Management Report

3. Sales and Earnings Forecast

Bayer Group

Based on the operational performance in the first quarter of 2015 and our expectations for the future business development, and taking into account the potential risks and opportunities, we are raising our guidance for 2015, mainly in view of the considerably more positive exchange rates prevailing on March 31, 2015.

We are now planning sales in the region of €48 billion to €49 billion (previously: in the region of €46 billion). This corresponds to a low-single-digit percentage increase on a currency- and portfolio-adjusted basis. We expect currency effects to boost sales by approximately 9% (previously: approximately 3%) compared with the prior year. We now plan to raise ebitda before special items by a high-teens percentage (previously: low- to mid-teens percentage), allowing for expected positive currency effects of about 8% (previously: about 2%). We now aim to increase core earnings per share (calculated as explained in Chapter 7) by a high-teens percentage (previously: low-teens percentage), allowing for expected positive currency effects of around 7% (previously: around 3%).

Forecast

We continue to expect to take special charges in the region of €700 million, with the integration of the acquired consumer care businesses and the planned stock market listing of MaterialScience accounting for most of this amount.

We continue to anticipate the financial result to come in at around minus €1 billion and the effective tax rate at around 25% in 2015. We expect net financial debt at year end to be below €20 billion (previously: below €18 billion).

Further details of the business forecast are given in Chapter 20.2 of the Annual Report 2014.

HealthCare

At HealthCare we now expect sales to rise to over €24 billion (previously: approximately €23 billion). This corresponds to a mid-single-digit percentage increase on a currency- and portfolio-adjusted basis. We predict positive currency effects of about 9% (previously: about 3%) compared with 2014. We now plan to raise ebitda before special items by a low-twenties percentage (previously: mid-teens percentage).

In the Pharmaceuticals segment, we now expect sales to move ahead to approximately €14 billion (previously: approximately €13 billion). This corresponds to a mid- to high-single-digit percentage on a currency- and portfolio-adjusted basis. Here we anticipate positive currency effects of about 9% (previously: about 2%) compared with 2014. We intend to raise sales of our recently launched products to over €4 billion (previously: toward €4 billion). We plan to raise ebitda before special items by a mid-teens percentage (previously: low-teens percentage), allowing for an additional €350 million (previously: €300 million) of investment in research and development. As a result of the dilutive currency effects, we expect the ebitda margin before special items to be slightly below the prior-year level (previously: slightly improve).

In the Consumer Health segment, we expect sales to increase to over €10 billion (previously: toward €10 billion), including those of the acquired consumer care businesses. We plan to grow sales by a mid-single-digit percentage on a currency- and portfolio-adjusted basis and anticipate positive currency effects of around 9% (previously: around 3%) compared with 2014. We expect to raise ebitda before special items by a mid-thirties percentage (previously: a mid- to high-twenties percentage), with the acquired consumer care businesses contributing to the increase.

CropScience

At CropScience we expect to continue growing faster than the market and now aim to raise sales to approximately €11 billion (previously: approximately €10 billion). This corresponds to a low- to mid-single-digit percentage increase on a currency- and portfolio-adjusted basis. We anticipate positive currency effects of about 11% (previously: about 4%) compared with 2014. In line with the clearly positive currency changes, we now plan to improve ebitda before special items by a low- to mid-teens percentage (previously: a low- to mid-single-digit percentage).

MaterialScience

At MaterialScience we continue to plan further volume growth in 2015 accompanied by declining selling prices. This will lead to lower sales on a currency- and portfolio-adjusted basis. However, we expect to see a significant increase in ebitda before special items, partly due to lower raw material costs. We aim to return to earning the full cost of capital in 2015.

We expect sales and ebitda before special items in the second quarter of 2015 to come in at least at the level of the first quarter of 2015.

Reconciliation

For 2015 we continue to anticipate sales on a currency- and portfolio-adjusted basis to be level with the previous year. We expect ebitda before special items to be roughly minus €0.3 billion.

Last updated: April 30, 2015  Copyright © Bayer AG
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