Management Report

3. Sales and Earnings Forecast

The following forecast for 2015 is based on the business development described in this report, taking into account the potential risks and opportunities.

Bayer Group

We have adjusted the exchange rates on which our forecast is based to reflect current developments. With respect to the second half of 2015, we are now using the exchange rates prevailing on June 30, 2015. Following the signing of the divestiture agreement with Panasonic Healthcare Holdings Co., Ltd. in June 2015, the Diabetes Care business is no longer included in continuing operations and therefore is also not included in the updated forecast. The prior-year figures are restated. The Diabetes Care business was still included in the forecasts published in February and April 2015. The aforementioned effects taken together result in an adjustment of the forecast; however, our expectation regarding the company’s operating performance remains largely unchanged.

We are now planning sales in the region of €47 billion (previously: in the region of €48 billion to €49 billion, of which discontinued operations: approximately €0.9 billion). This still corresponds to a low-single-digit percentage increase on a currency- and portfolio-adjusted basis. We expect currency effects to boost sales by approximately 7% (previously: approximately 9%) compared with the prior year. It remains our aim to raise ebitda before special items by a high-teens percentage, allowing for expected positive currency effects of about 5% (previously: around 8%). We continue to target a high-teens percentage increase in core earnings per share (calculated as explained in Chapter 7), allowing for expected positive currency effects of around 5% (previously: around 7%).

Forecast 2015 (April 2015)

We now expect to take special charges in the region of €900 million, with the integration of the acquired consumer care businesses, the planned stock market listing of MaterialScience and the optimization of production structures accounting for most of this amount.

We continue to anticipate the financial result to come in at around minus €1 billion and the effective tax rate at around 25% in 2015. As before, we expect net financial debt at year end to be below €20 billion.

Further details of the business forecast are given in Chapter 20.2 of the Annual Report 2014.

HealthCare

At HealthCare we now expect sales from continuing operations to rise to approximately €23 billion (previously: over €24 billion). This corresponds to a mid-single-digit percentage increase on a currency- and portfolio-adjusted basis. We predict positive currency effects of approximately 6% (previously: about 9%) compared with 2014. We plan to raise ebitda before special items by a low-twenties percentage.

We continue to expect sales in the Pharmaceuticals segment to move ahead to approximately €14 billion. This corresponds to a mid- to high-single-digit percentage increase on a currency- and portfolio-adjusted basis. We anticipate positive currency effects of approximately 6% (previously: about 9%) compared with 2014. We intend to raise sales of our recently launched products to over €4 billion. We plan to raise ebitda before special items by a mid-teens percentage.

In the Consumer Health segment, we now expect sales of over €9 billion (previously: over €10 billion), including those of the acquired consumer care businesses but excluding the Diabetes Care business. We plan to grow sales by a mid-single-digit percentage on a currency- and portfolio-adjusted basis. We anticipate positive currency effects of approximately 7% (previously: about 9%) compared with 2014. We expect to raise ebitda before special items by a mid-thirties percentage, with the acquired consumer care businesses contributing to the increase.

CropScience

At CropScience we expect to continue growing faster than the market and aim to raise sales to approximately €10.5 billion (previously: around €11 billion). This corresponds to a low-single-digit percentage increase on a currency- and portfolio-adjusted basis (previously: a low- to mid-single digit percentage increase). We anticipate positive currency effects of about 8% (previously: about 11%) compared with 2014. In view of the weakened market environment, we now plan to improve ebitda before special items by a mid- to high-single-digit percentage (previously: a low- to mid-teens percentage).

MaterialScience

At MaterialScience we continue to plan further volume growth in 2015 accompanied by declining selling prices. This will lead to lower sales on a currency- and portfolio-adjusted basis. However, we continue to expect to see a significant increase in ebitda before special items. We aim to return to earning the full cost of capital in 2015

After adjusting for currency and portfolio effects, we expect sales in the third quarter of 2015 to come in below the level of the prior-year quarter. We expect ebitda before special items to be above the level of the prior-year quarter but below the previous quarter.

Reconciliation

For 2015 we continue to expect sales on a currency- and portfolio-adjusted basis to be level with the previous year. We expect ebitda before special items to be in the region of minus €0.3 billion.

Last updated: July 29, 2015  Copyright © Bayer AG
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