Investor Handout. Financials. Strategy R & D. Investor Handout Spring 2001

Transcription

1 Investor Handout Financials Strategy R & D

2 1 Corporate Objectives Continuously increase corporate value Achieve above average return on capital Market capitalization (3 billions) ,022 Dividend payment Dividend per share % Ø Annual yield (dividends plus share price)

3 2 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 230 Cytec 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 ** 2004 estimate 300

4 3 Optimization of Business Mix >15% Operating margin 11% 9% 40% Health Care 24% 10% 31% 34% 12% 39% 15% 35% Agriculture Polymers 20% 15% 15% Agfa % of Sales 10% Target Chemicals

5 4 Strategic Priorities Health Care Agriculture Polymers Chemicals Improvement of profitability & 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

6 5 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

7 6 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

8 7 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

9 8 New Technologies Are Revolutionizing Pharmaceutical Research Research strategy patho mechanism molecular target screening optimization preclinical development Technology Genomics Functional Genomics Proteomics Bioinformatics High Throughput Screening Combinatorial Chemistry Substance Libraries

10 9 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 CuraGen 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

11 10 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 in 2000

12 12 Health Care 2000 Targets Achieved 3 million , % Q4 2, % 1-9 Q3 2, % 1H Q2 7, % 4, % 2, % 1, % % 103 1,024 1, % +40.0% % % % +67.7% % +69.6% , % % Q1 2, % % % Sales Op. Income (reported) Exceptionals (net) Op. Income (underlying)

13 13 Pharmaceuticals Top 10 Products 3 million Full Year 00 % (1) Ciprobay 1, (2) Adalat 1, (3) Lipobay/Baycol (4) Kogenate (5) Gamimune (6) Glucobay (7) Prolastin (8) Avelox 132 n.m. (9) Nimotop (10) Trasylol

14 14 Health Care High Growth Prospects 3 million Sales 2000 % market* objective Total 29, % Health Care 10, % Pharma 6,140 Consumer Care 1, > Diagnostics 1, * long term expected market growth p.a. in %

15 15 Health Care Growth/Value Drivers Increasing margins Growing above market Accelerating Avelox growth Gaining Baycol market share Capitalize brand awareness short term 2001 Achievement of targets in 2002 New product launches Pipeline growth Kogenate & plasma gaining momentum plus mid term 2 new products per year Pharmacogenomics plus long term

16 16 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

17 17 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)

18 18 FLINT The New Blockbuster Fungicide Trifloxystrobin (TFX) TFX + Propiconazole TFX TFX + Cymoxanil TFX + Cyproconazole TFX + Cyproconazole TFX The FLINT product line is targeted to reach million annual sales in 2004 Initial sales in 2001 are projected to be million TFX FLINT growth will be supported by growing demand for high performance strobilurin based fungicides Strobilurin fungicide sales achieved 3 1 bn in 2000 and will increase further to bn in 2005

19 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 Highly profitable value of seed as delivery tool for GM plants is growing steadily Fastest growing markets US and CAN 2000: million sales in seed treatment (35 % ms) market Bayer share

20 20 Rapid Expansion in GPC Continues million % market share World market GPC Bayer sales GPC Bayer market share GPC Marketing of products for non-agricultural markets to consumers (Home & Garden) and professional users (Turf, Termites) Top position achieved through strong product portfolio and acquisition of Pursell (US) and PBI (UK)

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 Strong Growth 3 million , % % +26 Q % 598 2, % +15.0% Q % % +31 2, H +20.1% +6.2% Q2 1, % % % % % % % Q1 1, % % % Sales Op. Income (reported) Exceptionals (net) Op. Income (underlying)

23 23 Agriculture Strong Positions in a Growing Industry 3 million Sales 2000 % market* objective Total 29, % Agriculture 3, % Crop Protection 2, > Animal Health > * long term expected market growth p.a. in %

24 24 Agriculture Growth/Value Drivers Growing imidacloprid business Flint & Mikado acquisition Seed treatment GPC-business short term 2001 Consolidation opportunities 2 3 product launches/year Pipeline growth Improving product portfolio Growing companion animal business plus mid term Output traits Genomics derived products plus long term

25 25 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

26 26 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

27 27 Global Leadership in High-Value-Added Polymers sales% Polycarbonates 40 ms% 30 # 2 Styrenics Semicrystalline Thermoplastics 10 > 5 6 Fabricated Products 10 > 15 2 TPU 5 > % Plastics sales%* TDI 20 ms%* 26 # 1 20% Rubber 4% Fibers 17% Coatings and Colorants 28% Polyurethanes MDI 34 Polyols sales% ms% # Isocyanates 39 >50 1 Adhesives ms = Market share # = Ranking Coatings 30 Others

28 28 Polymers Higher Raw Material Costs 3 million , % Q4 2, % 1-9 Q2 8, % Q3 2, % 1H 5, % 2, % +16.0% 1, % % % % -16 1, % % % % +1.9% 5.1% Q1 2, % % % Sales Op. Income (reported) Exceptionals (net) Op. Income (underlying)

29 29 Polymers Raw material and selling price development Raw materials Prices Q Q Q Q4 2001* * expected

30 30 Polymers Tremendous Potential 3 million Sales 2000 % market* objective Plastics 3, > Total 29, % Polymers 11, % Rubber 2,296 Polyurethanes 3, > Coatings & Colorants 1,946 Fibers > * long term expected market growth p.a. in %

31 31 Polymers Growth/Value Drivers Declining raw material prices Higher selling prices Increasing PUR competitiveness Strong PC growth Coatings increasing strongly short term 2001 Capacity additions Improved processes Cost cuttings Improving business mix ABS achieving hurdle Powder coatings plus mid term Achievement of margin target New applications plus long term

32 32 Chemicals Improving Profitability Focus on specialties Strict cost management Further restructuring Streamlining of portfolio DyStar smaller share in enlarged j.v. Erdölchemie divestiture pending

33 33 Chemicals Restructuring Efforts Bearing Fruit Op. margin % * 10.8* Divestiture of enamels, citric acid, H-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 '00 *restated

34 34 Chemicals Improving Greatly 3 million , % Q4 1, % 1-9 Q2 3, % Q3 1, % 1H 2, % 1, % % % % % % % % % +27.2% +25.3% 6.3% Q1* 1, % % % Sales Op. Income (reported) Exceptionals (net) Op. Income (underlying) *including Erdölchemie

35 35 Chemicals Attractive Opportunities 3 million Sales 2000 % market* objective Total 29, % Chemicals 4, % Basic & Fine Chemicals 1,006 Specialty products 1,312 H & R > > H. C. Starck > Wolff W > * long term expected market growth p.a. in %

36 36 Chemicals Growth/Value Drivers Op. margin target achieved Improving business mix Divest/joint venture non core activities Strengthening of fast growing areas plus Economic growth in EU Reducing cyclicality Booming electronic business short term 2001 plus mid term long term

37 37 Value Management CFRoI 17.0 CFRoI target CFRoI 2000 CFRoI H 35,103 Capital invested

38 38 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

39 40 Financial Highlights 3 million 2000 % consensus Sales 30, Sales (cont.) 29, ,619 Operating income 3, Operating income (cont.) 3, Operating income 3, ,349 pre-exceptionals (cont.) Non-operating result Pre-tax income 2, ,984 After-tax income 1, Net income 1, ,825 Net income (cont.) 1, Earnings/share Euro Dividend Euro

40 41 Components of 2000 Sales Trend 3 million % Sales Discontinuing 27,320 2,582 30, Continuing 24,738 % + Acquisitions/ Divestitures Acquisitions Lyondell PC-sheets + 80 Misung + 58 Sybron + 35 Cytec + 14 Divestitures 85 Tropon/Allergens 48 Biologicals 27 Others 10 + Currencies + Prices + Volumes 2, , Continuing 29,

41 42 Quarterly Sales Development 3 million % 4th quarter 8,053 6, Agfa (10) DyStar, Erdölchemie (250) (220) Continuing operations 7,803 6, 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, * including Erdölchemie

42 43 Comparable Operating Income 3 million % OPI reported 3,287 3, Segments 3,422 2, Reconciliation (239) (423) Discontinuing operations (104)* (1,155) Agfa 1,133 DyStar, Erdölchemie * OPI continuing 3,183 2, Exceptional items (cont.) OPI underlying 3,340 2, continuing operations * including 12 exceptionals, previous year = (+ 1)

43 44 Quarterly OPI Development 3 million % 4th quarter Agfa IPO & Sale (10) DyStar, Erdölchemie (40) (25) Exceptional items (cont.) OPI underlying continuing operations 3rd quarter Agfa Sale (67) DyStar, Erdölchemie (25) 8 Exceptional items (cont.) OPI underlying continuing operations 2nd quarter 960 1, Agfa IPO & OPI (985) DyStar, Erdölchemie (22) (4) Exceptional items (cont.) OPI underlying continuing operations 1st quarter 1, Agfa OPI (70) DyStar (3) 4 Exceptional items (cont.) 4 (6) OPI underlying* 1, continuing operations * including Erdölchemie

44 45 Full Year 2000 Exceptional Items 3 millions OPI (cont.) 3,183 Exceptional charges 276 Restructuring DS 61 Operational excellence PH 26 Alka Seltzer Plus recall 58 Site consolidation CC 15 Lyondell integration 48 Restructuring styrenics 32 Other 36 Exceptional gains (119) Tropon, Biologicals, Solar Silicon + 57 Real estate sale + 34 Other + 28 Net charges 157 OPI-underlying (cont.) 3,340

45 46 Full Year 2000 Exceptional Items million Charge Gain Net Charge Gain Net Net Health Care Agriculture Polymers Chemicals Reconciliation Discont Total

46 47 Full Year 2000 Sales by Region Total 3 30,971 million, % Continuing operations 3 29,986 million, % Germany % 8,844 Europe % 13,784 9,978 2,355 3,869 North America % Latin America % Far East/ Asia/Pacific % point of origin

47 48 Non-operating result 3 million % Non-operating result Income from affiliated companies net Schein Myriad + 65 Others (net) + 76 Net interest charge Interest on pension provisions & other expenses net

48 49 Capital Expenditures 2,632 2, % 29 % 9 % 12 % 42 % 41 % 3, % 9 % 46 % Health Care Agriculture Polymers 20 % 18 % 21 % Chemicals Plan % of total sales

49 50 R & D-Budget 2001 Total 32,400 million Polymers Agriculture Chemicals 7 % 14 % 16 % 7 % Central Research 56 % Health Care