DA ,18 Q3'2* Q4'2* Q1'3* Q2'3 1H'3 * special items restated Underlying margin nearly maintained during Q2 33m contribution from efficiency programs 4

7 Pharmaceuticals / Biological Products Quarterly Performance 1,116 1,227 1,131 1,19 2,321 Strong local currency growth during Q2: Pharmaceuticals % Biologicals % -2.4% -25.8% -1.% +2. % % % -4.2% % Cipro sales boosted by first shipments to Barr Avelox sales affected by destocking (Q2 U.S. scripts + 36% ) Levitra launch on track Kogenate continues to regain market share items (net) DA Q3'2* Q4'2* Q1'3* Q2'3 1H'3 * special items restated Plasma products performed well in competitive environment More efficient cost structures bear fruit Top 1 Pharma / Biological Products Q2'3 % % in Loc. Curr. 1H'3 % % in Loc. Curr. 1 Cipro Adalat Kogenate* Gamimune* 78 ± Glucobay Prolastin* Avelox Trasylol Aspirin Cardio Levitra * Biological Products 5

8 Avelox Performance Intact: U.S. Prescription Trend Healthy Rx () 5 4 Ex-Factory Prescriptions Linear (Prescriptions) Trend Ja Ma Ma Ju Se No Ja Ma Ma Ju Se No Ja Ma Ma Ju Se No Ja Ma Ma Consumer Care / Diagnostics Quarterly Performance % -17.5% -16.% % items (net) -6.8% % 1, % % DA Q3'2* Q4'2* Q1'3* Q2'3 1H'3 * special items restated Q2 sales decline due to Fx and divestitures Consumer Care + 4.9% Fx and portfolio adjusted Diagnostics + 2.6% local currency growth Strong performance of nutritionals and Alka-Seltzer line Situation in key Latin American countries improving Competitive pressure in Self-Testing segment Divestiture of household insecticides resulted in 122m capital gain in Q2 6

9 Animal Health Quarterly Performance % -1.9% -11.8% +.9 % -5.3 % 85 Q2 local currency sales growth + 15% Successful start of Advantix in the U.S % % 4-2.% % -8.6 % Attractive profit margin maintained items (net) DA Q3'2* Q4'2* Q1'3 Q2'3 1H'3 * special items restated CropScience Quarterly Performance 1,661 1,567 1,435 1, % % +91.8% % 443 3, % 476 1H DA margin of 27% fully in line with planning Business maintained in some regions market share gains (EU) Integration progressing smoothly % % Q2 performance weak but not representative approx. 1m integration costs (incl. 53m one-offs) items (net) DA Q3'2* Q4'2* Q1'3* Q2'3 1H'3 * special items restated Q1 incl. 123m divestiture effects and margin on mandatory divestments unfavorable cost structure compared to Q1 7

10 Development Q1/Q2 23 Q2 Q1 1,949 1, Actual 1H'2* 3,228 1,567 1,661 Actual 1H' % -4. % pro forma** * Actual 1H'2 includes former ACS business after 6/1/2 ** Pro Forma excludes divestments Europe ( 1,13 million) Position strengthened in difficult market environment NAFTA ( 662 million) Strong corn/cereal campaign in U.S. & Insecticide/Herbicide year in Canada NEA ( 25 million) Core markets Japan & Korea affected by market downturn Cono Sur ( 14 million) Conditions in Brazil & Argentina stabilizing; Expect strong 2nd semester International ( 46 million) Dramatic reduction in cotton acreage in core country Australia Environmental Science ( 418 million) Unfavorable weather affecting U.S. Consumer Business BioScience ( 168 million) Nunza on Track; strong growth in cotton and canola Business Investor Conference J. Wulff August 6, 23 Development Q1/Q2 23 Q2 Q ( %) Key Factors: First-time consolidation of full 6 months of ACS business in 23 Extraordinary factors impacting 1H'3: Divestment effects and margin on mandatory divestments million Restructuring cost - 1 million Actual 1H'2* Actual 1H'3 * Actual 1H'2 includes former ACS business after 6/1/2 Investor Conference J. Wulff August 6, 23 8

11 Development Q1/Q ,661 Q1' % -5.7 % Revenues 33 1,567 Q2'3 Q1 / Q2 Variance in ROS: Top line sales decrease Change in product mix Restructuring costs Increased functional costs ForEx development Divestment gains Fipronil transaction Investor Conference J. Wulff August 6, 23 CropScience Q1 to Q2 Development % 32 Divestment Effects Capital Gains - 12 Margin Contribution Inventory Seasonality Product Mix items ForEx R&D Cost & Others Q1'3 "predisposals" before special items Q2'3 Investor Conference J. Wulff August 6, 23 9

12 Polymers Quarterly Performance 2,596 2,55 2,552 2,451 5,3 Economic environment remains challenging -1.2% +4.4% -2.3% -8. % % 143 Weak demand from key customer industries negatively affected by high and rising raw material and energy costs % % Selling prices remain unsatisfactory % Margin losses throughout portfolio items (net) DA Q3'2* Q4'2* Q1'3* Q2'3 1H'3 * restated Efficiency programs contributed 9m during 1H Plastics / Rubber Quarterly Performance 1,314 1,259 1,272 1,188 2,46 Engineering thermoplastics dropped 11% (1.7% in local currencies) +6.6% +1.1% +.6% % items (net) % -6.7 % % DA Q3'2* Q4'2* Q1'3* Q2'3 1H'3 * restated % % Rubber polymers down 17% (9.8% in local currencies) Strong volume growth for Makrolon Styrenics face weak demand and increased Asian competition Ongoing margin pressure requires continued restructuring and portfolio adjustments includes 3m gain from PolymerLatex divestiture 1

13 Polyurethanes / Coatings / Fibers Quarterly Performance 1,282 1,291 1,28 1,263 2,543 Q2 sales growth in local currency: Polyurethanes: % Coatings: + 2% -8.% -.7% -5.1% -2.1 % -3.6 % High capacity utilisation, especially in MDI segment 6-5.% Pricing pressure in Asia intensified Improved cost structures with positive impact on profits 26m restructuring charge items (net) DA Q3'2* Q4'2* Q1'3 Q2'3 1H'3 * restated Chemicals Quarterly Performance % -3.3% -6.7% % items (net) -63.9% 1, % Q3'2* Q4'2* Q1'3 Q2'3 1H'3 * restated % % % DA Portfolio and currency adjusted top-line decline only -.4% Positive sales development in Functional Chemicals H.C. Starck still suffering from low demand in key customer industries Ongoing margin pressure requires additional restructuring and portfolio adjustments 11

14 1H Non-Operating Result Q2'3 Q2'2 1H'3 1H'2 Non-operating result (176) 44 (348) (113) Income from affiliated companies net Interest expense net (17) (116) (22) (178) Interest portion of pension provisions (64) (7) (131) (137) Exchange gain net (3) (11) (6) Miscellaneous net (5) (5) (3) (26) Cashflow Figures Q1'3 Q2'3 1H'3 Gross cash flow 1,42 1,89 2, /- Change in working capital (1,239) (122) (1,361) (1,99) = Net cash flow ,13 (23) - Capital expenditures (476) (324) (8) 216 = Operating free cash flow (313) Interest, dividends (64) (864) (928) 54 = Free cash flow (377) (221) (598) 67 - Acquisitions / divestments 1, ,455 4,93 = Free cash flow after acquisitions 1,29 (172) 857 4,997 - Derivatives, currency, others ,699 Net debt (financial statements) (1,133) 3 (1,13) 6,696 12

15 Outlook Economic environment expected to remain challenging in the second half of 23 Limited scope to increase selling prices Raw material and energy costs expected to remain high Weakness of the U.S. dollar Focus on cost-cutting and efficiency improvements Further seasonal decline in CropScience business HealthCare earnings restrained by launch costs of Levitra and competitive pressure on Cipro Double digit percentage increase in Committed to find strategic solution for challenges Investor Conference London, August 6, 23 Appendix 13

16 Polymers Raw material and selling price development Raw materials Prices Q1 2 Q2 2 Q3 2 Q4 21 Q1 21 Q2 21 Q3 21 Q4 22 Q1 22 Q2 22 Q3 22 Q4 23 Q1 23 Q2 1H Items 1H / 23 1H / 22 Charge Gain Net Charge Gain Net Net HealthCare (22) (27) CropScience (53) 38 (15) (15) Polymers (62) 3 (32) (185) (185) 153 Chemicals (13) (13) (45) (45) 32 Reconciliation (418) Continuing (15) (257) (1) Discontinuing Total (15) (257) (1) 14

17 Investor Relations Contacts Dr. Alexander Rosar Head of Investor Relations Building W 11 D Leverkusen Phone: Fax: alexander.rosar.ar1@bayer-ag.de Dr. Jürgen Beunink Investor Relations Manager Building W 11 D Leverkusen Phone: Fax: juergen.beunink.jb@bayer-ag.de Judith Nestmann Investor Relations Manager Building W 11 D Leverkusen Phone: Fax: judith.nestmann.jn@bayer-ag.de Peter Dahlhoff Investor Relations Manager Building W11 D Leverkusen Phone: Fax: peter.dahlhoff.pd@bayer-ag.de Calendar of Events Date Event Location Publication Thursday March 6, 23 Thursday March 13, 23 Friday March 14, 23 Friday April 25, 23 Friday May 2, 23 Monday May 7, 23 Wednesday August 6, 23 Tuesday November 11, 23 Tuesday November 11, 23 Spring Supervisory Board Dividend Proposal Meeting Spring Press Conference Leverkusen Full Year 22 Results Annual Report Spring Investor Conference Leverkusen Financial Presentations to Analysts & Investors Annual Shareholders' Cologne Meeting Dividend Payment Conference Call Leverkusen 1st Quarter 23 Stockholders' Newsletter, Review of Business Performance Half Year Investor Conference London 1st Half 23, Stockholders' Newsletter, Review of Business Performance Fall Press Conference Leverkusen 3rd Quarter 23 Stockholders' Newsletter Fall Investor Conference Leverkusen Financial Presentations to Analysts & Investors 15