Lehman Conference, April 2003

Transcription

1 Lehman Conference, April 2003 Klaus Kühn, CFO of Bayer AG 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 20-F). The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments. 1

2 2002 A Year of Transition Predominant factors: (1) Far-reaching portfolio changes (2) Reorganization of the Bayer Group (3) Extensive efficiency improvement projects (4) Weak economy (5) High charges resulting from Aventis acquisition (6) Economic impact of Baycol/Lipobay withdrawal Group operating performance was unsatisfactory Change goals fully achieved Net income target achieved Group Reorganization Milestones in 2002 Aventis and Visible Genetics acquired Elimination of 15,000 staff positions announced 2

3 Group Reorganization Milestones in 2002 Aventis The New and Bayer Visible Genetics acquired 2.2 billion efficiency improvement Corporate Center programs put in place Elimination of 15,000 staff positions announced Bayer Bayer Business Health Care Crop Polymers Services GmbH Co.KG AG Bayer AG) Bayer Science AG Bayer AG Bayer AG Bayer Technology Services GmbH Bayer Industry Services GmbH & Group Reorganization Milestones in 2002 Aventis and Visible Genetics acquired Febr Elimination of 15,000 staff positions Generics announced (E, RSA) Working capital reduced by more May than Haarmann 3 & billion Reimer since start of project Satisfying Progress of our Disposal Program Divestments 2002 Jan April Mrch closed or binding agreement Company housing Organic pigments Generics (F) Agfa stake disposals ¹) Household insecticides ¹) PolymerLatex ¹) 1) Subject to regulatory approvals Oct Nov 2003 Acquisitions 2002 April June Oct + Tectrade + Aventis + Visible Genetics 3

4 Group Reorganization Milestones in 2002 Efficiency Improvement Program million Aventis and Visible Genetics acquired Planned savings after exceptionals Elimination of 15,000 staff positions One-time charges announced , Total Group Reorganization Milestones in 2002 Headcount Reduction 15,000 Positions Business portfolio significantly improved for the long term Aventis and Visible Genetics acquired 1,300 5,300 BHC BCS BPO 1,400 3,000 4,000 Elimination of 15,000 staff positions BCH announced Services 8,800 6,200 Bayer AG Others 4

5 Group Reorganization Milestones in 2002 Working Capital Performance mill. Reduction of 1 bn Additional 1 bn Aventis and Visible Genetics acquired 1, billion efficiency improvement 441 programs put in place 766 Elimination of 15,000 staff positions announced 336 Working Capital Working capital reduced by more 822 than 1, billion 571 since 30 start of project Improvement Objectives: 1, Q3 01 1, ,175 Q Q1 02 Q2'02 1, Q3'02 1, Q4'02 Net cash flow Gross cash flow Change in net working capital (prev. year) Group Reorganization Milestones in 2002 million Aventis and Visible Genetics acquired 2,139 Strict Capital Discipline Enforced Capital Expenditures Elimination of 15,000 staff positions announced Target CapEx/D&A Ratio Depreciation & Amortization 1.8 2,703 1,521 2, ,811 2, ,617 2,516 2,383 3,

6 Group Reorganization Milestones in 2002 Net Debt Target achieved billion 15 Aventis and Capital Visible Discipline Genetics acquired Acquisition of Aventis Elimination of 15,000 staff positions announced 6, /31 6/30 9/30 12/ Divestment program Working Capital Mgmt. 8.9 Driving Sustained Value Creation Improvement of asset-productivity Achievement of value-generating growth Further balance sheet strengthening Execution of portfolio strategy 6

7 Mid-term Targets CFRoI EBITDA - Margin Group 2002 Target 8% 14% 2002 Target 10% 21% HealthCare 11% 17% 10% 20% 6% 14% 7% 29% Polymers 8% 12% 19% 9% 17% These targets are based on current assumptions. Due to various known and unknown risks and uncertainties, actual future results might differ substantially from these targets. The company assumes no liability whatsoever to update these forward looking statements. We also refer to the general disclaimer at the beginning of the presentation. EBITDA Targets - Group million EBITDA Margin 10% 21% 32,500 28,958 3% p.a. 6,800 2,983 Economic recovery Sales increment Crop Science Turnaround Biologicals Efficiency improvements One-time charges Sales EBITDA Sales EBITDA 2002 Mid-term target These targets are based on current assumptions. Due to various known and unknown risks and uncertainties, actual future results might differ substantially from these targets. The company assumes no liability whatsoever to update these forward looking statements. We also refer to the general disclaimer at the beginning of the presentation. 7

8 Strong Positions in 80% of Business Portfolio HealthCare # 5 in OTC business # 1 in Insecticides # 4 in Diagnostics # 4 in Animal Health # 3 in Biologicals # 16 in Pharma (EP) 31% 21% # 1 in Environmental Science # 2 in Fungicides # 3 in Herbicides A Promising Biotech Opportunity Polymers # 1 / 2 in Engin. Thermoplastics 35% # 1 in Isocyanates Projected Sales Breakdown 2003 # 1 in Synthetic Rubber # 1 in Leather # 2 in Methyl- & Nitrocellulose # 1 in Tantalum Strategic Priorities HealthCare Find strategic solution Accomplish integration Polymers Build on leadership position Focus on core activities 8

9 HealthCare Find Strategic Solution Consumer Care 18% Pharmaceuticals 39% Significant growth potential in consumer health Some of the world s best-known OTC brands Expansion of diabetes self-testing, NAD and hospital PoC Attractive opportunities in companion animals segment 9% 22% 12% Consolidation of turnaround in Biologicals Kogenate offers significant potential for sales and profit growth Gamunex launch expected in 2H 03 Animal Health Diagnostics Sales breakdown FY2002 Total 9,732 bn Biologicals Structural problem in Pharmaceuticals addressed Establishment of strategic solution remains priority Adjustment of cost base under way New products (Levitra, Cipro XR, Kinzal) with significant potential Accomplish Integration Environmental Science Seed Treatment Ag Bio 2% 6% 27% Insecticides 22% 31% Fungicides Herbicides Integration progressing smoothly Growth of 4% p.a. targeted Strong market position in all segments Leading positions in fast growing niche segments Strong pipeline with expected 2 3 launches p.a. EBITDA of 29% by 2006 targeted Exploitation of 570m synergy potential Improved portfolio mix and shift toward new products Economies of scale and bundling opportunities Realization of growth target Biotech opportunity Sales breakdown FY2002 Total 4,697 bn 9

10 Polymers Build on Leadership Positions Plastics Polyurethanes Focused on four key technologies (PC, PU, Styrenics, Synthetic Rubber) 30% Leading positions in approx. 90% of business 20% 18% 30% On average above GDP growth achievable Significant earnings recovery potential Cyclical upswing Rubber Fibers Coatings and Colorants Efficiency programs to save 700m initiated Headcount reduction of approx. 5,000 by 2005 Strict capital discipline enforced Sales breakdown FY2002 Total 10,775 bn Expansion of business in Asia/Pacific ongoing Focus on Core Activities H.C. Starck Basic & Fine 18% 11% Wolff Walsrode 28% 42% Specialty Products Business portfolio already significantly improved Attractive growth opportunities in specialty areas Initiatives to save additional 200m in costs under way Headcount reduction of 1,300 by 2005 Sales breakdown FY2002 Total 3,304 bn 10

11 R & D and CapEx. Budgets for 2003 million CapEx. R & D Polymers 34% Central 57% Health Care 11% 4% 14% 28% 11% Polymers 28% Health Care 1,770 (cont.) 2,658 (cont.) The New Bayer Major Potential for Earnings Improvement and Growth recovery in industrial business synergies from ACS acquisition turnaround in Biologicals new product launches Strategic solution for Pharmaceuticals that creates value for the Group Further reduction of net debt Strict capital discipline to raise CFROI 11