(Edited from: “Chairman's letter” and Annual Report 2008)
On the back of what Bayer describes as an “eventful year” the company states that operationally 2008 was Bayer’s most successful year ever. “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. 
Bayer will increase its R&D spending in 2009 to €2.9bn, which it says is the highest amount ever in its history. This it says will lay the foundations for Bayer’s future growth.
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.
Given the favourable market environment Bayer expects that its €2bn sales target for new active ingredients from the launch programme initiated in 2000 will be reached by the end of 2009. That would be two years earlier than originally planned.
As a result, Bayer has set itself a new goal. Between 2008 and 2012 it plans to launch new active substances with sales potential totalling over €1bn.
In its Bayer MaterialScience business, it experienced a much weaker 2008, with declines 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” in 2009, 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.
ICIS Chemical Business magazine has unveiled the ICIS Top 100 Chemical Companies, with rankings based on 2008 sales.
A PDF of the ICIS Top 100 Chemical Companies is available for download on ICIS connect.
See the article and analysis of the ICIS Top 100 on ICIS news.
Financial highlights: Bayer, year ended 31 December
|
|
2008 |
2007 |
2006 |
2005 |
2004 |
|
Sales (€ m) |
32,918 |
32,385 |
28,956 |
24,701 |
23,278 |
|
EBIT (€ m) |
3,544 |
3,154 |
2,762 |
2,514 |
1,875 |
|
Net Profit (€ m) |
1,719 |
4,711 |
1,695 |
1,595 |
682 |
|
Total Assets (€ m) |
52,511 |
51,378 |
55,891 |
36,722 |
37,588 |
|
Diluted earnings per share (€) |
2.22 |
5.84 |
2.22 |
2.19 |
0.94 |
|
Number of Employees |
108,600 |
106,200 |
106,000 |
82,600 |
91,700 |
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Bayer AG
Company Structure
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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