(Edited from: “Chairman's letter” Annual Report)
"While the economy remains surrounded by considerable uncertainty, we are looking to the future with relative confidence. Our strategy is tried and tested, and our commitment to research and development stands undiminished even in difficult times”, says chairman, Werner Wenning.
In its Bayer HealthCare business, with all divisions performing “very well” and posting above-market rates of growth, the company expects approvals for its new thrombosis drug Xarelto to achieve annual sales of more than €2bn.
In its Bayer CropScience business, it had the “best performance in the history of its crop protection business”, benefiting from the positive conditions on agricultural markets around the world.
In its Bayer MaterialScience business, it experienced in sales and earnings. The company says it responded “prudently” to the difficult market conditions at an early stage, reinforcing the foundations for its long-term success.
“We significantly strengthened our presence in the expanding Chinese market with the inauguration of the world’s largest methyl di-p-phenylene isocyanate (MDI) production facility in Shanghai. At the same time, this entire production complex sets standards for energy-efficient and environmentally compatible production. Bayer MaterialScience will have invested a total of €2.1bn in Shanghai by the end of 2012”, says Wenning.
Bayer states that the strategic alignment of the company allows it to look forward to 2009 with confidence despite the current financial and economic crisis. The fact that the less cyclical life-science businesses, HealthCare and CropScience, account for more than 70% of its sales is said to be “paying off”.
For HealthCare and CropScience, Bayer expects a “gratifying trend” and aims to improve the earnings before interest, tax, depreciation and amortisation (EBITDA) margin before special items toward 28% at HealthCare and maintain the margin for CropScience at the high level of around 25%.
The business situation at its MaterialScience business is expected to run counter to this. The company anticipates an “extremely difficult” year ahead, with a severe drop in sales and earnings. However, the company is confident of limiting the decline in its EBITDA before special items to about 5%.
“We are convinced that Bayer can emerge from the financial and economic crisis even stronger than before. We are aiming for sustainability in everything we do. In these turbulent times we could, of course, help to improve earnings in the short term by cutting back on research, for example. But that would not be a sustainable strategy. It would simply be short-sighted”, says Wenning.
“Our investment in research and development is intended to drive our growth and produce groundbreaking innovations. That is how we safeguard growth – and with it jobs and prosperity. Success tomorrow demands investment today”, concludes Wenning.
Please see Bayer MaterialScience business to strengthen in 2010 and Bayer to focus on securing raw material supplies - CEO on ICIS news.
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Bayer AG is an agrochemicals, polymers and healthcare group. The Bayer’s roots date back to 1863 where Friedrich Bayer and Johann Friedrich Weskott opened a modest dye works by the name Friedr. Bayer & Co. in Wuppertal-Barmen. The company's headquarters were moved in 1912 to Leverkusen, Germany, on the banks of the Rhine, where it has remained to this day.
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