Third Quarter Results 2005

Transcription

1 Science For A Better Life Company Presentation Third Quarter Results 25 Forward Looking Statements 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.

2 Q3'5 results underscore strength and breadth of Bayer s upturn We are maintaining the strong growth momentum We are accelerating earnings growth We are achieving committed objectives We are optimistic for future developments Q3'5 Results Underscore Strength and Breadth of Bayer s Upturn Key Figures Q3'5 Regional Sales Performance Sales 6,531m EBIT* 691m Net income 493m LA/ Africa/ Middle East + 14% Europe + 22% % + 19% + 12% + 848% % Fx & portfolio adjusted + 8% Asia/ Pacific + 15% North America + 2% *pre special items y-o-y 3Q Investor Conference Call Werner Wenning Page 4

3 Upward Trend at Bayer Continues In million 1, * 852 2, ** , '2 '3 '4 Q1 '5 '2 '3 '4 '5 '2 '3 '4 '5 '2 '3 '4 '5 '2 '3 '4 '5 Q2 Q3 Q4 FY 3Q Investor Conference Call Werner Wenning Page 5 22 underlying EBIT as reported in FY underlying EBIT as restated in underlying EBIT as reported in 24 * Including 9m EBIT from divested products ** Including 12m reversal of pension provisions Growth Momentum Maintained Q3'5 Sales as reported Growth Analysis In million, % y-o-y Material Science + 18% 348 Reconciliation 2,639 2,373 1,171 Group 6,531m, + 19% HealthCare + 21% CropScience + 4% Pharma, Biologicals Consumer Care DS/ DC Animal Health HealthCare Crop Protection Environ Sc./BioSc. CropScience Materials Systems MaterialScience % y-o-y (Fx adj.) Share of growth* 13% 3% 4% 2% 49% -2% 3% % 24% 26% 5% *excl. Reconciliation 3Q Investor Conference Call Werner Wenning Page 6

4 Underlying EBIT Doubled In million, % y-o-y Material Science + 241% Q3'5 EBIT as reported -33 Reconciliation HealthCare + 55% CropScience % Group 87m, +227% (underly. 691m, +12%) Pharma, Biologicals Consumer Care DS/ DC Animal Health HealthCare Crop Protection Environ Sc./BioSc. CropScience Materials Systems MaterialScience Growth Analysis % y-o-y (underlying) Share of growth* 9% 2% % -1% 1% 25% 8% 33% 23% 34% 57% *excl. Reconciliation 3Q Investor Conference Call Werner Wenning Page 7 Strong Working Capital Performance Q3'5 Cash flow Net Debt Development million GCF 92m NCF* 1,438m CapEx 346m FCF* 1,92m 6, ,978 % y-o-y + 47% + 174% + 2% + 363% % of D&A 69% Q2 5 Q3 5 * Operating FCF, continuing ** Inventories, receivables, payables only 3Q Investor Conference Call Werner Wenning Page 8

5 Excellent Progress Against Strategic Agenda and Committed Objectives Nexavar filed with EMEA in September 25 Nexavar granted Priority Review Designation by FDA Factor Xa inhibitor development and marketing partnership Avelox marketing approval in Japan Integration on Roche OTC business ahead of schedule, faster realization of synergies expected Spin-off of anti-infectives research announced ODesi formulation technology launched for cereal herbicide business 3Q Investor Conference Call Werner Wenning Page 9 FY 25 Outlook Raised 25 Going forward Sales growth expectations Above 26bn as reported EBIT growth expectations Approx. + 5% y-o-y underlying On track towards mid-term financial targets Leadership in vast majority of businesses Significant new product opportunities Efficiency improvements underway Expanding presence in Asia driven by China 3Q Investor Conference Call Werner Wenning Page 1

6 On Track Towards Mid-Term Targets EBITDA margin > Long-term aspiration Achieving benchmark performance: Mid-term commitment Narrow the gap: Starting point BHC BCS BMS Group BHC BCS BMS Group 14% 19% 13% 12% BHC BCS BMS Group >17% 25% 18% 19% 23% 26% 21% 22% Third Quarter Results 25 November 25 Page 11 Portfolio Optimization Align Business For Sustained Profitable Growth 1996 Sales 24.9bn 25e (cont.) Sales > 25bn HealthCare CropProtection Generics Household insecticides Plasma Antitrust requirements + Roche OTC + Chiron Diagnostics + Visible Genetics HealthCare Major examples since 1996 Polymers Lanxess H.C. Strack Wolff Walsrode EC Erdölchemie Haarmann & Reimer Agfa Real estate Silicones TiO2 Acrylic fibers PolymerLatex regrouped regrouped divested divested divested divested + Aventis CropScience + Flint + Mikado + Seed treatment activities + Lyondell Polyols CropScience MaterialScience Headcount 142,2 Headcount 94, Third Quarter Results 25 November 25 Page 12

7 Leadership In Vast Majority Of Businesses 24 Sales (cont.)* 23.9bn CropScience Pharma/ Kogenate 16% 25% 12% Animal Health/ Diagnostics 9% 36% Material Science Consumer Health (OTC) CropScience A market leader MaterialScience A world leading industry participant Consumer Health (OTC) Committed to become #1 Animal Health/ Diagnostics Strongest in fastest growing segments Pharma/ Kogenate A business opportunity after the refocus *Excl. Reconciliation sales, incl. 9m Roche OTC sales Third Quarter Results 25 November 25 Page 13 Significant New Product Opportunities: Promising Late-Stage Pharma Pipeline As of June 25 Project Indication Status Anticipated Timeline Nexavar (Raf Kinase and VEGFR Inhibitor ) Renal Cell Carcinoma Melanoma Hepatocellular Carcinoma Other cancers* NDA submitted Phase III Phase III Phase II 1H'6 Launch 27 Launch 28 Launch BAY (Factor Xa Inhibitior) VTE prevention VTE treatment Stroke prevention in A'fib Phase II Phase II Phase II Late 27 Submission 29 Submission 29 Submission 11 Projects Phase I > Projects Pre-clinical > 28 * Chronic Myeloid Leukemia, Breast, Non-Small-Cell-Lung, Pancreatic, Colorectal, other Third Quarter Results 25 November 25 Page 14

8 Nexavar New Paradigm In Treatment Of Cancer New interim analysis showed encouraging estimated 39% improvement in survival Median overall survival for patients on Nexavar has not yet been reached Previous findings on Progression free survival, response rates and safety confirmed: Doubling of PFS for Nexavar patients versus placebo 84% of Nexavar patients had stable disease or better (investigator assessment) Nexavar is well tolerated, with manageable side-effects Demonstrated combinability with a variety of different cancer agents Initiated Phase III trials in liver cancer and melanoma Initiation of a fourth Phase III trial in a larger tumor type planned Evaluation in other tumor types ongoing NDA submission completed for RCC in the U.S. in July 5; EU Sept 5 Sales and marketing organization in the US in place Third Quarter Results 25 November 25 Page 15 BAY Convincing Phase IIb Study Results Impressive results from two randomized, double-blind phase IIb studies in VTE prevention after elective total hip or knee replacement: More than 1,3 patients involved Oral bid treatment 5 to 9 days after surgery 12-fold dose range tested (BAY mg bid) Active-comparator enoxaparin Efficacy and safety demonstrated in a wide, 4-fold dose range (2.5-1mg bid) to be comparable to gold standard anticoagulation treatment (enoxaparin s.c.), with advantage of easy oral administration At present no indication that coagulation or safety monitoring will be necessary Current clinical data suggest: Wide therapeutic window, dose-adjustment unlikely to be necessary No indication of specific contraindications (above those expected with an anticoagulant treatment) Third Quarter Results 25 November 25 Page 16

9 BAY The Novel, Oral, Direct Factor Xa Inhibitor Explore improved treatment options with BAY in prevention and treatment of chronic and acute thrombotic disorders: VTE prevention (major orthopedic surgery) VTE treatment Stroke prevention in A'fib Final decision for BID or OD phase III studies anticipated for Q4'5 Filing anticipated in late 27 Filing anticipated in 29 Filing anticipated in 29 Once-daily (OD) dose finding studies well underway to explore opportunity with potential added benefits especially for extended and chronic indications BAY is a promising candidate for establishing a new gold standard in anticoagulation therapy Third Quarter Results 25 November 25 Page 17 Partnership with Johnson&Johnson To Co-Develop & Market Factor Xa Key elements of co-operation: U.S. marketing rights to Johnson&Johnson company Ortho-McNeil for cardiology, primary care and hospital segments Sharing of Factor Xa future global development costs Upfront and milestone payments total $ 29 million Following US launch, Ortho McNeil to pay royalties up to 3 percent, depending on sales thresholds Bayer HealthCare retains co-promotion rights for U.S. specialty market, and sole marketing rights for Factor Xa outside U.S. Bayer HealthCare gains co-promotion rights to market Elmiron urology drug Third Quarter Results 25 November 25 Page 18

10 Johnson&Johnson is the Ideal Partner to Maximize the Value of Factor Xa Johnson&Johnson is the partner of choice: Top U.S. pharma and healthcare company by sales (No.2) Sufficient sales power to fully exploit US market Proven track record of developing first-in-class CV therapies, performing large cardio development/registration programs Excellent relationship with key opinion leaders in the cardiovascular arena Significant experience of commercializing blockbuster products Johnson & Johnson is committed to expanding CV franchise with Factor Xa at center of strategy Third Quarter Results 25 November 25 Page 19 New Products Bolster CropScience Portfolio 9 Active Ingredients launched between Development Projects scheduled for launch between Methoxyfenozide Spirodiclofen Fluoxastrobin Spiromesifen Fluopicolide INFINITO Mesosulfuron Clothianidin Prothioconazole Ethiprole plus: 3 Fungicides Foramsulfuron 4 Herbicides (incl. Safener) 2 Insecticides (incl. Ketoenole #3) Herbicides Insecticides Fungicides Seed Treatment Third Quarter Results 25 November 25 Page 2

11 New Active Ingredients Drive Growth At CropScience New Active Ingredients ~ 2, (Sales in million) Fungicides 1, 85 4 Herbicides 72 (incl. Safener) Insecticides (incl. Ketoenol #3) proforma Target Target Peak Sales Potential  26 new active ingredients to be launched between 2 and 211  Combined peak sales potential of about 2 billion Third Quarter Results 25 November 25 Page 21 Expanding Presence in Asia driven by China Strengthen our regional competitiveness through local production in China PCS PUR CAS Shanghai PC MDI Desmodur L 1 kt in 26* +1 kt in 27 Splitter in 26* 35 kt in kt in 24 Desmodur N 11 kt in 25 TDI 15 kt in 29 HDI 3 kt in 26* +2 kt thereafter * under construction PCS: Polycarbonates PUR: Polyurethanes CAS: Coating Raw Materials Third Quarter Results 25 November 25 Page 22 1

12 Efficiency Improvements: Restructuring Actions Indicate Sustainable Improvements >27 Sales per employee ( thousands) Employees (in thousands) Total Foreign Domestic e Third Quarter Results 25 November 25 Page 23 Personnel expenses (% of sales) The New Bayer: Achieving Benchmark Performance A portfolio of world-leading businesses Strong and reliable earnings growth High capital spending discipline Significant new product opportunities Clear targets, clear strategy, focused on execution Committed To Create Value For Our Shareholders Third Quarter Results 25 November 25 Page 24

13 Science For A Better Life Appendix Bayer Group Dynamic Sales And Earnings Growth Continues in Q3'5 Continuing business in million Q3'4 Q3'5 % yoy Sales 5,485 6, EBIT EBIT underlying EBITDA 747 1, Non-operating result (161) (182) 83.4 Pre-tax income Net income (cont. and discont.) Earnings per share (cont. and discont. in ) Third Quarter Results 25 November 25 Page 26

14 HealthCare Q3'5 Growth Momentum Regained Sales in million 1,961 2, % + 6.2% Strong Trasylol and Levitra sales benefited from successful marketing activities Pharma Biologicals Consumer Care Diabetes Care / Diagnostics Roche % + 7.% + 7.8% Kogenate showed continuing strong business Acquired Roche OTC brands developed nicely Aleve still not fully recovered from NSAID debate Diabetes Care with strong growth in Europe Diagnostics grew in US and Europe Animal Health 195 Q3'4 Third Quarter Results 25 November 25 Page Advantage product line showed + 8.7% good sales in the US Q3'5 yoy CropScience Q3'5 Positive Despite Weak Season Sales in million 1,124 1, % Insecticides sales dropped due to lower pest infestation in cotton Crop Protection % Fungicides business unit held steady Herbicides improved by 9.5% Environmental Science BioScience % + 9.3% Professional products business expanded in North America and Middle East Q3'4 Q3'5 yoy Third Quarter Results 25 November 25 Page 28

15 MaterialScience Q3'5 Profited Again From Higher Prices Sales in million 2, % Polycarbonates 2, % + 2.1% Price-before-volume strategy continued Substantially increased prices yoy Favorable pricing environment H.C. Starck Polyurethanes 189 1,21 1, % Price increases primarily in North America were instrumental for improvement MDI prices signifiantly up yoy, volumes almost maintained TDI supply recently tight Coatings, Adhesives, Sealants Other % % Again stable increase Q3'4 Third Quarter Results 25 November 25 Page 29 Q3'5 yoy Q3'5 Non-Operating Result million Q3'4 Q3'5 % yoy Non-operating result (161) (182) (13.) Expenses from affiliated companies net (9) (7) 22.2 Interest expense net (67) (116) (73.1) Interest portion of provisions (7) (58) 17.1 Exchange gains (losses) net 1 1 Miscellaneous net (16) (2) 87.5 Pre-tax income Income taxes (92) (183) (98.9) Net income (cont. and discont.) Third Quarter Results 25 November 25 Page 3

16 Q3'5 Special Items million Charge Q3'4 Gain Net Charge Q3'5 Gain Net Net Pharma / BP (67) 39 (28) (21) Consumer Care (12) (12) (17) 15 (2) 1 DC / DS (16) Animal Health (1) Crop Protection (4) ES / BS (3) Materials (1) Systems (27) (27) (34) Reconciliation (22) (22) (18) Group (128) 51 (77) (111) Third Quarter Results 25 November 25 Page 31 Q3'5 Cash Flow Figures million Q3'4 Q3'5 % yoy Gross cash flow (cont.) /- Change in working capital (cont.) (12) 518 = Net cash flow continuing operations 525 1, Net cash flow discontinued operations 129 (12) = Net cash flow 654 1, Capital expenditures (289) (346) = Operating free cash flow 365 1, Interest, Capital increase (139) (128) -7.9 = Free cash flow /- Acquisitions / divestments, dividends 33 (9) = Free cash flow after acquisitions /- Derivatives, currency, others (129) (35) Net debt (financial statements) (388) (897) Third Quarter Results 25 November 25 Page 32

17 Net Cash Flow Improved million (as reported) 24 (restated) 25* Working Capital Gross cash flow Net cash flow Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 GCF 1, , WC -1, ,21-1, , NCF , , ,15 1,438 3Q Investor Conference Call Werner Wenning Page 33 *continuing business Average Sales Price Versus Petrochemical Raw Material Costs Bayer MaterialScience Worldwide, Euro based Note: Petrochemical raw material costs only make up ~75% of BMS s total raw material purchase volume. Currency fixed on base year (.95 USD/EUR) Raw material costs 123 Sales Prices 22 Q1'3 Q2'3 Q3'3 Q4'3 Q1'4 Q2'4 Q3'4 Q4'4 Q1'5 Q2'5 Q3'5 Third Quarter Results 25 November 25 Page 34

18 R&D And CapEx Budget 25 R & D Group 1.9bn CapEx Group 1.2bn Material Science 12% Other 4% HealthCare Other 16% HealthCare 27% 5% 34% Material Science 41% 16% CropScience CropScience (CapEx without Plasma) Third Quarter Results 25 November 25 Page 35 Calendar of Events Date Event Location Publication Wednesday November 9, 25 Investor Conference Call Third Quarter Results Stockholders Newsletter Thursday December 8, 25 R&D Day London Presentations to Analysts and Investors on Bayer R&D Monday March 6, 26 Investor Conference Call Full Year 25 Results 25 Annual Report Thursday April 27, 26 Investor Conference Call First Quarter Results Stockholders Newsletter Friday April 28, 26 Annual Stockholders Meeting 26 Cologne Tuesday August 1, 26 Investor Conference Call Second Quarter Results Stockholders Newsletter Tuesday October 31, 26 Investor Conference Call Third Quarter Results Stockholders Newsletter Third Quarter Results 25 November 25 Page 36

19 Investor Relations Contacts Dr. Alexander Rosar Head of Investor Relations Phone: Dr. Jürgen Beunink Investor Relations Manager Phone: Peter Dahlhoff Investor Relations Manager Phone: Ilia Kürten Junior Investor Relations Manager Phone: Ute Menke Investor Relations Manager Phone: Judith Nestmann Investor Relations Manager Phone: Third Quarter Results 25 November 25 Page 37