FY/Q4 2012 ResultsInvestor Conference Call
February 28, 2013 / Marijn Dekkers, CEO
DisclaimerThis presentation may contain forward-looking statements based on currentassumptions and forecasts made by Bayer Group or subgroup management.
Various known and unknown risks, uncertainties and other factors could lead tomaterial 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 areavailable on the Bayer website at www.bayer.com.
The company assumes no liability whatsoever to update these forward-lookingstatements or to conform them to future events or developments.
• FY/Q4 2012 Investor Conference Call • Marijn Dekkers Page 2
2012 Has Been a Very Successful Year For Bayer
• FY/Q4 2012 Investor Conference Call • Marijn Dekkers Page 3
Operationally, a record year driven by strong execution and currency tailwind
All subgroups contributed to top and bottom line improvement
5% organic sales growth to ~€40bn, driven by LifeSciences
Special charges of €1.7bn, mainly further provisions for litigation resulted in reported EBITDA / net income on prior-year level
Adj. EBITDA up 9% at €8.3bn, core EPS up 11%, group targets achieved, proposed DPS of €1.90 up 15% (payout ratio 35.5%)
Excellent innovation pipeline progress strengthens LifeScience businesses
Encouraging growth (+7%) in the emerging markets (37% of group sales, up by ~80 basis points)
Q4 – strong finish to a very successful year
Outlook 2013 projects continuing record performance in anniversary year
4th Quarter 2012 –Strong Finish to a Very Successful Year
• FY/Q4 2012 Investor Conference Call • Marijn Dekkers Page 4
EBITin € million
+17%
735629
Salesin € million% currency & portfolio adj.
+6%
9,8629,191
EBITDAadjusted*in € million
+18%
1,825
1,541
Core EPSin €
+3%
1.000.97
*before special items
Q4’12Q4’11 Q4’12Q4’11 Q3’12Q4’11 Q4’12Q4’11
• FY/Q4 2012 Investor Conference Call • Marijn Dekkers Page 5
4th Quarter 2012 –All Subgroups With Higher Sales and EarningsSales & adjusted EBITDA ∆ in € million, sales ∆% y-o-y Fx and portfolio adjusted
HealthCare
Pharma
Consumer Health
CropScience
MaterialScience
∆ Sales Y-o-Y ∆ Adj. EBITDA Y-o-Y
69+9%
93+22%
16+6%
149+141%
162+14%
187+5%
141+5%
180+9%
165+5%
328+5%
4th Quarter 2012 –Performance Driven by Emerging Markets
• FY/Q4 2012 Investor Conference Call • Marijn Dekkers Page 6
Western Europe
+1%
~1,560
~1,420
+14%
~460
-1%~520
+12%
¹ Emerging economies include: Latin America, Asia w/o Japan, Australia,New Zealand, Africa and Middle East incl. Turkey, Eastern Europe
² Others = Japan, Australia, New Zealand, Canada³ Emerging Asia = Asia w/o Japan, Australia, New Zealand
Q4’12 Group Sales by Region Emerging EconomiesIn € million, ∆% yoy Fx adjusted
Group €9,862m; +5%
Emerging Asia³
LatinAmerica
EasternEurope
Africa & Middle East
EmergingEconomies¹
+9%
Others²+2%
USA+5%
40%
30%
20%
10%
+7%
Full Year 2012 –All Targets Achieved
• FY/Q4 2012 Investor Conference Call • Marijn Dekkers Page 7
Sales ∆ Fx & portf. adjusted, EBITDA before special items2012
Outlookoriginal
2012actual
∆ vs.2011 Comments
Sales +~3% or €37bn €39.8bn +5% Raised to 4-5% or
€39-40bn in Q2
adj. EBITDA
slightlyimprove €8.3bn +9% Raised to a high-single-
digit % increase in Q2
Core EPS
slightlyimprove €5.35 +11% Raised to ~10% in Q2
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2013 – 2015:Aspirations by
Subgroup
• FY/Q4 2012 Investor Conference Call • Marijn Dekkers Page 9
Priority 2012 Target 2013*
Aspiration 2015
HealthCare: Accelerate sales growth €18.6bn
Pharma: Successfully commercialize new products and realize emerging markets (EM) opportunity New product sales¹ EM growth
Consumer Health: Aspire to become #1 OTC company €7.8bn ~€9bn
HealthCare: Improve margins Pharma Consumer Health
27.2%29.6%23.9%
slightly upslightly up
at level
towards 29%≥31%~25%
HealthCare –Building Growth Momentum, Improving Margins
¹ Xarelto, Eylea, Stivarga, Radium-223-Dichloride and Riociguat; subject to regulatory approval*Assuming Fx rate of $1.29 per €
Outlook depends on specific planning assumptions as detailed in the Annual Report
€10.8bn
€368m7.5%
mid-single-digit % to ~€11bn
~€1bnhigh-single
digit %
CAGR ~7% towards €13bn
>€2.5bnhigh-single
digit %
CAGR ~6% towards €22bn
mid-single-digit % to ~€8bn
mid-single-digit % to ~€19bn
Sales ∆ Fx & portf. adjusted, margin = EBITDA before special items to sales
Pharma – New Products Drive Growth and Rejuvenate Portfolio
• FY/Q4 2012 Investor Conference Call • Marijn Dekkers Page 10
86
368
~1,000
>2,500
2011 2012 2013e 2015e
Sales from new Pharma pipeline in € m
Xarelto 322Eylea 14Stivarga 32
Successful launch, 2012 sales above target –important countries with outstanding uptake, disappointing so far in Japan
Encouraging early feedback on first launches
Positive early indications on commercial launch in the US, approved for GIST in the US, CHMP opinion expected 1H 2013
Submitted for treating bone metastases in patients with CRPC (Dec. 2012)
Radium-223- Dichloride
Submitted for PAH and CTEPH (Feb. 2013)
• FY/Q4 2012 Investor Conference Call • Marijn Dekkers Page 11
Pharma Aspiration – Targeting High-Single Digit Emerging Market Growth
Developed Markets
+2%
¹ Emerging economies include: Latin America, Asia w/o Japan, Australia,New Zealand, Africa and Middle East incl. Turkey, Eastern Europe
² Others = Japan, Australia, New Zealand, Canada
2012 Pharma Sales by Region Highlights Emerging EconomiesIn € million, ∆% yoy Fx adjusted
Total €10,803m; +4%
EmergingEconomies¹
+7.5%
36%64%
Portfolio of established brands and innovative medicines further expanding
Sales CAGR of 11% in EM for the last 5 years
Women’s Health business growing 8%
PR China sales above €1bn, up 23%
Consumer Health –Aspire to Become #1 OTC Company
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2,634
3,020 3,0803,371
3,5343,853
2007 2008 2009 2010 2011 2012
+6%
* Only Aspirin CC
€494m (+1%)
Product Highlights 2012
€323 (+5%)
€269 (+14%)
€250 (+8%)
€196 (+4%)
*
Sales Consumer Care in € million; ∆% Fx & portfolio adj.
• FY/Q4 2012 Investor Conference Call • Marijn Dekkers Page 13
CropScience – Above Market Growth at Benchmark Profitability
Priority 2012 Target 2013*
Aspiration 2015
Above-market sales growth +12.4% to €8.4bn
high-single digit %
towards €9bn
CAGR ~6% towards €10bn
Translate R&D effectively into new product sales (CP products launched since 2006)
€1.1bn ~€1.4bn ~€1.9bn
Extend seeds footprint +14%
Maintain industry leading profitability level 24.0% slight improvement ~24%
Sales ∆ Fx & portf. adjusted, margin = EBITDA before special items to sales
double-digit % growth p.a.
CP: Crop Protection*Assuming Fx rate of $1.29 per €
Outlook depends on specific planning assumptions as detailed in the Annual Report
double-digit % growth
CropScience – Translate R&D Effectively into New Product Sales
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Sales from new Crop Protection products launched since 2006 in € bn∆% y-o-y, () Fx adj.
Xpro (+61%) - New cereal fungicide with yield-boosting effect
Adengo family (+85%) - Excellent weed control in corn and cereal crops, also in case of glyphosate resistance
Belt (+54%) – Broad-spectrum insecticide with fast and long-lasting action
Launch of Luna fungicide in the US
First launch of new SeedGrowth family EverGol/Emesto in Canada0.02
0.3
0.7
1.1
~1.4
~1.9
2007 2009 2011 2012 2013e 2015e
+60%
2012 Highlights
High demand for InVigor in Canada; launch of conventional oilseed rapein Europe
Expansion of cotton seed business driven by US and Brazil
Growing rice seed business in Asia(esp. India)
About 70 new vegetable seed varietieslaunched
Successful launch of Bayer soybean seed in the US
Build-up of global wheat seed business continued with new research cooperations
Seeds – Double-Digit Growth in All Our Broad-Acre Crops in 2012
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299 304
227 311
1791994047
2011 2012 2015e
820962
Sales in € million; ∆% y-o-y, () Fx & portfolio adj.
2012 Highlights
+14%
Vegetables (-2%)
Rice (+23%)
Oilseeds (+33%)
Soybean (+83%)
Cotton (+10%)
Other
+14%+14%
Double-digit % CAGR expected
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Sales ∆ Fx & portf. adjusted, margin = EBITDA before special items to sales
*Assuming Fx rate of $1.29 per €#after reproduction
Outlook depends on specific planning assumptions as detailed in the Annual Report
MaterialScience – Higher Asset Utilization & Efficiency Measures Are Driving Performance
2012 Target 2013 Aspiration 2015
Sales +3.0% to €11.5bn (volumes +2%)
Adj. EBITDA +7% to €1,251m
CFROI# 5.6% < WACC 7.1%
Sales to slightly increase to ~€12bn
Adj. EBITDA to further improve
Q1‘2013 vs Q4‘2012: Sales to further increase and adj. EBITDA at same level
Grow business (volume) above global GDP
Defend market leading positions in PCS and PUR
Realize 150 bp margin contribution through new efficiency initiative
Optimize asset structure in Germany
CFROI# > WACC
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Group Outlook
Full Year 2013 –R&D And CapEx Budgets
• FY/Q4 2012 Investor Conference Call • Marijn Dekkers Page 18
2%
MaterialScience~€0.2bn
HealthCare~€2.1nthereof Pharma~€1.7bn
MaterialScience~€0.6bn
HealthCare~€0.6bn
Reconciliation~€0.1bn
65%
26%
7%
Reconciliation~€0.3bn
CropScience~€0.8bn
CropScience~€0.5bn
CapEx (PPE) 2013e: ~€1.9bn (+24%)R&D 2013e: ~€3.2bn (+7%)
32%
25%
28%
14%
Full Year 2013 Outlook Projects Further Growth And Higher Earnings
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2012 ∆ vs. 2011 2013E
Sales €39.8bn +5% +4-5% to~€41bn*
adj. EBITDA €8.3bn +9% mid-single-digit % increase
Core EPS €5.35 +11% high-single-digit % increase
Sales ∆ Fx and portfolio adjusted, EBITDA before special items
*Assuming Fx rate of $1.29 per €Outlook depends on specific planning assumptions as detailed in the Annual Report
FY/Q4 2012 ResultsInvestor Conference Call
February 28, 2013 / Marijn Dekkers, CEO
• FY/Q4 2012 Investor Conference Call • Marijn Dekkers Page 21
Appendix
Q4’2012 –Cash Flow and Net Debt Development
• FY/Q4 2012 Investor Conference Call • Marijn Dekkers Page 22
+€223m 7.0GCF oFCF
755
Invest-ments
743 160
∆ %y-o-y -25 -63
NCFcont.
903
-22 +2Q3´12 Q4´12
6.8
Q4’12 Cash Flow Net Debt DevelopmentCash Flow in € million, Net Debt in € billion
Net debt increase of €1bn due to pension funding, partly offset by positive cash generation
Q4’2012 –HealthCare
• FY/Q4 2012 Investor Conference Call • Marijn Dekkers Page 23*before special items
Q4’12 Sales Earnings
Pharma+7% (+5%)
ConsumerHealth
+7% (+5%)36%
HealthCare €4,923m; +7% (+5%)
2,8672,056
Price0%
Volume+5%
Fx+2%
Portfolio0%
In € million, ∆% yoy, () = Fx & portf. adjusted
Q4‘11 Q4‘12 Q4‘11 Q4‘12
758827
422515
+9%
+22%
1,180
1,342 +14%
317 +28%
8151,001 +23%
498
407
Adj.EBITDA*
Adj.EBIT*
594 +19%
Q4’2012 –CropScience
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Crop Protection+12% (+11%)
EnvironmentalScience
+18% (+16%)
*before special items
Seeds-10% (-11%)
Q4’12 Sales Earnings In € million, ∆% yoy, () = Fx & portf. adjusted
CropScience €1,856m; +11% (+9%)
Price0%
Volume+9%
Fx+2%
Portfolio0%
1,540
Q4‘11 Q4‘12 Q4‘11 Q4‘12
273289 +6%
145162 +12%
Adj.EBITDA*
Adj.EBIT*
174142
Q4’2012 –MaterialScience
• FY/Q4 2012 Investor Conference Call • Marijn Dekkers Page 25 **CAS: Coatings, Adhesives, Specialties*** IO: Industrial Operations
Polyurethanes+11% (+9%)
Polycarbonates0% (-3%)
CAS**+3% (+5%)
Q4’12 Sales Earnings In € million, ∆% yoy, () = Fx & portf. adjusted
*before special items
MaterialScience €2,761m; +6% (+5%)
Price+2%
Volume+3%
Fx+2%
Portfolio-1%
1,473669
IO***0% (-1%)
Q4‘11 Q4‘12Q4‘11
Q4‘12
Adj.EBITDA*
Adj.EBIT*
106
255 +141%
-48
93 +294%451
168
FY’2012 –Cash Flow and Net Debt Development
• FY/Q4 2012 Investor Conference Call • Marijn Dekkers Page 26
+€15m 7.0GCF oFCF
4,599
Invest-ments
1,929 2,603
∆ %y-o-y -11 -24
NCFcont.
4,532
-10 +19FY´11 FY´12
7.0
2012 Cash Flow Net Debt DevelopmentCash Flow in € million, Net Debt in € billion
Net debt constant, despite €1bn pension funding in Q4’2012
FY’2012 –Regional Performance
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Africa & Middle East
EasternEurope
Emerging Economies
EmergingEconomies¹
+7%
Others²+4%
USA+9%
Western Europe0%
2012 Group Sales by Region
Group €39,760m; +5%
~4,900
+12%~5,700
+5%
~1,800
0%~2,400
+10%
¹ Emerging economies include: Latin America, Asia w/o Japan, Australia,New Zealand, Africa and Middle East incl. Turkey, Eastern Europe
² Others = Japan, Australia, New Zealand, Canada³ Emerging Asia = Asia w/o Japan, Australia, New Zealand
In € million, ∆% yoy Fx adjusted
37%
11%31%
21%
Latin America
Emerging Asia³
FY’2012 –HealthCare
• FY/Q4 2012 Investor Conference Call • Marijn Dekkers Page 28*before special items
2012 Sales Earnings
Pharma+9% (+4%)
ConsumerHealth
+8% (+4%)36%
HealthCare €18,612m; +8% (+4%)
10,8037,809
Price0%
Volume+4%
Fx+4%
Portfolio0%
In € million, ∆% yoy, () = Fx & portf. adjusted
FY‘11 FY‘12 FY‘11 FY‘12
2,9723,203
1,7301,865
+8%
+8%
4,7025,068 +8%
1,325 +9%
3,3673,736 +11%
2,042
1,438
Adj.EBITDA*
Adj.EBIT*
2,298 +13%
FY’2012 –CropScience
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Crop Protection+16% (+13%)
EnvironmentalScience
+9% (+5%)
*before special items
Seeds+17% (+14%)
2012 Sales Earnings In € million, ∆% yoy, () = Fx & portf. adjusted
CropScience €8,383m; +16% (+12%)
Price+1%
Volume+12%
Fx+4%
Portfolio-1%
6,741
FY‘11 FY‘12 FY‘11 FY‘12
1,654
2,008 +21%
1,168
1,526 +31%
Adj.EBITDA*
Adj.EBIT*
680962
FY’2012 –MaterialScience
• FY/Q4 2012 Investor Conference Call • Marijn Dekkers Page 30 **CAS: Coatings, Adhesives, Specialties*** IO: Industrial Operations
2012 Sales Earnings In € million, ∆% yoy, () = Fx & portf. adjusted
*before special items
MaterialScience €11,503m; +6% (+3%)
Price+1%
Volume+2%
Fx+4%
Portfolio-1%
5,995
FY‘11 FY‘12 FY‘11 FY‘12
Adj.EBITDA*
Adj.EBIT*
1,1711,251 +7%
589629 +7%
Polycarbonates-2% (-7%)
CAS**+3% (+4%)
2,823
IO***+8% (+6%)
1,972
713
Polyurethanes+12% (+8%)
MaterialScience –Planning Assumptions 2013
• FY/Q4 2012 Investor Conference Call • Marijn Dekkers Page 31
20%
17%
28%
19%
Automotive(+2%)
Electro /Electronic
(+5%)
Construction(+4%)
Furniture(+5%)
Others(incl. Chemicals)
2.5
0.1 0.4
1.7
5.1
4
3
2
1
5
GDP growth % prev. year
16%
*Assuming Fx rate of $1.29 per €Outlook depends on specific planning assumptions as detailed in the Annual Report
Sales by industry 2012 and expected 2013 growth
Global Economic GDP Outlook Key Customer Industries Outlook
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