A n n u A l R e p o R t 2012 » Science For A Better Life » Key Data » Chairman’s Letter » MagazinE: innovation through partnErship .............................. 16 » For a healthy life .............................................................................................. 18 » Food for all ....................................................................................................... 24 » Keeping out the cold ........................................................................................ 30 You can also download the Bayer Annual Report as an to our stockholdErs app from the appstore under “Bayer Annual Report.” » Executive Council ............................................................................................ 38 » Report of the Supervisory Board ..................................................................... 40 » Investor Information ........................................................................................ 46 » c oMbinEd Management Report of thE bayEr group and bayEr ag ......................................................54 » c onsolidatEd financial statements of thE bayEr group ....166 » Re sponsibility statement ....................................................................282 » a uditor’s Report .......................................................................................283 » f urthEr inforMation ..................................................................286 » The Bayer Group » At Home Throughout The World For direct access to a chapter, » Five-Year Financial Summary simply click on its name. » Financial Calendar, Masthead, Disclaimer t aBle of contents Bayer-GeschäftsBericht 2010 Science For A Better Life Bayer is a global enterprise with core competencies in the fields of health care, agriculture and high-tech materials. As an innovation company, we set trends in research-intensive areas. Our products and services are designed to benefit people and improve their quality of life. At the same time we aim to create value through innovation, growth and high earning power. We are committed to the principles of sustainable development and to our social and ethical responsibilities as a corporate citizen. 150 years SINCE 1863 – INNOVATING FOR THE FUTURE Time and again over the past 150 years, Bayer inventions have helped improve people’s quality of life. Some of the company’s principal innovations in the fields of health care, agriculture and high-tech materials are briefly described in the section “150 Years of Bayer.” internet Interactive journey through our company‘s history www.bayer.com/en/ 150-years-of-bayer.aspx Table of ConTenTs Key Data The Bayer Group At Home Throughout The World Five-Year Financial Summary [table 1.1] [table 1.2] 2011 2012 change 2008 2009 2010 2011 2012 € million € million % € million € million € million € million € million Bayer Group Bayer Bayer Group Sales 36,528 39,760 + 8.8 Europe Sales 32,918 31,168 35,088 36,528 39,760 EBIT 1 4,149 3,960 – 4.6 Bayer AG defines common values, goals and strategies for the entire Group. Sales outside Germany 85.4% 86.7% 87.4% 87.3% 88.3% 2 The subgroups and service companies operate independently, led by the manage­ 1 EBIT before special items 5,025 5,671 + 12.9 In 2012 Bayer achieved sales of €14.7 billion in EBIT 3,544 3,006 2,730 4,149 3,960 ment holding company. The Corporate Center supports the Group Management EBITDA 3 6,918 6,920 0.0 North America the European market. Numerous major production EBIT before special items 2 4,342 3,772 4,452 5,025 5,671 Board in its task of strategic leadership. EBITDA before special items 2 7,613 8,284 + 8.8 facilities and 52,300 employees (of whom 34,600 EBITDA2 6,266 5,815 6,286 6,918 6,920 In North America (United States and Canada), EBITDA margin before special items 4 20.8% 20.8% are based in Germany) give the company a strong EBITDA before special items 2 6,931 6,472 7,101 7,613 8,284 Bayer is represented in all strategic business presence in this region. Income before income taxes 3,363 3,248 – 3.4 areas. In 2012 Bayer’s 15,300 employees in this Income before income taxes 2,356 1,870 1,721 3,363 3,248 Net income 2,470 2,446 – 1.0 region generated sales of €9.6 billion. Income after taxes 1,724 1,359 1,310 2,472 2,496 Earnings per share (€) 5 2.99 2.96 – 1.0 Earnings per share (€) 3 2.22 1.70 1.57 2.99 2.96 Core earnings per share (€) 6 4.83 5.35 + 10.8 Bayer HealthCare noncurrent assets 35,351 34,049 33,188 32,697 32,350 Gross cash flow7 5,172 4,599 – 11.1 of which goodwill and other intangible assets 22,598 21,546 20,163 19,455 18,757 Net cash flow8 5,060 4,532 – 10.4 Bayer HealthCare is among the world’s foremost innovators in the field of Y of which property, plant and equipment 9,492 9,409 9,835 9,823 9,863 Net financial debt 7,013 7,028 + 0.2 pharmaceutical and medical products. This subgroup’s mission is to research, current assets 17,152 16,993 18,318 20,068 18,986 Capital expenditures as per segment table 1,666 2,012 + 20.8 develop, manufacture and market innovative products that improve the health Inventories 6,681 6,091 6,104 6,368 6,980 of people and animals throughout the world. Read more on page 68ff. Research and development expenses 2,932 3,013 + 2.8 37.1% Receivables and other current assets 8,377 8,177 9,374 11,846 10,311 Dividend per Bayer AG share (€) 1.65 1.90 + 15.2 24.1% Cash and cash equivalents 2,094 2,725 2,840 1,770 1,695 healthcare Financial liabilities 16,870 12,949 11,833 11,679 9,532 Sales 17,169 18,612 + 8.4 Bayer CropScience Noncurrent 10,614 11,460 9,944 7,995 6,962 r Financial Summar EBIT 3,191 2,154 – 32.5 Current 6,256 1,489 1,889 3,684 2,570 Bayer CropScience offers its customers an outstanding range of products 2 EBIT before special items 3,367 3,736 + 11.0 E-YEa Interest expense – net (702) (548) (499) (335) (252) including high­value seeds, innovative crop protection solutions based on Group EBITDA 3 4,502 3,815 – 15.3 Return on equity 10.4% 7.7% 6.9% 13.0% 13.2% chemical and biological modes of action, and extensive service backup for mod­ YEr · Fiv 2 4 EBITDA before special items 4,702 5,068 + 7.8 ern, sustainable agriculture. Another core area is non­agricultural applications. Ba Gross cash flow 5,295 4,658 4,771 5,172 4,599 EBITDA margin before special items 4 27.4% 27.2% Read more on page 74ff. Share of global sales by region Capital expenditures (total) 1,982 1,669 1,621 1,666 2,012 Gross cash flow7 3,254 2,614 – 19.7 Depreciation and amortization 2,570 2,660 2,571 2,521 2,613 Net cash flow8 3,357 3,543 + 5.5 Personnel expenses cropScience Bayer MaterialScience (including pension expenses) 7,491 7,776 8,099 8,726 9,203 Sales 7,255 8,383 + 15.5 KEY · thE Data 22.0% Number of employees 5 (Dec. 31) 108,600 111,000 111,400 111,800 110,500 EBIT 562 1,539 . Bayer MaterialScience is a renowned supplier of high­tech polymers and Research and development expenses 2,653 2,746 3,053 2,932 3,013 EBIT before special items 2 1,168 1,526 + 30.7 develops innovative solutions for a broad range of applications relevant to every­ Equity including non-controlling EBITDA 3 1,215 2,033 + 67.3 day life. Products holding leading positions on the world market account for a interest (total) 16,340 18,951 18,896 19,271 18,569 large proportion of its sales. Read more on page 77ff. EBITDA before special items 2 1,654 2,008 + 21.4 Capital stock 1,957 2,117 2,117 2,117 2,117 EBITDA margin before special items 4 22.8% 24.0% 16.8% Reserves 14,383 16,834 16,779 17,154 16,452 Gross cash flow7 900 1,320 + 46.7 Net income 1,719 1,359 1,301 2,470 2,446 at homE throuGhout thE WorlD Net cash flow8 691 899 + 30.1 Asia / Pacific Non­controlling interest 77 54 63 59 100 liabilities (total) 36,171 32,091 32,610 33,494 32,767 materialScience With its tremendous growth potential, this eco­ Sales 10,832 11,503 + 6.2 total assets 52,511 51,042 51,506 52,765 51,336 nomic region is one of the most important markets EBIT 633 597 – 5.7 Service companies of the future. In 2012 Bayer generated €8.8 billion Equity ratio 31.1% 37.1% 36.7% 36.5% 36.2% 2 EBIT before special items 589 629 + 6.8 in sales here with 26,700 employees. Bayer aG EBITDA 3 1,215 1,224 + 0.7 Bayer Business Services is the Bayer Bayer technology Services, the currenta offers services for the Net income 1,161 2,226 1,245 1,125 889 EBITDA before special items 2 1,171 1,251 + 6.8 Group’s global competence center global technological backbone and a chemical industry including utility Latin America / Africa / Middle East Allocation to (withdrawal from) retained EBITDA margin before special items 4 10.8% 10.9% for IT and business services. Its port­ major innovation driver of the Bayer supply, waste management, infra­ earnings 91 1,068 5 (239) (682) folio is focused on services in the core Group, is engaged in process develop­ structure, safety, security, analytics Bayer has been present in Latin America for more than Gross cash flow7 939 947 + 0.9 Total dividend payment 1,070 1,158 1,240 1,364 1,571 areas of IT infrastructure and applica­ ment and in process and plant engi­ and vocational training.