Bayer Ag · XETR:BAYN
Bayer — Investor Day (December 2018)
42 slides from Bayer's investor day presentation, Dec 5, 2018
Slide 1: Introduction to Agriculture
Introduction to Agriculture /////////// Capital Markets Day London, December 5, 2018 Frank Terhorst Head of Crop Science Strategy and Portfolio Management
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: Agenda
Agenda 1 The Case for Investment 2 Global Ag Market Snapshot 3 Planting Decisions 4 Creating Solutions for Farmers 5 Appendix 128 /// Bayer Capital Markets Day /// London, December 5, 2018
Slide 4: Need for Innovation Driven by Megatrends
Need for Innovation Driven by Megatrends Producing More with Less: A Fundamental Driver for our Crop Science Business Growing Population Pressure on Ecosystems +2.2bn +50% -20% Megatrends people1 more food and feed through 2050 required to meet -17% growing demand and 2016 2050 changing diets2 Harve
Slide 5: Land is Precious
Land is Precious Only 3% of Earth’s Surface is Arable Land that’s Able to be Farmed Pasture Population in Arable Land Arable land per person in m2 billions Forest 3% 7% 11% Biofuels Industry, etc 8% 18% Food 11% 71% Animal Feed In developing countries, the amount of arable land per person will be fa
Slide 6: Trendline Demand Requires Substantive Yield Improvement
Trendline Demand Requires Substantive Yield Improvement Global Corn Yield Rate of Gain must More than Double and Soybean Yield Rate of Gain must Triple by 2030 Long-term Demand Trendlines1 Corn Soybean 65 20 60 CAGR = 2.6% CAGR = 3.2% 18 55 Billions of Bushels Billions of Bushels 16 50 CAGR = 3.9% 4
Slide 7: Agriculture Sales by Crop And Input
Agriculture Sales by Crop And Input Corn and Soybean Lead in Value of Inputs; Cereals in Acreage Total Ag Input Market: By Input Total Ag Input Market: By Crop Planted Area: By Crop, in % Total Market Value €90bn1 Total Market Value €90bn1 ~ 2bn ha (2017) Fungicides Seeds and Traits 16% 11% 12% 12%
Slide 8: Global Stock-to-Use Ratios for Wheat and Corn Expected to Decline
Global Stock-to-Use Ratios for Wheat and Corn Expected to Decline Ratios Indicate Improving Market Dynamics in the Short-to-Medium Term (%) 2018/2019 Forecast 40 37% Wheat Harvested acres Avg yield Avg farm price Prod Value 36% 35% World 35 50 bu/ac Wheat Soy 32% 535m 5.10 $/bu $151.2bn 30% 30% EU 3
Slide 9: Tailored Solutions to Address Farmers' Individual Needs and Challenges
Tailored Solutions to Address Farmers’ Individual Needs and Challenges We know growers… Seeds & Traits …make approximately 40 key A combination of decisions every season products, technologies and services to constitute …want to grow the best seed varieties, Tailored an individualized solution with
Slide 10: Growers Face ~40 Key Decisions Each Growing Season
Growers Face ~40 Key Decisions Each Growing Season Digital tools and a Broad Portfolio of Solutions Allow Growers to Optimize Those Decisions Planning Pre-Planting Planting In-Season Harvest Keep Stand or Production Planning Production Planning Seed Depth Equipment Re-Plant Planting Speed Post-Emerg
Slide 11: Economics Highly Influence Farmer Decision Making
Economics Highly Influence Farmer Decision Making… 2018 Indicative Variable Grower Production Cost Budget Examples Corn – U.S.A. Soybean – U.S.A. Wheat – France Total ~ $840/ha or $340/acre Total ~ $270/ha or $110/acre Total ~ 1050 $/ha or $425/acre 9% 10% 7% 8% 29% 18% 36% 19% 22% 39% 11% 33% 15% 2
Slide 12: …as do Location and Timing
…as do Location and Timing Decisions Take into Account Both Time of Year and Climate Corn United States [35 %] 3 Brazil (Safrinha Crop) [8 %] 3 J F M A M J J A S O N D J F M A M J J A S O N D Planting Harvest Planting Harvest Soybean United States [33 %] 2 Brazil [30 %] 2 J F M A M J J A S O N D J F
Slide 13: Tailored Solutions Enable Optimal Grower Productivity
Tailored Solutions Enable Optimal Grower Productivity Optimizing Decisions for Growers to Produce More with Less Superior products and use of digital tools like Climate FieldView across the Brazil soybean season Digital Farming + Seeds Seed Weed Pest Disease & Traits Treatment Management Management
Slide 14: Key Takeaways
Key Takeaways Shaping Agriculture to Benefit Farmers, Consumers and our Planet 1 Climate and population trends, combined with finite resources, demand innovation in Ag 2 Our focus is in the leading crops within the growing €90bn global Ag input market Farmers make over 40 key decisions a season; our
Slide 15: Introduction to Agriculture
Introduction to Agriculture /////////// Capital Markets Day London, December 5, 2018 Frank Terhorst Head of Crop Science Strategy and Portfolio Management
Slide 16: Appendix
Appendix /////////// Reference Materials
Slide 17: Highest Corn Yields in U.S.A.
Highest Corn Yields in U.S.A. Majority of Global Corn is used for Feed Corn Yields (bu/ac)1 Major Corn Growing Countries (harvested acres)1 181 Other China 118 195.8m 90.2m 93 98 86 45 20% 43% World avg. U.S.A. European China Brazil India Union 454.1m 18% Corn Use2 U.S.A.3 Feed 59% 10% 81.8m 4% 5% B
Slide 18: Americas the Highest Yielding, Key Growing Region for Soybeans
Americas the Highest Yielding, Key Growing Region for Soybeans Soybean Yields (bu/ac)1 Major Soybean Growing Countries (harvested acres)1 Other Brazil 53 48 42 45 43.9m 92.7m 27 14% 14 China 29% 20.8m 6% World avg. U.S.A. Brazil Argentina China India 9% 319.8m India Soybean Use2 27.2m 14% Crush (Mea
Slide 19: A Quarter of Global Soybean Production Goes to China
A Quarter of Global Soybean Production Goes to China China Tariff on U.S.A. Soybean Expected to Impact Global Trade Flows United States 2018/19P mMT E.U. 2018/19P mMT Demand 60.1 Demand 18.3 Production 127.6 Production 2.7 Exports 56.1 Exports 15.8 China 2018/19P mMT Argentina 2018/19P mMT Demand 11
Slide 20: The U.S.A. is a Major Supplier of Global Corn and Soybean
The U.S.A. is a Major Supplier of Global Corn and Soybean Corn Supply Soybean Supply 89.1 Million Acres Planted 89.1 Million Acres Planted 81.8 Million Acres Harvested 88.3 Million Acres Harvested 14.8 Billion Bushels Produced 4.7 Billion Bushels Produced 2.2 Billion Bushels Imports and Stocks 0.5 B
Slide 21: Wheat: Largest Global Staple Crop by Acreage
Wheat: Largest Global Staple Crop by Acreage Only Conventional Varieties Grown Wheat Yields (bu/ac)1 Major Wheat Growing Countries (harvested acres)1 80 80 India 74.1m 50 49 48 40 Other 14% 235.4m Russia 64.2m 44% 12% World avg. China European India U.S.A. Russia Union 535.3m 12% Wheat Use2 European
Slide 22: 2016 Crop Protection Market by Crop and Segment
2016 Crop Protection Market by Crop and Segment Corn / Soybean Corn Crop Protection Market Soybean Crop Protection Market Fungicides Other Other 1% 1% 11% Fungicides 39% Herbicides Insecticides 28% 20% 69% $5.6bn $7.8bn 32% Herbicides Insecticides Source: Phillips McDougall AgriService 2017, Global
Slide 23: 2016 Crop Protection Market by Crop and Segment
2016 Crop Protection Market by Crop and Segment Cereals / Cotton Cereals Crop Protection Market Cotton Crop Protection Market Other Other 5% Herbicides Fungicides 12% 24% Herbicides 6% 36% 50% $7.9bn $2.5bn Fungicides 9% 58% Insecticides Insecticides Source: Phillips McDougall AgriService 2017, Glob
Slide 24: 2016 Crop Protection Market by Crop and Segment
2016 Crop Protection Market by Crop and Segment Fruit & Vegetables / Rice Fruit & Vegetables Crop Protection Market Rice Crop Protection Market Other Other 3% 2% Herbicides Fungicides 22% 22% 41% 41% $12.6bn $4.8bn 34% Fungicides 35% Herbicides Insecticides Insecticides Source: Phillips McDougall Ag
Slide 25: Leading Corn Seed and Trait Products and Brands
Leading Corn Seed and Trait Products and Brands United States Brazil Argentina E.U. BRANDED SEED PRODUCTS: SEED BRANDS: BRANDED SEED: BRANDED SEED BRANDED SEED SmartStax RIB Complete DEKALB VT Triple PRO VT TRIPLE PRO Conventional VT Double PRO RIB Complete VT Double PRO YieldGard RR2 VT Triple PRO
Slide 26: Leading Soybean and Cotton Seed and Trait Products and Brands
Leading Soybean and Cotton Seed and Trait Products and Brands United States Brazil United States Soybean Cotton BRANDED SEED PRODUCTS: BRANDED SEED PRODUCTS: BRANDED SEED PRODUCTS: Roundup Ready 2 Xtend SEED BRANDS: Intacta RR2 PRO Bollgard II XtendFlex Cotton Roundup Ready 2 Yield Asgrow Roundup Xt
Slide 27: Bayer is a Global Leading Player in the Vegetable Seed Market
Bayer is a Global Leading Player in the Vegetable Seed Market Major Players in Vegetable Seed (sales)1 Other Bayer Vegetable Seed sales by crop Competitors 19% Other Crops 26% Tomato €3.7bn 18% 10% Rijk Zwaan Limagrain 12% 15% Pepper Sweet Corn BASF Syngenta Onion Cucumber 1 Various external sources
Slide 28: Our Focus Crops and Regions Align With Global Vegetable Market
Our Focus Crops and Regions Align With Global Vegetable Market Our Leading Crops are Tomatoes, Pepper, Cucumber and Regions are EMEA and North America Vegetable Growing Regions (Value)1 Major Vegetable Crops (Value)1 South America Other Crops Tomato 6% Europe, Middle East, 22% North America Africa 2
Slide 29: Developing World-Class Biotech Traits and Crops
Developing World-Class Biotech Traits and Crops Scale and Expertise in Biotech Crop Development Lead the Industry Discovery Phase One Phase Two Phase Three Phase Four Trait Development Process (11-12 years) Gene / Trait Identification Proof of Concept Early Development Advanced Development Pre-Launc
Slide 30: Scale and Leading Technology Drives Breeding Crop Development
Scale and Leading Technology Drives Breeding Crop Development Optimizing Extensive Germplasm Library to Develop New Capabilities for Better Customer Solutions Testing in the lab 1 Beaker = 900,000 Plots 2 mo. Lab = 1 yr. in the Field Enabling Sequencing & Early Pipeline Pre-commercial Germplasm “Gal
Slide 31: Chemical Crop Protection – From Idea to Market
Chemical Crop Protection – From Idea to Market Phase 2 Phase 3 Submission Active ingredient Synthesis Process development Chemistry Synthesis optimization Pilot plant production Production Formulation Formulation/packaging Authority Evaluation Research Laboratory/greenhouse Application Biology Profi
Slide 32: Glossary of Scientific and Agricultural Terms
Glossary of Scientific and Agricultural Terms Abiotic Stress The negative impact of non-living factors on the living organisms in a specific environment. The non-living variable must influence the environment beyond its normal range of variation to affect adversely the population performance or indi
Slide 33: Glossary of Scientific and Agricultural Terms
Glossary of Scientific and Agricultural Terms Biotechnology Applied biological science, as bioengineering or recombinant DNA technology. Agricultural An extension of traditional plant breeding through biotechnology, allowing plant breeders to make precise genetic changes that impart Biotechnology be
Slide 34: Glossary of Scientific and Agricultural Terms
Glossary of Scientific and Agricultural Terms Carbon Trading A trading system modeled on a stock exchange that is designed to offset carbon emissions from one activity (such as burning fossil fuels in manufacturing, driving, or flying) with another (such as installing more efficient technologies, pl
Slide 35: Glossary of Scientific and Agricultural Terms
Glossary of Scientific and Agricultural Terms Detasseling The act of removing the pollen-producing tassel from a corn (maize) plant and placing it on the ground. By removing the tassels from all plants of one variety, all the grain growing on those plants will be fertilized by the another variety's
Slide 36: Glossary of Scientific and Agricultural Terms
Glossary of Scientific and Agricultural Terms Fertilizer Chemical compounds given to plants to promote growth; they are usually applied either through the soil, for uptake by plant roots, or by foliar feeding, for uptake through leaves. Fertilizers can be organic (composed of organic matter), or ino
Slide 37: Glossary of Scientific and Agricultural Terms
Glossary of Scientific and Agricultural Terms Genomics The science that identifies crop traits and accelerate plant breeding. It is one of the tools used to "mine" germplasm, finding the best combinations of characteristics that can be bred or introduced into plants for better products. Genomics all
Slide 38: Glossary of Scientific and Agricultural Terms
Glossary of Scientific and Agricultural Terms Herbicide A herbicide is used to kill unwanted plants. Selective herbicides kill specific targets while leaving the desired crop relatively unharmed. Some of these act by interfering with the growth of the weed and are often based on plant hormones. Herb
Slide 39: Glossary of Scientific and Agricultural Terms
Glossary of Scientific and Agricultural Terms Molecular Breeding An enhanced tool that involves the use of DNA markers for genes in combination with physical measurement of traits to accelerate selection in plant breeding programs. Also called marker-assisted breeding Mutagenic An agent, such as a c
Slide 40: Glossary of Scientific and Agricultural Terms
Glossary of Scientific and Agricultural Terms Rootstock A rootstock is a plant, and sometimes just the stump, which already has an established, healthy root system, used for grafting a cutting or budding from another plant. The tree part being grafted onto the rootstock is usually called the scion.
Slide 41: Glossary of Scientific and Agricultural Terms
Glossary of Scientific and Agricultural Terms Sustainable A pattern of resource use that seeks to meet human needs while preserving the natural environment so these needs can be met Development in the present and in the indefinite future. Sustainable The ability to direct the course of a company, co
Slide 42: Glossary of Scientific and Agricultural Terms
Glossary of Scientific and Agricultural Terms Transgenic resistant crop varieties. Classical plant breeders use a number of in vitro techniques such as protoplast fusion, embryo rescue or mutagenesis to generate diversity and produce plants that would not exist in nature. (continued) Such traditiona