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

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Transcription:

Investor Handout Financials Strategy R & D

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 Corporate Objectives Continuously increase corporate value Achieve above average return on capital 13 25 26 34 949 Market capitalization (3 billions) Dividend payment 710 747 461 0.97 1.02 1.30 Dividend per share 0.66 1994 1997 1998 1999 20% Ø Annual yield (dividends plus share price)

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 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 1996 3/4 Year 2000 % of Sales 10% Target Chemicals

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 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 Health Care Substantial Profitability Improvement Under Way 20% Operating Margin* 13% 8,367 7% p.a. 10,500 Sales Sales 1,095 2,100 500 150 400 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 Health Care Far-Reaching Cost Cutting Initiatives 2 million 600 500 350 Consumer Care 2 100m Diagnostics 2 125m 100 100 75 75 0 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 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 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 Leading Position in Key Technologies Achieved 3rd league 2nd league 1st league Genomics 1995 2000 Bioinformatics Chemical Library Combichem HTS Proteomics

13 Substantial Improvement in Research Productivity Development candidates/year 20 Ten-fold increase of research output Productivity improvement of 30% per year 5 9 13 '97 '99 '01 '04 Shortening research times to 24 months Improvement of success rate through toxicogenomics First genomics project expected in 2000

14 Pharma Pipeline Important Development Projects Launch Date Peak Sales Potential (3, million) Status 1999 2000 2001 2002 100* 150** 1050 900 Avelox Baynas Viadur Vardenafil (Bacterial Inf.) (Allerg. Rhinitis) (Cancer) (Sexual Dysfunct.) Launched Launched Approved Phase III 2002 325 Cipro OD (Bacterial Inf.) Phase I 2003 400 Taxane analog (Cancer) Phase I 2003 400 Camptoth. Gly. (Cancer) Phase I 2003 500 Faropenem (Bacterial Inf.) Phase III 2004 450 Repinotan (Stroke, TBI) Phase III 2004 200 IL-2 SA (Cancer) Phase I 2004 750 PDE IV Inh. (Asthma) Phase II 2004 1250 PDE IV Inh. (COPD) Phase II 2005 650 IL-4 RA (Asthma) Phase I 2005 300 Implitapide (Hyperlipidemia) Phase II 2005 500 HSV Inh. (Viral inf.) Phase I * Japan only ** US sales

15 Health Care on track 3 million 1-9 7,265 +20.6% Q3 2,518 +20.4% 1,024 +57.3% 36 1,060 +40.0% 1H Q2 4,747 +20.7% 2,442 +19.1% 324 700 +86.2% 385 +17.8% +69.6% 10 1 334 726 +67.7% 386 +3.1% +47.3% Q1 2,305 +22.5% 315 +111.4% 25 340 +98.8% Sales Op. Income (reported) Exceptionals (net) Op. Income (underlying)

16 Pharmaceuticals Top 10 Products 3 million 3/4 Year 00 % (1) Ciprobay 1.240 + 12 (2) Adalat 888 + 20 (3) Lipobay/Baycol 447 + 85 (4) Kogenate 365 + 41 (5) Glucobay 231 + 14 (6) Gamimune 226 + 27 (7) Prolastin 102 + 104 (8) Nimotop 94 ± 0 (9) Trasylol 76 + 43 (10) Avelox 71 n.m.

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 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 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 Market Leadership in Seed Treatment 3 million 1000 750 500 250 0 870 760 560 35% 36% 19% 1994 1999 2004 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 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 Agriculture growing strongly 3 million 1-9 2,815 +15.0% Q3 722 +2.4% 1H Q2 2,093 +20.1% 1,068 +23.0% 598 117 481 +6.2% 215 +13.3% +56.0% +28.0% +25 573 +13.0% +31 86 4.4% 487 +17.1% 1 216 +29.3% Q1 1,025 +17.3% 266 6.7% 5 271 +8.8% Sales Op. Income (reported) Exceptionals (net) Op. Income (underlying)

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 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 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 Global Leadership in High-Value-Added Polymers sales% Polycarbonates 40 Styrenics 35 ms% 30 15 # 2 1 Semicrystalline Thermoplastics 15 TPU 5 Fabricated Products 5 5 20 15 6 2 2 31% Plastics sales%* TDI 18 ms%* 28 # 1 21% Rubber 5% Fibers 19% Coatings and Colorants 24% Polyurethanes MDI 33 Polyols 44 * Figures: 2000e 33 29 1 1 sales% ms% # Isocyanates 39 >50 1 Adhesives 12 34 1 ms = Market share # = Ranking Coatings 30 Others 19 24 1

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

30 Polymers selling prices increasing 3 million 1-9 8,408 +28.8% Q3 2,939 +31.9% 833 0.1% 64 897 +3.7% 1H Q2 5,469 +27.3% 2,912 +30.9% 225 11.1% -41 608 +4.6% 280 5.1% -16 266 631 +4.5% 296 +1.9% 5.1% Q1 2,557 +23.3% 328 +14.7% 7 335 +14.7% Sales Op. Income (reported) Exceptionals (net) Op. Income (underlying)

31 Polymers Raw material and selling price development 142 143 121 132 Raw materials Prices 100 100 98 101 104 107 1999 2000 Q1 2000 Q2 2000 Q3 2000 Q4* 2001* * expected

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 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 Chemicals Restructuring Efforts Bearing Fruit Op. margin % 4.2 6.9 11.8 10.0 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 Chemicals improving greatly 3 million 1-9 3,160 +17.9% Q3 1,056 +18.7% 1H Q2 2,104 +17.5% 1,088 +16.4% 346 +6.1% 6 352 99 +35.6% 5 247 2.4% 120 4.0% 0 104 248 3.9% 120 +3.2% +25.3% 6.3% Q1* 1,178 +24.1% 141 +4.4% 1 142 +3.6% Sales Op. Income (reported) Exceptionals (net) Op. Income (underlying) *including Erdölchemie

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

39 3/4 Year 2000 Financial Highlights Sales Euro 22,918m + 11.8 % Sales (cont.) Euro 22,183m + 22.2 % Operating income Euro 2,718m 14.5 % Operating income (cont.) Euro 2,654m + 28.8 % Non-operating result Euro 170m + 54.2 % 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 + 39.5 % Earnings/share Euro 2.15 26.9 %

40 Components of 3/4 Year 2000 Sales Trend (continuing) Group sales 1999 3 mill 18,147 % 3 mill Acquisitions/ Divestitures + 508 + 2.8 Acquisitions + 559 Lyondell + 419 PC sheets + 82 Misung + 58 Divestitures 51 Tropon/Allergens 41 Others 10 Volumes Prices Currencies + 1,674 + 181 + 1,673 + 9.2 + 1.0 + 9.2 Group sales 2000 22,183 + 22.2

41 Quarterly Sales Development 3 million * including Erdölchemie 2000 1999 % 3/4 year 22,918 20,499 + 11.8 Agfa 1,791 DyStar, Erdölchemie (735) 561 Continuing operations 22,183 18,147 + 22.2 3rd quarter 7,680 6,275 + 22.4 Agfa 13 DyStar, Erdölchemie (247) 205 Continuing operations 7,433 6,057 + 22.7 2nd quarter 7,907 7,230 + 9.4 Agfa (752) DyStar, Erdölchemie (242) (186) Continuing operations 7,665 6,292 + 21.8 1st quarter 7,331 6,994 + 4.8 Agfa (1,026) DyStar (84) (77) Continuing operations* 7,247 5,891 + 23.0

42 3/4 Year 2000 Comparable Operating Income 3 million * including 6 exceptionals, previous year = ( 4) 2000 1999 % OPI reported 2,718 3,180 14.5 Segments 2,801 2,339 + 19.8 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 2,060 + 28.8 Exceptional items (cont.) 47 131 OPI underlying 2,701 2,191 + 23.3 continuing operations

43 Quarterly OPI Development 3 million * including Erdölchemie 2000 1999 % 3rd quarter 724 624 + 16.0 Agfa Sale (67) DyStar, Erdölchemie (25) 8 Exceptional items 25 83 OPI underlying 724 648 + 11.7 continuing operations 2nd quarter 960 1,685 43.0 Agfa OPI (4 5 99) (33) Agfa IPO (952) DyStar, Erdölchemie (22) (4) Exceptional items 18 54 OPI underlying 956 750 + 27.5 continuing operations 1st quarter 1,034 871 + 18.7 Agfa OPI (70) DyStar (3) 4 Exceptional items 4 (6) OPI underlying* 1,035 799 + 29.5 continuing operations

44 3/4 Year 2000 Exceptional Items 2000 1999 3 mill Charge Gain Net Charge Gain Net Net Health Care 56 + 20 36 109 + 3 106 + 70 Agriculture 0 + 25 + 25 16 + 37 + 21 + 4 Polymers 64 0 64 31 0 31 33 Chemicals 6 0 6 15 0 15 + 9 Reconciliation 6 + 34 + 28 4 0 4 + 32 Total 132 + 79 53 175 + 40 135 + 82

45 3/4 Year 2000 Sales by Region Total 3 22,918 million, + 11.8 % Continuing operations 3 22,183 million, + 22.2 % Germany + 12.8 % 6,618 Europe + 12.3 % 10,311 1,435 3,125 7,312 North America + 30.5 % Latin America + 21.8 % Asia /Africa/Australia + 43.1 % point of origin

46 Investor Relations Contacts Dr. Alexander Rosar Head of Investor Relations Phone: +49-214-30-81013 FAX: +49-214-30-66247 E-Mail: alexander.rosar.ar1@bayer-ag.de Dr. Jürgen Beunink Investor Relations Manager Phone: +49-214-30-65742 FAX: +49-214-30-66247 E-Mail: juergen.beunink.jb@bayer-ag.de Astrid Lurati Investor Relations Manager Phone: +49-214-30-66836 FAX: +49-214-30-66247 E-Mail: astrid.lurati.al@bayer-ag.de Peter Dahlhoff Assistant Investor Relations Manager Phone: +49-214-30-33022 FAX: +49-214-30-41637 E-Mail: peter.dahlhoff.pd@bayer-ag.de Marion Hildebrandt Secretary Phone: +49-214-30-72704 FAX: +49-214-30-66247 E-Mail: marion.hildebrandt.mh@bayer-ag.de