Investor Handout. Financials. Strategy R & D. Investor Handout 3/4 Year 2000

Transcription

1 Investor Handout Financials Strategy R & D

2 2 3/4 Year 2000 Business performance Strong growth in all businesses: + 22 percent (cont.) Op. income (cont.) up 29 percent Health Care op. income up 40 percent Polymers/Chemicals performance improving Portfolio mix 60 percent profit contribution (cont.) from life sciences Acquisitions: Flint, Sybron, Cytec, CSM Divestitures: Erdölchemie (pending), acrylic fibers, Schein, Tropon, Basics, animal vaccines, solar grade silicon Structures and processes Business reengineering (SAP introduction) E-commerce Culture Focus on value creation Stock option plan

3 3 Corporate Objectives Continuously increase corporate value Achieve above average return on capital Market capitalization (3 billions) Dividend payment Dividend per share % Ø Annual yield (dividends plus share price)

4 4 Acceleration of Portfolio Management: More than 3 9bn since 96 Sales in 3 million Bayer 3,200 6,400 Acquisitions* Flint** 50 CSM 130 Sybron (pending) 230 Cytec (planned) 70 Polyols & PO j.v. 800 Gustafson (50%) 110 Chiron 500 Graphic Arts 450 Sheet business 200 Roche j.v. 200 Divestitures* Acrylic fibers 160 Erdölchemie (pending) 460 DyStar 400 Agfa 4,350 Titanium dioxide 210 Silicones 220 Citric acid 250 Enamels 100 Skin & body care 115 * major examples since 1996 ** 2003 estimate 300

5 5 Optimization of Business Mix >15% Operating margin 12% 9% 40% Health Care 24% 10% 31% 34% 13% 38% 15% 35% Agriculture Polymers 20% 15% 15% Agfa /4 Year 2000 % of Sales 10% Target Chemicals

6 6 Strategic Priorities Health Care Agriculture Polymers Chemicals Improvement of profitability and gaining market share Participating in industry consolidation Expanding global leadership Improving profitability Restructuring program in pharmaceuticals Chiron synergies Site consolidation CC Life-cycle management for established products Successful launch of new products Build the pipeline Improvement of R&D productivity Concentration on innovative chemistry Strengthening of imidacloprid franchise Seed treatment market leadership Leadership in home garden market Two product launches/year Access to frontline technologies Optimization of business mix Concentration on high-value-added polymers Efficient cost structures Exploitation of growth potential in Asia Researching new areas of application Focus on specialties Strict cost management Further restructuring Streamlining of portfolio DyStar smaller share in enlarged j.v. Erdölchemie divestiture pending

7 7 Health Care Improvement of Profitability and Gaining Market Share Restructuring program pharmaceuticals Chiron synergies Site consolidation CC Life-cycle management for established products Successful launch of new products Build the pipeline Improvement of R&D productivity

8 8 Health Care Substantial Profitability Improvement Under Way 20% Operating Margin* 13% 8,367 7% p.a. 10,500 Sales Sales 1,095 2, Cost cutting One-time effects OPI on sales increments OPI OPI 1999 Target 2002 Stable profit contribution from existing portfolio Successful launch of new products Initiatives under way to save over 2500 million in costs * before exceptionals

9 9 Health Care Far-Reaching Cost Cutting Initiatives 2 million Consumer Care 2 100m Diagnostics 2 125m Pharma 2 350m Pharma restructuring program under way Headcount reduction of 2,200 people Closure of 6 production sites Streamlining of product portfolio (37 products) Allergens, Tropon, Schein and Basics 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) Production Development Marketing & Sales General Administration

10 10 New Technologies Are Revolutionizing Pharmacological Research Research strategy patho mechanism molecular target screening optimization preclinical development Technology Genomics Functional Genomics Proteomics Bioinformatics High Throughput Screening Combinatorial Chemistry Substance Libraries

11 11 International Cooperations with Biotech Blue-Chips patho mechanism molecular target screening optimization Genomics Functional Genomics Proteomics Bioinformatics High Throughput Screening Combinatorial Chemistry Substance Libraries Millennium Exelixis Myriad Genome Therap. Incyte Nova DX Affymetrix Dyax Onyx Oxford Glyco Science Lion Bioscience Cybio Novalon Receptron Pharmacopeia ArQule ComGenex Oxford Asymmetry Genzyme Genetics Institute Morphosys Investment of 21bn US $ 465 million genomics cooperation with Millennium Access to more than 1 million substances HTS capacity of more than 200,000 substances per day

12 12 Leading Position in Key Technologies Achieved 3rd league 2nd league 1st league Genomics Bioinformatics Chemical Library Combichem HTS Proteomics

13 13 Substantial Improvement in Research Productivity Development candidates/year 20 Ten-fold increase of research output Productivity improvement of 30% per year '97 '99 '01 '04 Shortening research times to 24 months Improvement of success rate through toxicogenomics First genomics project expected in 2000

14 14 Pharma Pipeline Important Development Projects Launch Date Peak Sales Potential (3, million) Status * 150** Avelox Baynas Viadur Vardenafil (Bacterial Inf.) (Allerg. Rhinitis) (Cancer) (Sexual Dysfunct.) Launched Launched Approved Phase III Cipro OD (Bacterial Inf.) Phase I Taxane analog (Cancer) Phase I Camptoth. Gly. (Cancer) Phase I Faropenem (Bacterial Inf.) Phase III Repinotan (Stroke, TBI) Phase III IL-2 SA (Cancer) Phase I PDE IV Inh. (Asthma) Phase II PDE IV Inh. (COPD) Phase II IL-4 RA (Asthma) Phase I Implitapide (Hyperlipidemia) Phase II HSV Inh. (Viral inf.) Phase I * Japan only ** US sales

15 15 Health Care on track 3 million 1-9 7, % Q3 2, % 1, % 36 1, % 1H Q2 4, % 2, % % % +69.6% % % +47.3% Q1 2, % % % Sales Op. Income (reported) Exceptionals (net) Op. Income (underlying)

16 16 Pharmaceuticals Top 10 Products 3 million 3/4 Year 00 % (1) Ciprobay (2) Adalat (3) Lipobay/Baycol (4) Kogenate (5) Glucobay (6) Gamimune (7) Prolastin (8) Nimotop 94 ± 0 (9) Trasylol (10) Avelox 71 n.m.

17 17 Strategic Priorities Health Care Agriculture Polymers Chemicals Improvement of profitability and gaining market share Participating in industry consolidation Expanding global leadership Improving profitability Restructuring program in pharmaceuticals Chiron synergies Site consolidation CC Life-cycle management for established products Successful launch of new products Build the pipeline Improvement of R&D productivity

18 18 Agriculture Participating in Industry Consolidation Concentration on innovative chemistry Strengthening of imidacloprid franchise Seed treatment market leadership Leadership in home garden market Two product launches/year Access to frontline technologies

19 19 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)

20 20 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 Highly profitable value of seed as delivery tool for GM plants is growing steadily Fastest growing markets US and CAN market Bayer share

21 21 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

22 22 Agriculture growing strongly 3 million 1-9 2, % Q % 1H Q2 2, % 1, % % % +56.0% +28.0% % % % % Q1 1, % % % Sales Op. Income (reported) Exceptionals (net) Op. Income (underlying)

23 23 Strategic Priorities Health Care Agriculture Polymers Chemicals Improvement of profitability and gaining market share Participating in industry consolidation Expanding global leadership Improving profitability Concentration on innovative chemistry Strengthening of imidacloprid franchise Seed treatment market leadership Leadership in home garden market Two product launches/year Access to frontline technologies

24 24 Polymers Expanding Global Leadership Optimization of business mix Concentration on high-value-added polymers Efficient cost structures Exploitation of growth potential in Asia Researching new areas of application

25 25 Concentration on High-Value-Added Polymers PVC 15% PP 16% PS 8% PET 5% PE 31% 1% 3% 4% 4% 5% 8% Thermosetting Resins Others Coatings PU Engineering Thermoplastics Others PC ABS World market polymers 99; Total 160m tons

26 26 Global Leadership in High-Value-Added Polymers sales% Polycarbonates 40 Styrenics 35 ms% # 2 1 Semicrystalline Thermoplastics 15 TPU 5 Fabricated Products % Plastics sales%* TDI 18 ms%* 28 # 1 21% Rubber 5% Fibers 19% Coatings and Colorants 24% Polyurethanes MDI 33 Polyols 44 * Figures: 2000e sales% ms% # Isocyanates 39 >50 1 Adhesives ms = Market share # = Ranking Coatings 30 Others

27 27 Well-Balanced Portfolio for Polyurethane Raw Materials World PU market: 7.5m t/year 56% Lyondell acquisition 27% 17% 18% 28% 33% 11% Polyols TDI MDI Bayer market share Strategic gap closed in polyols business Polyols as technology carriers for customer oriented system solutions Challenges of changing competitive landscape addressed

28 28 World Leadership in Technology and Costs Propylene oxide e.g. IMPACT Technology MDI Polyols TDI Rigid polyurethane foams Flexible polyurethane foams Control over entire value chain Cost efficient propylene oxide supply secured State-of-the-art technology for polyols production

29 29 Opening Up New Markets Scratch resistant polycarbonate for automotive glazing Photoaddressable polymers Hybrid technology for polyurethanes

30 30 Polymers selling prices increasing 3 million 1-9 8, % Q3 2, % % % 1H Q2 5, % 2, % % % % % % 5.1% Q1 2, % % % Sales Op. Income (reported) Exceptionals (net) Op. Income (underlying)

31 31 Polymers Raw material and selling price development Raw materials Prices Q Q Q Q4* 2001* * expected

32 32 Strategic Priorities Health Care Agriculture Polymers Chemicals Improvement of profitability and gaining market share Participating in industry consolidation Expanding global leadership Improving profitability Optimization of business mix Concentration on high-value-added polymers Efficient cost structures Exploitation of growth potential in Asia Researching new areas of application

33 33 Chemicals Improving Profitability Focus on specialties Strict cost management Further restructuring Streamlining of portfolio DyStar smaller share in enlarged j.v. Erdölchemie divestiture pending

34 34 Chemicals Restructuring Efforts Bearing Fruit Op. margin % Divestiture of enamels, citric acid Divestiture of Erdölchemie (pending) Minority joint ventures TiO 2 /silicones Relocation of chromium activities New organization introduced Life science intermediates strengthened 0.9 '95 '96 '97 '98 '99

35 35 Chemicals improving greatly 3 million 1-9 3, % Q3 1, % 1H Q2 2, % 1, % % % % % % % +25.3% 6.3% Q1* 1, % % % Sales Op. Income (reported) Exceptionals (net) Op. Income (underlying) *including Erdölchemie

36 36 Strategic Priorities Health Care Agriculture Polymers Chemicals Improvement of profitability and gaining market share Participating in industry consolidation Expanding global leadership Improving profitability Focus on specialties Strict cost management Further restructuring Streamlining of portfolio DyStar smaller share in enlarged j.v. Erdölchemie divestiture pending

37 37 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 in stock 3 5 years, revolving yearly 30 percent performance of shares Outperformance of EURO STOXX 50 Value creation through link to CVA January 1st 2000

38 38 Outlook 2000 Sales (cont.) > + 10 % Op. income (cont.) > + 10 % 2001 Double-digit sales and operating income (cont.) increase Improvement of operating margin

39 39 3/4 Year 2000 Financial Highlights Sales Euro 22,918m % Sales (cont.) Euro 22,183m % Operating income Euro 2,718m 14.5 % Operating income (cont.) Euro 2,654m % Non-operating result Euro 170m % Pre-tax income Euro 2,548m 9.3 % After-tax income Euro 1,585m 26.3 % Net income Euro 1,567m 27.1 % Net income (cont.) Euro 1,514m % Earnings/share Euro %

40 40 Components of 3/4 Year 2000 Sales Trend (continuing) Group sales mill 18,147 % 3 mill Acquisitions/ Divestitures Acquisitions Lyondell PC sheets + 82 Misung + 58 Divestitures 51 Tropon/Allergens 41 Others 10 Volumes Prices Currencies + 1, , Group sales ,

41 41 Quarterly Sales Development 3 million * including Erdölchemie % 3/4 year 22,918 20, Agfa 1,791 DyStar, Erdölchemie (735) 561 Continuing operations 22,183 18, rd quarter 7,680 6, Agfa 13 DyStar, Erdölchemie (247) 205 Continuing operations 7,433 6, nd quarter 7,907 7, Agfa (752) DyStar, Erdölchemie (242) (186) Continuing operations 7,665 6, st quarter 7,331 6, Agfa (1,026) DyStar (84) (77) Continuing operations* 7,247 5,

42 42 3/4 Year 2000 Comparable Operating Income 3 million * including 6 exceptionals, previous year = ( 4) % OPI reported 2,718 3, Segments 2,801 2, Reconciliation (147) (279) Discontinuing operations (64)* (1,120) Agfa OPI 104 Agfa IPO 952 Agfa Sale 67 DyStar, Erdölchemie 64* (3) OPI continuing 2,654 2, Exceptional items (cont.) OPI underlying 2,701 2, continuing operations

43 43 Quarterly OPI Development 3 million * including Erdölchemie % 3rd quarter Agfa Sale (67) DyStar, Erdölchemie (25) 8 Exceptional items OPI underlying continuing operations 2nd quarter 960 1, Agfa OPI (4 5 99) (33) Agfa IPO (952) DyStar, Erdölchemie (22) (4) Exceptional items OPI underlying continuing operations 1st quarter 1, Agfa OPI (70) DyStar (3) 4 Exceptional items 4 (6) OPI underlying* 1, continuing operations

44 44 3/4 Year 2000 Exceptional Items mill Charge Gain Net Charge Gain Net Net Health Care Agriculture Polymers Chemicals Reconciliation Total

45 45 3/4 Year 2000 Sales by Region Total 3 22,918 million, % Continuing operations 3 22,183 million, % Germany % 6,618 Europe % 10,311 1,435 3,125 7,312 North America % Latin America % Asia /Africa/Australia % point of origin

46 46 Investor Relations Contacts Dr. Alexander Rosar Head of Investor Relations Phone: FAX: Dr. Jürgen Beunink Investor Relations Manager Phone: FAX: Astrid Lurati Investor Relations Manager Phone: FAX: Peter Dahlhoff Assistant Investor Relations Manager Phone: FAX: Marion Hildebrandt Secretary Phone: FAX: