SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of November 2003
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Bayer Aktiengesellschaft
Bayer Corporation*
(Translation of registrant's name into English)
Bayerwerk, Gebaeude W11
Kaiser-Wilhelm-Allee
51368 Leverkusen
Germany
(Address of principal executive offices)
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Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form 20-F X Form 40-F
---
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101 (b)(1): N/A
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101 (b)(7): N/A
Indicate by check mark whether the registrant by furnishing the information
contained in this form, the registrant is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the Securities
Exchange Act of 1934.
Yes No X
---
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): N/A
* Bayer Corporation is also the name of a wholly-owned subsidiary of the
registrant in the United States.
Stockholders' Newsletter 2003
Interim Report for the First Three Quarters
Sales and EBIT in line with expectations
Sales up 4.6 percent before portfolio and currency effects
Net debt reduced to (euro)6.9 billion
Levitra(R) successfully launched in the United States
Group sales in the third quarter of 2003 declined by 8.4 percent to (euro)6,834
million in what continued to be a difficult business environment. The decrease
was mainly due to adverse currency parities and several divestitures. Before
portfolio and currency effects, sales grew by 4.6 percent, buoyed primarily by
the Pharmaceuticals and Biological Products, and Polyurethanes, Coatings and
Fibers segments.
Third-quarter EBIT amounted to (euro)21 million. The (euro)858 million
figure for the same period of 2002 contained (euro)909 million in proceeds from
the sale of Haarmann & Reimer. Before special items, EBIT improved by (euro)36
million, or 52.9 percent, to (euro)104 million, largely thanks to higher
earnings in HealthCare.
EBIT for the first three quarters of 2003 was (euro)1,550 million, compared
to (euro)1,950 million in the same period of 2002. Before special items, EBIT in
the first nine months improved by (euro)474 million, or 53.4 percent, to
(euro)1,361 million. Through strict capital discipline, net debt was reduced by
(euro)828 million in the third quarter to (euro)6,930 million; during the first
nine months, therefore, net debt was brought down by (euro)1,931 million using
the operating cash flow and proceeds from divestitures.
We do not anticipate a sustained economic recovery before the end of the
year. Earnings in HealthCare will be hampered by high launch costs for
Levitra(R). In CropScience we expect full-year EBIT to be slightly below the
figure for the first three quarters due to seasonal factors. Earnings in
Polymers and Chemicals are not expected to improve in the near term.
In connection with the comprehensive strategic realignment of our
portfolio, we will review the valuation of all relevant assets in the fourth
quarter; this may lead to a charge against fourth-quarter earnings. However,
such a charge would not impair our ability to pay a dividend for the year.
We expect EBIT before these special items to increase by a double-digit
percentage from the previous year as forecast.
Bayer Group Highlights
(euro) million 3rd Quarter First Three Quarters
2002 2003 Change 2002 2003 Change
--------------------------------------------------------------------------------------------------------------------
Net sales 7,459 6,834 - 8.4% 22,196 21,446 - 3.4%
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of which discontinuing operations 362 159 1,155 452
Change in sales
--------------------------------------------------------------------------------------------------------------------
Volume + 6% + 5% 0% + 4%
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Price - 1% 0% - 3% + 1%
--------------------------------------------------------------------------------------------------------------------
Currency - 8% - 6% - 4% - 9%
--------------------------------------------------------------------------------------------------------------------
Portfolio changes + 11% - 7% + 4% + 1%
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EBITDA 1 1,639 753 - 54.1% 4,161 3,635 - 12.6%
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Operating result (EBIT) 858 21 - 97.6% 1,950 1,550 - 20.5%
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of which discontinuing operations 875 (19) 889 (42)
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of which special items 790 (83) 1,063 189
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Return on sales 11.5% 0.3% 8.8% 7.2%
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Net income (loss) 656 (123) o 1,472 591 - 59.9%
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Earnings per share ((euro)) 0.90 (0.17) 2.02 0.81
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Gross cash flow 2 611 541 - 11.5% 2,206 3,032 + 37.4%
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Net cash flow 3 1,397 1,193 - 14.6% 2,730 2,323 - 14.9%
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Capital expenditures 611 384 - 37.2% 1,627 1,184 - 27.2%
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Depreciation and amortization 781 732 - 6.3% 2,211 2,085 - 5.7%
--------------------------------------------------------------------------------------------------------------------
Number of employees (as of September 30) 123,500 117,300 - 5.0%
--------------------------------------------------------------------------------------------------------------------
Personnel expenses 2,200 1,940 - 11.8% 6,166 5,898 - 4.3%
2002 figures restated
1 EBITDA = operating result (EBIT) plus depreciation and amortization
2 Gross cash flow = operating result (EBIT) plus depreciation and
amortization, less gains on retirements of noncurrent assets, less income
taxes, and adjusted for changes in long-term provisions
3 Net cash flow = cash flow from operating activities according to IAS 7
PERFORMANCE BY BUSINESS AREA
Our business activities are grouped together in the HealthCare, CropScience,
Polymers and Chemicals business areas, comprising the following reporting
segments:
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Business Area Segments
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HealthCare Pharmaceuticals, Biological Products;
Consumer Care, Diagnostics;
Animal Health
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CropScience CropScience
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Polymers Plastics, Rubber;
Polyurethanes, Coatings, Fibers
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Chemicals Chemicals
--------------------------------------------------------------------------------
Healthcare
Disregarding portfolio changes, the HealthCare subgroup turned in a pleasing
performance in the third quarter. Despite unfavorable exchange rates and the
sale of the household insecticides business, year-on-year sales were steady at
(euro)2,259 million. In local currencies and before portfolio changes, sales
rose by 10.9 percent. EBIT improved by (euro)88 million to (euro)216 million.
Even after negative currency effects, business of the Pharmaceuticals and
Biological Products segment expanded by 8.4 percent in the third quarter of 2003
to (euro)1,210 million. The sales increase in local currencies amounted to 16.5
percent. This segment thus continued the positive trend of the second quarter,
with both the Pharmaceuticals and Biological Products divisions contributing to
the increase. Positive developments included the increase in market share for
the Factor VIII drug Kogenate(R) and the very successful launch of Levitra(R) in
the United States in September 2003. Levitra(R), our new medicine to treat
erectile dysfunction, had already captured an approximately 14 percent share of
new prescriptions in the United States by the 43rd calendar week of the year.
The product is now registered in nearly 60 countries. Levitra(R) is on the
market in the United States, Europe, numerous South American countries, New
Zealand and Australia. The patent disputes with Pfizer are ongoing.
HealthCare Key Data
(euro) million 3rd Quarter First Three Quarters
2002 2003 Change 2002 2003 Change
----------------------------------------------------------------------------------------------------------------------------
Net Sales 2,279 2,259 - 0.9% 7,039 6,571 - 6.6%
----------------------------------------------------------------------------------------------------------------------------
of which discontinuing operations 152 159 489 452
----------------------------------------------------------------------------------------------------------------------------
Proportion of Group sales 30.6% 33.1% 31.7% 30.6%
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EBITDA* 306 360 + 17.6% 1,105 1,468 + 32.9%
----------------------------------------------------------------------------------------------------------------------------
Operating result (EBIT) 128 216 + 68.8% 606 1,075 + 77.4%
----------------------------------------------------------------------------------------------------------------------------
of which discontinuing operations (47) (19) (76) (42)
----------------------------------------------------------------------------------------------------------------------------
of which special items (43) (26) 6 270
----------------------------------------------------------------------------------------------------------------------------
Return on sales 5.6% 9.6% 8.6% 16.4%
----------------------------------------------------------------------------------------------------------------------------
Gross cash flow* 285 350 + 22.8% 796 1,268 + 59.3%
----------------------------------------------------------------------------------------------------------------------------
Net cash flow* 347 238 - 31.4% 689 683 - 0.9%
----------------------------------------------------------------------------------------------------------------------------
Pharmaceuticals, Biological Products
----------------------------------------------------------------------------------------------------------------------------
Net sales 1,116 1,210 + 8.4% 3,540 3,531 - 0.3%
----------------------------------------------------------------------------------------------------------------------------
of which discontinuing operations 152 159 489 452
----------------------------------------------------------------------------------------------------------------------------
Pharmaceuticals 846 913 + 7.9% 2,768 2,724 - 1.6%
----------------------------------------------------------------------------------------------------------------------------
Biological Products 270 297 + 10.0% 772 807 + 4.5%
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EBITDA* 43 108 + 151.2% 420 564 + 34.3%
----------------------------------------------------------------------------------------------------------------------------
Operating result (EBIT) (33) 40 o 192 385 + 100.5%
----------------------------------------------------------------------------------------------------------------------------
of which discontinuing operations (47) (19) (76) (42)
----------------------------------------------------------------------------------------------------------------------------
of which special items (30) (44) 31 (47)
----------------------------------------------------------------------------------------------------------------------------
Return on sales (3.0)% 3.3% 5.4% 10.9%
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Gross cash flow* 41 108 +163.4% 226 489 + 116.4%
----------------------------------------------------------------------------------------------------------------------------
Net cash flow* 87 85 -2.3% 246 40 - 83.7%
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Consumer Care, Diagnostics
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Net sales 940 845 -10.1% 2,861 2,443 - 14.6%
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Consumer Care 457 363 -20.6% 1,385 1,053 - 24.0%
----------------------------------------------------------------------------------------------------------------------------
Diagnostics 483 482 -0.2% 1,476 1,390 - 5.8%
----------------------------------------------------------------------------------------------------------------------------
EBITDA* 203 202 -0.5% 514 754 + 46.7%
----------------------------------------------------------------------------------------------------------------------------
Operating result (EBIT) 110 133 +20.9% 270 562 + 108.1%
----------------------------------------------------------------------------------------------------------------------------
of which special items (13) 18 (25) 315
----------------------------------------------------------------------------------------------------------------------------
Return on sales 11.7% 15.7% 9.4% 23.0%
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Gross cash flow* 196 196 0.0% 430 645 + 50.0%
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Net cash flow* 203 93 -54.2% 368 541 + 47.0%
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Animal Health
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Net sales 223 204 -8.5% 638 597 - 6.4%
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EBITDA* 60 50 -16.7% 171 150 - 12.3%
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Operating result (EBIT) 51 43 -15.7% 144 128 - 11.1%
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of which special items 0 0 0 2
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Return on sales 22.9% 21.1% 22.6% 21.4%
----------------------------------------------------------------------------------------------------------------------------
Gross cash flow* 48 46 -4.2% 140 134 - 4.3%
----------------------------------------------------------------------------------------------------------------------------
Net cash flow* 57 60 +5.3% 75 102 + 36.0%
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* for definition see Bayer Group Highlights
EBIT increased to (euro)40 million in the third quarter. This growth in earnings
resulted mainly from the optimization of production processes in Biological
Products, the cost-structure programs in Pharmaceuticals and the favorable
business trend. The special items largely comprised restructuring charges.
The U.S. Food and Drug Administration approved the once-daily formulation
Cipro(R) XR to treat complicated urinary tract infections. We have also taken an
important step in the field of cancer research: a Raf kinase inhibitor that is
being developed jointly with U.S.-based Onyx Pharmaceuticals Inc. has reached
Phase III clinical testing for the treatment of advanced renal cell carcinoma.
As part of our ongoing portfolio management, we plan to divest the plasma
business of the Biological Products Division. These activities are shown under
discontinuing operations. The Kogenate(R) business is not affected by this
decision.
Following the first two successfully concluded Baycol(R) trials in Texas
and Mississippi in March and April of this year, the number of rhabdomyolysis
cases resolved by settlement increased substantially. As of November 6, 2003,
1,811 cases had been settled for payments totaling US$ 659 million. Moreover,
Bayer is in settlement negotiations with several hundred further plaintiffs.
Bayer remains willing to settle those cases in which plaintiffs suffered serious
side-effects due to our product. As of November 6, 2003, 11,459 cases remain
pending. Where facts have been developed in the course of the litigation it so
far appears that the vast majority of plaintiffs did not suffer serious
side-effects.
Should the U.S. plaintiffs in the Baycol(R) litigation or in the
phenylpropanolamine (PPA) product liability litigation substantially prevail
despite the existing meritorious defenses, it is possible that Bayer could face
payments that exceed its insurance coverage. The same is true should an
unexpectedly sharp increase in settlement cases occur in the Baycol(R)
litigation. PPA, which was widely used as an active ingredient in appetite
suppressants and cough-and-cold medications by many manufacturers, was
voluntarily replaced by Bayer and other producers in the U.S. in 2000 after a
recommendation by the U.S. Food and Drug Administration.
Best-Selling HealthCare Products
First Three
(euro) million 3rd Quarter Quarters
2003 Change 2003 Change
--------------------------------------------------------------------------------------------------------------
Ciprobay(R)/Cipro(R) (Pharmaceuticals) 332 - 1% 1,111 0%
--------------------------------------------------------------------------------------------------------------
Adalat(R) (Pharmaceuticals) 167 - 8% 505 - 19%
--------------------------------------------------------------------------------------------------------------
Aspirin(R) (Consumer Care/Pharmaceuticals) 152 + 5% 438 0%
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Kogenate(R) (Biological Products) 140 + 18% 355 + 25%
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Ascensia(R) Elite (Diagnostics) 117 - 1% 316 - 15%
--------------------------------------------------------------------------------------------------------------
ADVIA(R) Centaur System (Diagnostics) 98 + 21% 278 + 15%
--------------------------------------------------------------------------------------------------------------
Levitra(R) (Pharmaceuticals) 88 o 111 o
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Gamimune(R)N (Biological Products) 82 + 6% 220 - 5%
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Glucobay(R) (Pharmaceuticals) 72 + 13% 207 - 1%
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Avalox(R)/Avelox(R) (Pharmaceuticals) 54 + 8% 193 +19%
--------------------------------------------------------------------------------------------------------------
Total 1,302 + 11% 3,734 + 2%
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Proportion of HealthCare sales 58% 57%
--------------------------------------------------------------------------------------------------------------
The Consumer Care and Diagnostics segment continued to develop well in the
third quarter. Despite the divestment of the household insecticides business and
the strength of the euro, reported sales moved back by only 10.1 percent to
(euro)845 million. In local currencies and before portfolio effects, sales
climbed by 5.3 percent, with the Consumer Care and Diagnostics divisions
expanding by 3.3 and 7.2 percent, respectively. The U.S. business drove growth
of the Consumer Care Division, which was mainly due to the very positive
performance of the One-A-Day(R) Weight Smart vitamin line introduced at the
beginning of the
year. Also making pleasing gains was the analgesic Aleve(R), which grew faster
than the U.S. market for non-prescription pain relievers. Both the Professional
Testing and Self-Testing units of the Diagnostics Division posted good growth
year on year. In the Self-Testing business, the improvement over the preceding
quarters was chiefly attributable to new product launches in the Ascensia(R)
line in a number of countries. We expect these newly launched blood glucose
measurement systems to further improve our position in the self-testing market.
In Professional Testing all product groups performed encouragingly, with the
ADVIA(R) product line fairing especially well. Our position should again be
strengthened by the launches of the ADVIA(R) IMS800i laboratory diagnostics
system and the BNP heart failure assay for the ADVIA(R) Centaur system.
EBIT improved by 20.9 percent compared to the third quarter of 2002, to
(euro)133 million, helped by special items and particularly the enhanced
performance of the Professional Testing unit.
The Animal Health segment was also hampered by negative currency effects.
Third-quarter sales fell by 8.5 percent in euros but remained steady in local
currencies.
EBIT dropped by 15.7 percent to (euro)43 million, largely because of
unfavorable currency parities and heightened competition in the United States.
These effects were only partly offset by strict cost management.
CropScience Key Data
(euro)million 3rd Quarter First Three Quarters
2002 2003 Change 2002 2003 Change
---------------------------------------------------------------------------------------------------------------------------
Net sales 1,313 1,125 - 14.3% 3,262 4,353 + 33.4%
---------------------------------------------------------------------------------------------------------------------------
Proportion of Group sales 17.6% 16.5% 14.7% 20.3%
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Insecticides* 282 1,043
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Fungicides* 176 836
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Herbicides* 317 1,390
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Seed Treatment/Environmental
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Science/BioScience* 335 1,069
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EBITDA** (55) 51 o 299 920 o
---------------------------------------------------------------------------------------------------------------------------
Operating result (EBIT) (219) (134) + 38.8% (53) 342 o
---------------------------------------------------------------------------------------------------------------------------
of which special items (3) (25) (3) (40)
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Return on sales (16.7)% (11.9)% (1.6)% 7.9%
---------------------------------------------------------------------------------------------------------------------------
Gross cash flow** (40) (100) - 150.0% 221 620 + 180.5%
---------------------------------------------------------------------------------------------------------------------------
Net cash flow** 541 461 - 14.8% 870 1,003 + 15.3%
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* 2002 sales figures for product groups are not available.
** for definition see Bayer Group Highlights
CropScience
The third quarter saw a year-on-year fall of 14.3 percent, or (euro)188 million,
in CropScience sales to (euro)1,125 million. In local currencies and adjusted
for the absence of the products divested to comply with antitrust conditions,
sales rose by 3.5 percent. Products containing our most important active
ingredient, imidacloprid, continued to enjoy strong sales, as in the first half
of the year - particularly our seed treatment product Gaucho(R), which made
further gains in the important U.S., German and Italian markets. Business in
Europe was impaired by sustained drought conditions that led to lower demand for
fungicides. Sales increased significantly in North America due to heavy demand
for fungicides and insecticides. In the third quarter we obtained registration
there for our new insecticides Poncho(R) and Calypso(R). Business in South
America was impacted by negative currency and portfolio effects. Sales in the
first three quarters increased by 33.4 percent, or (euro)1,091 million, to
(euro)4,353 million as a result of the Aventis CropScience acquisition.
EBIT improved to minus (euro)134 million in the third quarter despite the
sales decline and restructuring charges, margins for the former Aventis
CropScience products having been impaired in the same period last year by
factors related to the acquisition. EBIT for the first nine months improved from
minus (euro)53 million to (euro)342 million, while EBITDA rose to (euro)920
million, compared to (euro)299 million in the first three quarters of 2002. This
yields an EBITDA margin of 21.1 percent, compared to 9.2 percent a year ago.
The integration of Aventis CropScience has continued successfully in 2003
and is now at an advanced stage.
Polymers Key Data
(euro)million 3rd Quarter First Three Quarters
2002 2003 Change 2002 2003 Change
-----------------------------------------------------------------------------------------------------------------------
Net sales 2,595 2,456 - 5.4% 7,872 7,459 - 5.2%
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Proportion of Group sales 34.8% 35.9% 35.5% 34.8%
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EBITDA* 440 233 - 47.0% 1,072 815 - 24.0%
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Operating result (EBIT) 101 - 11 - 110.9% 137 132 - 3.6%
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of which special items (51) (32) (236) (64)
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Return on sales 3.9% (0.4)% 1.7% 1.8%
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Gross cash flow* 378 210 - 44.4% 927 756 - 18.4%
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Net cash flow* 336 514 + 53.0% 795 666 - 16.2%
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Plastics, Rubber
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Net sales 1,313 1,170 - 10.9% 3,951 3,630 - 8.1%
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Thermoplastic Polymers 770 702 - 8.8% 2,245 2,121 - 5.5%
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Rubber Polymers 543 468 - 13.8% 1,706 1,509 - 11.5%
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EBITDA* 258 62 - 76.0% 501 262 - 47.7%
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Operating result (EBIT) 95 (50) o 126 (41) o
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of which special items 5 (23) (56) (16)
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Return on sales 7.2% (4.3)% 3.2% (1.1)%
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Gross cash flow* 208 58 - 72.1% 407 224 - 45.0%
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Net cash flow* 167 215 + 28.7% 331 102 - 69.2%
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Polyurethanes, Coatings, Fibers
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Net sales 1,282 1,286 + 0.3% 3,921 3,829 - 2.3%
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Polyurethane Materials 786 810 + 3.1% 2,388 2,373 - 0.6%
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Coatings Materials 496 476 - 4.0% 1,533 1,456 - 5.0%
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EBITDA* 182 171 - 6.0% 571 553 - 3.2%
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Operating result (EBIT) 6 39 o 11 173 o
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of which special items (56) (9) (180) (48)
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Return on sales 0.5% 3.0% 0.3% 4.5%
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Gross cash flow* 170 152 - 10.6% 520 532 + 2.3%
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Net cash flow* 169 299 + 76.9% 464 564 + 21.6%
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* for definition see Bayer Group Highlights
Polymers
Sales of Polymers declined by 5.4 percent in the third quarter, to (euro)2,456
million, mainly due to adverse currency effects. EBIT was sharply down, at minus
(euro)11 million.
Business in the PLASTICS AND RUBBER segment decreased by 10.9 percent to
(euro)1,170 million, largely because of the weakness of the U.S. dollar. In
local currencies and adjusted to reflect the divestment of PolymerLatex, sales
fell by 3.1 percent, hampered as before by the absence of an economic recovery
in Europe. Despite the overall trend, however, there was encouraging growth in
polycarbonate sales in the Greater China region as important customers such as
the automotive and electronics industries continued their expansion in the Far
East.
The main reasons for the significant decline in EBIT, to minus (euro)50
million, were sustained pressure on prices - partly because Asian competitors
were able to exploit their currency advantages - and high raw material costs.
Special items diminished ~earnings by (euro)23 million, with the closure of a
production line for butadiene rubber (BR) at the site in Marl, Germany,
accounting for (euro)12 million. Our acquisition of the remaining shares of
Makroform GmbH on July 15, 2003 strengthens our position as a leading supplier
of polycarbonate sheet.
Sales of the Polyurethanes, Coatings and Fibers segment remained steady
year on year at (euro)1,286 million. Business was up by 6.0 percent in local
currencies. The MDI business continued to expand, with high capacity utilization
and sales up 12.0 percent in the third quarter. Despite a squeeze on prices, the
TDI business rebounded from its low level of the second quarter to grow 7.2
percent year-on-year in the third quarter. The drop in sales of coatings
materials was largely currency-related.
EBIT improved to (euro)39 million in the third quarter, largely thanks to
the strength of the MDI business. For this segment, too, competitive pressure
from outside Europe was a negative factor. EBIT contains (euro)9 million in
special items, including a (euro)7 million charge for the closure of the
polyether site at Institute, West Virginia, United States.
Chemicals Key Data
(euro)million 3rd Quarter First Three Quarters
2002 2003 Change 2002 2003 Change
-------------------------------------------------------------------------------------------------------------------------------
Net sales 1,105 839 - 24.1% 3,450 2,582 - 25.2%
-------------------------------------------------------------------------------------------------------------------------------
of which discontinuing operations 210 0 666 0
-------------------------------------------------------------------------------------------------------------------------------
Proportion of Group sales 14.8% 12.3% 15.5% 12.0%
-------------------------------------------------------------------------------------------------------------------------------
Industrial Chemicals 245 246 + 0.4% 757 747 - 1.3%
-------------------------------------------------------------------------------------------------------------------------------
Custom Manufacturing 57 40 - 29.8% 172 134 - 22.1%
-------------------------------------------------------------------------------------------------------------------------------
Functional Chemicals 128 126 - 1.6% 392 398 + 1.5%
-------------------------------------------------------------------------------------------------------------------------------
Process Chemicals 217 184 - 15.2% 683 562 - 17.7%
-------------------------------------------------------------------------------------------------------------------------------
H.C. Starck 141 137 - 2.8% 458 421 - 8.1%
-------------------------------------------------------------------------------------------------------------------------------
Wolff Walsrode 60 59 - 1.7% 177 173 - 2.3%
-------------------------------------------------------------------------------------------------------------------------------
Others (including Haarmann & Reimer in 2002) 257 47 - 81.7% 811 147 - 81.9%
-------------------------------------------------------------------------------------------------------------------------------
EBITDA* 1,055 79 - 92.5% 1,353 264 - 80.5%
-------------------------------------------------------------------------------------------------------------------------------
Operating result (EBIT) 959 13 - 98.6% 1,050 53 - 95.0%
-------------------------------------------------------------------------------------------------------------------------------
of which discontinuing operations 922 0 965 0
-------------------------------------------------------------------------------------------------------------------------------
of which special items 889 0 844 (13)
-------------------------------------------------------------------------------------------------------------------------------
Return on sales 86.8% 1.5% 30.4% 2.1%
-------------------------------------------------------------------------------------------------------------------------------
Gross cash flow* 138 24 - 82.6% 377 216 - 42.7%
-------------------------------------------------------------------------------------------------------------------------------
Net cash flow* 205 7 - 96.6% 421 75 - 82.2%
-------------------------------------------------------------------------------------------------------------------------------
* for definition see Bayer Group Highlights
Chemicals
Chemicals sales fell by 24.1 percent in the third quarter of 2003, to (euro)839
million. Adjusted for portfolio changes and measured in local currencies,
business remained nearly steady, with sales gains for Industrial Chemicals and
H.C. Starck in particular.
With margins impaired by unfavorable currency parities, EBIT from
continuing operations declined by (euro)24 million to (euro)13 million.
To further optimize our portfolio, we sold Walothen GmbH to the Wihuri
group of Finland effective November 1, 2003.
PERFORMANCE BY REGION
There was still no tangible improvement in the economic situation of the euro
zone in the third quarter of 2003. Investment and private consumption remained
weak, while the continuing strength of the euro made it more difficult for many
export-oriented companies to offer competitive prices. Against this background,
sales of our European companies decreased by 10.5 percent to (euro)3,065
million. This decline and the lower margins, particularly on export business,
caused EBIT to fall to minus (euro)151 million.
The U.S. economy received strong stimulus from the government's economic
policy, with GDP growing surprisingly fast since the beginning of the year.
Although sales of our North American companies dipped by 1.7 percent in euros,
business was up by 8.9 percent in local currencies. As in the preceding
quarters, the increase in HealthCare earnings led to a significant improvement
in EBIT, to (euro)92 million.
An economic uptrend was also apparent in most of the Asia/Pacific
countries. Third-quarter sales of our companies in that region grew by 4.5
percent in local currencies and declined by 5.6 percent in euros. Our business
in China remains the growth driver in this region. EBIT for the Asia/Pacific
region increased by (euro)14 million to (euro)43 million.
The economy appears to be stabilizing this year in most parts of our Latin
America/Africa/Middle East region. The substantial decline in the sales of our
companies in this region, which fell by 21.9 percent to (euro)610 million, was
primarily due to the sale of the household insecticides business and factors
relating to CropScience. EBIT also declined significantly, to (euro)86 million.
Bayer Group Summary Cash Flow Statements
(euro)million 3rd Quarter First Three Quarters
2002 2003 2002 2003
-------------------------------------------------------------------------------------------------------------------------
Gross cash flow* 611 541 2,206 3,032
-------------------------------------------------------------------------------------------------------------------------
Changes in working capital 786 652 524 (709)
-------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 1,397 1,193 2,730 2,323
-------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities (2,729) (272) (7,135) 677
-------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 1,190 (469) 4,394 (1,571)
-------------------------------------------------------------------------------------------------------------------------
Changes in cash and cash equivalents due to business activities (142) 452 (11) 1,429
-------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of period 840 1,728 719 767
-------------------------------------------------------------------------------------------------------------------------
Change due to exchange rate movements and to changes in scope of
consolidation 11 (9) 1 (25)
-------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of third quarter 709 2,171 709 2,171
-------------------------------------------------------------------------------------------------------------------------
Marketable securities and other instruments 27 32 27 32
-------------------------------------------------------------------------------------------------------------------------
Liquid assets as per balance sheets 736 2,203 736 2,203
-------------------------------------------------------------------------------------------------------------------------
* for definition see Bayer Group Highlights
LIQUIDITY AND CAPITAL RESOURCES
The consolidated financial statements for the first three quarters of 2003 have
been prepared as for the year 2002 according to the rules of the International
Accounting Standards Board (IASB), London. Reference should be made as
appropriate to the notes to the 2002 statements.
Gross cash flow decreased by (euro)70 million, or 11.5 percent, in the
third quarter of 2003, chiefly as a result of higher income tax payments. Net
cash flow, at (euro)1,193 million, was down (euro)204 million but still at a
high level. A significant component of the operating cash flow was a (euro)558
million decline in accounts receivable during the third quarter, resulting
mainly from seasonal effects in the CropScience business area and strict
receivables management. Net cash flow in the first three quarters amounted to
(euro)2,323 million, after disbursements of (euro)231 million made following a
settlement reached with U.S. authorities in the context of an investigation into
pharmaceutical product prices. A cash outflow of (euro)51 million pertained to
the discontinuing plasma operations. (In 2002, a (euro)102 million cash outflow
pertained to the plasma operations, and a (euro)100 million inflow to Haarmann &
Reimer).
Net cash used in investing activities came to (euro)272 million in the
third quarter. Here, cash outflows of (euro)454 million for capital expenditures
were partially offset by (euro)164 million in inflows from asset sales and
divestments. Interest and other financial receipts amounted to (euro)18 million.
Net cash used in investing activities in the third quarter of the previous year
included disbursements in connection with the acquisition of Aventis
CropScience. In the first three quarters, investing activities provided net cash
of (euro)677 million, with a (euro)15 million outflow pertaining to
discontinuing operations. (In 2002, a (euro)9 million cash outflow pertained to
the plasma operations, and a (euro)69 million outflow to Haarmann & Reimer).
Financing activities resulted in a net cash outflow of (euro)469 million in
the third quarter, including primarily (euro)384 million in loan repayments and
(euro)91 million in interest paid after taxes. Net cash of (euro)1,571 million
was used in financing activities in the first nine months, with a cash inflow of
(euro)66 million pertaining to discontinuing operations. (In 2002, a (euro)109
million cash inflow pertained to the plasma operations, and a (euro)1 million
outflow to Haarmann & Reimer).
Cash and cash equivalents increased from the third quarter of 2002 by
(euro)1,462 million to (euro)2,171 million. Including marketable securities and
other instruments, the Group had liquid assets of (euro)2,203 million on
September 30, 2003.
Earnings
(euro)million 3rd Quarter First Three Quarters
2002 2003 Change 2002 2003 Change
------------------------------------------------------------------------------------------------------------------
Operating result (EBIT) 858 21 - 97.6% 1,950 1,550 - 20.5%
------------------------------------------------------------------------------------------------------------------
of which discontinuing operations 875 (19) 889 (42)
------------------------------------------------------------------------------------------------------------------
of which special items 790 (83) 1,063 189
------------------------------------------------------------------------------------------------------------------
Non-operating result (241) (211) + 12.4% (354) (559) - 57.9%
------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 617 (190) o 1,596 991 - 37.9%
------------------------------------------------------------------------------------------------------------------
Net income (loss) 656 (123) o 1,472 591 - 59.9%
------------------------------------------------------------------------------------------------------------------
EARNINGS PERFORMANCE
Reported EBIT declined by (euro)837 million in the third quarter of 2003, to
(euro)21 million, though before special items EBIT increased by 52.9 percent to
(euro)104 million. Special items for the third quarter mainly comprised
restructuring charges. Earnings for the same period of 2002 contained proceeds
of (euro)909 million from the sale of the Haarmann & Reimer group.
The non-operating result improved by (euro)30 million to minus (euro)211
million, largely because of a (euro)39 million reduction in net interest
expense, to (euro)93 million.
The Bayer Group reported a pre-tax loss of (euro)190 million for the
quarter. After accounting for tax income of (euro)74 million and minority
interests, a net loss of (euro)123 million was recorded. Net income for the
first three quarters amounted to (euro)591 million.
We terminated our research agreement with Millennium Pharmaceuticals on
October 31, 2003, as planned, and sold our interest in this biotech company in
the fourth quarter. The divestiture proceeds of more than US$ 300 million will
be used to further reduce net debt.
Balance Sheet Structure
(euro)million Sept. 30, 2002 Sept. 30, 2003 Dec. 31, 2002
------------------------------------------------------------------------------------------------------
Noncurrent assets 25,337 21,666 23,513
------------------------------------------------------------------------------------------------------
Current assets 17,884 17,031 16,890
------------------------------------------------------------------------------------------------------
Deferred taxes and deferred charges 1,262 1,048 1,289
------------------------------------------------------------------------------------------------------
Stockholders' equity 16,131 14,713 15,335
------------------------------------------------------------------------------------------------------
Minority stockholders' interest 152 137 120
------------------------------------------------------------------------------------------------------
Liabilities 24,979 22,461 23,320
------------------------------------------------------------------------------------------------------
Deferred taxes and deferred income 3,221 2,434 2,917
------------------------------------------------------------------------------------------------------
Total assets 44,483 39,745 41,692
------------------------------------------------------------------------------------------------------
ASSET AND CAPITAL STRUCTURE
Total assets decreased by (euro)1.9 billion compared with the beginning of 2003,
to (euro)39.7 billion.
Intangible assets shrank by (euro)0.9 billion to (euro)8.0 billion.
Property, plant and equipment decreased by (euro)1.1 billion, with (euro)0.9
billion in capital expenditures offset by (euro)1.3 billion in depreciation and
amortization and (euro)0.3 billion in retirements. Negative currency effects
diminished property, plant and equipment by (euro)0.4 billion.
The total of inventories and receivables dropped by (euro)1.3 billion, or
7.9 percent, to (euro)14.8 billion, with inventories up 0.5 percent, to
(euro)6.4 billion, but trade accounts receivable down by 4.3 percent, to
(euro)5.3 billion. Other receivables declined by 25.2 percent to (euro)3.2
billion, as the assets earmarked for divestment and since divested in connection
with the Aventis CropScience acquisition were still included in this item at the
end of 2002. Liquid assets grew by (euro)1.4 billion to (euro)2.2 billion,
particularly due to the operating cash flow. Total current assets increased by
(euro)0.1 billion compared with December 31, 2002, to (euro)17.0 billion.
Stockholders' equity declined by (euro)0.6 billion to (euro)14.7 billion. A
(euro)0.6 billion allocation out of net income was offset by the (euro)0.6
billion dividend payment for 2002 along with a further (euro)0.6 billion
reduction, resulting mainly from currency translations, which was not recognized
in net income.
Equity coverage of total assets rose by 0.2 percentage points compared to
the end of 2002, to 37.0 percent.
Liabilities fell by (euro)0.9 billion to (euro)22.5 billion, chiefly due to
a decline in trade accounts payable and to the disbursements made following the
settlement reached with U.S.
authorities in the context of an investigation into pharmaceutical product
prices. Gross financial liabilities dropped by (euro)0.5 billion, to (euro)9.1
billion.
Net debt declined by (euro)1.9 billion in the first three quarters, to
(euro)6.9 billion.
CAPITAL EXPENDITURES
As in the previous quarters, we again spent considerably less for intangible
assets, property, plant and equipment in the third quarter of 2003 than in the
corresponding period last year. Capital expenditures were down by 37.2 percent,
to (euro)384 million.
Bayer Group Consolidated Statements of Income (Summary)
First Three
(euro)million 3rd Quarter Quarters
2002 2003 2002 2003
--------------------------------------------------------------------------------------------------------------
Net sales 7,459 6,834 22,196 21,446
--------------------------------------------------------------------------------------------------------------
of which discontinuing operations 362 159 1,155 452
--------------------------------------------------------------------------------------------------------------
Cost of goods sold (4,524) (4,199) (13,108) (12,329)
--------------------------------------------------------------------------------------------------------------
Gross profit 2,935 2,635 9,088 9,117
--------------------------------------------------------------------------------------------------------------
Selling expenses (1,757) (1,497) (5,048) (4,688)
--------------------------------------------------------------------------------------------------------------
Research and development expenses (640) (639) (1,842) (1,766)
--------------------------------------------------------------------------------------------------------------
General administration expenses (391) (427) (1,063) (1,197)
--------------------------------------------------------------------------------------------------------------
Other operating income 1,048 225 1,786 942
--------------------------------------------------------------------------------------------------------------
Other operating expenses (337) (276) (971) (858)
--------------------------------------------------------------------------------------------------------------
Operating result (EBIT) 858 21 1,950 1,550
--------------------------------------------------------------------------------------------------------------
of which discontinuing operations 875 (19) 889 (42)
--------------------------------------------------------------------------------------------------------------
Non-operating result (241) (211) (354) (559)
--------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 617 (190) 1,596 991
--------------------------------------------------------------------------------------------------------------
Income taxes 44 74 (115) (385)
--------------------------------------------------------------------------------------------------------------
Income (loss) after taxes 661 (116) 1,481 606
--------------------------------------------------------------------------------------------------------------
Minority stockholders' interest (5) (7) (9) (15)
--------------------------------------------------------------------------------------------------------------
Net income (loss) 656 (123) 1,472 591
--------------------------------------------------------------------------------------------------------------
Earnings per share ((euro)) 0.90 (0.17) 2.02 0.81
--------------------------------------------------------------------------------------------------------------
Total capital spending in the first nine months of 2003 fell by 27.2
percent to (euro)1,184 million. At 57.2 percent of our (euro)2,069 million
scheduled depreciation and amortization, the level of capital expenditures was
in line with our planning. Europe accounted for capital spending of (euro)778
million, 60.4 percent of which went for our sites in Germany.
EMPLOYEES
On September 30, 2003, the Bayer Group had 117,300 employees, 5,300 fewer than
at the start of the year. Headcount was reduced by 2,200 in Europe, 1,100 in
North America, 1,400 in Asia/Pacific and 600 in Latin America/Africa/Middle
East.
Personnel expenses were down by 11.8 percent in the third quarter, to
(euro)1,940 million, and by 4.3 percent in the first three quarters as a whole,
to (euro)5,898 million.
Bayer Group Consolidated Balance Sheets (Summary)
(euro)million Sept. 30, Sept. 30, Dec. 31,
2002 2003 2002
---------------------------------------------------------------------------------------------
Assets
Noncurrent assets
Intangible assets 10,512 8,010 8,879
---------------------------------------------------------------------------------------------
Property, plant and equipment 12,704 11,387 12,436
---------------------------------------------------------------------------------------------
Investments 2,121 2,269 2,198
---------------------------------------------------------------------------------------------
25,337 21,666 23,513
---------------------------------------------------------------------------------------------
Current Assets
Inventories 6,706 6,375 6,342
---------------------------------------------------------------------------------------------
Receivables and other assets
---------------------------------------------------------------------------------------------
Trade accounts receivable 6,134 5,302 5,542
---------------------------------------------------------------------------------------------
Other receivables and other assets 4,308 3,151 4,210
---------------------------------------------------------------------------------------------
10,442 8,453 9,752
---------------------------------------------------------------------------------------------
Liquid assets 736 2,203 796
---------------------------------------------------------------------------------------------
17,884 17,031 16,890
---------------------------------------------------------------------------------------------
Deferred Taxes 915 618 967
---------------------------------------------------------------------------------------------
Deferred Charges 347 430 322
---------------------------------------------------------------------------------------------
44,483 39,745 41,692
---------------------------------------------------------------------------------------------
of which discontinuing operations 902 815 853
---------------------------------------------------------------------------------------------
Stockholders' Equity and Liabilities
Stockholders' Equity
Capital stock and reserves 4,812 4,812 4,812
---------------------------------------------------------------------------------------------
Retained earnings 10,127 10,479 10,076
---------------------------------------------------------------------------------------------
Net income 1,472 591 1,060
---------------------------------------------------------------------------------------------
Other comprehensive income
---------------------------------------------------------------------------------------------
Currency translation adjustment (284) (1,268) (593)
---------------------------------------------------------------------------------------------
Miscellaneous items 4 99 (20)
---------------------------------------------------------------------------------------------
16,131 14,713 15,335
---------------------------------------------------------------------------------------------
Minority Stockholders' Interest 152 137 120
---------------------------------------------------------------------------------------------
Liabilities
Long-term liabilities
Long-term financial liabilities 7,268 6,960 7,318
---------------------------------------------------------------------------------------------
Miscellaneous long-term liabilities 108 80 92
---------------------------------------------------------------------------------------------
Provisions for pensions and other 4,946 5,112 4,925
---------------------------------------------------------------------------------------------
post-employment benefits
---------------------------------------------------------------------------------------------
Other long-term provisions 1,298 1,277 1,215
---------------------------------------------------------------------------------------------
13,620 13,429 13,550
---------------------------------------------------------------------------------------------
Short-term Liabilities
Short-term financial liabilities 5,272 2,656 2,841
---------------------------------------------------------------------------------------------
Trade accounts payable 2,285 1,749 2,534
---------------------------------------------------------------------------------------------
Miscellaneous short-term liabilities 2,101 2,100 2,138
---------------------------------------------------------------------------------------------
Short-term provisions 1,701 2,527 2,257
---------------------------------------------------------------------------------------------
11,359 9,032 9,770
---------------------------------------------------------------------------------------------
24,979 22,461 23,320
---------------------------------------------------------------------------------------------
of which discontinuing operations 90 98 81
---------------------------------------------------------------------------------------------
Deferred taxes 2,803 1,867 2,453
---------------------------------------------------------------------------------------------
Deferred income 418 567 464
---------------------------------------------------------------------------------------------
44,483 39,745 41,692
---------------------------------------------------------------------------------------------
The statements for the first three quarters are unaudited.
Bayer Group Consolidated Statements of Changes in Stockholders' Equity (Summary)
Capital
stock Currency
and Retained Net translation Miscellaneous
(euro)million reserves earnings income adjustment items Total
-----------------------------------------------------------------------------------------------------------------
December 31, 2001 4,812 9,841 965 759 545 16,922
-----------------------------------------------------------------------------------------------------------------
Dividend payment (657) (657)
-----------------------------------------------------------------------------------------------------------------
Allocation to retained earnings 286 (308) (22)
-----------------------------------------------------------------------------------------------------------------
Exchange differences (1,043) (1,043)
-----------------------------------------------------------------------------------------------------------------
Other changes in stockholders' equity (541) (541)
-----------------------------------------------------------------------------------------------------------------
Net income 1,472 1,472
-----------------------------------------------------------------------------------------------------------------
September 30, 2002 4,812 10,127 1,472 (284) 4 16,131
-----------------------------------------------------------------------------------------------------------------
December 31, 2002 4,812 10,076 1,060 (593) (20) 15,335
-----------------------------------------------------------------------------------------------------------------
Dividend payment (657) (657)
-----------------------------------------------------------------------------------------------------------------
Allocation to retained earnings 403 (403) 0
-----------------------------------------------------------------------------------------------------------------
Exchange differences (675) (675)
-----------------------------------------------------------------------------------------------------------------
Other changes in stockholders' equity 119 119
-----------------------------------------------------------------------------------------------------------------
Net income 591 591
-----------------------------------------------------------------------------------------------------------------
September 30, 2003 4,812 10,479 591 (1,268) 99 14,713
-----------------------------------------------------------------------------------------------------------------
Key Data by Segment
-----------------------------------------------------------------------------------------------------------------------------------
3rd Quarter HealthCare CropScience Polymers
Segments
Pharmaceuticals, Consumer Polyurethanes,
Biological Care, Coatings,
Products Diagnostics Animal Health CropScience Plastics, Rubber Fibers
3rd Quarter 3rd Quarter 3rd Quarter 3rd Quarter 3rd Quarter 3rd Quarter
(euro)million 2002 2003 2002 2003 2002 2003 2002 2003 2002 2003 2002 2003
------------------------------------------------------------------------------------------------------------------------------------
Net sales (external) 1,116 1,210 940 845 223 204 1,313 1,125 1,313 1,170 1,282 1,286
------------------------------------------------------------------------------------------------------------------------------------
o Change in(euro) -2.4% +8.4% -8.2% -10.1% -3.0% -8.5% +135.7% -14.3% -2.2% -10.9% -6.4% +0.3%
------------------------------------------------------------------------------------------------------------------------------------
o Change in local
currencies +5.6% +16.5% +2.7% -2.1% +6.1% -0.9% +146.2% -8.3 % +2.1% -6.2% -0.1% +6.0%
------------------------------------------------------------------------------------------------------------------------------------
Intersegment
sales 8 25 0 8 0 1 12 10 30 4 13 60
------------------------------------------------------------------------------------------------------------------------------------
Operating result
(EBIT) (33) 40 110 133 51 43 (219) (134) 95 (50) 6 39
------------------------------------------------------------------------------------------------------------------------------------
Return on sales (3.0)% 3.3% 11.7% 15.7% 22.9% 21.1% (16.7)% (11.9)% 7.2% (4.3)% 0.5% 3.0%
------------------------------------------------------------------------------------------------------------------------------------
Depreciation and
amortization 76 68 93 69 9 7 164 185 163 112 176 132
------------------------------------------------------------------------------------------------------------------------------------
Gross cash flow* 41 108 196 196 48 46 (40) (100) 208 58 170 152
------------------------------------------------------------------------------------------------------------------------------------
Net cash flow* 87 85 203 93 57 60 541 461 167 215 169 299
------------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
3rd Quarter Chemicals
Segments of which
discontinuing
operations of which
(Pharmaceuticals, discontinuing
Biological operations
Reconciliation Bayer Group Products (Chemicals)
3rd Quarter 3rd Quarter 3rd Quarter 3rd Quarter 3rd Quarter
(euro)million 2002 2003 2002 2003 2002 2003 2002 2003 2002 2003
----------------------------------------------------------------------------------------------------------------------------
Net sales (external) 1,105 839 167 155 7,459 6,834 152 159 210 0
----------------------------------------------------------------------------------------------------------------------------
o Change in(euro) +2.0% -24.1% +7.6% -8.4%
----------------------------------------------------------------------------------------------------------------------------
o Change in local currencies +10.9% -20.4% +15.6% -2.2%
----------------------------------------------------------------------------------------------------------------------------
Intersegment sales 103 42 (166) (150)
----------------------------------------------------------------------------------------------------------------------------
Operating result (EBIT) 959 13 (111) (63) 858 21 (47) (19) 922 0
----------------------------------------------------------------------------------------------------------------------------
Return on sales 86.8% 1.5% 11.5% 0.3%
----------------------------------------------------------------------------------------------------------------------------
Depreciation and amortization 96 66 4 93 781 732 8 7 1 0
----------------------------------------------------------------------------------------------------------------------------
Gross cash flow* 138 24 (150) 57 611 541
----------------------------------------------------------------------------------------------------------------------------
Net cash flow* 205 7 (32) (27) 1,397 1,193
----------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
First Three Quarters HealthCare CropScience Polymers
Segments
Pharmaceuticals,
Biological Consumer Care, Polyurethanes,
Products Diagnostics Animal Health CropScience Plastics, Rubber Coatings, Fibers
First Three First Three First Three First Three First Three First Three
Quarters Quarters Quarters Quarters Quarters Quarters
(euro)million 2002 2003 2002 2003 2002 2003 2002 2003 2002 2003 2002 2003
----------------------------------------------------------------------------------------------------------------------------
Net sales
(external) 3,540 3,531 2,861 2,443 638 597 3,262 4,353 3,951 3,630 3,921 3,829
------------------------------------------------------------------------------------------------------------------------------------
o Change in _ -13.1% -0.3% -5.3% -14.6% -0.6% -6.4% +45.8% +33.4% -8.8% -8.1% -6.0% -2.3%
------------------------------------------------------------------------------------------------------------------------------------
o Change in local
currencies -9.3% +10.9% +0.4% -2.6% +4.3% +5.7% +51.4% +44.0% -7.0% -0.9% -3.0% +6.3%
------------------------------------------------------------------------------------------------------------------------------------
Intersegment sales 25 47 2 11 1 2 38 42 94 50 55 162
------------------------------------------------------------------------------------------------------------------------------------
Operating result
(EBIT) 192 385 270 562 144 128 -(53) 342 126 (41) 11 173
------------------------------------------------------------------------------------------------------------------------------------
Return on sales 5.4% 10.9% 9.4% 23.0% 22.6% 21.4% (1.6)% 7.9% 3.2% (1.1)% 0.3% 4.5%
------------------------------------------------------------------------------------------------------------------------------------
Depreciation and
amortization 228 179 244 192 27 22 352 578 375 303 560 380
------------------------------------------------------------------------------------------------------------------------------------
Gross cash flow* 226 489 430 645 140 134 221 620 407 224 520 532
------------------------------------------------------------------------------------------------------------------------------------
Net cash flow* 246 40 368 541 75 102 870 1,003 331 102 464 564
------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
First Three Quarters Chemicals
Segments of which
discontinuing
operations of which
(Pharmaceuticals, discontinuing
Biological operations
Reconciliation Bayer Group Products (Chemicals)
First Three First Three First Three First Three First Three
Quarters Quarters Quarters Quarters Quarters
(euro)million 2002 2003 2002 2003 2002 2003 2002 2003 2002 2003
--------------------------------------------------------------------------------------------------------------------------------
Net sales (external) 3,450 2,582 573 481 22,196 21,446 489 452 666 0
--------------------------------------------------------------------------------------------------------------------------------
o Change in _ -9.5% -25.2% -3.1% -3.4%
--------------------------------------------------------------------------------------------------------------------------------
o Change in local currencies -4.3% -18.7% +0.9% +5.7%
--------------------------------------------------------------------------------------------------------------------------------
Intersegment sales 291 251 (506) (565)
--------------------------------------------------------------------------------------------------------------------------------
Operating result (EBIT) 1,050 53 210 (52) 1,950 1,550 (76) (42) 965 0
--------------------------------------------------------------------------------------------------------------------------------
Return on sales 30.4% 2.1% 8.8% 7.2%
--------------------------------------------------------------------------------------------------------------------------------
Depreciation and amortization 303 211 122 220 2,211 2,085 25 21 32 0
--------------------------------------------------------------------------------------------------------------------------------
Gross cash flow* 377 216 (115) 172 2,206 3,032
--------------------------------------------------------------------------------------------------------------------------------
Net cash flow* 421 75 (45) (104) 2,730 2,323
--------------------------------------------------------------------------------------------------------------------------------
* for definition see Bayer Group Highlights
2002 figures restated
Key Data by Region
3rd Quarter
-----------------------------------------------------------------------------------------------
Regions Europe North America Asia/Pacific
3rd Quarter 3rd Quarter 3rd Quarter
(euro)million 2002 2003 2002 2003 2002 2003
-----------------------------------------------------------------------------------------------
Net sales (external) -
by market 3,000 2,733 2,204 2,153 1,242 1,119
-----------------------------------------------------------------------------------------------
Net sales (external) -
by point of origin 3,423 3,065 2,212 2,174 1,043 985
-----------------------------------------------------------------------------------------------
of which discontinuing
operations 129 18 162 129 43 11
-----------------------------------------------------------------------------------------------
o Change in(euro) +11.4% -10.5% -4.8% -1.7% +14.7% -5.6%
-----------------------------------------------------------------------------------------------
o Change in local currencies +11.6% -10.0% +5.3% +8.9% +21.4% +4.5%
-----------------------------------------------------------------------------------------------
Interregional sales 776 901 456 468 53 120
-----------------------------------------------------------------------------------------------
Operating result (EBIT) 793 (151) (48) 92 29 43
-----------------------------------------------------------------------------------------------
of which discontinuing
operations 922 8 (54) (27) 1 0
-----------------------------------------------------------------------------------------------
Return on sales 23.2% (4.9)% (2.2)% 4.2% 2.8% 4.4%
-----------------------------------------------------------------------------------------------
Gross cash flow* 205 14 263 381 74 68
-----------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Latin America/Africa/
Regions Middle East Reconciliation Bayer Group
3rd Quarter 3rd Quarter 3rd Quarter
(euro)million 2002 2003 2002 2003 2002 2003
--------------------------------------------------------------------------------------------------
Net sales (external) -
by market 1,013 829 7,459 6,834
--------------------------------------------------------------------------------------------------
Net sales (external) -
by point of origin 781 610 7,459 6,834
--------------------------------------------------------------------------------------------------
of which discontinuing
operations 28 1 362 159
--------------------------------------------------------------------------------------------------
o Change in(euro) + 24.6% -21.9% +7.6% -8.4%
--------------------------------------------------------------------------------------------------
o Change in local currencies +58.9% -14.1% +15.6% -2.2%
--------------------------------------------------------------------------------------------------
Interregional sales 39 80 (1,324) (1,473)
--------------------------------------------------------------------------------------------------
Operating result (EBIT) 134 86 (50) (49) 858 21
--------------------------------------------------------------------------------------------------
of which discontinuing
operations 6 0 0 0 875 (19)
--------------------------------------------------------------------------------------------------
Return on sales 17.2% 14.1% 11.5% 0.3%
--------------------------------------------------------------------------------------------------
Gross cash flow* 120 75 (51) 3 611 541
--------------------------------------------------------------------------------------------------
First Three Quarters
----------------------------------------------------------------------------------------------------------------------
Regions Europe North America Asia/Pacific
First Three First Three First Three
Quarters Quarters Quarters
(euro)million 2002 2003 2002 2003 2002 2003
----------------------------------------------------------------------------------------------------------------------
Net sales (external) -
by market 9,225 9,183 6,801 6,569 3,654 3,406
----------------------------------------------------------------------------------------------------------------------
Net sales (external) -
by point of origin 10,387 10,219 6,898 6,673 3,050 2,918
----------------------------------------------------------------------------------------------------------------------
of which discontinuing
operations 404 51 523 360 138 37
----------------------------------------------------------------------------------------------------------------------
o Change in(euro) -2.9% -1.6% -7.1% -3.3% +3.2% -4.3%
----------------------------------------------------------------------------------------------------------------------
o Change in local currencies -2.9% -1.0% -3.6% +12.5% +7.4% +8.4%
----------------------------------------------------------------------------------------------------------------------
Interregional sales 2,303 2,971 1,471 1,450 155 192
----------------------------------------------------------------------------------------------------------------------
Operating result (EBIT) 1,927 842 (205) 308 187 241
----------------------------------------------------------------------------------------------------------------------
of which discontinuing
operations 958 24 (100) (66) 11 0
----------------------------------------------------------------------------------------------------------------------
Return on sales 18.6% 8.2% (3.0)% 4.6% 6.1% 8.3%
----------------------------------------------------------------------------------------------------------------------
Gross cash flow* 1,253 1,517 679 1,036 240 278
----------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Latin America/Africa/
Regions Middle East Reconciliation Bayer Group
First Three First Three First Three
Quarters Quarters Quarters
(euro)million 2002 2003 2002 2003 2002 2003
---------------------------------------------------------------------------------------------------------------------
Net sales (external) -
by market 2,516 2,288 22,196 21,446
---------------------------------------------------------------------------------------------------------------------
Net sales (external) -
by point of origin 1,861 1,636 22,196 21,446
---------------------------------------------------------------------------------------------------------------------
of which discontinuing
operations 90 4 1,155 452
---------------------------------------------------------------------------------------------------------------------
o Change in(euro) +2.2% -12.1% -3.1% -3.4%
---------------------------------------------------------------------------------------------------------------------
o Change in local currencies +27.5% +11.4% +0.9% +5.7%
---------------------------------------------------------------------------------------------------------------------
Interregional sales 122 125 (4,051) (4,738)
---------------------------------------------------------------------------------------------------------------------
Operating result (EBIT) 209 319 (168) (160) 1,950 1,550
---------------------------------------------------------------------------------------------------------------------
of which discontinuing
operations 20 0 0 0 889 (42)
---------------------------------------------------------------------------------------------------------------------
Return on sales 11.2% 19.5% 8.8% 7.2%
---------------------------------------------------------------------------------------------------------------------
Gross cash flow* 204 280 (170) (79) 2,206 3,032
---------------------------------------------------------------------------------------------------------------------
* for definition see Bayer Group Highlights
2002 figures restated
Forward-Looking Statements
This Stockholders' Newsletter contains forward-looking statements. These
statements use words like "believes," "assumes," "expects" or similar
formulations. Various known and unknown risks, uncertainties and other factors
could lead to material differences between the actual future results, financial
situation, development or performance of our company and those either expressed
or implied by these statements. These factors include, among other things:
o downturns in the business cycle of the industries in which we compete;
o new regulations, or changes to existing regulations, that increase our
operating costs or otherwise reduce our profitability;
o increases in the prices of our raw materials, especially if we are
unable to pass these costs along to customers;
o loss or reduction of patent protection for our products;
o liabilities, especially those incurred as a result of environmental
laws or product liability litigation;
o fluctuation in international currency exchange rates as well as
changes in the general economic climate; and
o other factors identified in this Stockholders' Newsletter.
These factors include those discussed in our public reports filed with the
Frankfurt Stock Exchange and with the U.S. Securities and Exchange Commission
(including our Form 20-F).
In view of these uncertainties, we caution readers not to place undue reliance
on these forward-looking statements. We assume no liability whatsoever to update
these forward-looking statements or to conform them to future events or
developments.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Bayer Aktiengesellschaft
(Registrant)
Date: November 21, 2003 By: /s/ ALEXANDER ROSAR
----------------------------------
NAME: Alexander Rosar
Title: Head of Investor Relations
By: /s/ ARMIN BUCHMEIER
----------------------------------
Name: Armin Buchmeier
Title: Senior Counsel