Investor Handout. Financials. Strategy R & D

Transcription

1 Investor Handout Financials Strategy R & D

2 Sustained increase in the company s value Focus on creating value and improving profitability State-of-the-art portfolio management system Expansion of life science activities Acceleration of portfolio management Stock option plan introduced Transparency and investor relations

3 Expansion of life science activities continues 1999 Target Polymers Polymers 38 % 34 % Health Care 40 % 35 % 18 % Chemicals 13 % 15 % 10 % Agriculture Chemicals % of total sales

4 Acceleration of portfolio management: Nearly 3 9bn since 96 Sales in 3 million * since 1996 Bayer 28,000 2,900 5,900 Acquisitions* Polyols & PO j.v. 800 Gustafson (50%) 110 Chiron 500 Graphic Arts 450 Sanvet 25 Premier 40 CPB 55 Sheet business 200 Roche j.v. 200 Printing plates 420 Hüls j.v. 75 Divestitures* DyStar 400 Agfa 4,350 Titanium dioxide 210 Silicones 220 Citric acid 250 Copying systems 250 Enamels 100 Skin & body care 115 Mycelex 15

5 Strategic priorities Health Care Agriculture Polymers Chemicals Improving profitability and market share Participating in industry consolidation Expanding global leadership Improving profitability Pharma restructuring Chiron integration Site consolidation CC Life-cycle management Cipro Adalat still going strong Kogenate blockbuster potential Baycol Sales target 3 1bn in 2000 Avelox successful launch Build pipeline World class technology platform Successful inlicensing

6 Health Care Substantial profitability improvements Operating margin '96 '97 '98 '99 '00 '01 '02 Initiatives under way to save over million in costs Stable profit contribution from existing portfolio Successful launch of new products

7 Health Care Far-reaching cost cutting initiatives 2 million Consumer Care 2 100m Diagnostics 2 125m Pharma 2 350m 0 Production Development Marketing & Sales General Administration Pharma restructuring program under way Headcount reduction of 2,200 people Closure of 6 production sites Streamlining of product portfolio (37 products) Allergens and Tropon divested Diagnostics Synergies from Chiron integration Headcount reduction of 1,200 people Consumer Care Consolidation of production sites Cumulative savings over 5 years 3 100m Headcount reduction 175 people (net)

8 Build the pipeline

9 New technologies are revolutionizing life science research Research strategy patho mechanism molecular target screening optimization preclinical development Technology Genomics Functional genomics Bioinformatics High throughput screening Combinatorial chemistry Substance libraries

10 Leading position in key technologies achieved Genomics 1st league Combichem top player HTS 1st league Chem. Library 1st league Bioinformatics 1st league

11 Substantial improvement in research productivity Development candidates/year '97 '99 '01 '04

12 Health Care Top 10 Products 3 million Sales 1999 % (1) Ciprobay 1, (2) Adalat 1, (3) Aspirin (4) Kogenate (5) Glucometer Elite (6) Lipobay/Baycol (7) Gamimune (8) Glucobay (9) Alka-Seltzer (10) Vitamins

13 Health Care Strong Growth and Excellent Perspectives 3 million '99 8, % Q4 2, % 1, % 1 9 Q3 1H Q2 Q1 6,024 (+21%) 2,092 3,932 (+19%) 2,050 1, % +28% +11% ( 6%) ( 18%) % % +17% +27% 49% (+10%) ( 6%) % +42% +47% 43% Sales Op. Income (reported) Exceptionals (net) Op. Income (underlying)

14 Agriculture Strong in Difficult Environment 3 million '99 3,094 +6% Q4 1 9 Q3 1H % 2,447 (+3%) 705 1,742 (+2%) +7% 533 5% ( 3%) 7 61% ( 7%) 76 28% (+3%) 413 ( 6%) 15 8% 21% 13% Q % 174 5% % Q % + 9% 239 6% Sales Op. Income (reported) Exceptionals (net) Op. Income (underlying)

15 Polymers Strong growth and good profitability 3 million '99 9,307 +6% Q4 2, % 1,164 4% 1 9 Q3 1H 6,817 (+1%) 2,328 +9% ,489 ( 3%) 577 (+11%) 17% 82 70% 838 (±0%) 19% % 874 ( 7%) ( 3%) 15% Q2 2,320 +1% % % Q1 2,169 6% % % Sales Op. Income (reported) Exceptionals (net) Op. Income (underlying)

16 Chemicals Restructuring bearing fruit 3 million '99 3,704 ± 0% Q % 1 9 2,951 ( 7%) % Q % % % 1H Q2 1,955 ( 11%) 1,025 4% % 275 ( 20%) (±0%) 56% ( 31%) ( 22%) 52% % % Q % 98 26% % Sales Op. Income (reported) Exceptionals (net) Op. Income (underlying)

17 Strategic priorities Health Care Agriculture Polymers Chemicals Improving profitability and market share Participating in industry consolidation Expanding global leadership Improving profitability Concentration on innovative chemistry Leadership in home garden market Seed treatment market leadership Strengthening of imidaacloprid franchise Two product launches/year Access to frontline technologies

18 Imidacloprid the world s leading insecticide Garden & Professional Care Consumer Care Crop Protection N NH CI N O2N N Wood Protection Animal Health Market introduction 1991, patent protected until 2004 Average life cycle of insecticides > 30 years Doubling of market share in GPC segment (16% in 2002)

19 Market leadership in seed treatment 3 million % 36% 19% Position strengthened through Gustafson joint-venture and acquisition of seed treatment business from Zeneca Strong portfolio providing excellent growth prospects Fast growing segment of crop protection market (+ 6%) Highly profitable value of seed as delivery tool for GM plants is growing continously Fastest growing markets US and CAN market Bayer share

20 Crop Protection Growth through innovative products 0 > 3 500m Herbicides Fungicides Insecticides peak sales potential year '97 Impulse fungicide '98 Win fungicide '98 Axiom herbicide '99 Teldor fungicide '99 Melody fungicide '00 Everest herbicide '00 Calypso insecticide 2 product introductions/year

21 Strategic priorities Health Care Agriculture Polymers Chemicals Improving profitability and market share Participating in industry consolidation Expanding global leadership Improving profitability Engineering thermoplastics attractive growth potential Isocyanates world leader Access to complete value chain ABS-restructuring under way Makrolon key growth driver Acrylic fibers cooperation envisaged

22 Strategic priorities Health Care Agriculture Polymers Chemicals Improving profitability and market share Participating in industry consolidation Expanding global leadership Improving profitability Focus on specialities Strict cost management Further restructuring Streamlining of portfolio DyStar enlarged jointventure

23 Chemicals Restructuring efforts bearing fruit Op. margin % 11,8 10,0 6,9 4,2 0,9 '95 '96 '97 '98 '99 Divestiture of enamels/ citric acid Minority joint venture TiO 2 /Silicones Relocation of chromium activities New organization introduced Life science intermediates strengthened

24 Bayer An excellent investment Clear corporate vision Focus on value creation Excellent positions in core businesses Strong growth potential Improvement of profitability Strong balance sheet Open and reliable partner for capital markets

25 Strategic gap closed World PU market: 7.5m t/year 56% capacity required for balanced portfolio 17% 27% 27% 28% 11% Polyols TDI MDI Bayer market share Weak position in polyols compared to TDI/MDI capacities Customer oriented system solutions require access to additional polyol capacities Challenges of changing competitive landscape addressed 90 percent of capacities for well-balanced portfolio achieved

26 Control over the entire value chain Propylene oxide e.g. IMPACT Technology MDI Polyols TDI Rigid polyurethane foams Flexible polyurethane foams Isocyanate chemistry is a core activity with excellent growth prospects World leader in isocyanates Polyols are technology carriers for the production of polyurethanes Cost efficient propylene oxide supply secured Technology base broadened

27 Pharma Pipeline Important Development Projects Launch Date Peak Sales Potential (3, million) Avelox (Bacterial Inf.) ** Baynas (Allerg. Rhinitis) PDE V Inh. (Sexual Dysfunct.) Camptoth. Gly. (Cancer) MTP Inh. (Hyperlipidemia) Repinotan (Stroke) Faropenem (Bacterial Inf.) IL-4 DM (Asthma) PDE IV Inh. (Asthma) PDE IV Inh. Bronchitis (COPD) Anti-HCMV (HCMV Inf.) * US only ** Japan only

28 1999 Financial Highlights Sales Euro 27,320m 2.6% Operating income Euro 3,357m + 6.4% Non-operating result Euro 521m 22.0% After-tax income Euro 2,018m % Net income Euro 2,002m % Dividend/share Euro 1.30m %

29 Components of 1999 Sales Trend Group sales mill 28,062 % 3 mill Acquisitions/ Divestitures 2, Acquisitions Chiron Gustafson + 49 Sheet business + 72 Others + 24 Divestitures 2,894 Agfa 2,548 TiO 2 / Silicones 244 Citric acid 102 Changes in consolidated companies Volumes* Prices* Currencies* Group sales , , *rounded

30 1999 Quarterly Sales Development 2 million % Full year 27,320 28, Agfa (1,801) (4,349) DyStar (325) (361) Continuing operations 25,194 23, th Quarter 6,821 6, Agfa (14) (1,080) DyStar (325) (361) Continuing operations 6,482 5, rd Quarter 6,275 6, Agfa (9) (1,055) Continuing operations 6,266 5, nd Quarter 7,230 7, Agfa (752) (1,172) Continuing operations 6,478 6, st Quarter 6,994 7, Agfa (1,026) (1,042) Continuing operations 5,968 6,

31 1999 Comparable Operating Income 2 million % OPI reported 3,357 3, Discontinuing operations (79) (269) Agfa OPI ('99 only 1 5) (103) (263) DyStar 24 (6) Agfa IPO & Sale (1,030) Reconciliation Segments 2,671 3, Reconciliation (423) (251) OPI continuing operations 2,248 2, Exceptional Items OPI underlying 2,821 2, continuing operations

32 1999 Quarterly OPI Development 2 million % 4 th Quarter Agfa OPI (45) Agfa IPO & Sale (10) DyStar 24 (6) Exceptional Items 438 (43) OPI underlying continuing operations 3 rd Quarter Agfa OPI (67) Agfa Sale (67) Exceptional Items 87 4 OPI underlying continuing operations 2 nd Quarter 1, Agfa OPI ('99 only 4 5) (34) (86) Agfa IPO (952) Exceptional Items 60 (28) OPI underlying continuing operations 1 st Quarter Agfa OPI 1-3 '99 (70) (65) Exceptional Items (12) 114 OPI underlying continuing operations

33 1999 Exceptional Items mill Charge Gain Net Charge Gain Net Net Health Care Agriculture Polymers Chemicals Reconciliation Total

34 1999 OPI Development 2 million Sales continuing 25, % OPI-underlying 2, % continuing operations Chiron integration 81 Biological products 70 Y2K 122 SAP 64 OPI-adjusted 3, % Research & Development % continuing operations

35 Net Debt and Net Interest Charge 3 million 3,009 1,099 1,441 2,225 2,168 Net debt (yearly average) ,270 1,326 Net debt (year end) Net interest income/expense

36 1999 Non-operating Result 3 million Income from affiliated companies-net Net interest charge Interest on pension provisions & other expenses-net Total

37 1999 Sales by Region Total 3 27,320 million, 2.6 % Continuing Operations 3 25,194 million, % Germany 0.3 % 8,304 Europe % 12,791 1,612 3,068 7,723 North America % Latin America 4.0 % Asia/Africa/Australia % point of origin

38 2000 Capital Spending Budget Total 3 2, % 25% Chemicals 22% Health Care 11% Agriculture 42% Polymers Germany 44% North America 28% 60% Europe 4% 8% AAA Latin America

39 Stock-Option Plan Value Creation Incentivized Authorized Prerequisite Maturity Exercise hurdle I Exercise hurdle II Exercise hurdle III Introduction Board members and first management level Individual investment 3 5 years, revolving yearly 30 percent performance of shares Outperformance of EURO STOXX 50 Value creation through link to CVA January 1st 2000

40 R & D Expenditures 2 million 2,141 2,170 56% 57% Health Care 17% 12% 7% 8% 17% 12% 7% 7% 1999 Budget 2000 Agriculture Polymers Chemicals Central Research

41 Outlook 2000 Sales 27 bn OPI underlyingcontinuing operations > 2.8 bn