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Bayer Group
The Bayer Group is confident for 2010. We are targeting currency- and portfolio-adjusted sales growth of more than 5% and aim to increase EBITDA before special items toward €7 billion. Core earnings per share (calculated as explained in Annual Report 2009, “Core Earnings Per Share”) are expected to improve by about 10%. Our estimates are based on an exchange rate of US$1.40 (2009 average: US$1.39) to the euro.
We do not expect to incur special charges for restructuring programs in 2010.
Our capital expenditure budget is €1.4 billion. Depreciation and amortization are expected to total about €2.6 billion, including €1.3 billion in amortization of intangible assets. We plan to spend some €2.9 billion on research and development.
Having largely achieved our current target margins, our main focus for the future is on creating value through profitable growth. To do this we plan to continue investing primarily in our research and development pipeline, in BioScience and in the emerging markets. We expect to achieve steady currency- and portfolio-adjusted sales growth of approximately 5% annually through 2012 and plan to raise EBITDA before special items to around €8 billion within this period. We are targeting an average 10% annual improvement in core earnings per share, which would mean an increase to around €5 per share.
HealthCare
HealthCare plans to grow at least with the market in 2010. This corresponds to a currency- and portfolio-adjusted expansion of about 5%. We also intend to increase EBITDA before special items.
We aim to continue growing at least with the market through 2012 and to steadily improve EBITDA before special items.
CropScience
For CropScience we anticipate slightly above-market growth in 2010, equivalent to a currency- and portfolio-adjusted increase of approximately 4%. We are targeting a small increase in EBITDA before special items. However, the business environment is currently more difficult than expected.
We aim to grow at least with the market through 2012 and to further improve EBITDA before special items.
MaterialScience
We anticipate a continuing recovery in the markets relevant to our MaterialScience business. In light of this we aim to increase sales by more than 10% on a currency- and portfolio-adjusted basis in 2010. We are targeting a substantial increase in EBITDA before special items.
We expect to report somewhat higher sales in the first quarter of 2010 than in the fourth quarter of 2009. In light of further increases in raw material costs, we expect first-quarter EBITDA before special items to be roughly level with the preceding quarter.
Provided the economic recovery continues, we expect MaterialScience to return to its pre-crisis sales level of more than €10 billion by 2012. We plan to considerably increase EBITDA before special items.
Bayer AG
As the holding company for the Bayer Group, Bayer AG derives most of its income from its subsidiaries. Under profit and loss transfer agreements with the major operating subsidiaries in Germany, their earnings are transferred directly to Bayer AG. The positive expectations for the Group’s business development outlined above are also likely to be reflected in the earnings of Bayer AG. In addition, the net interest position should continue to improve in light of the reduction in financial debt. We therefore expect to maintain a level of after-tax income that allows the payment of an appropriate dividend.
