Bayer AG · XETR:BAYN

Bayer — J.P. Morgan Milan Investor Forum 2019

39 slides from Bayer's conference presentation, Sep 26, 2019

  1. Slide 1: Bayer 2022: Delivering Value Creation

    Bayer 2022: Delivering Value Creation /////////// J.P. Morgan Milan Investor Forum September 26th, 2019 Milan Oliver Luckenbach & Simone Moerchen Bayer AG

  2. 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

  3. Slide 3: 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 #2 Position in Cardiovascular #2 Position Growing ahead of comp

  4. Slide 4: 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 4 // Bayer // J.P. Morgan Milan Investor

  5. Slide 5: 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

  6. Slide 6: 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

  7. Slide 7: 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

  8. Slide 8: 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

  9. Slide 9: Group Targets - Value Creation from Strengthened Base

    Group Targets - Value Creation from Strengthened Base €bn 20181 Guidance 20192,3 Target 20222,3 Sales Total Group 39.6 ~46 ~52 Total Group 9.5 ~12.2 (~27%) ~16 (>30%) Crop Science 2.7 ~25% >30% EBITDA before special items (%) Pharmaceuticals 5.6 ~34% >35% Consumer Health 1.1 ~21% ~24% Core EPS (€) 5

  10. Slide 10: 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

  11. Slide 11: 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

  12. Slide 12: Q2 2019 & Outlook 2019

    /////////// Q2 2019 & Outlook 2019

  13. Slide 13: Bayer Operationally on Track

    Bayer Operationally on Track € 11,485m € 2,927m  Sales increased by 21% to €11.5bn (+1% cpa) Sales EBITDA  EBITDA before special items Before special items improved by 25% to €2.9bn  Margin up 70 bps to 25.5%  Core EPS plus 6% to €1.62 € 1.62 € 751m  Free Cash Flow impacted by timing of closing

  14. Slide 14: Crop Science: Solid Performance in a Very Challenging Environment

    Crop Science: Solid Performance in a Very Challenging Environment Sales Volume Currency In million €, ∆% yoy, Fx & portfolio adj. - 3% + 1% -3% 4,788 Price Portfolio + % 0 + 61%  -3% cpa sales reduction driven by adverse 3,011 business conditions in North America  Good growth across insecticides a

  15. Slide 15: 2019 U.S. Planting Heavily Impacted by Flooding

    2019 U.S. Planting Heavily Impacted by Flooding Corn Acres Expected to be Down 2-3% and Soybean Acres to Decline Between 7% and 10% vs Last Year May 2019 - Precipitation in many U.S. states „much above average“ or „record wettest“ Source: USDA Weekly Weather and Crop Bulletin, June 11, 2019; USDA Cr

  16. Slide 16: Pharmaceuticals Driven by Xarelto, Eylea and China

    Pharmaceuticals Driven by Xarelto, Eylea and China Sales Volume Currency In million €, ∆% yoy, Fx & portfolio adj. + 4% + 1% +4% 4,217 4,422 Price Portfolio - 0% - 0%  Xarelto up 12%, Eylea grew by 11%  Continued strong performance in China overcompensates weaker US business Q2'18 Q2'19  FDA gran

  17. Slide 17: Consumer Health Returning to Top- and Bottom Line Growth

    Consumer Health Returning to Top- and Bottom Line Growth Sales Volume Currency In million €, ∆% yoy, Fx & portfolio adj. 0 + % + 1% +2% 1,442 Price Portfolio 1,413 2 + % - 1%  EMEA, Asia/Pacific and Latin America with positive development  North America bottoming out, double-digit growth in allerg

  18. Slide 18: Business Drivers to be Considered for H2 2019

    Business Drivers to be Considered for H2 2019 Crop Science Pharmaceuticals  Corn and soybean commodity prices up which  Xarelto, Eylea and China expected to may lead to positive volume impact in H2 keep on growing  Market growth in H2 expected to be strong in  Launch of Darolutamide in the US La

  19. Slide 19: FY 2019 Guidance Confirmed, Yet Ambitious

    FY 2019 Guidance Confirmed, Yet Ambitious 20181 Group Forecast 20192 Δ 2018 – 2019 (at constant currencies) Sales €39.6bn ~€46bn +~16% Fx-sensitivity: (thereof +~12% portfolio) ± 1% change of the € vs all other currencies = EBITDA €9.5bn ~€12.2bn +~28% ∓ ~€340m on Sales (before special items) & ∓ ~€

  20. Slide 20: Focus Areas

    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  Drive performance improvement and intensify external sourcing 5 6 Efficiency /

  21. Slide 21: Appendix

    /////////// Appendix

  22. Slide 22: 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

  23. Slide 23: Pharma: Xarelto – Continued Growth of a Leading Anticoagulant

    Pharma Xarelto – Continued Growth of a Leading Anticoagulant Most broadly indicated anticoagulant for use in venous and arterial thromboembolic conditions Sales in €bn 3.6 3.3 A leading pharma brand with global sales of €5.2bn in 2018 incl. sales at Johnson & Johnson 2.9 2.3 New CAD/PAD indication l

  24. Slide 24: Pharma: Eylea – A Leader in Retinal Diseases

    Pharma Eylea – A Leader in Retinal Diseases A leader in retinal diseases with global brand sales of €5.6bn in 2018 incl. sales at Regeneron1 Sales in €bn 2.2 Approved for the treatment of 5 retinal diseases: 1.9 wAMD, DME, BRVO, CRVO, mCNV 1.6 Treat and extend dosing regimen with injection intervals

  25. Slide 25: Pharma: Late-stage Pipeline with Progress in Oncology

    Pharma Late-stage Pipeline with Progress in Oncology Larotrectinib Darolutamide Copanlisib Finerenone Vericiguat (Vitrakvi) (Nubeqa) (Aliqopa) Indication TRK-fusion Prostate Cancer Lymphoma Diabetic Kidney Chronic Heart Cancer Disease Failure Launched in Launched in Launched in Phase III Phase III S

  26. Slide 26: Consumer Health: A Leading Player Globally

    Consumer Health A Leading Player Globally… Built up top leading position Strong positions in 7 out of Top 10 OTC markets NA OTC OTC portfolio Merck ASPIRIN business of Sagmel & Consumer introduced Sterling Topsun Care 1899 1994 2008 2014 1978 2005 2013 2014 Top 10 OTC markets1 Miles Roche Steigerwal

  27. Slide 27: Consumer Health: …with a Fast Growing Nutritionals Category

    Consumer Health …with a Fast Growing Nutritionals Category Sales development Category focus1 € bn; sales growth currency and portfolio adjusted 3.5% Digestive Health Allergy/Cough & Cold -1.7% -0.7% ~15% ~22% 6.1 6.0 5.9 +5.2% 5.5 1.1 +3.3% 1.1 1.2 +5.9% 1.1 +3.2% -2.8% -2.3% Pain/Cardio ~17% 5.0 4.

  28. Slide 28: Consumer Health: Focused on Executing a Comprehensive Turnaround Plan

    Consumer Health Focused on Executing a Comprehensive Turnaround Plan Accelerate Build high- Focus on Modernize performing Optimizing growth-focused winning Portfolio Marketing & Sales Product Supply our Resources Innovation Divest Rx Derma- Drive consumer- Accelerating Upgrade Become leaner tology,

  29. Slide 29: Consumer Health: Our Strategic and Operational Roadmap

    Consumer Health Our Strategic and Operational Roadmap Acceleration of growth and profitability through 2022 2021 / 2022 2019 / 2020 2018 Acceleration phase Setting the Driving rigorous change foundation Put in new leadership team Execute portfolio choices Drive higher innovation level Make portfolio

  30. Slide 30: Crop Science: Shaping Agriculture to Benefit Farmers, Consumers and Our Planet

    Crop Science Shaping Agriculture to Benefit Farmers, Consumers and Our Planet As the Industry Leader Uniquely Positioned to Create Value and Pioneer Tailored Solutions Our Mission Seed & Traits Deliver Pioneer Set new world-class the digital standards of innovation transformation sustainability Tail

  31. Slide 31: 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 0,8 Corteva 12.1 BASF Ag3 7.6 Bayer Crop Corteva ChemChina Ag BASF Ag Science Seed & Trait

  32. Slide 32: Crop Science: Leading Position in All Major Categories

    Crop Science Leading Position in All Major Categories Crop Science Market1 Currently Valued at ~€90bn Corn Soybean Horticulture2 Cereals Digital Farming Total Ag Market: By Input Total Market Value ~€90bn3 Fungicides Seeds and Traits 16% Climate 13% 44% FieldView ~€20bn ~€15bn ~€15bn ~€10bn Digital

  33. Slide 33: Crop Science: Opportunity for Digital Transformation and Tailored Solutions

    Crop Science Opportunity for Digital Transformation and Tailored Solutions Precise Resource Use and Innovation Required to Address Demand Growth, Field Variability and Increased Pressure on Ecosystems to Generate Sustainable Yield Improvements Yield = f (g,e,p) g = Genetics e = Environment p = Farmi

  34. Slide 34: Crop Science: Convergence of Leading R&D Platforms

    Crop Science Next Growth Opportunity: Convergence of Leading R&D Platforms Continued Investment in Data Science and New Technologies are Driving Future Opportunity Strong discovery platform 170,000 #1 database microbes in collection for molecules with new of grower and field trial mode-of-action and

  35. Slide 35: Crop Science: FieldView: The Leading Brand and Platform for Growers

    Crop Science FieldView: The Leading Brand and Platform for Growers Significant Opportunity to Expand Digital Ag Footprint Global Paid Acres1 Growth Fueled by Platform Advantages #1 >60 Partners Platform in the 90m Most Established, Digital Ag space scalable on the FieldView Platform digital farming

  36. Slide 36: Crop Science: Leadership and Innovation Drive Above Market Sales Growth Target

    Crop Science Leadership and Innovation Drive Above Market Sales Growth Target Target Above Market Sales Growth from 2018 to 2022 and >30% EBITDA Margin by 20223,4 8% Other Key Sales Growth Drivers 3% Vegetable Seeds 5% Environmental Science 7% Insecticides Deliver annual germplasm refresh across the

  37. Slide 37: FY 2019 Guidance

    FY 2019 Guidance Sales 2018 EBITDA-margin 2018 Sales Growth 2019 EBITDA-margin (before special items) (cpa2) 2019 (before special items) (at constant currencies) Crop €14.3bn1 18.6% ~4% ~25% Science Pharma €16.7bn 33.4% ~4% ~34% Consumer €5.5bn 20.1% ~1% ~21% Health Animal €1.5bn 23.9% ~4% ~24% Heal

  38. Slide 38: Group FY 2018 – Sales Breakdown by Region

    Group FY 2018 – Sales Breakdown by Region 24% Europe / Middle North America 34% 39% Consumer 42% Pharma East / Africa €16,746m Health +3% €5,450m -1% 6% 31% 11% 29% 13% 36% Group €39,586m +5% 26% 27% 33% 20% Animal Crop 15% Health 42% Science €14,266m €1,501m +6% 10% +1% 28% 13% Latin America Asia /

  39. Slide 39: Bayer 2022: Delivering Value Creation

    Bayer 2022: Delivering Value Creation /////////// J.P. Morgan Milan Investor Forum September 26th, 2019 Milan Oliver Luckenbach & Simone Moerchen Bayer AG

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