Bayer Ag · XETR:BAYN
Bayer — Investor Day (December 2018)
24 slides from Bayer's investor day presentation, Dec 5, 2018
Slide 1: Financial Targets through 2022: Focus on Value Creation
Financial Targets through 2022: Focus on Value Creation /////////// Capital Markets Day London, December 5, 2018 Wolfgang Nickl CFO Bayer AG
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: 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
Slide 4: Steady Growth until Today…
Steady Growth until Today… Profile Improvement Through Strategic Portfolio Measures Development of key financials 2018e PF results CAGR2 +3% 46.8 44.6 42.2 39.8 39.4 +6% 35.1 35.0 11.3 11.5 9.5 +6% 8.8 9.3 8.3 7.1 7.3 6.7 ~6.7 5.4 6.0 5.70-5.90 4.2 +8% 1.50 1.90 2.25 2.70 2.80 ≥2.80 2010 2012 2014 2
Slide 5: We Will Make Further Portfolio Adjustments: Crystallizing Value of Non-core Assets
We Will Make Further Portfolio Adjustments: Crystallizing Value of Non-core Assets Portfolio assets Rationale Financials (2018e) Sales EBITDA before special items Explore strategic Inorganic investments required to build exit options for a leading position will be shifted to ~€1.5bn ~€0.35bn Animal
Slide 6: Transformation into a Global Leader in Health & Nutrition - Next Phase to Deliver Value Creation
Transformation into a Global Leader in Health & Nutrition - 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
Slide 7: Delivering Value through Relentless Execution on Focus Areas
Delivering Value through Relentless Execution on 4 Focus Areas Growth We are operating in highly attractive markets and allocate a substantial part of capital to R&D 1 ahead of Pharma and Crop expected to continue their growth trajectory ahead of competition competition Consumer Health to approach m
Slide 8: We Focus on Growth in Attractive Markets
Growth ahead of competition 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 portf
Slide 9: Bayer 2022 Synergy & Efficiency Programs
Consistent profitability enhancement 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 inno
Slide 10: Crop Science: Realization of Sales and Cost Synergies
Consistent profitability enhancement Crop Science: Realization of Sales and Cost Synergies Key Initiatives Synergies Targeted Realization Key Measures U.S., Brazil, Argentina and Mexico as key levers Sales Synergies ~€0.2bn By 2022 Increase crop protection chemistry sales Digital Ag to serve as an e
Slide 11: Pharmaceuticals: Re-alignment of R&D Activities and Adjustment of Hemophilia Manufacturing
Consistent profitability enhancement Pharmaceuticals: Re-alignment of R&D Activities and Adjustment of Hemophilia Manufacturing Key Initiatives Contribution Key Measures Re-alignment Increased externalization of R&D of R&D activities ~€0.1bn Adjustment of internal R&D structures Adjustment of the he
Slide 12: Consumer Health: Comprehensive Growth Acceleration Program
Consistent profitability enhancement Consumer Health: Comprehensive Growth Acceleration Program Key Initiatives Contribution Key Measures Flattening structures Lean organization ~€0.1bn Regional cluster optimization Reduction of divisional HQ structures ZBB1 implementation across countries and funct
Slide 13: Platform Cost Reduction: Adjustment of Corporate Platform
Consistent profitability enhancement Platform Cost Reduction: Adjustment of Corporate Platform Thereof contribution Key Initiatives Contribution divisional programs Key Measures Review footprint of cross-divisional country platforms Reduce redundancies between divisional / corporate functions Struct
Slide 14: Targeting Significant Profitability Improvements Across All Divisions
Consistent profitability enhancement Targeting Significant Profitability Improvements Across All Divisions Sales and EBITDA before special items (margin) development (in €bn, %) >4% p.a ~4% Crop Science >30% 19.3 ~23% ~25% 4.5 ~4% ~4-5% p.a. Pharma- ceuticals 16.8 ~33% ~34% >35% 5.6 Consumer ~1% ~2%
Slide 15: Robust Development of Underlying Earnings
Consistent profitability enhancement Robust Development of Underlying Earnings Core EPS in 2019 Held Back by Portfolio Adjustments and One-time Effects ~0.5 ~0.1 ~11.9 ~0.3 ~12.2 ~11.5 ~9.5 ~ -0.05 ~ -0.2 EBITDA before special items (€bn) ~6.7 ~0.4 ~0.1 ~6.8 0.0 ~6.8 ~5.7-5.9 Core ~ -0.2 ~ -0.2 EPS1
Slide 16: Core EPS to Reach ~€10 by 2022 Driven by Sales Growth and Bayer 2022
Consistent profitability enhancement Core EPS to Reach ~€10 by 2022 Driven by Sales Growth and Bayer 2022 Synergy & Efficiency Programs ~4.5 ~2.1 0.0 ~16 ~12.2 ~ -0.5 EBITDA ~11.5 ~ -2.4 before ~9.5 special items (€bn) Contributions ~0.2 ~0.1 ~0.2 ~2.1 ~2.6 €bn ~3.4 ~1.7 ~0.3 ~10 ~6.7 ~6.8 ~ -0.4 Co
Slide 17: Cash Flow Improvement Focusing on Capex and Working Capital Optimization
€ Solid free cash flow generation Cash Flow Improvement Focusing on Capex and Working Capital Optimization 3.1 2.5 2.6 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
Slide 18: Group Targets - Value Creation from Strengthened Base
Growth ahead of competition Consistent profitability enhancement € Solid free cash flow generation Group Targets - Value Creation from Strengthened Base Triple Leverage €bn 2018e PF Indicative Guidance 2019 Target 2022 CAGR 2018-222 Total Group 44.6 ~46 (~4%) ~52 ~4% Crop Science 19.3 ~4% >4% Sales1
Slide 19: We Have Clear Priorities for Capital Allocation
Disciplined 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
Slide 20: 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
Slide 21: Financial Targets through 2022: Focus on Value Creation
Financial Targets through 2022: Focus on Value Creation /////////// Capital Markets Day London, December 5, 2018 Wolfgang Nickl CFO Bayer AG
Slide 22: Key Assumptions (1)
Key Assumptions (1) FX rates: All figures based on constant 2018 rates as disclosed below €1/ FX Rate BRL Brazil 4.37 CAD Canada 1.53 CHF Switzerland 1.15 CNY China 7.82 GBP United Kingdom 0.89 JPY Japan 131.01 MXN Mexico 22.50 RUB Russia 73.96 USD United States 1.18 Free cash flow (FCF) defined as
Slide 23: Key Assumptions (2)
Key Assumptions (2) Pro-forma (PF) 2018: The unaudited Pro-forma data are presented as if both the acquisition of Monsanto and the associated divestments had taken place as of January 1, 2018. Sales of Monsanto are presented in periods as per the Bayer fiscal year. One-time effects of business opera
Slide 24: IFRS 16 – Summary and Illustrative Example
IFRS 16 – Summary and Illustrative Example Existing operating lease contracts will be reported as so-called right of use assets and respective lease liabilities Right of use assets are part of the fixed assets and will generally be depreciated over the duration of the underlying lease contracts The