Safe Harbour. Investor Handout Spring 2002

Transcription

1 Investor Handout Spring 2002

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 1. 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 2. Acceleration of Portfolio Management: Nearly 16 bn since 96 Sales in million Bayer 7,500 Acquisitions 1) ACS 2) 4,300 Flint 3) 50 CSM 130 Sybron 230 Cytec paper chemicals 70 Polyols & PO j.v. 800 Gustafson (50%) 110 Chiron Diagnostics 500 Graphic Arts 450 Sheet business 200 Roche j.v ,300 1) major examples since ) 2001 sales; subject to regulatory approval 3) 2004 estimate 300 4) pending Divestitures 1) Household insecticides 4) 390 Haarmann & Reimer 4) 870 Rhein Chemie 4) 300 PolymerLatex (50%) 4) 200 Spandex fibers 4) 220 Acrylic fibers 160 Erdölchemie 460 DyStar 400 Agfa 4,350 Titanium dioxide 210 Silicones 220 Citric acid 250 Enamels 100 Skin & body care 115

5 3 Ov. Proactive Portfolio Management 1) million HC Ag Pol Ch Acqui- sitions /022) + Chiron + Millennium + Gustafson + Seed treatment Citric acid TiO 2 Silicones Zeolites + Oncogene + Lion Bioscience Allergens + Pbi Home & Garden + PC shields + PC shields + Laserlite + Elastochem + Rid Schein Myriad Tropon Basics + Flint + Misung Biologicals + Lyondell DyStar + Sybron + CSM + Cytec paper chemicals Solar-grade Silicon 1, ,160 7,450 1) Major examples, acquisition prices rounded 2) pending/subject to regulatory approval/as of Feb. 02 3) incl. Agfa & others 4) Non-binding letter of intent, subject to relevant approvals + CuraGen + Aventis Behring 4) Generics 2) Household insecticides 2) + Mikado + ACS 2) Acrylic fibers Rhein Chemie 2) Polymer Latex 2) Organic Pigments US 2) Erdölchemie Covexx Films Haarmann & Reimer 2) Acqui- sitions 1,300 8,500 2, ,400 3)

6 4 Portfolio Optimization Continues Acquisitions/ Joint Ventures Divestitures 2001 Jan + Mikado 2001 May Erdölchemie Aug + Aventis CropScience 1) Dec Haarmann & Reimer 2) PolymerLatex 2) Rhein Chemie 2) Generics 2) (F, SA, E) 2002 Jan Real estate Organic pigments 2002 Feb + Aventis Behring 1) Mar Household insecticides 2) 1) subject to relevant approvals 2) pending

7 5. Strategic Priorities Health Care CropScience Polymers Chemicals Find strategic partner Successfully manage ACS integration Expand global leadership Continue restructuring Life cycle management of established products Successful launch of new products Build the pipeline Establish new business group Biologicals Achieve Diagnostics restructuring targets Gain market share Optimize regional presence Exploit full synergy potential Achieve margin target Develop position of Agbio Optimize business mix Concentrate on high-valueadded polymers Exploit growth potential in Asia Research new areas of applications Achieve specific efficiency improvements Streamline portfolio rigorously Strengthen specialty business Consider all options for cooperations Achieve targeted cost savings Find long-term solutions for Basic, Fine and Specialty Chemicals

8 6 Bayer Health Care: Strong Presence in Main Areas of the Business Sales 2001: 10.7 bn Consumer Care Aspirin Alka-Seltzer Canesten Pharmaceuticals Cipro Adalat Avelox Trasylol 20% 44% 19% 8% 9% Diagnostics Glucometer Elite Advia Centaur ACS Animal Health* Advantage Baytril Biologicals Kogenate Gamimune * Animal Health business is part of Health Care effective January 1, 2002

9 7 Building a New Biologicals Company* Bayer Biologicals Sales 2001: 945 m Others Albumin % % Kogenate % Prolastin % % Gamimune Combination of Bayer s Biologicals with Aventis Behring Bayer would own a substantial majority interest Option of acquiring the remaining interest at a later date Attractive long-term growth prospects Reliable and steady plasma supply Potential to optimize plasma utilization Potential to increase efficiency in quality assurance and manufacturing processes Stronger pipeline and technology platform in million euros * Non-binding letter of intent to establish a joint venture, subject to due diligence, the negotiation of a final agreement, approval by the boards of both companies and regulatory authorities

10 8 A World Class Drug Discovery Platform patho mechanism molecular target screening Genomics Functional Genomics Proteomics Bioinformatics High Throughput Screening Millennium CuraGen Myriad Genome Therap. Incyte Nova DX Affymetrix Dyax Onyx Oxford Glyco Science Lion Bioscience CyBio Novalon Receptron More than 1bn investment committed US $ 465 million genomics cooperation with Millennium Bioinformatics alliance with Lion Bioscience optimization Combinatorial Chemistry Substance Libraries Pharmacopeia ArQule ComGenex Oxford Asymmetry Genzyme Genetics Institute Morphosys First risk/reward sharing agreement with CuraGen Toxicogenomics CuraGen

11 9 Substantial Growth of the Pipeline Research Development Number of candidates/year Number of candidates/stage * * objective Preclinical Phase I Phase II Phase III Phase III / NDAs Vardenafil: Cipro OD: Acarbose IGT: Repinotan: Faropenem: highly selective and potent PDE 5 inhibitor, filed in US, EU and Japan innovative once daily formulation new indication for Glucobay/ Precose intravenous drug for the treatment of acute stroke new broad spectrum antibiotic

12 10 HC Vardenafil: The New Blockbuster Peak sales potential > 1 bn A highly selective and potent PDE 5 inhibitor Significant improvement in key efficiency parameters irrespective of age, severity and etiology A very favorable safety profile Global co-promotion partner (except Japan): GSK NDA submission: 9/2001 US, Mexico 10/2001 Canada, South Africa 12/2001 Europe, Japan % Yes Improvement of erections after treatment with Vardenafil General Population Diabetics 65 % 80 % 85 % 57 % 72 % 28 % 13 % Placebo 5 mg 10 mg 20 mg Placebo 10 mg 20 mg

13 11 Strategic Priorities Health Care CropScience Polymers Chemicals Find strategic partner Successfully manage ACS integration Expand global leadership Continue restructuring Life cycle management of established products Successful launch of new products Build the pipeline Establish new business group Biologicals Achieve Diagnostics restructuring targets Gain market share Optimize regional presence Exploit full synergy potential Achieve margin target Develop position of Agbio Optimize business mix Concentrate on high-valueadded polymers Exploit growth potential in Asia Research new areas of applications Achieve specific efficiency improvements Streamline portfolio rigorously Strengthen specialty business Consider all options for cooperations Achieve targeted cost savings Find long-term solutions for Basic, Fine and Specialty Chemicals

14 12 ACS Acquisition Agreement* million Acquisition price 7,250 (incl. debt, 100% of shares) Sales ,300 StarLink Dilution year 1 year 2 Synergies Technology and potential liabilities remain with sellers 0.30 EPS 0.05 EPS approx. 500 per year Restructuring costs approx. 500 Goodwill Closing approx. 4,000 (over 12 years) April 2002 * The acquisition of Aventis CropScience is subject to regulatory approval

15 13 Cr Bayer CropScience Enormous Potential billion % % 8.1** 20% % % 0.85* CombiCo (pro forma) 2000 Bayer 2001 ACS 2001 CombiCo (pro forma) 2001 CombiCo Target 2005 Sales EBIT (pre exceptionals) EBIT-Margin ** excluding 625m one-time charges ** without future divestments

16 14. Strategic Priorities Health Care CropScience Polymers Chemicals Find strategic partner Successfully manage ACS integration Expand global leadership Continue restructuring Life cycle management of established products Successful launch of new products Build the pipeline Establish new business group Biologicals Achieve Diagnostics restructuring targets Gain market share Optimize regional presence Exploit full synergy potential Achieve margin target Develop position of Agbio Optimize business mix Concentrate on high-valueadded polymers Exploit growth potential in Asia Research new areas of applications Achieve specific efficiency improvements Streamline portfolio rigorously Strengthen specialty business Consider all options for cooperations Achieve targeted cost savings Find long-term solutions for Basic, Fine and Specialty Chemicals

17 15. Customer Structure Sales 2001: 14.5 bn (Polymers & Chemicals) Health Care* Polymers 20 % 13 % Automotive Electronics 38% 39% 12 % Construction 16 % Chemicals 10% CropScience* 13% Chemicals 8 % 6 % 25 % Furniture Textile, Leather & Footwear Others * Animal Health business included in Health Care

18 16. Concentration on High-Value-Added Polymers PVC 14% PP 16% PS 8% PE 29% 1% 3% 3% 5% 4% PET 5% 7% 5% Engineering Thermoplastics Others PC ABS Solid Rubber Thermosetting Resins Others Coatings PU World market polymers 01e; Total 185m tons

19 17. Global Leadership in High-Value-Added Polymers Sales 2001: 10.8 bn sales% ms% # Polycarbonates Styrenics % Plastics Semicrystalline Thermoplastics 10 > 5 6 Fabricated Products 10 > 20 2 TPU 5 > 20 2 sales% TDI 17 ms% 25 # 1 20% Rubber 19% Coatings and Colorants 30% Polyurethanes MDI 33 Polyols 43 sales% ms% # Isocyanates 38 Adhesives 14 Colorants 25 Others 23 > ms = Market share # = Ranking

20 18 Strategic Priorities Health Care CropScience Polymers Chemicals Find strategic partner Successfully manage ACS integration Expand global leadership Continue restructuring Life cycle management of established products Successful launch of new products Build the pipeline Establish new business group Biologicals Achieve Diagnostics restructuring targets Gain market share Optimize regional presence Exploit full synergy potential Achieve margin target Develop position of Agbio Optimize business mix Concentrate on high-valueadded polymers Exploit growth potential in Asia Research new areas of applications Achieve specific efficiency improvements Streamline portfolio rigorously Strengthen specialty business Consider all options for cooperations Achieve targeted cost savings Find long-term solutions for Basic, Fine and Specialty Chemicals

21 19 Chemicals Business Portfolio and Operational Performance Substantially Improved Sales 4,898 m Inorganics Organic Chemicals Specialty Products H.C. Starck EC Erdölchemie H-acid Solar-grade silicon Titanium dioxide Silicones Citric acid Enamels Abrasives & Refractory divested Cytec Sybron CSM Sales 3,748 m Basic & Fine Chemicals Specialty Products H.C. Starck DyStar divested Haarmann & Reimer to be divested regrouped Wolff Walsrode 1996 Divestitures 2,600 Acquisitions 480 Headcount 10,000* 2001 * including 3,800 of H & R

22 20 Bayer Chemicals Attractive Opportunities in Specialist Applications Sales 2001: 3.7 bn H.C. Starck Metallic powders Mill products Ceramic powders Basic & Fine Chemicals Fine chemicals 27 % Basic chemicals 49 % Inorganic basic chemicals 22 % Others 2 % 22% 27% 12% 39% Wolff Walsrode Cellulose derivatives Plastic films Specialty Products Leather chemicals 22 % Textile auxiliaries 27 % Paper chemicals 21 % Polymer additives 11 % Material protection 8 % Ion exchange 10 %

23 21 Corp. Strategic Priorities* Sales (cont.) 2001: m Health Care Find strategic partner 38% 10% CropScience Successfully manage ACS integration 13% 39% Polymers Expand global leadership Chemicals Continue restructuring * Animal Health business included in Health Care The acquisition of Aventis CropScience is subject to regulatory approval

24 22 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 23 Strict Capital Spending Discipline Enforced million 1.8 2,703 2, ,647 2,139 2,617 2,516 1,543 1, Plan CapEx: Capital Expenditures CapEx/D&A-Ratio D&A: Depreciation & Amortization

26 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

27 25 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 Reduce complexity of corporate organization and governance Achieve necessary flexibility for strategic partnerships and integration of acquisitions Exploit cross-business-group synergies in business area companies more efficiently Enhance visibility and competitive stance of service functions

28 26 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

29 27 The New Group Management Board Werner Wenning Chairman Corporate Policy Corporate Coordination Communication Investor Relations Dr. Richard Pott Strategy, Human Resources and Labor Director Klaus Kühn Finance Dr. Udo Oels Technology and Environment Werner Spinner Marketing, Regions and Services 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

30 28 The New Bayer Holding Structure Group Management Board Corporate Center-Departments Corporate Planning and Controlling Finance Int. HR Management Communications Legal, Intellectual Properties, Insurances Health, Safety and Environment Management Investor Relations Taxes Corporate Auditing

31 29 Bayer HealthCare AG Board of Management Global Executive Committee Chairman Head of Animal Health Head of Pharma Administration Dr. F. Morich Head of Biological Products Head of Diagnostics Head of Consumer Care Head of Strategy Animal Health Biological Products Consumer Care Diagnostics Pharma Administr. & Services Strategy Germany USA USA USA Germany Germany USA

32 30 Bayer CropScience AG Board of Management Chairman Business Operations Technology Administration Dr. J. Wulff Dr. E. Zirakparvar Dr. B. Garthoff W. Scherf Portfolio Management Development Industrial Operations Supply Chain Europe Cono Sur North-East Asia International France Environmental Science Research NAFTA BioScience USA Brazil Japan France France Planning, Contr. & Coordination Accounting Information Technology Business Processes Procurement Communications Legal & Patents Human Resources Germany

33 31 Bayer Polymers AG Board of Management Chairman Innovation, Information, Services Operations Dr. H. Noerenberg Global Executive Committee Head of Europe Head of America Head of Asia Innovation Product units Europe America Asia Germany USA Hong Kong Services Technology

34 32 Bayer Chemicals AG Board of Management Chairman Dr. U. Koemm Technology, R & D, Services Business Units Regions H. C. Starck Research and Development Units Technology Regions Planning, Contr., Reporting Business Services

35 33 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

36 34 Productivity, Employees and Personnel Expenses Sales per + 47 % employee (EUR thousands) Employees (thousands) Total 21 % Foreign 17 % Domestic 26 % * 2001* Personnel expenses (% of sales) * Continuing operations

37 35 Efficiency Improvement Program Planned savings of 1.8 bn by 2005 Number of projects: 9 Total one-time charges: 640 Headcount reduction: 5, ,734 Identified Net Savings (after excep.) Total million

38 36 Working Capital Initiative Time Objective Reduction of working capital 1 bn End 01 Improvement of working capital processes and organization Receivables Management Payables Management Inventory Management bn End 02 Broadly based program initiated Wide range of actions identified

39 37 Strong Working Capital Performance million % YoY 3, ,923 1, Net cash flow Gross cash flow 1, , , % Change in net working capital ,375 2,009 W. Cap. improvement (prev. year) Q1 Q2 Q3 Q4 Year 2001

40 38 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

41 39 Financial Highlights million Q4 % 2001 % Sales 7, , Sales (cont.) 7, , Operating income , Operating income (cont.) , Operating income , pre-exceptionals (cont.) Non-operating result Pre-tax income , After-tax income Net income Earnings/share Euro Dividend Euro

42 40 Components of 2001 Sales Trend million % Sales Discontinuing 30,971 2,356 30,275 1, Continuing 28,615 + Acquisitions/ Divestitures Acquisitions Lyondell CSM Flint Mikado + 46 Sybron Cytec + 83 Others Divestitures 124 Covexx 61 Biologicals (AH) 30 H-acid 18 Bayer Solar 15 + Currencies + Prices Volumes Continuing 28,

43 41 Quarterly Sales Development* million % 4th quarter 7,372 8, H & R Fibers EC 162 DyStar 88 Continuing operations 7,115 7, rd quarter 6,931 7, H & R Fibers EC 162 DyStar 85 Continuing operations 6,651 7, nd quarter 8,071 7, H & R Fibers EC DyStar 93 Continuing operations 7,732 7, st quarter 7,901 7, H & R Fibers EC DyStar 84 Continuing operations 7,440 6, * completely restated

44 42 Comparable Operating Income million % OPI reported 1,611 3, Segments 1,504 3, Reconciliation (262) (239) Discontinuing operations H & R Fibers (37) 51 Erdölchemie (OPI + Sale) DyStar* 5 OPI continuing 1,242 3, Exceptional items (cont.) (613) (145) OPI underlying 1,855 3, continuing operations * accounted as at equity since 2001

45 43 Quarterly OPI Development* million % 4th quarter H & R Fibers (10) 4 EC 46 DyStar (6) Exceptional items (105) (102) OPI underlying continuing operations rd quarter (316) H & R Fibers (8) 13 EC (1) 20 DyStar 5 Exceptional items (373) (21) OPI underlying continuing operations nd quarter H & R Fibers (4) 18 EC (OPI + Sale) DyStar 3 Exceptional items (47) (18) OPI underlying continuing operations st quarter 848 1, H & R Fibers (15) 16 EC DyStar 3 Exceptional items (88) (4) OPI underlying continuing operations * completely restated

46 44 Q Exceptional Items million Charge Gain Net Charge Gain Net Net Health Care Agriculture Polymers Chemicals Reconciliation Cont Discont Total

47 45 FY 2001 Exceptional Items million Charge Gain Net Charge Gain Net Net Health Care Agriculture Polymers Chemicals Reconciliation Cont Discont Total

48 46 Non-Operating Result million Q YoY Non-operating result Income (expenses) from affiliated companies net Interest expense net Interest portion pension provisions Exchange gain net Miscellaneous net

49 Sales by Region Total 30,275 million, 2.2 % Continuing operations 28,938 million, % Germany 0.2 % Europe % 8,116 12,999 9,806 2,316 3,817 North America % Latin America % Far East/Asia/Pacific % point of origin

50 Segment Restatements million 2001 Segments w/o restatements Chemicals 4,618 (16 %) Polymers 10,788 (37 %) Agriculture 3,696 (13 %) Health Care 9,833 (34 %) Segments sales 28,938 Restatements* Animal Health (988), w/o Environmental Health (129) to Health Care Environmental Health to Crop Science H & R (872) to Discontinuing Operations Electronic Chemicals (40) from Basic and Fine Chemicals to H. C. Starck PolymerLatex (200) and Rhein Chemie (300) remain in Polymers until divested 2001 Segments restated Chemicals 3,749 (13 %) Polymers 10,788 (39 %) CropScience 2,708 (10 %) Health Care 10,692 (38 %) Segments sales 27,937 * Sales figures for FY 2001

51 49 Health Care Full Year 2001 million FY 01 9, Q4 2, Q3 2,167 1H Q2 7, % 4, % 2, % % % % Q1 2, Sales % % % Op. Income (reported) Exceptionals (net) Op. Income (underlying)

52 50 Pharmaceuticals Top 10 Products million Q4 01 % 2001 % (1) Ciprobay , (2) Adalat (3) Lipobay (4) Gamimune (5) Glucobay (6) Kogenate (7) Avelox (8) Trasylol (9) Prolastin (10) Nimotop

53 51 Agriculture Full Year 2001 million FY 01 3, Q , % 125 Q H 16.4% 2, % % Q2 1, % % Q Sales % % % Op. Income (reported) Exceptionals (net) Op. Income (underlying)

54 52 Polymers Full Year 2001 million FY 01 10, Q4 2, H Q2 8, % Q3 2, , % % 2, % 39.6% % Q1 2, Sales % % % Op. Income (reported) Exceptionals (net) Op. Income (underlying)

55 53 Chemicals Full Year 2001* million FY 01 3, Q Q H Q2 Q1 2, % 2, % 1,028 1,022 Sales % % Op. Income (reported) Exceptionals (net) % % Op. Income (underlying) % % % * completely restated (without H & R)

56 54 R & D and CapEx. Budgets for 2002 million CapEx. R & D Polymers Chemicals Health Care 16% 58% 37% 15% Central 6% 7% 25% Chemicals 7% 13% 16% Crop Science Health Care Polymers Crop Science 2,335 (cont.) ( 8.5 % to 2001) 2,440 (cont.) ( 1.9 % to 2001) Animal Health included in CropScience

57 55 Full Year 2001 Overview by New Reporting Segments Sales Q1/ Q2/ Q3/ Q4/ Q1/ Q2/ Q3/ Q4/ ( million) % 2001 % 2001 % 2001 % Pharma 1,394 1,467 1,527 1,752 1, , , , CC + DS , , , , Health Care 2,304 2,442 2,518 2,763 2, , , , Crop Protection Animal Health Agriculture 1,025 1, , KA + KU 1,365 1,446 1,476 1,528 1, , , , PU + LS 1,069 1,337 1,332 1,338 1, , , , Polymers 2,434 2,783 2,808 2,866 2, , , , Chemicals , , OPI pre-except. ( million) Pharma CC + DS Health Care Crop Protection Animal Health Agriculture KA + KU PU + LS Polymers Chemicals

58 56 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