Please read our caution about Forward-Looking Statements in the General Conditions of Use when using this information.
Our forecast for HealthCare has been confirmed so far this year. The increases achieved in sales and EBITDA before special items support this view. In addition, we expect to report slight growth in the fourth quarter compared with the very strong last quarter of 2008. Therefore we still expect to improve the underlying EBITDA margin toward 28%.
The market environment for CropScience deteriorated in the third quarter. However, this subgroup still plans to increase full-year sales compared with 2008. In light of the weak third quarter, we anticipate that EBITDA before special items will come in below the high prior-year level. Accordingly we now expect to achieve an EBITDA margin before special items of between 23% and 24% (previously: about 25%).
At MaterialScience, third-quarter sales and earnings were significantly above the low levels of the second quarter. We anticipate that the economic environment will continue to stabilize in the fourth quarter. Due to the usual seasonal weakening of business activity toward the end of the year, we expect underlying EBITDA in the fourth quarter to be below the third quarter but well ahead of the prior-year period.
Against this background we still expect to post full-year Group sales of between 31 billion and 32 billion and are adhering to our ambitious target of limiting the decline in Group EBITDA before special items to about 5%.
We intend to bring our current restructuring programs to a conclusion this year. Special charges of about 350 million (previously: 250 million) are expected to be incurred in this connection. In addition, we already took special charges of some 200 million in the first nine months for litigations and the additional pro rata funding required for the German corporate pension assurance association.
We still plan to make capital expenditures of 1.4 billion. We estimate depreciation and amortization at about 2.7 billion, including 1.2 billion in depreciation of property, plant and equipment. Our research and development budget amounts to 2.9 billion.
We expect to further reduce net financial debt toward 10 billion during the fourth quarter.
For HealthCare and CropScience we continue to expect a positive trend in 2009, with growth in sales and EBITDA before special items. HealthCare plans to achieve currency-adjusted growth rates ahead of the market average in all divisions. We aim to further improve the EBITDA margin before special items toward 28%. CropScience still plans to continue expanding sales in a generally favorable market environment. Here we aim to maintain the EBITDA margin before special items at the high level of about 25%.
At MaterialScience, second-quarter sales and earnings exceeded the very low levels of the first quarter as expected. While the signs that the downturn was bottoming out have been confirmed, there is no indication yet of a sustained improvement. Moreover, earnings are likely to be held back by a renewed increase in raw material costs. We nevertheless expect this subgroup to report positive EBITDA before special items in the third quarter.
Against this background we expect to post full-year Group sales of between 31 billion and 32 billion and are adhering to our ambitious target of limiting the decline in Group EBITDA before special items to 5%.
The ongoing restructuring programs and the remaining measures connected with the Schering integration are expected to lead to special charges of approximately 250 million.
We still plan to make capital expenditures of 1.4 billion. We estimate depreciation and amortization at about 2.7 billion (previously: 2.8 billion), including 1.2 billion (previously: 1.3 billion) in depreciation of property, plant and equipment. Research and development expenses are planned to rise to approximately 2.9 billion.
We continue to assume that we will reduce net financial debt toward 10 billion in 2009. This forecast does not take into account any possible portfolio changes.
For HealthCare and CropScience we continue to expect a positive trend in 2009, with growth in sales and EBITDA before special items. HealthCare plans to achieve currency-adjusted growth rates ahead of the market average in all divisions. We aim to further improve the EBITDA margin before special items toward 28%. CropScience plans to continue expanding sales in a generally favorable market environment. We aim to maintain the EBITDA margin before special items at the high level of about 25%.
The drop in sales and earnings at MaterialScience in the first quarter of 2009 turned out to be even steeper than we had expected. However, sales stabilized at a low level in the first three months. The downturn thus seems to be bottoming out, and first signs of a modest recovery in demand are appearing. We expect this subgroup to improve sales and earnings in the second quarter of this year compared with the first quarter and are targeting positive EBITDA before special items for the full year.
Against this background, we believe our aim of limiting the decline in Group EBITDA before special items to 5% to be increasingly demanding, though still achievable if there is a tangible recovery in the MaterialScience business. However, we no longer consider it possible to match the prior-year figure, still less to improve upon it.
We expect Group sales for the full year to be in the region of 32 billion.
We have budgeted for special charges in the region of 250 million related to our ongoing restructuring programs.
We now expect to make capital expenditures of 1.4 billion. We estimate depreciation and amortization at about 2.8 billion, including 1.3 billion in depreciation of property, plant and equipment. Research and development expenses are planned to rise to approximately 2.9 billion.
We expect to reduce net financial debt toward 10 billion in 2009, helped by the conversion of the mandatory convertible bond into equity upon maturation in June 2009 and an improvement in net cash flow. This forecast does not take into account any possible portfolio changes.
Bayer Group
The strategic alignment of the Bayer Group allows us to look forward to 2009 with relative confidence despite the current financial and economic crisis. The fact that the less cyclical life-science businesses account for more than 70% of our sales is paying off.
For the markets relevant to our HealthCare business we predict largely steady growth of between 3% and 5%. For the CropScience markets we are assuming moderate growth of 2% to 3%. In the main sectors of importance for our MaterialScience business, however, we anticipate a very difficult year marked by a great deal of uncertainty. We have budgeted for an exchange rate of US$ 1.35 to the euro.
For HealthCare and CropScience we expect a gratifying trend in 2009, with growth in sales and EBITDA before special items. At MaterialScience the start to the year has been even weaker than expected, and we therefore anticipate an extremely difficult year for this subgroup, with a severe drop in sales and earnings. In this negative scenario for MaterialScience we are nevertheless confident of limiting the decline in Group EBITDA before special items to about 5%. Group sales would probably then be in the region of 32 billion.
Should there be a tangible recovery in our MaterialScience business in the short term, Group EBITDA before special items could match the very high level of 2008 or even post a slight increase.
We have budgeted for special charges in the region of 250 million related to our ongoing restructuring programs.
Our capital expenditure budget for 2009 is 1.5 billion. We expect to record some 2.8 billion in depreciation and amortization, including 1.3 billion in depreciation of property, plant and equipment. Research and development expenses are planned to rise to about 2.9 billion.
We expect to reduce net debt toward 10 billion in 2009, helped by the conversion of the mandatory convertible bond into equity upon maturation in June 2009 and an improvement in net cash flow. This forecast does not take into account any possible portfolio changes.
We are not currently issuing any sales or earnings guidance beyond 2009 in view of the considerable uncertainty as to the future development of the global economy.
Bayer HealthCare
In 2009 HealthCare plans to achieve currency-adjusted growth rates ahead of the market average in all divisions. We aim to further improve the EBITDA margin before special items toward 28%.
Bayer CropScience
CropScience plans to continue expanding sales in a generally favorable market environment. We aim to maintain the EBITDA margin before special items at the high level of about 25%.
Bayer MaterialScience
The MaterialScience business is greatly impeded by the global recession. We expect sales and EBITDA before special items to show a further decline in the first quarter of 2009 compared with the fourth quarter of 2008, which included a comparatively steady October. For the full year we predict a severe drop in sales and EBITDA before special items.
