Lehman Brothers Global Chemical Industry Leaders Conference March 18, 2005 Dr. Rüdiger Scheitza Member of the Board of Mangement Bayer CropScience Forward Looking Statements This presentation contains forward-looking statements based on current assumptions and forecasts made by Bayer CropScience AG management. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the Bayer CropScience AG or our parent company, Bayer AG, and the estimates given here. These factors include those discussed in Bayer AG's public reports filed with the Frankfurt Stock Exchange and with the U.S. Securities and Exchange Commission (including Bayer AG's Form 20-F). Neither Bayer AG nor Bayer CropScience AG assumes any liability whatsoever to update these forward-looking statements or to conform them to future events or developments. Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 2 1
Global Market Environment 2004 Americas: Favorable growing conditions & increased planting in North America Robust farm economy driven by higher acreages in key crops & Asian Rust in Latin America Europe: Overall recovery from drought in 2003 High channel inventory in key markets France and Germany Benefiting from widespread rainfall for winter cereals Asia/Pacific: Competitive pressure in North East Asia Rainfall negatively affected rice, cotton and cereal harvest in China and North East Asia Strong Insecticide season in Australia Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 3 Highlights Bayer CropScience 2004 Growth above market Bayer CropScience global No. 1 crop science company Top level portfolio of new active ingredients Powerful pipeline and broad platform of branded products to drive future growth Well positioned to capitalize on strengths in specialties business Distinct performance improvements towards 2006 targets Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 4 2
Bayer CropScience seizes No. 1 position in 2004 Sales 2004 (in million) */** YOY (in EUR) +3% +1% -7% YOY (in USD) +13% +11% +2% * +3% +6% +2% +14% +16% +12% +19% +31% ** Conventional Agrochemicals Biotechnology & Seeds -1% +0% +9% +10% 0 1000 2000 3000 4000 5000 6000 Exchange rate: 1 = 2003: 1.131 US-$; 2004: 1.244 US-$ Source: company reports, Cropnosis estimates, March 2005 * estimates by Cropnosis, excl. non-ag business; ** restated due to different fiscal year (Cropnosis) Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 5 Overview Sales, EBIT and EBITDA Development (FY 2004 - in Million) Sales Underlying EBIT & EBITDA-Margin 5,764 5,946 EBITDA-Margin: 18.9 % 20.5 % Nominal: + 3.2% 432 522 Portfolio & currency adjusted: + 8.4% + 23.4% FY 2003 FY 2004 FY 2003 FY 2004 Sales FY 2003 include sales from divested operations of 100 million EBIT and EBITDA Figures 2003 restated Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 6 3
Sales Development 2004 by Business Groups (in Million) Jan-Dec 2003 Jan-Dec 2004 YOY (in %) YOY FX (in %) Sales 5,764 5,946 +3.2 +7.1 Crop Protection 4,801 4,957 +3.2 +7.1 - Insecticides* 1,376 1,378 +0.1 +5.5 - Fungicides 1,168 1,277 +9.3 +12.9 - Herbicides* 1,848 1,855 +0.4 +3.7 - Seed Treatment* 409 447 +9.3 +13.2 Environmental Science 692 678-2.0 +3.2 BioScience 271 311 +14.8 +18.7 * 2003 Figures restated FX exchange rate adjusted Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 7 Latin America leads Growth in 2004 Recovery from economic crisis in Latin America spurred strong development of agro markets Higher acreages in the region, especially for soybeans, in 2004 Bayer CropScience: clear Latin American market leader in crop protection Sales in the region incl. Mexico achieved record sales of 1.1 billion Business up 19.4 % YOY in (31.3 % in USD), driven primarily by excellent performance in Brazil and the impact of Asian Rust Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 8 4
Bayer CropScience Financial Performance 2004 (in Million) Jan-Dec 2003 Jan-Dec 2004 YOY (in %) EBITDA 1,091* 1,219 +11.7 EBITDA-Margin 18.9% 20.5% Depreciation & Amortization 749 727-2.9 EBIT 342* 492 +43.9 EBIT-Margin 5.9% 8.3% Special items (81) (30) EBIT underlying 423* 522 +23.4 * 2003 Figures restated Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 9 Strategic Priorities Crop Protection Capitalize on Best in Class Portfolio Environmental Science Expand Specialty Business BioScience Develop Next Generation Biotech Solutions Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 10 5
Top 10 Sales Products drive Business Growth (in Million) FY 2003 FY 2004 YOY YOY Fx* Imidacloprid 590 603 2.2% 6.6% Tebuconazole 315 411 30.5% 34.9% Trifloxystrobin 200 240 20.0% 25.0% Fenoxaprop-p ethyl 226 227 0.4% 4.9% Glufosinate 159 197 23.9% 28.3% Deltamethrin 159 172 8.2% 12.6% Ethofumesate / PMP / DMP 143 144 0.7% 3.5% Diflufenican 115 118 2.6% 2.6% Aldicarb 90 109 21.1% 28.9% Fosethyl-Al 107 99-7.5% -4.7% Total Top 10 Products 2,104 2,320 10.3% 14.4% * Currency adjusted Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 11 Top Level new Active Ingredient Portfolio (Sales in Million) New Active Ingredients launched in Key Countries since 2000 expected to contribute more than 1 bn in sales in 2006 >1,000 in (+ 35%) 520 702 >850 Iodosulfuron Mesosulfuron Foramsulfuron Clothianidin Thiacloprid 350 Prothioconazole Others Trifloxystrobin 2002 2003 2004 2005 2006 proforma target target Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 12 6
Active Portfolio Management safeguards Success 22 new active ingredients launched since 1998 More than 20 % of crop protection active ingredients is 6 or less years old High share of patent protected sales compared to market average Ongoing portfolio streamlining: Reduction of active ingredients from 113 in 2002 to about 94 in 2008 Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 13 Increasing Share of new Active Ingredients of overall Portfolio (2002 2009) No. of A.I.s 120 100 80 113 108 108 11 13 15 Launched since 2000 Launched prior to 2000 94 22 60 40 102 95 93 72 20 0 2002 2003 2004 2008 21 A.I.s expected to be phased out / divested until 2008 * Definition of new A.I.: launched in Key Countries since 2000 Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 14 7
Strong Pipeline to support Future Growth 7 Active Ingredients launched between 2002 2004 2 Compounds + 5 major products scheduled for launch in 2005 10 Development Projects under way between 2006-2011 2002 2003 2004 2005 2006 2011* Methoxyfenozide Spirodiclofen Fluoxastrobin Spiromesifen Fluopicolide INFINITO Mesosulfuron Clothianidin Prothioconazole Ethiprole plus: 3 Fungicides Foramsulfuron 4 Herbicides (incl. Safener) 2 Insecticides (incl. Ketoenole #3) Herbicides Insecticides Fungicides Seed Treatment *Subject to regulatory approval Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 15 From new Actives to successful Products Active Ingredients Branded Products Seed Treatment Applications Registrations e.g. Prothioconazole Input Formulation Technology Branding Output Technology Agricultural Platforms Development (e.g. Safener) Research & Development Marketing Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 16 8
Launch Plan 2005 Major Launches 2005* Spiromesifen Tebuconazole + Prothioconazole Clothianidin + Betacyfluthrin Ethiprole Trifloxystrobin + Tebuconazole Prothioconazole Herbicides Insecticides Fungicides Seed Treatment *Subject to regulatory approval Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 17 Prothioconazole A new Active with great Potential Launch schedule: 2004 in D 2005* in UK, IRL, A, CZ 2006* in F New chemical class: triazolinthiones Curative and protective properties Broader, better fusarium activity New option for resistance management vis-a-vis strobilurins Cornerstone for mixing partner strategies with other specific and broad spectrum fungicides Anticipated peak sales of Prothioconazolebased products: > 300 million *expected Prothioconazole Prothioconazole Prothioconazole & Prothioconazole & Prothioconazole & (foliar application) (seed treatment application) Tebuconazole Spiroxamine Fluoxastrobin Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 18 9
Fusarium A Challenge for the Farming Industry FUSARIUM - a fungal disease family Severe economic losses every year in wheat and maize crops Affects germination rate, yield and quality of the products Has ability to produce mycotoxins that are very harmful when entering the food and feed chain Marketability of crops at risk if mycotoxins above threshold values Best solution seen in Integrated Crop Management Bayer CropScience has a broad portfolio based on Prothioconazole & Tebuconazole to contribute Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 19 Asian Soybean Rust in South & North America USA: First detection in early November 2004 in Louisiana Since then, detection in a number of states Soya Area Grown: ~ 30 Mio ha. Paraguay: First detection in 2000/01; Further spread to Brazil and Argentina in 2001/2002 We offer a comprehensive Portfolio Brazil: Season 2002/2003 Soya area grown: Rust treated hectares: Market value*: Season 2003/2004 Soya area grown: Rust treated hectares: Market value*: ~ 18 Mio ha. ~ 13 Mio ha. ~ US$ 140 Mio. ~ 21 Mio ha. ~ 30 Mio ha. ~ US$ 400 Mio. * Estimation Bayer CropScience September 2004 Argentina: First occurrence end of season 2003/2004 Soya area grown: ~ 14 Mio ha. Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 20 10
Portfolio Approach in Soybean Fungicides Main stages of development Disease & Solution Powdery Mildew Asian Rust (preventive) Asian Rust (curative) LSD * * Late season diseases Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 21 Tebuconazole - Growing to new Heights Sales in Million 450 400 350 300 250 200 150 100 50 Soybeans Potato Turf Other Flowers & Ornamentals Coffee Oil Seed Rape Banana Grapes Pome / Stone Fruit Vegetables Peanuts Cereals Seed Treatment 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 22 11
Strategic Priorities Crop Protection Capitalize on Best in Class Portfolio Environmental Science Expand Specialty Business BioScience Develop Next Generation Biotech Solutions Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 23 Environmental Science Overview Global Leader in Environmental Science market Environmental Science serves non-agricultural Professional and Consumer markets worldwide Branded solutions for Consumers and Professionals to protect the environment and improve quality of life Access to attractive markets and extension of crop protection active ingredients life cycle Global sales of 678 million in 2004 (+ 3.2% currency adjusted) Investor Information Rüdiger Scheitza September 17, 2004 Slide 24 Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 24 12
Proximity Innovation in Environmental Science at the Example of Imidacloprid Crop Protection Active Ingredient Innovation Development Production Consumer Business (Sales 2004: 49 Million) Professional Business (Sales 2004: 90 Million) Consumer Proximity Innovation to offer tailor-made Solutions for the specific Requirements of the Consumer and Professional Market Segments Competitive Advantage through Forward Integration: Business Risk Diversification Augmented Value of innovative Active Ingredients Markets with strong Growth Potential Higher Margins through Branding Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 25 Strategic Priorities Crop Protection Capitalize on Best in Class Portfolio Environmental Science Expand Specialty Business BioScience Develop Next Generation Biotech Solutions Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 26 13
Set for Growth / strategic Goals Short - Term -Expand Vegetable Seed Business Nunhems -Leverage FiberMax Brand and Cotton Expertise -Further enhance InVigor Position in Canola -Continue Crop Production Model (Seeds + Technology + Chemicals) Mid - Term -Build on Technology Platform in Cotton, Canola & Rice -Expand leading Position in Cotton Fiber Quality -Engage in Downstream Product Development through Partnerships (e.g. Starch Modification) Long - Term -Increase Investment in New Business Ventures covering: Health, Nutrition & BioMaterials Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 27 Global Market Outlook 2005 2005 global agrochemicals market estimated to grow at 1-2 percent in local currencies Increase in cereals and soybeans acreage as well as improved farm economies in Eastern Europe and strong exports of crop commodities in Latin America expected to lead market growth Main commodity crop prices expected to stabilize Asian Rust in North America as potential new business opportunity however, not yet quantifiable Environmental Science market expected to post above average growth at 2 3 percent in terms of Euro Continuous strong technology-driven growth potential of plant biotech and seeds industry Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 28 14
Strengthen a sustainable Leadership Position Encourage a focused and result driven organization 26% Long-term aspiration 25% 2006 Commitment EBITDA-margin Reinforce our leading role in Crop Protection & Environmental Science Develop plant biotechnology business Maximize Profitability by Active Portfolio Management Sustain to deliver best-in-class pipeline Finalize achievement of our synergy targets Continue above market growth Foster Industry leadership in innovation and profitability Global Chemical Industry Leaders Conference Athens, March 18, 2005 R. Scheitza Slide 29 Your partner for growth 15