Spring Investor Conference Financial Performance 2003 Klaus Kühn, CFO 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.
Financial Highlights 2003 Net special items underlying Non-operating result Pre-tax income (loss) After-tax income (loss) Net income (loss) Earnings per share ( ) Q4 7,121 (2,753) (2,774) 21 (103) (232) (2,985) (1,955) (1,952) 225 983 (2.67) % yoy -4.1 + 22.7-72.9-41.5 2003 28,567 (2,585) 1,382 3,532 (791) (1,994) (1,349) (1,361) 3,244 3.293 (1.86) % yoy -3.6 + 66.9-28.2-20.9 + 5.2-26.1 Reconciliation of Basis (197) Hedging gains 2) (net) + 989 + 36 New definition of special items 1) + 828 Reported 2002 underlying cont. Adjusted 2002 underlying cont. 1) Mainly gains from BCS product disposals 2) In 2003 reallocated from financial result to
2003 Hampered by High Special Charges + 1,382 (1,927) Total Special items (2,585) 2003 before special items Impairment losses, valuation (508) adjustments Restructuring expenses, other asset write-downs (619) + 469 2003 Other special items Portfolio changes 2003 Hampered by High Special Charges + 1,382 2003 before special items Polymers ( 1,134) - 1.927 Chemicals (476) HealthCare (317) Impairment losses, valuation (508) adjustments Restructuring expenses, other asset write-downs Impairment losses and valuation adjustments Polymers: Plastics/Rubber: (463) Summe Polyurethanes/Coatings/Fibers: Sondereinflüsse (671) -2.585 (619) + 469 2003 Other special items Portfolio changes
2003 Hampered by High Special Charges + 1,382 2003 before special items Polymers ( 1,134) - 1.927 Chemicals (476) HealthCare (317) Impairment losses, valuation (508) adjustments Restructuring expenses, other asset write-downs Impairment losses and valuation adjustments Chemicals: Fine Chemicals: (286) Textile Chemicals Summe Paper Chemicals Sondereinflüsse (190) Inorganic Pigments -2.585 (619) + 469 2003 Other special items Portfolio changes 2003 Hampered by High Special Charges + 1,382 2003 before special items Polymers ( 1,134) - 1.927 Chemicals (476) HealthCare (317) Impairment losses, valuation (508) adjustments Restructuring expenses, other asset write-downs Impairment losses and valuation adjustments HealthCare: Summe Plasma Business: Sondereinflüsse (317) -2.585 (619) + 469 2003 Other special items Portfolio changes
2003 Hampered by High Special Charges + 1,382 (1,927) Restructuring and other asset writedowns: Restructuring CropScience: Summe (102) Restructuring Polymers: Sondereinflüsse (135) Closure Kyoto: (119) Write-down SAP System: - 2.585 (100) Others: (52) 2003 before special items Impairment losses, valuation (508) adjustments Restructuring expenses, other asset write-downs (619) + 469 2003 Other special items Portfolio changes 2003 Hampered by High Special Charges + 1,382 (1,927) Summe Other special items: Sondereinflüsse Accounting measures Baycol: (300) - 2.585 Senior part-time working: (209) Others: (110) 2003 before special items Impairment losses, valuation (508) adjustments Restructuring expenses, other asset write-downs (619) + 469 2003 Other special items Portfolio changes
2003 Hampered by High Special Charges + 1,382 (1,927) Total Special items (2,585) 2003 before special items Impairment losses, valuation (508) adjustments Restructuring expenses, other asset write-downs (619) + 469 2003 Other special items Portfolio changes Financial Highlights in Q4 Net special items underlying Non-operating result Pre-tax income (loss) After-tax income (loss) Net income (loss) Earnings per share ( ) 7,428 (340) (281) (59) 761 (300) (640) (418) (412) 829 1,679 (0.56) 7,121 (2,753) (2,774) 21 (103) (232) (2,985) (1,955) (1,952) 225 983 (2.67) yoy -307-2,413 2,493 80-864 68-2,345-1,537-1,540-604 -696-2.11
Components of Q4 Trend Q4'02 Q4'03 % yoy + Acquisitions / Divestitures - Currencies -Prices + Volumes 7,428 (265) (525) (74) 557 7,121-3.6-7.0-1.0 + 7.5-4.1 CropScience (net) Household Ins., CC Polymer Latex, PO Organic Pigm., CH Walothen, CH Others (155) (42) (42) (9) (10) (7) Financial Highlights in Q4 Net special items underlying Non-operating result Pre-tax income (loss) After-tax income (loss) Net income (loss) Earnings per share ( ) 7,428 (340) (281) (59) 761 (300) (640) (418) (412) 829 1,679 (0.56) 7,121 (2,753) (2,774) 21 (103) (232) (2,985) (1,955) (1,952) 225 983 (2.67) yoy -307-2,413 2,493 80-864 68-2,345-1,537-1,540-604 -696-2.11
HealthCare Pharma / Biological Products in LC 1,227 1,214-1.1 8.5 (256) (434) (378) (810) Special Items (364) (785) Underlying (14) (25) (222) (298) 238 (203) HealthCare Consumer Care / Diagnostics in LC 894 893 0.1 9.9 427 135-68.4 333 27-91.9 Special items 239 (47) Underlying 93 74-20.4 397 23-94.2 583 178-69.5
HealthCare Animal Health in LC 212 193-9.0-0.8 48 52 8.3 26 42 61.5 Special Items (11) 20 Underlying 37 22-40.5 42 9-78.6 65 124 90.8 CropScience in LC 1,435 1,411-1.7 6.0 Crop Protection 1,256 1,212-3.6 - Insecticides 389 320-17.7 - Fungicides 302 330 9.3 - Herbicides 549 454-17.3 - Seed Treatment 56 103 83.9 - Others (Transitional ACS) (40) 5 Environmental Science 132 137 3.8 BioScience 47 62 31.9
CropScience 221 153-30.8 (55) (18) Special items 70 41 Underlying (125) 23 295 304 3.1 342 162-52.6 Polymers Plastics / Rubber in LC 1,259 1,183-6.0-0.5 10 (25) (50) (625) Special items (35) 577 Underlying (15) (48) 13 144 126 96-23.8
Polymers PUR / Coatings / Fibers in LC 1,292 1,255-2.9 3.9 211 103-51.2 (145) (687) Special items (194) (737) Underlying 49 50 190 129-32.1 246 280 15.4 Chemicals in LC 872 818-6.2-2.3 136 (1) 7 (552) Special Items 13 (528) Underlying (6) (24) 96 75-21.9 170 124-27.1
Non-Operating Result 2003 2002 2003 % Non-operating result (654) (791) -20.9 Income (exp.) from affiliated companies - net 223 (93) Interest expense - net (449) (353) + 21.4 Interest portion of provisions (296) (281) + 5.1 Exchange losses - net (5) (31) Miscellaneous - net (127) (33) Income (loss) before income-taxes 956 (1,994) Taxes 2003 Income taxes* Germany Other countries Effective tax rate (%) Other taxes 2002 107 (45) 152 (11.2) (221) 2003 645 406 239 (32.3) (303) * including deferred taxes
Balance Sheet Structure 2003 billion 37.4 (10%) 37.4 (10%) Property, Plant, Equipment 9.9 (-20%) 12.2 (-20%) Stockholders equity Intangibles Investments 6.5 (-27%) 1.8 (-19%) 8.9 (+6%) Provisions Trade a/c receiv. + inventories 11.0 (-8%) 4.7 (-1%) Remaining liabilities Other current assets 6.7 (+34%) 9.4 (-7%) Financial obligations Excluding minority interests, deferred taxes and deferred charges/income Free Cash Flow 2003 FY 2002 FY 2003 829 225 3,085 3,244 +/- Changes in working capital = 850 1,679 758 983 1,373 4,458 49 3,293 - Capital expenditures (638) (469) (2,239) (1,653) = Free operating cash flow 1,041 514 2,219 1,640 - Interest, dividends (81) (98) (964) (1,081) = Free cash flow 960 416 1,255 559 +/- Acquisitions / divestments 1,025 280 (4,759) 1,830 = Free cash flow after acquis./divest. 1,985 696 (3,504) 2,389 Changes due to cash payments - Derivatives, currencies, other (1,985) (597) (696) (282) 3,504 (1,180) (2,389) (520) Net debt (balance sheet) (2,582) (978) 2,324 (2,909)
Dividend 2003 Earnings per share - 1.86 Cash flow per share 4.44 1.40 2000 0.90 0.90 0.50 2001 2002 2003