Bayer AG – 2012 was very successful and the group will continue to grow

Bayer expanded its business sharply in emerging markets. Group sales rose 8.8 % to a record level of EUR 39.8 billion, or by 5.3 % when adjusted for currency and portfolio effects. EBIT declined 4.6 % to EUR 3,960 million due to the effect of special items such as litigation expenses in connection with Yasmin/YAZ contraceptive products.

MaterialScience business

Growth in sales of PU materials helped to improve the earning of this division. Savings of EUR 170 million, resulting from the division’s continuous efficiency programme also contributed to improved profitability. These efficiency savings are needed to allow BMS to adapt to the increasing commoditisation of many of its materials. Polycarbonate sales came under pressure from growing global capacities and the resulting lower prices. Increased energy and raw material costs could not all be passed onto customers which impacted profitability.

BMS contributed to a very good full year performance with sales increasing by 3 % over 2011 to EUR 11.5 billion. EBITDA increased by nearly 7 % to EUR 1.3 billion. Polyurethanes sale was mentioned for its especially positive contribution through increased sales and prices during 2012, resulting from rising demand and more satisfactory capacity utilisation leading to improved earnings. Volumes in Europe were flat but good gains were posted in all other regions. Sales of product to the polyurethane foams market improved by 7.9 % due to higher volumes and prices in all regions. Sales by the Coatings, Adhesives, Specialities (CAS) subgroup, also increased by 3.5 %. The polyurethanes business supported the polycarbonates which suffered from falling prices resulting from new production capacities affecting the market dynamics. Overall, BMS suffered from increased raw material and energy costs which could not be fully passed onto customers.

MaterialScience is expected to increase sales slightly during 2013 to EUR 12 billion. Bayer anticipates it will be able to achieve a volume driven expansion greater than the growth rate of the global economy. The current high capacities available to the polyurethane and polycarbonate industries are expected to be absorbed during the coming years.

Bayer MaterialScience Q4/2012 and full year 2012
EUR million	Q4/2011	Q4/2012	Full year 2011	Full year 2012	Change %
Sales	2,596	2,761	10,832	11,503	6.2
EBIT	-4	92	633	597	-5.7
Special items	44	-1	44	-32	0
EBIT before special items	-48	93	589	629	6.8
EBITDA	150	256	1,215	1,224	0.7
Special items	44	-1	44	-27	0
EBITDA before special items	106	355	1,171	1,251	6.8

Aspirations for BMS absent from Dekker’s presentation

When asked about the future for BMS, Dekkers stated that the next 3 – 4 years represent a great opportunity due to the expected higher capacity utilisation of more than 90 % for most plants. Bayer AG is small enough to be flexible and adapt to market demands but big enough to be amongst the best of what we do. He explained that future aspirations for BMS into 2015 are more difficult to comment on, because the market’s vulnerabilty to economic cycles more so than for than for Cropscience and Healthcare. However the target is for growth of 1 – 2 % greater than GDP.

When challenged about the structure of the company, Dekkers explained that overall the business offered a good distribution of risks and opportunities. Some companies have spun off their pharmaceutical businesses to gain additional share value, but this is a one off exercise and cannot be repeated. In contrast, Bayer AG is looking for steady and continuous growth from its pipeline of innovation driven products and technology in all three divisions.

150 years of Bayer: Success through innovation and change

To mark the 150^th anniversary of Bayer, an interactive exhibition will tour 30 sites around the world. The exhibition comprises of 2 m high boxes each containing a Bayer topic including health care, agriculture, and high quality materials. “The exhibition also shows how our employees put our corporate mission – Bayer: Science for a Better Life – into practice”, explained Michael Schade, Head of Corporate Communications at Bayer AG. The exhibition will also tour major Bayer sites in Germany during the next six months.