Your partner for growth

Transcription

1 Your partner for growth A New Market Leader Takes Shape Bayer Fall Investor Conference November 13, 2002 Dr Jochen Wulff Chairman of the Board of Management Bayer CropScience AG

2 Disclaimer: Forward-Looking Statements This presentation may contain forward-looking statements based on current assumptions and forecasts made by Bayer Group management. Various known and unknown risks, uncertainties and other factors could lead to substantial differences between the actual future results, financial situation, development or performance of the company and the estimates given here. These factors include those discussed in our public reports filed with the Frankfurt Stock Exchange and with the U.S. Securities and Exchange Commission (including our Form 20-F). The company accepts no obligation to continue to report or update these forward-looking statements or adjust them to future events or developments. Slide 3 A New Market Leader Takes Shape Formation of Bayer CropScience Milestones Integration & Divestments Business Development 2002 A Successful Future Market Leader Goals Strong Market Position in All Segments Best-in-Class Pipeline Fast Realization of Synergies Portfolio Consolidation Process Slide 4

3 A New Market Leader Takes Shape Milestones Formation Bayer CropScience Signing of purchase agreement for the acquisition of Aventis CropScience October 2, 2001 EU approval received April 17, 2002 FTC approval received May 30, 2002 Closing Date June 3, 2002 Day One Bayer CropScience June 4, 2002 Legal Entity Bayer CropScience AG fully operational October 1, 2002 Finalizing divestment process and submission to authorities November, 2002 Slide 5 A New Market Leader Takes Shape Formation of Bayer CropScience Milestones Integration & Divestments Business Development 2002 A Successful Future Market Leader Goals Strong Market Position in All Segments Best-in-Class Pipeline Fast Realization of Synergies Portfolio Consolidation Process Slide 6

4 Integration and Divestment Status One Face to the Customer Nov 1: 80 % of countries Dec 1: 90 % March 2003: complete Implementation of integration now completely in line function Divestment process on track All contracts signed (31 agreements) Successful submission within the restricted timelines Everest agreement already closed Slide 7 Divestments - Successful Completion Within the Restricted Timelines Anticipated All divestments subject to the approval by the corresponding regulatory authorities Product Sales 2001 Sold to Package Multiple Package (Mio ) Value (Mio ) Fipronil 500 BASF 1,330 2,7 Everest / Goltix 100 Arvesta/ 260 2,6 Makhteshim 600 1,590 2,7 Others 100 various 110 1,1 (includes licenses) 700 1,700 2,4 Slide 8

5 A New Market Leader Takes Shape Formation of Bayer CropScience Milestones Integration & Divestments Business Development 2002 A Successful Future Market Leader Goals Strong Market Position in All Segments Best-in-Class Pipeline Fast Realization of Synergies Portfolio Consolidation Process Slide 9 Market Performance Key Factors World market development (estimation Wood Mackenzie for full year) in Euro in US-Dollar -8% -5% North America Latin America West Europe Far East - Drought conditions in Midwest and downward price pressure affected Herbicides sales negatively - US distributors adjust inventory - Strong devaluation due to economic and political instability - Downward price pressure on distributors - Growth in Fungicide market - Increasing competitive pressure in East Asia - Drought conditions in Australia - Further reduction in Japanese rice area Slide 10

6 Business Development Q (in million ) Maintained market share despite intensive integration process External Net Sales EBIT % -6 % pro forma Sales Pro forma sales development in line with overall market reduction -6 EBIT (major factors) Goodwill* from ACS acquisition Q Q Slide 11 * Impact of preliminary Purchase Accounting including step-up inventory Business Development Q1-Q (in million ) Maintained market share despite intensive integration process External Net Sales EBIT 2, , Q1-Q Q1-Q % -6 % pro forma Sales Pro forma sales development in line with overall market reduction EBIT (major factors) Brazil, Argentina -60 (Bad debt / channel inventory reduction) Goodwill from ACS acquisition* -329 Acquisition / Integration / Carve-out / Restructuring/ Synergies -80 Slide 12 * Impact of preliminary Purchase Accounting including step-up inventory

7 Reduction of Working Capital - A Critical Success Factor Reduction of combined working capital is a major focus: Trade Receivables Special focus: Reducing risk in Brazil and Argentina Focus on credit control/overdue payments worldwide Inventories Optimization of supply chain processes Combination of two stand-alone systems (midterm) Streamlining of manufacturing and formulation activities (longterm) Target December 2002 (pro forma): Reduction of combined working capital by 500 million Slide 13 A New Market Leader Takes Shape Formation of Bayer CropScience Milestones Integration & Divestments Business Development 2002 A Successful Future Market Leader Goals Strong Market Position in All Segments Best-in-Class Pipeline Fast Realization of Synergies Portfolio Consolidation Process Slide 14

8 Targets for 2006 Confirmed - Switch to 29% EBITDA Target Baseline Net Sales* 2001: 6.5 billion Net Sales* 2002 E: 6.0 billion Growth target of + 4% p.a. confirmed Expected market growth 2% p.a. Goodwill related to ACS acquisition after divestments and reassessment Amortization of 400m p.a.** (from 330m p.a.) Total Goodwill amortization now 500m p.a. (including 100m p.a. from Flint/Mikado) Switch to 29% EBITDA target for better assessment of business performance Previous EBIT target of 20% corresponds to EBITDA target of 29% Slide 15 * pro forma - continued business excluding divestments ** preliminary Purchase Accounting evaluation A New Market Leader Takes Shape Growth Target Goal: Growth Target of 4 % p.a. until Net Sales 2002 E: 6.0 billion - Net Sales Target 2006: 7.0 billion Assumption: Expected market growth of 2 % p.a. How do we get there? Strong market position in all segments allows over-proportional growth participation Best-in-class pipeline allows further market share increase Slide 16

9 A New Market Leader Takes Shape Profitability Target Goal: 29% EBITDA in 2006 How do we get there? Realization of growth targets Fast realization of synergies of 570 million related to one-time restructuring costs of total 550 million Increase of operating margins through portfolio optimization and migration to new products Slide 17 What Are the Future Risks? Market Environment Further market deterioration in Latin America Impact of generic producers No upturn for agricultural commodity prices Political and Regulatory Environment Higher registration and re-registration hurdles Increased political pressure on agrochemicals Public acceptance of Biotechnology still low Slide 18

10 A New Market Leader Takes Shape Formation of Bayer CropScience Milestones Integration & Divestments Business Development 2002 A Successful Future Market Leader Goals Strong Market Position in All Segments Best-in-Class Pipeline Fast Realization of Synergies Portfolio Consolidation Process Slide 19 We Do Business in Many Different Markets Bayer CropScience Market Segment Market Business Group Dynamics Crop Protection Conventional Crop stable Protection Environmental Non-Agricultural growing Science Markets BioScience Green Biotechnology growing and Seeds Slide 20

11 Different Business Segments to Address Specific Market Needs Crop Protection Bayer CropScience Bio Science Environmental Science Slide 21 Crop Protection Insecticides - Strengthen Leadership Key Key Figures ** Turnover bn bn Market Market share share % Market Market rank rank 1 Strategy Expand Expand neonicotinoid neonicotinoid business business with with introduction introduction of of Calypso Calypso Grow Grow Leadership Leadership in in pyrethroid pyrethroid market market focusing focusing on on Decis Decis and and Bulldock Bulldock Defend Defend classics classics portfolio portfolio Rapidly Rapidly introduce introduce three three new new pipeline pipeline products products Top Top Products Confidor Imidacloprid Temik Temik Aldicarb Decis Decis Deltamethrin * pro forma excluding divested products Slide 22

12 Crop Protection Seed Treatment - Consolidate Leading Position Key Key Figures ** Turnover bn bn Market Market share share % Market Market rank rank 1 Strategy Expand Expand neonicotinoid neonicotinoid insecticidal insecticidal seed seed treatment treatment business business through through launch launch of of new new products products based based on on chlothianidin chlothianidin (Poncho (Poncho )) in in cereals, cereals, corn, corn, sugar sugar beet beet and and OSR/canola OSR/canola Launch Launch new new fungicidal fungicidal seed seed treatment treatment products products (Bariton (Bariton,, Redigo Redigo,, Scenic Scenic )) in in cereals cereals Expand Expand Gaucho Gaucho business business Top Top Products Gaucho Imidacloprid Raxil Tebuconazole Premis Premis Triticonazole * pro forma excluding divested products Slide 23 Pipeline Products Insecticides / Seed Treatment Clothianidin Expected Launch: 2003 Spirodiclofen Expected Launch: 2003 (selected) Insecticidal seed treatment for cereals, corn, sugar beet, sunflower and canola Broad-spectrum Neonicotinoid insecticide with excellent activity against sucking and biting insects, at low application rates New broad spectrum long lasting miticide (acaricide) for fruit crops First product from a new chemical class developed by Bayer, the ketoenols Slide 24

13 Portfolio of Three Neonicotinoid Insecticides Offer Tailored Solutions to Growers Seed treatment Soil treatment Foliar + Stem treatment Gaucho Admire / Confidor Provado / Confidor Poncho Bariard Calypso Slide 25 Crop Protection Fungicides - Growth Strategy Key Key Figures ** Turnover bn bn Market Market share share % Market Market rank rank 2 Strategy Above Above average average growth growth through through Flint Flint and and new new products products Exploit Exploit full full potential potential of of other other products products through through effective effective life life cycle cycle management management Utilise Utilise full full potential potential of of best best in in class class portfolio portfolio through through tailor tailor made made offerings offerings and and mixtures mixtures for for all all significant significant markets markets Top Top Products Folicur Folicur // Raxil Raxil Tebuconazole Flint Flint // Stratego Trifloxistrobin Aliette Aliette Fosetyl Fosetyl Rovral Rovral Iprodione * pro forma excluding divested products Slide 26

14 Pipeline Products Fungicides Prothioconazol Expected Launch: 2004 Fluoxastrobin Expected Launch: 2004 (selected) New dimension DMI that makes the difference Prothioconazol is the cornerstone for mixing partner strategies with other specific and broad spectrum fungicides New generation of strobilurin Start to finish disease control in combination with Prothioconazol Slide 27 Unique Growth Opportunities With the Best Fungicide Portfolio in Cereals Today 2004 Azoles (Bayfidan, Folicur, others) Spiroxamine (Impulse) Strobilurins (Flint) + Prothioconazol family new-dimension azole azole Fluoxastrobin family new-generation strobilurin Slide 28

15 Crop Protection Herbicides - Profitable Growth Key Key Figures ** Turnover bn bn Market Market share share % Market Market rank rank 3 Strategy Grow Grow market market position position in in Corn Corn through through key key products products Balance, Balance, Foramsulfuron, Foramsulfuron, Axiom, Axiom, Mikado Mikado and and Liberty Liberty Extend Extend leading leading position position in in Cereals Cereals through through launch launch of of Mesosulfuron Mesosulfuron and and Attribute Attribute Continued Continued development development of of the the Glufosinate Glufosinate business business in in both both selective selective and and GMO-crops GMO-crops (corn, (corn, cotton, cotton, canola) canola) Top Top Products 2001: 2001: Puma Puma Fenoxaprop Balance Isoxaflutole Basta Basta // Liberty Liberty Glufosinate Buctril Buctril Bromoxynil Betanal PMP/DMP/Etho. Sencor Sencor Metribuzin * pro forma excluding divested products Slide 29 Pipeline Products Herbicides Foramsulfuron Launched in 2002 (selected) New flexible SU/safener combination with complete grass and good basic broadleaf spectrum in corn Foramsulfuron + Iodosulforon MaisTer Mesosulfuron Launched in 2002 Cereal post-emergence herbicide Very broad and consistent grassy weed performance as driver, based on new generation of safened sulfonylurea technology Slide 30

16 Environmental Science - A Business Group with Dedicated Organization Professional Market Pest Pest Management Management Rural Rural Hygiene Hygiene Turf Turf and and Ornamentals Ornamentals Wood Wood Protection Protection Stored Stored Products Products Vector Vector Control Control Termites Termites Consumer Market Lawn Lawnand and Garden Garden Household Household Specialty Specialty Actives Actives Umbrella Umbrella Brands: Brands: USA USA Europe Europe Bayer Bayer Advanced Advanced Bayer Bayer Garden Garden & Chipco Slide 31 Environmental Science - Leader in the Non Agricultural Markets Key Key Figures ** Turnover: bn bn Market Market share share % Market Market rank rank 1 Strategy Grow Grow Bayer Bayer Advanced Advanced Lawn Lawn & Garden Garden market market in in the the US US through through partnership partnership Expand Expand user user and and environmental environmental friendly friendly product product range range Maintain Maintain top top position position in in Professional Professional markets markets Top Top Products // Brands Premise, Merit Merit Imidacloprid Maxforce Fipronil Fipronil Tempo, Kothrine Cyfluthrin, Deltamethrin Chipco Chipco GT GT Iprodione Bayer Bayer Advanced & Bayer Bayer Garden Garden * pro forma excluding divested products Slide 32

17 BioScience - Expand in Growing Biotechnology A separate business group, focusing upon the research, development and commercialization of products derived from biotechnology and seeds A 0.2 billion business operating globally with a significant investment in R&D in germplasm and traits primarily in Nunza, a stand alone conventional vegetable seed business 5 crop sectors (Corn, Cotton, Canola, Rice & Vegetables) 5 technology areas (Crop Protection, Crop Yield, Reproductive Biology, Stress Tolerance & Carbohydrate Modification) A complementary business to the conventional crop protection Slide 33 BioScience - Expand in Growing Biotechnology Key Key Figures ** Turnover: bn bn Strategy Continue Continue with with profitable profitable seed seed business business Nunza Nunza Convert Convert existing existing IP IP estate estate into into a sustainable sustainable revenue revenue stream stream (Herbicide (Herbicide tolerance tolerance & insect insect resistance) resistance) Continued Continued growth growth in in cotton, cotton, rice rice and and vegetable vegetable businesses businesses integrating integrating in-house in-house technologies technologies Build Build upon upon canola canola and and corn corn seed seed market market share share in in North North America America introducing introducing new new traits traits into into the the crop crop Key Key Brands // Technology Nunza: Nunza: Sunseeds, Nunhems Liberty Liberty Link, Link, Seed Seed Link Link Bt Bt technology FiberMax * pro forma Slide 34

18 A New Market Leader Takes Shape Formation of Bayer CropScience Milestones Integration & Divestments Business Development 2002 A Successful Future Market Leader Goals Strong Market Position in All Segments Best-in-Class Pipeline Fast Realization of Synergies Portfolio Consolidation Process Slide 35 Best-in-Class Development Pipeline Boosts Future Growth Herbicides Insecticides Fungicides 2005 Picobenzamid 2005 Spiromesifen (Oberon ) 2004 Fluoxastrobin (Fandango ) 2004 Prothioconazole (Proline ) 2003 Ethiprole (Curbix ) 2003 Clothianidin (Poncho ) Goal: 2-3 Goal: Spirodiclofen (Envidor ) new compounds new compounds 2002 Foramsulfuron (MaisTer ) per year per year 2002 Mesosulfuron (Atlantis ) 2002 Methoxyfenozide (Runner ) 2001 Propoxycarbazone (Attribut ) 2001 Fentrazamide (Innova ) 2001 Fenamidone (Fenomen ) 2001 Thiacloprid (Calypso ) Slide 36

19 Best-in-Class Development Pipeline Boosts Future Growth Insecticides Projected sales > 800 million Herbicides Fungicides Slide 37 A New Market Leader Takes Shape Formation of Bayer CropScience Milestones Integration & Divestments Business Development 2002 A Successful Future Market Leader Goals Strong Market Position in All Segments Best-in-Class Pipeline Fast Realization of Synergies Portfolio Consolidation Process Slide 38

20 Synergy Process - Overview Top-down synergy goal of 500 million has been extended during a bottom-up process over the last months Synergy goal is now backed by a detailed project list (over 450 projects with 3,000 activities) traceable in our electronic synergy tracking tool Synergy target: 570 million by 2006 Total restructuring costs: 550 million Slide 39 Fast Realization of Synergies Synergy target: 570 million in 2006 Split: SG&A: 55 % R&D: 20 % Manufacturing: 25 % Personnel reduction: Total restructuring costs: 550 million 4,000 positions (thereof ca. 3,800 identified) Synergies Restructuring costs Slide 40

21 A New Market Leader Takes Shape Formation of Bayer CropScience Milestones Integration & Divestments Business Development 2002 A Successful Future Market Leader Goals Strong Market Position in All Segments Best-in-Class Pipeline Fast Realization of Synergies Portfolio Consolidation Process Slide 41 Portfolio Consolidation Process Drives Profitability - Focus on High Margin Products Goal: Maintaining sales volume through migration to high margin products! Number of Active Ingredients worldwide Sales ~ 200 Mio Portfolio after Divestments Portfolio Optimization Future Portfolio /2005 Slide 42

22 A New Market Leader Takes Shape A successful future market leader: Starting from a strong basis... Leader in conventional Crop Protection Leader in Environmental Science Emerging player in BioScience Best-in-class development pipeline... to reach its ambitious growth and profitability targets! Slide 43 Your partner for growth