Science For A Better Life Investor Conference Call FY/Q4 Results Werner Wenning, CEO February 26 2010 FY/Q4 Investor Conference Call Werner Wenning Disclaimer This presentation may contain forward-looking statements based on current assumptions and forecasts made by Bayer Group or subgroup 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 Bayer s public reports which are available on the Bayer website at www.bayer.com. The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments. FY/Q4 Investor Conference Call Werner Wenning Page 2 1
Fiscal : Successful in a difficult environment Record sales and earnings at HealthCare, record sales at, unprecedented drop in demand at Third highest group underlying EBITDA ever Restructuring, efficiency and performance projects delivered Record net cash flow Q4 underlying EBITDA back to pre-crises levels Optimistic 2010 outlook, new mid-term targets FY/Q4 Investor Conference Call Werner Wenning Page 3 Q4 Upward Trend Confirmed Key Figures EBITDA by Subgroup In million, Δ% y-o-y 7,872 EBITDA* 1,513 Δ% -1% +11% ² +16% Δ% Adj. ** +3% EBIT* 817 Core EPS 0.90 +27% <1% Reconciliation 11% 13% 76% HealthCare * Before special items ** Currency & portfolio adjusted FY/Q4 Investor Conference Call Werner Wenning Page 4 2
HealthCare Strong Finish to a Successful Year Q4 Earnings In million, Δ% y-o-y Consumer Health 0% (+5%) Pharma +1% (+7%) EBITDA 1,095 1,154 +5% EBIT 1,466 2,698 753 789 +5% 759 481 775 +2% 497 +3% 342 365 +7% 278 278 0% HealthCare 4,164m; +1% (+6%) Q4 08 Q4 Q4 08 Q4 ( ) Currency & portfolio adjusted FY/Q4 Investor Conference Call Werner Wenning Page 5 Strong Growth, Earnings Down on Fx And Weaker Prices Q4 Earnings In million, Δ% y-o-y Environmental Science/ BioScience -3% (0%) 221 Crop Protection +5% (+7%) EBITDA 182 166-9% EBIT 158 149-6% 1,177 24 17 53 42-21% 52 42-19% -29% 1 0 1,398m; +3% (+6%) Q4 08 Q4 Q4 08 Q4 ( ) Currency & portfolio adjusted FY/Q4 Investor Conference Call Werner Wenning Page 6 3
Ongoing Recovery Earnings In million, Δ% y-o-y 2,055 1,830 1,636 2,038-2% (+1%) (y-o-y) 2,016 54 EBITDA -116 121 238 +276% (y-o-y) 203-86 EBIT -22 100 (y-o-y) 59-263 Q4 08 Q1 Q2 Q3 Q4 Q4 08 Q1 Q2 Q3 Q4 Q4 08 Q1 Q2 Q3 Q4 ( ) Currency & portfolio adjusted FY/Q4 Investor Conference Call Werner Wenning Page 7 Cash Flow and Net Debt Development Q4'09 Net Debt Development In million GCF NCF Investments ofcf In billion -1.0 10.7 9.7 1,029 1,766 495 1,271 Δ % y-o-y -11% +85% -22% +291% Q3 Q4 FY 09 14.2-4.5 GCF NCF Investments ofcf 9.7 4,658 5,375 1,575 3,800 Δ % y-o-y -12% +49% -10% +106% Q4 08 Q4 FY/Q4 Investor Conference Call Werner Wenning Page 8 4
Performance vs. Targets in million Outlook adj. Δ Comments HealthCare Margin* above market growth improve towards 28% 15,988 27.9% 4% +90bps Pharma slightly behind, consumer in-market performance ahead Strong in pharmerging markets esp. China Margin* increase maintain 25%, Q3 update 23-24% 6,510 23.2% 2.5% -190bps Gained market share Achieved targeted 2bn sales with new products Met Q4 guidance of higher sales (+6%) uebitda** ofcf*** severe decline severe decline positive 7,520 446 345-25% -59% +214% Unprecedented drop in demand Sequential recovery clearly visible Q4 sales in Asia/Pacific above pre-crises levels FY/Q4 Investor Conference Call Werner Wenning Page 9 *underlying EBITDA margin **uebitda = pre-exceptional items ***ofcf = operating free cash flow Group: Performance vs. Targets Outlook actual Δ Comments 31-32bn 31.2bn -5.7% Record sales at HealthCare and Unprecedented drop in demand at uebitda approx. -5% 6.5bn -6.6% Includes 140m ( 80m in Q4 alone) negative currency effect At constant exchange rates decline -4.6% Net debt reduce towards 10bn 9.7bn -4.5bn Includes conversion of mandatory convertible bond Record net and ofcf Achieved 1bn trade working capital improvement (constant vol/prices) Dividend payout ratio 30-40% of Core EPS 1.40 +/-0 Payout ratio 38.5% Underscores optimism for future developments FY/Q4 Investor Conference Call Werner Wenning Page 10 5
Consistent Strong Performance EBIT in million 4,287 4,342 4,400 3,300 3,479 3,772 3,660 Group + 356% 2,920 n.m. 2,244 2,180 + 140%* 1,466 828 1,440 HealthCare + 373% 2002 2003 2004 2005 2006 2007 2008-126 700 * % vs. 2003 As reported in respective year 2002 as reported in 2003 2003 as reported in 2004 2006 excluding H.C. Starck and Wolff Walsrode FY/Q4 Investor Conference Call Werner Wenning Page 11 28 26 24 22 20 18 16 14 12 10 Consistent Strong Performance 4,287 4,342 27 28 4,400 26 25 3,772 23 3,660 3,479 23 3,300 22 21 21.1 22 20.9 20.8 20 21 19 19.3 2,920 18 18.6 16 2,244 18 17 15.1 2,180 14 1,466 15 14 1,440 11 EBITDA margin in % 828 12.2 14.4 HealthCare Group + 424% Group 8 6 2002 2003 2004 2005 2006 2007 2008 700 6-126 * % vs. 2003 As reported in respective year 2002 as reported in 2003 2003 as reported in 2004 2006 excluding H.C. Starck and Wolff Walsrode FY/Q4 Investor Conference Call Werner Wenning Page 12 6
Group Outlook Fx and portfolio adjusted Δ 2010E 2012E 31.2bn -6% >5% ~5% p.a. uebitda 6.5bn -7% improve towards 7bn ~8bn Core EPS 3.64-13% ~10% average ~10% p.a. to ~ 5 FY/Q4 Investor Conference Call Werner Wenning Page 13 Outlook depends on planning assumptions as detailed in the annual report Subgroup Outlook 2010 And Beyond 2010E 2012E Group HealthCare at least market growth corresponds to adj. sales increase of ~5% increase in uebitda at least market growth steady improvement of uebitda slightly above market growth equivalent to adj. sales increase of ~4% small increase in uebitda business environment currently more difficult than expected at least market growth further improvement of uebitda continuing economic recovery aim to increase sales 10+% substantial increase uebitda somewhat higher sales in Q1 vs. Q4 09 and Q1 uebitda roughly level with Q4 09 FY/Q4 Investor Conference Call Werner Wenning Page 14 provided economic recovery continues, expect pre-crises sales levels of > 10bn by 2012 considerable increase of uebitda Outlook depends on planning assumptions as detailed in the annual report 7
Significant Newsflow From Pharma Pipeline Expected in 2010 selection Further data from EINSTEIN program in DVT treatment Xarelto Nexavar Regorafenib VEGF-Trap-Eye Riociguat Visanne Potential newsflow from products in registration Completion of ROCKET AF trial in stroke prevention in A fib patients Completion of MAGELLAN trial in VTE prevention in medically ill patients First filings in DVT treatment and in stroke prevention Phase III initiation in breast cancer Completion of NExUS lung cancer trial Initiation of phase III (colorectal cancer 3/4th line) First data from phase III program in wet-amd (VIEW program) Phase III decision for PH-ILD Launch for treatment of endometriosis (EU) Xarelto (VTE prevention after hip/knee replacement surgery) (US) Qlaira (OC and treatment of heavy/prolonged menstrual bleeding) (US) Levitra orodispersible tablet (US, EU) YAZ plus (US) FY/Q4 Investor Conference Call Werner Wenning Page 15 Fiscal : Successful in a difficult environment Record sales and earnings at HealthCare, record sales at, unprecedented drop in demand at Third highest group underlying EBITDA ever Record net cash flow Optimistic 2010 outlook, new mid-term targets FY/Q4 Investor Conference Call Werner Wenning Page 16 8
Science For A Better Life FY/Q4 Investor Conference Call Werner Wenning 9