Bayer AG · XETR:BAYN
Bayer — Debt Investor Presentation (June 2019)
34 slides from Bayer's debt investor presentation, Jun 26, 2019
Slide 1: Investor Handout
Investor Handout /////////// Issuer & Investor Bond Forum 2019 London/Frankfurt June 26/27, 2019
Slide 2: Disclaimer
Disclaimer Cautionary Statements Regarding Forward-Looking Information This presentation contains forward-looking statements. A forward-looking statement is any statement that does not relate to historical facts and events, but rather reflects Bayer’s current beliefs, expectations and assumptions re
Slide 3: Global Megatrends in Health & Nutrition
Global Megatrends in Health & Nutrition Attractive Macro Drivers of Our Businesses Aging Population Growing Population Pressure on Ecosystems People 60+ +2.2bn +50% -20% Megatrends more than people1 through -17% doubling1 more food and feed 2050 required to meet Harvest losses from 2016 2050 growing
Slide 4: Transformation into a Leader in Health & Nutrition
Transformation into a Leader in Health & Nutrition – Next Phase to Deliver Future Value Creation Past Today Pharma- Crop ceuticals, Biological Crop- Polyure- Science Products HealthCare Science thanes, Coatings, Fibres Group Consumer Care, Profile Diagnostics Animal Health Polymers Wolff Basic and F
Slide 5: We are a Global Leader in Health & Nutrition
We are a Global Leader in Health & Nutrition Well-Positioned Across Our Businesses ~€45bn 2018 Pro-forma Sales1 Crop Science Pharmaceuticals Consumer Health ~€19bn / ~43% of Group ~€17bn / ~38% of Group ~€5bn / ~12% of Group #1 Position Leading Positions in Key Therapeutic Areas #2 Position Growing
Slide 6: FY 2018 – Sales Breakdown by Region
FY 2018 – Sales Breakdown by Region Europe / Middle North America Consumer Pharma East / Africa Health €16,746m €5,450m (42%*) (14%*) 29% 36% Group €39,586m Crop 20% Animal 15% Health Science €14,266m €1,501m (36%*) (4%*) Latin America Asia / Pacific in € million; ∆% yoy, Fx & portfolio adj.; *Sales
Slide 7: Pharma: Innovative Medicines in Areas of High Unmet Medical Need
Pharma Innovative Medicines in Areas of High Unmet Medical Need Leading positions in Therapeutic area focus Emerging markets exposure important therapeutic areas Other Emerging Retinal Diseases Markets Hematology Cardio- vascular 33% Women´s Health Sales 2018 Sales 2018 Ophthal- €16.7bn Established
Slide 8: Crop Science: World's Broadest Commercial Footprint in Agriculture
Crop Science World’s Broadest Commercial Footprint in Agriculture ~7,800 Customer-facing Employees with Significant Opportunity to Optimize Portfolio Across Key Regions Seed & Trait Technology Acres 2017/20182: Sales 20181 >400m acres (160m ha) ~ 5% ~ 5% ~ 45% ~ 10% ~ 45% ~ ~ 20% ~ 45% €19.3bn Crop
Slide 9: Crop Science: The Established Leader in Crop Science
Crop Science The Established Leader in Crop Science Industry Leading Sales and Unmatched Investment in R&D Sales 2018 (€bn) 2018 Ag R&D Investment (€bn)1 2,3 Bayer Crop Science1 19.3 ChemChina Ag2 14.4 1,2 1,1 0,9 Corteva 12.1 BASF Ag3 7.6 Bayer Crop Corteva ChemChina Ag BASF Ag Science Seed & Trait
Slide 10: Consumer Health: Focus on Core OTC Categories
Consumer Health We Will Focus on our Core OTC Categories To Leverage our Science and Marketing Capabilities Sales Split 20181 Global Position2 Main Brands Allergy + Cough + Cold #5 Categories Nutritionals #2 to accelerate Dermatology €5,450m #2 Pain + Cardio #4 Digestive Health #2 Categories Divestm
Slide 11: Next Phase to Deliver Value Creation
Next Phase to Deliver Value Creation Transformation Completed Next Phase Focused on … Crop 1 Growth ahead of competition in Health and Nutrition Science 2 Consistent profitability enhancement 3 Strong free cash flow generation 4 Disciplined capital allocation 11
Slide 12: We Focus on Growth in Attractive Markets
We Focus on Growth in Attractive Markets Market Bayer’s growth levers Size 2017 CAGR Using our leading positions in Agriculture, Pharmaceuticals and Self-care to Bayer 2018-2022 address societal needs and benefit from global megatrends Group Drive innovation Leading portfolio of seed & traits, crop
Slide 13: Bayer 2022 Synergy & Efficiency Programs
Bayer 2022 Synergy & Efficiency Programs Crop Science Consumer Health Pharmaceuticals Overall Realization of Crop Comprehensive Re-alignment of R&D Contribution Science sales and cost growth acceleration activities towards external ~€2.6bn2 synergies program innovation / Hemophilia ~€0.17bn (=$0.2bn
Slide 14: Targeting Significant Profitability Improvements Across All Divisions
Targeting Significant Profitability Improvements Across All Divisions Sales and EBITDA before special items (margin) development (in €bn, %) >4% p.a ~4% Crop Science >30% 19.3 ~25% ~4% ~4-5% p.a. Pharma- ceuticals 16.7 ~34% >35% Consumer ~1% ~2% p.a. Health 5.5 ~21% ~24%1 ~4-5% p.a. ~4% Bayer Group
Slide 15: Cash Flow Improvement Focusing on Capex and Working Capital Optimization
Cash Flow Improvement Focusing on Capex and Working Capital Optimization 3.1 2.5 1.9 2.2 Annual contribution of ~0.5bn EUR by 2022 Past and current levels impacted by single large-scale 1.5 Capex investments in fixed assets spend Licensing will continue to be an element to drive growth in €bn in % o
Slide 16: Group Targets - Value Creation from Strengthened Base
Group Targets - Value Creation from Strengthened Base Triple Leverage €bn 2018 PF Guidance 2019 Target 2022 CAGR 2018-222 Total Group 44.7 ~46 (~4%) ~52 ~4% Crop Science 19.3 ~4% >4% Sales1 Pharmaceuticals 16.7 ~4% ~4-5% Consumer Health 5.5 ~1% ~2% Total Group ~12.2 (~27%) ~16 (>30%) ~9% EBITDA Crop
Slide 17: We Have Clear Priorities for Capital Allocation
We Have Clear Priorities for Capital Allocation Focus on Shareholder Return, Innovation and Deleveraging Divestment Disciplined capital allocation proceeds Growing dividends Shareholder Consider share buy backs with parts of Return divestment proceeds Target range ~€26-28bn1 net financial debt by en
Slide 18: We Will Create Significant Value Through 2022 and Beyond
We Will Create Significant Value Through 2022 and Beyond Focus on Execution and Driving Sustained Profitable Growth… 1 We have completed Bayer’s portfolio transformation into a global leader in Health & Nutrition The next phase is focused on driving value creation through (i) growth ahead of competi
Slide 19: Q1 2019 & Outlook 2019
/////////// Q1 2019 & Outlook 2019
Slide 20: Q1 Results
Q1 Results Sales EBITDA Core EPS Free Cash Flow In million €, ∆% yoy, Fx & portfolio adj. In million €, before special items In €, Cont. Operations In € million Positive Fx effect of €108m Negative Fx effect of €110m - # of shares increased from 886m to 980m Expanded CS business working capital need
Slide 21: Divisional Q1 Results
Divisional Q1 Results In million €, ∆% yoy, Fx & portfolio adj. Crop Science Pharma Consumer Health +6% 6,444 +5% 1,409 -1% 1,395 4,075 4,354 Sales 2,861 Q1'18 Q1'19 Q1'18 Q1'19 Q1'18 Q1'19 In million €, ∆% yoy, before special items 2,322 1,512 1,415 313 >100% +7% –11% 279 EBITDA 1,042 36.4% 36.0% 3
Slide 22: FY 2019 Guidance Confirmed after Q1
FY 2019 Guidance Confirmed after Q1 20181 Group Forecast 2019 ∆ 2018 – 2019 (at constant currencies) Sales €39.6bn ~€46bn +~16% Fx-sensitivity: (thereof +~12% portfolio) ± 1% change of the € vs all EBITDA €9.5bn ~€12.2bn +~28% other currencies = (before special items) ∓ ~€340m on Sales & Core EPS €5
Slide 23: Progress in All Focus Areas
Progress in All Focus Areas 1 2 Target Delivery Crop Science Deliver on operational targets Integration of acquired business to shape the future of agriculture 3 4 Pharmaceuticals Consumer Health Further strengthening of pipeline and Drive performance improvement intensify external sourcing
Slide 24: Additional Debt Investor Information
Additional Debt Investor Information /////////// June 2019
Slide 25: Bayer Pursues Conservative Financial Policy
Bayer Pursues Conservative Financial Policy… Financing instruments // Syndicated credit facilities Key objectives Ensure liquidity and // Global Commercial Paper program creditworthiness Long term target of investment grade rating in single A category // Multi-currency bonds Sustained increase in en
Slide 26: Remains Committed to Rating in Single A Target Category
… and Remains Committed to Rating in Single A Target Category Development of Ratings and Leverage1 Schering2 Monsanto2,3 4,2x 4,5x Merck OTC2 4.1x4 3,4x ~3,5x 2,9x 2,6x Proven track record of 2,4x 2,6x 2,1x disciplined deleveraging 2,5x 1,9x 1,9x 1,9x 1,6x 1,1x (Net Financial Debt + Pensions – 50% o
Slide 27: Bayer's Maturity Profile is Well Balanced
Bayer’s Maturity Profile is Well Balanced Bond and Loan Maturity Profile1 (€bn) Currency Exposure incl. Derivatives2 as of April 26, 2019 as of March 31, 2019 Hybrid (first Call Dates) Mandatory Convertible Notes 7 Exchangeable Bond EUR Senior Bonds JPY Private Placements USD RegS/144a Other BRL USD
Slide 28: Overview of Bayer's Funding Structure
Overview of Bayer‘s Funding Structure Net Financial Debt1 Nominal Volume of Mayor Instruments (bn) Net Financial Debt1 as of March 31, 2019 Dec. 31, 2018 Mar. 31, 2019 Senior EUR Bonds €6.3 € million € million 1 RegS/144a USD Bonds $27.2 Bonds and notes / promissory notes 35,402 35,840 of which hybr
Slide 29: Main Issuing Entities at Bayer Group
1 Main Issuing Entities at Bayer Group Bayer AG Germany Hybrid EUR EB1 Bonds Bonds Bayer US Finance LLC USD Bayer Holding Ltd. Bayer Capital Corp. B.V. USA Bonds Japan Netherlands Bayer US Finance II LLC JPY EUR USD MCN2 Bonds Bonds USA Bonds Bayer Corp. USD USA Bonds Monsanto Company USD USA Bonds
Slide 30: Profile of €1bn Covestro Exchangeable Bond due 2020
2 Profile of €1bn Covestro Exchangeable Bond due 2020 Conversion €1.600 Repayment at 100% Price: €78.5514 Market Value of Shares €1.400 Value (mEUR) €1.200 Investor’s Upside €1.000 €800 €600 €40 €50 €60 €70 €80 €90 €100 €110 Covestro Share Price at Maturity Face value Exchange Price Reference Divide
Slide 31: Hybrid Bonds at Bayer
3 Hybrid Bonds at Bayer NC6 3% €1.75bn: NC10 3.75% €1.5bn: NC7.5 2.45% €1.3bn: 217.6 bps spread + 5Y Swap1 230 bps spread + 5Y Swap1 200.7 bps spread + 5Y Swap1 1st Step-up: +25bps 1st Step-up: +25bps 1st Step-up: +25bps 2nd Step-up: +75bps 2nd Step-up: +75bps 2nd Step-up: +75bps 2014 2015 2020 2022
Slide 32: $56.9bn Monsanto Acquisition Loan Facilities
4 $56.9bn Monsanto Acquisition Loan Facilities Transaction Value at Closing Acquisition Facilities $63bn $56.9bn Net Debt $6bn Bridge Loan Tranche Final Initial Outstanding in $bn Equity Value Maturity Amount Dec. 31 Apr. 29 $46.9bn in $bn 2018 2019 $57bn Loan A1 Jun. 2019 39.9 - - Loan A2 Jun. 2020
Slide 33: Mechanics of €4bn Mandatory Convertible Notes
5 Mechanics of €4bn Mandatory Convertible Notes Face value Min. Conversion Price Max. Conversion Price Settlement Maturity Term Coupon €4bn At Issuance: €90 (100%) At Issuance: €108 (120%) Nov 2016 Nov 2019 3 years 5.625% After Adjustments for three Dividends and After Adjustments for three
Slide 34: Other Sources of Liquidity
6 Other Sources of Liquidity Syndicated Loan Facility Commercial Paper Program The multicurrency Syndicated Loan Facility can be used for general corporate Commercial Paper (CP) is a short-term unsecured debt instrument. CP are purposes and is primarily a back-up line. Thus, it is not intended to be